-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UBD87MIXfNfDm5tSOuuGmDmmBlN4824oOTHcec2drI7/eeFh6KRIBg8SdOtBQ4+5 M50MG0KVhuCheoJxAhwnAA== 0000950148-95-000682.txt : 19951030 0000950148-95-000682.hdr.sgml : 19951030 ACCESSION NUMBER: 0000950148-95-000682 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19951012 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19951027 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALL AMERICAN COMMUNICATIONS INC CENTRAL INDEX KEY: 0000783265 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 953803222 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14333 FILM NUMBER: 95585125 BUSINESS ADDRESS: STREET 1: 2114 PICO BLVD CITY: SANTA MONICA STATE: CA ZIP: 90405 BUSINESS PHONE: 3104503193 MAIL ADDRESS: STREET 1: 2114 PICO BLVD CITY: SANTA MONICA STATE: CA ZIP: 90405 FORMER COMPANY: FORMER CONFORMED NAME: ALL AMERICAN TELEVISION INC DATE OF NAME CHANGE: 19910306 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): October 12, 1995 ALL AMERICAN COMMUNICATIONS, INC. --------------------------------- (Exact Name of Registrant as Specified in its Charter) DELAWARE -------- (State or Other Jurisdiction of Incorporation) 0-14333 95-3803222 ------- ---------- (Commission File (I.R.S. Employer Number) Identification Number) 2114 Pico Boulevard, Santa Monica, California 90405 --------------------------------------------------- (Address of Principal Executive Offices) (310) 450-3193 -------------- (Registrant's Telephone Number, Including Area Code) Not Applicable -------------- (Former Name or Former Address, if Changed Since Last Report) 2 ITEM 5. OTHER EVENTS All American Communications, Inc. (the "Company") entered into an Asset Purchase Agreement, dated as of October 6, 1995, pursuant to which a newly-formed New York limited liability company (the "LLC") to be jointly owned, directly or indirectly, by the Company and The Interpublic Group of Companies, Inc. ("Interpublic"), agreed to acquire substantially all of the assets (excluding assets relating to the lottery business) and to assume certain specified liabilities (the "Mark Goodson Acquisition") of Mark Goodson Productions, L.P. and The Child's Play Company (collectively the "Sellers"). The assets of Mark Goodson Productions include ownership rights to approximately 45 game show formats, including "The Price Is Right," and a tape library of approximately 17,000 broadcast hours of programming and 30,000 episodes. The Asset Purchase Agreement provides that the purchase price will consist of payment by the Company of $25.0 million in cash and issuance by Interpublic of $25.0 million in its common stock to the Sellers, together with a contingent earn-out described below. Under the earn-out, the LLC will initially pay to an assignee of the Sellers a specified percentage of "Domestic Net Profits" (i.e. generally gross receipts less production costs, if applicable, a distribution fee to the Company under certain circumstances and residual payments) realized from the exploitation in the U.S. and Canada (currently, primarily consisting of "The Price Is Right") of the Goodson game shows and other purchased television formats during the five-year period following October 6, 1995 (which period is subject to extension for an additional five years if total earn-out payments do not equal $48.5 million, in which case the earn-out shall be payable in neither a minimum nor a maximum amount). The specified percentage of Domestic Net Profits payable to the Sellers with respect to "The Price Is Right" is 75% during the network exhibition of the program during the five years after October 6, 1995. However, the earn-out does not apply to any net profits realized from the international exploitation of any of the purchased game show or other purchased television formats. Consummation of the Mark Goodson Acquisition is subject to expiration or termination of the regulatory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR") and satisfaction of other customary closing conditions. On October 24, 1995, the Company received notice of the early termination of the HSR waiting period. The parties executed and delivered most of the principal operative documents (including the delivery by the Company of a $25.0 million letter of credit covering the cash portion of the purchase price) into escrow, pending final closing. As of the final closing, the LLC will enter into a long-term license with a wholly-owned subsidiary of the Company which will exploit, in consideration of customary distribution fees and recoupment of certain out-of-pocket expenses, all of the Goodson formats world-wide. Accordingly, while the Company's ownership interest resulting from the Mark Goodson Acquisition will be limited to a 50% interest, the Company will be responsible for the world-wide exploitation of the underlying rights, subject only to rights under certain existing licenses. The Company's wholly-owned subsidiary has agreed to sublicense the right to continuously exploit "The Price Is Right" on U.S. network television during the earn-out period to a wholly-owned subsidiary of Interpublic, which will hire an affiliate of mark Goodson Productions, L.P., as producer of the show on a "for hire" basis under an agreed-upon production budget. 2 3 It is anticipated that Interpublic and the Company will enter into an agreement pursuant to which the Company will have a six-month option to acquire Interpublic's undivided 50% share in the LLC commencing in April 1996 for $25.9 million (increasing during the option exercise period at a rate of 7% per annum). In addition, under the operative documents relating to the LLC, Interpublic will have certain rights to "put" its interest in the LLC to the Company and the Company will have certain additional rights to "call" Interpublic's interests under certain circumstances, which may be accelerated upon certain changes of control or ownership (as defined) of the Company. The description contained herein of the Asset Purchase Agreement and related agreements, which does not purport to be complete, is qualified in its entirety by reference to the Asset Purchase Agreement and such related agreements, which are attached as exhibits hereto. 3 4 ITEM 7. (a) Financial Statements of Business Acquired. REPORT OF INDEPENDENT AUDITORS To the Partners of Mark Goodson Productions, L.P., The Childs Play Company and Affiliates: We have audited the accompanying combined statements of net assets of THE GAME SHOW DIVISION of MARK GOODSON PRODUCTIONS and AFFILIATES (the "Division") as of December 31, 1993 and 1994, and the related combined statements of operating income and cash flows for the years ended December 31, 1992, 1993 and 1994. These financial statements are the responsibility of the Division's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As indicated in Note 1, the combined financial statements have been prepared from the books and records of certain commonly controlled entities and reflect significant assumptions and allocations of costs and expenses. Accordingly, they are not necessarily indicative of the financial position or results of operations of the Division had it operated as a stand alone entity. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined net assets of the Game Show Division of Mark Goodson Productions and Affiliates at December 31, 1993 and 1994, and the combined operating income and their combined cash flows for the years ended December 31, 1992, 1993 and 1994, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. New York, New York September 8, 1995. 4 5 THE GAME SHOW DIVISION OF MARK GOODSON PRODUCTIONS AND AFFILIATES (NOTE 1) COMBINED STATEMENTS OF NET ASSETS (IN THOUSANDS)
DECEMBER 31, ----------------- JUNE 30, 1995 1993 1994 (UNAUDITED) ------ ------ ------------- ASSETS (NOTE 1) Current assets: Accounts receivable........................................ $6,231 $6,091 $4,105 Deferred production costs.................................. 1,541 1,985 992 Prepaid expenses and other current assets.................. 82 ------ ------ ------ Total current assets............................... 7,854 8,076 5,097 Property and equipment, net of accumulated depreciation of $2,033, $381, and $402 (Note 2)............ 275 296 276 Deferred tape library costs, net of accumulated amortization of $97 and $269 (Note 3)................................... 1,344 1,733 Programs in the process of development....................... 338 326 205 Other assets................................................. 88 113 104 ------ ------ ------ Total assets....................................... 8,555 10,155 7,415 ------ ------ ------ LIABILITIES (NOTE 1) Current liabilities: Accounts payable and accrued expenses...................... 2,096 3,483 1,539 Deferred syndication revenue............................... 692 ------ ------ ------ Total current liabilities.......................... 2,096 4,175 1,539 ------ ------ ------ Total liabilities.................................. 2,096 4,175 1,539 Commitments and contingencies (Note 4) ------ ------ ------ Net assets......................................... $6,459 $5,980 $5,876 ====== ====== ======
The accompanying notes are an integral part of these financial statements. 5 6 THE GAME SHOW DIVISION OF MARK GOODSON PRODUCTIONS AND AFFILIATES (NOTE 1) COMBINED STATEMENTS OF OPERATING INCOME (IN THOUSANDS)
FOR THE YEARS ENDED FOR THE SIX MONTHS DECEMBER 31, ENDED JUNE 30, ----------------------------- -------------------------- 1992 1993 1994 1994 1995 ------- ------- ------- ----------- ----------- (UNAUDITED) (UNAUDITED) Revenues (Note 1): Network................................ $20,105 $18,808 $12,720 $ 5,586 $ 6,095 Syndication............................ 6,746 7,405 11,454 3,429 3,750 Advertising............................ 1,440 460 1,111 167 276 Foreign royalties...................... 8,047 8,503 6,890 3,432 2,921 Music and other royalties.............. 630 447 487 175 228 ----- ----- ----- ----- ----- Total operating revenues....... 36,968 35,623 32,662 12,789 13,270 Operating expenses (Note 1): Production costs....................... 13,847 12,873 14,023 4,142 4,986 General and administrative............. 18,255 12,919 11,278 5,611 4,776 Depreciation and amortization.......... 1,662 653 156 28 194 ----- ----- ----- ----- ----- Total operating expenses....... 33,764 26,445 25,457 9,781 9,956 ----- ----- ----- ----- ----- Operating income............... 3,204 9,178 7,205 3,008 3,314 Other: Gain/(loss) on sale of fixed assets.... 2,665 (30) (32) ----- ----- ----- ----- ----- Operating income............... $ 3,204 $11,843 $ 7,175 $ 2,976 $ 3,314 ===== ===== ===== ===== =====
The accompanying notes are an integral part of these financial statements. 6 7 THE GAME SHOW DIVISION OF MARK GOODSON PRODUCTIONS AND AFFILIATES (NOTE 1) COMBINED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE YEARS ENDED FOR THE SIX MONTHS DECEMBER 31, ENDED JUNE 30, -------------------------------- ------------------------- 1992 1993 1994 1994 1995 ------- -------- ------- ----------- ----------- (UNAUDITED) (UNAUDITED) Cash flows from operating activities: Operating income...................... $ 3,204 $ 11,843 $ 7,175 $ 2,976 $ 3,314 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization...... 1,662 653 156 28 194 (Gain)/loss on disposal of property and equipment.................... (2,665) 30 32 Changes in: Accounts receivable.............. (836) (1,111) 140 1,272 1,986 Prepaid expenses................. (90) 82 83 57 Deferred production costs........ 215 (185) (444) 423 993 Programs in the process of development................... 400 (79) 12 (67) 121 Other assets..................... 15 1 (25) (25) 9 Accounts payable and accrued expenses...................... (1,062) (788) 1,387 (649) (1,945) Deferred syndication revenue..... (72) 692 (692) ------- -------- ------- ------- ------- Net cash provided by operating activities.................. 3,436 7,751 9,206 4,047 3,980 ------- -------- ------- ------- ------- Cash flows from investing activities: Purchase of property and equipment.... (73) (21) (116) (91) (1) Sale of marketable securities......... 1,008 Proceeds from sale of property and equipment.......................... 4,532 5 Deferred tape library costs........... (1,441) (516) (561) ------- -------- ------- ------- ------- Net cash used in investing activities.................. (73) 5,519 (1,552) (607) (562) ------- -------- ------- ------- ------- Cash flows from financing activities: Repayment of long term debt........... (426) (4,224) Cash distribution to Parent........... (2,937) (9,046) (7,654) (3,440) (3,418) ------- -------- ------- ------- ------- Net cash used in financing activities.................. (3,363) (13,270) (7,654) (3,440) (3,418) ------- -------- ------- ------- ------- Net cash and cash equivalents................. $ -- $ -- $ -- $ -- $ -- ======= ======== ======= ======= ======= Non cash distribution to Parent......... (220)
The accompanying notes are an integral part of these financial statements. 7 8 THE GAME SHOW DIVISION OF MARK GOODSON PRODUCTIONS AND AFFILIATES (NOTE 1) NOTES TO THE COMBINED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES AND TRANSACTIONS (A) BASIS OF PRESENTATION: The Game Show Division of Mark Goodson Productions and Affiliates (the "Division") is not a separate legal entity, but was operated as part of the overall business of Mark Goodson Productions, L.P., The Childs Play Company and certain affiliates under common control (collectively the "Parent" or "Owner"). The Division is in the business of producing and licensing television game shows (primarily Price is Right, Family Feud and Concentration), for network and syndicated broadcasters, in domestic and foreign markets. The Parent is currently negotiating an Asset Purchase Agreement for the sale of the Division's net assets. Under the terms of the proposed agreement, the Parent will sell substantially all the assets of the Division, except the assets relating to the operations of the Video Lottery Business, the Sony Game Show Channel and other assets as specified in the agreement. The accompanying statements have been prepared from the books and records of Mark Goodson Productions, L.P., The Childs Play Company and certain affiliates under common control and present substantially all the revenues and expenses of the Division for the years ended December 31, 1992, 1993 and 1994 and the net assets of the Division at December 31, 1993 and 1994. The statements of net assets and statements of operations and cash flows may not necessarily be indicative of the financial position or results of operations that would have resulted had the Division been operated as a stand-alone entity. General and administrative expenses, deemed reasonable by management, totaling $18,255,000 in 1992, $12,919,000 in 1993 and $11,278,000 in 1994, are net of expenses allocated by the Parent to the Video Lottery Business and the Sony Game Show Channel in the amounts of $444,000, $939,000 and $1,228,000 for 1992, 1993 and 1994, respectively. The allocation procedures include various bases such as employee numbers and estimated time spent. Expenses not allocated to the Division include taxes on income, pension, post retirement and interest, other than interest expense incurred for the airplane financing amounting to $334,000 in 1992 and $208,000 in 1993. Rental expense incurred by the Division amounted to $1,532,000 in 1992, $1,325,000 in 1993 and $1,138,000 in 1994. These amounts are included in general and administrative expenses. The financial statements do not include any adjustments which may be required by the consummation of the agreement of sale nor do they consider any adjustments which may result from changes in the operations of the Division by the Buyer. (B) UNAUDITED SIX MONTH FINANCIAL STATEMENTS: The unaudited six month financial statements as of June 30, 1994 and 1995 include all adjustments, consisting only of normal recurring adjustments which in the opinion of the Division's management, are necessary for a fair presentation of the results of operations for the six months presented. The results for the six months ended June 30, 1995 are not indicative of the results which may be expected for the entire year ended December 31, 1995. (C) REVENUE RECOGNITION: Revenue from television licensing agreements is recognized in the accounting period in which the game shows become available for broadcast or when identified and broadcast according to the terms of the license agreements. Foreign, music and other royalty income is recognized upon receipt of earnings reports from licensees. Advertising revenue is recognized when the advertisements are broadcast. Deferred revenues consists of advance payments received on television contracts for which the revenue has not yet been recognized. 8 9 THE GAME SHOW DIVISION OF MARK GOODSON PRODUCTIONS AND AFFILIATES (NOTE 1) -- (CONTINUED) NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED) (D) PRODUCTION COSTS: Game show production costs are recognized in a manner consistent with the revenue recognition policies. Program development costs are deferred unless management's estimates indicate that such costs are non-recoverable, in which case the costs are charged against operations currently. (E) PROPERTY AND EQUIPMENT: Property and equipment are stated at cost. Depreciation and amortization are recorded by the declining-balance method for furniture and equipment, and by the straight-line method for leasehold improvements, over the shorter of lease term or estimated useful lives of the assets. (F) INCOME TAXES No provision for income taxes has been reflected in the accompanying statement of operating income because income tax expense is not allocated by the Parent to the Division. (G) DIVISION EQUITY For cash flow purposes, all transfers of cash between the Division and the Parent are recorded through Division Equity. 2. PROPERTY AND EQUIPMENT The components of property and equipment are:
DECEMBER 31, ------------- ESTIMATED 1993 1994 LIFE ------ ---- -------------- Office furniture and equipment........................ $1,937 $411 5 to 7 years Automobiles........................................... 147 126 5 years Leasehold improvements................................ 224 140 7 shorter of lease term or life of assets ------ ---- 2,308 677 Less: Accumulated depreciation and amortization..... 2,033 381 ------ ---- Property and equipment, net................. $ 275 $296 ====== ====
Depreciation and amortization expense for the years ended December 31, 1993 and 1994 amounted to $653,000 and $59,000 respectively, and $22,000 for the six months ended June 30, 1995. 3. DEFERRED TAPE LIBRARY COSTS Deferred tape library costs consists of costs incurred to upgrade and copy the Division's program library. Amortization of these costs is provided by the straight-line method over a five-year period and amounted to $97,000 in 1994 and $172,000 for the six months ended June 30, 1995. 9 10 THE GAME SHOW DIVISION OF MARK GOODSON PRODUCTIONS AND AFFILIATES (NOTE 1) -- (CONTINUED) NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 4. COMMITMENTS AND CONTINGENCIES (A) TALENT AGREEMENTS: The Division is committed under four talent agreements relating to the game show productions. The gross compensation due on the agreement's, which extend through the end of the 1995-1996 broadcast year is $6,193,000 (net of network reimbursements -- $1,102,000). (B) LITIGATION: In the opinion of management and its counsel, the Division is not a party to any litigation that would have a material adverse effect on its business, results of operations, or financial condition if settled in an unfavorable manner. 10 11 (b) Pro Forma Financial Information CERTAIN PRO FORMA INFORMATION The following unaudited pro forma condensed consolidated balance sheet as of June 30, 1995 and the pro forma condensed consolidated statements of operations for the six months ended June 30, 1995 and 1994 and the year ended December 31, 1994 give effect to the October 1995 agreement of Mark Goodson Productions, LLC (the "LLC") to purchase substantially all of the assets of Mark Goodson Productions, L.P. and The Child's Play Company (the "Sellers") (the "Mark Goodson Acquisition"), the August 1994 acquisition (the "Fremantle Acquisition") of certain net assets and all of the outstanding non-voting common stock of Fremantle International, Inc. ("Fremantle") and the offering. The pro forma information is based on the historical financial statements of the Company, the Sellers and Fremantle, giving effect to: (i) the Mark Goodson Acquisition under the equity method of accounting, (ii) the Fremantle Acquisition under the purchase method of accounting, (iii) the offering and (iv) the assumptions and adjustments described in the accompanying notes to the pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated statements of operations have been prepared as if the above transactions had occurred at the beginning of the earliest period presented (January 1, 1994). The unaudited pro forma condensed consolidated balance sheet data has been prepared as if the Mark Goodson Acquisition and the offering had occurred at the end of the period presented (June 30, 1995). These pro forma statements may not be indicative of the results that would have occurred if the above transactions had occurred on the dates indicated or which may be obtained in the future. The pro forma financial statements should be read in conjunction with the Consolidated Financial Statements and notes of the Company for the year ended December 31, 1994 and the condensed consolidated financial statements and notes of the Company for the six months ended June 30, 1995 contained or incorporated by reference herein. THE MARK GOODSON ACQUISITION As of October 6, 1995, the Company agreed to form the LLC as a 50/50 joint venture with Interpublic. The LLC entered into an agreement to purchase substantially all of the assets of the Sellers. The purchase price paid by the Company for its undivided 50% interest of the Sellers' net assets acquired consisted of a cash payment of $25.0 million plus an as yet undetermined contingent purchase price. The contingent purchase price, payable to the Sellers, is to be earned and paid based on the income (as defined) resulting from a domestic television network contract and the exploitation of certain other domestic television rights. The contingent purchase price, in total, is limited to $48.5 million if paid (whether earned or not) during the first five years following October 6, 1995. Otherwise the amount of contingent purchase price is unlimited to the extent it is earned within the first ten years following October 6, 1995. At the end of ten years no additional contingent purchase price accrues. The Company shares equally with Interpublic in the contingent purchase price. Based upon a preliminary review and evaluation, substantially all of the Company's $25.0 million portion of the initial purchase price has been allocated to goodwill. The contingent purchase price, to the extent earned, will be treated as an increase in goodwill and will be amortized coterminously with the original 25 year period. To the extent additional contingent purchase price payments are made, amortization will increase in future periods. Management of the Company is in the process of reviewing the allocation of the purchase price and, when completed, may modify its preliminary allocation. The Mark Goodson Acquisition will be accounted for by the Company under the equity method of accounting. THE FREMANTLE ACQUISITION In August 1994 the Company completed the Fremantle Acquisition. The purchase price paid by the Company consisted of the following: (i) a cash payment of $31.5 million and (ii) the issuance of 630,000 shares of Common Stock and 2,520,000 shares of Class B Common Stock. The Company has accounted for the Fremantle Acquisition as a purchase and has allocated the purchase price based on the estimated fair value of assets and liabilities acquired. The total consideration of $52.5 million (including expenses related to the acquisition of $1.0 million) exceeded the estimated fair value of net assets acquired by $50.3 million (goodwill); such goodwill is being amortized over 25 years. The amounts shown as historical Fremantle have been adjusted to reflect contractual terms with respect to the Fremantle Acquisition. 11 12 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE 30, 1995 ---------------------------------------------- AS ADJUSTED FOR THE MARK GOODSON ACQUISITION HISTORICAL PRO FORMA AND THE COMPANY ADJUSTMENTS OFFERING ----------- ------------ ------------- (IN THOUSANDS) Cash and cash equivalents........................................ $ 10,126 $ 7,095(1) $ 17,221 Trade receivables, net........................................... 65,553 65,553 Inventory........................................................ 1,173 1,173 Advances to recording artists.................................... 1,357 1,357 Television program costs, net.................................... 88,109 88,109 Property and equipment, net...................................... 3,725 3,725 Investment in unconsolidated affiliate........................... -- 25,000(2) 26,000 1,000(3) Goodwill, net.................................................... 50,476 50,476 Debt issue costs................................................. 5,031 400(4) 5,431 Deferred income taxes............................................ 1,373 1,373 Other............................................................ 1,591 (400)(3) 1,191 -------- ------ -------- Total assets................................................ $228,514 $ 33,095 $261,609 ======== ====== ======== Liabilities: Accounts payable and accrued expenses............................ $ 20,464 $ 600(3) $ 21,464 400(4) Royalties payable................................................ 2,555 2,555 Deferred revenues................................................ 2,878 2,878 Due to producers................................................. 29,295 29,295 Participations payable........................................... 18,862 18,862 Due to banks..................................................... 67,475 (37,475)(1) 55,000 25,000(5) Notes payable.................................................... 60,000 60,000 -------- ------ -------- Total liabilities........................................... 201,529 (11,475) 190,054 Stockholders' equity: Preferred stock.................................................. -- -- Common stock..................................................... 1 1 Class B common stock............................................. -- 1(6) 1 Additional paid in capital....................................... 28,751 44,569(6) 73,320 Accumulated deficit.............................................. (1,880) (1,880) Other............................................................ 113 113 -------- ------ -------- Total stockholders' equity.................................. 26,985 44,570 71,555 -------- ------ -------- Total liabilities and stockholders' equity.................. $228,514 $ 33,095 $261,609 ======== ====== ========
12 13 PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 --------------------------------------------- AS ADUSTED FOR THE MARK GOODSON HISTORICAL ACQUISITION ----------- PRO FORMA AND THE COMPANY ADJUSTMENTS OFFERING ----------- ------------ ------------ (IN THOUSANDS -- EXCEPT PER SHARE AMOUNTS) Revenues........................................................................ $75,027 $ $ 75,027 Cost of sales................................................................... 59,971 (1,461)(7) 58,510 Selling, general and administrative............................................. 12,094 12,094 Goodwill amortization........................................................... 1,070 826(8) 1,896 ------- ------- -------- Operating income.............................................................. 1,892 635 2,527 ------- ------- -------- Equity earnings in unconsolidated affiliate..................................... -- 1,657(9) 2,681 2,485(10) (1,461)(7) Other income, net............................................................... 127 127 Interest income/(expense), net.................................................. (4,728) 1,400(11) (4,590) (1,195)(12) (67)(13) ------- ------- -------- Income (loss) before taxes.................................................... (2,709) 3,454 745 Provision (benefit) for income taxes............................................ (1,138) 1,451(14) 313 ------- ------- -------- Net income (loss)............................................................. $(1,571) $2,003 $ 432 ======= ======= ======== Net income (loss) per share................................................... $ (0.20) $ 0.04 ======= ======== Weighted average number of common shares and common share equivalents 105(15) outstanding................................................................. 7,976 4,000(6) 12,081 ======= ========
SIX MONTHS ENDED JUNE 30, 1994 ----------------------------------------------------------------------------------- AS FURTHER ADJUSTED FOR THE AS ADJUSTED MARK GOODSON HISTORICAL FOR THE ACQUISITION ------------------- PRO FORMA FREMANTLE PRO FORMA AND THE COMPANY FREMANTLE ADJUSTMENTS ACQUISITION ADJUSTMENTS OFFERING ------- --------- ----------- ----------- ------------ ------------- (IN THOUSANDS -- EXCEPT PER SHARE AMOUNTS) Revenues.................................... $27,607 $ 26,882 $ $54,489 $ $54,489 Cost of sales............................... 20,348 21,546 255(17) 42,149 (1,716)(7) 40,433 Selling, general and administrative......... 8,815 2,491 11,306 11,306 Goodwill amortization....................... 46 383 967(18) 1,013 670(8) 1,683 (383)(19) ------- ------- ------- ------- ------ ------- Operating income.......................... (1,602) 2,462 (839) 21 1,046 1,067 ------- ------- ------- ------- ------ ------- Equity earnings in unconsolidated affiliate................................. -- -- 1,488(9) 2,592 2,820(10) (1,716)(7) Other income/(expense), net................. -- 428 428 428 Interest income/(expense), net.............. (2,124) 85 (1,500)(12) (3,722) (1,195)(12) (4,984) (183)(13) (67)(13) ------- ------- ------- ------- ------ ------- Income (loss) before taxes................ (3,726) 2,975 (2,522) (3,273) 2,376 (897) Provision (benefit) for income taxes........ 31 1,729 (1,370)(14) 390 (767)(14) (377) ------- ------- ------- ------- ------ ------- Net income (loss)......................... $(3,757) $ 1,246 $(1,152) $(3,663) $3,143 $ (520) ======= ======= ======= ======= ====== ======= Net income (loss) per share............... $ (0.78) $ (0.46) $ (0.04) ======= ======= ======= Weighted average number of common shares and common share equivalents outstanding.... 4,826 3,150(21) 7,976 4,000(6) 11,976 ======= ======= ======= ====== =======
13 14 PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1994 ------------ SEVEN MONTH YEAR ENDED PERIOD ENDED AS ADJUSTED DECEMBER 31, JULY 31, 1994 FOR THE 1994 HISTORICAL PRO FORMA FREMANTLE AS REPORTED(16) FREMANTLE ADJUSTMENTS ACQUISITION --------------- ------------- ------------ ------------ (IN THOUSANDS -- EXCEPT PER SHARE AMOUNTS) Revenues................................................. $ 114,901 $30,564 $ $145,465 Cost of sales............................................ 85,946 25,820 298(17) 112,064 Selling, general and administrative...................... 21,523 2,992 24,515 Goodwill amortization.................................... 971 447 1,183(18) 2,154 (447)(19) -------- ------- ------- -------- Operating income....................................... 6,461 1,305 (1,034) 6,732 -------- ------- ------- -------- Equity earnings in unconsolidated affiliate.............. -- -- -- Other income, net........................................ 49 64 113 Interest income/(expense), net........................... (5,725) 99 (1,750)(12) (7,590) (214)(13) -------- ------- ------- -------- Income (loss) before taxes............................. 785 1,468 (2,998) (745) Provision (benefit) for income taxes..................... 330 992 (965)(14) 357 -------- ------- ------- -------- Net income (loss)...................................... $ 455 $ 476 $ (2,033) $ (1,102) ======== ======= ======= ======== Net income (loss) per share............................ $ 0.07 $ (0.14) ======== ======== Weighted average number of common shares and common (66)(20) share equivalents outstanding........................ 6,201 1,841(21) 7,976 ======== ======== YEAR ENDED DECEMBER 31, 1994 ------------------------------ AS FURTHER ADJUSTED FOR THE MARK GOODSON ACQUISITION PRO FORMA AND THE ADJUSTMENTS OFFERING ----------- ------------ (IN THOUSANDS -- EXCEPT PER SHARE AMOUNTS) Revenues................................................. $ $145,465 Cost of sales............................................ (3,445)(7) 108,619 Selling, general and administrative...................... 24,515 Goodwill amortization.................................... 1,340(8) 3,494 ------ ------- Operating income....................................... 2,105 8,837 ------ ------- Equity earnings in unconsolidated affiliate.............. 3,588(9) 5,860 5,717(10) (3,445)(7) Other income, net........................................ 113 Interest income/(expense), net........................... 1,000(11) (9,114) (2,391)(12) (133)(13) ------ ------- Income (loss) before taxes............................. 6,441 5,696 Provision (benefit) for income taxes..................... 2,035(14) 2,392 ------ ------- Net income (loss)...................................... $ 4,406 $ 3,304 ====== ======= Net income (loss) per share............................ $ 0.27 ======= Weighted average number of common shares and common 66(15) share equivalents outstanding........................ 4,000(6) 12,042 =======
- --------------- NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following footnotes relate to the pro forma balance sheet as of June 30, 1995 and the pro forma statements of operations for the six month periods ended June 30, 1995 and 1994 and the year ended December 31, 1994. (1) Reflects expected use of net proceeds in connection with the offering based upon an assumed aggregate offering amount of $49.0 million before expenses. (2) Reflects the Company's investment in the LLC. (3) Reflects closing costs incurred by the Company in connection with the Mark Goodson Acquisition ($.4 million of such costs were included in the Company's other assets as prepaid items in the June 30, 1995 historical balance sheet). (4) Reflects debt issue costs incurred in connection with the Mark Goodson Acquisition. (5) Reflects the bank financing incurred in connection with the Mark Goodson Acquisition. (6) Reflects the issuance of Class B Common Stock in connection with the offering. (7) Reflects the intercompany elimination of the Company's 50% share of Fremantle license fees paid to Mark Goodson Productions, L.P. (8) Reflects amortization of initial goodwill in connection with the Mark Goodson Acquisition of $26.0 million, plus amortization of estimated contingent purchase price of $7.5 million in 1994 over 25 years and amortization of additional estimated contingent purchase price of $3.8 million for the 1995 six month period over 24 years. To the extent additional contingent purchase price payments are made, amortization will increase in future periods. 14 15 NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (9) Reflects the Company's 50% interest in the historical net earnings of Mark Goodson Productions, L.P. (10) Reflects the elimination of the Company's 50% share of Mark Goodson Productions, L.P. historical selling, general and administrative costs which will not be incurred subsequent to the date of the Mark Goodson Acquisition. The Mark Goodson Productions, L.P. day to day operations will be absorbed into the Company's existing operations. (11) Reflects expected reduction in interest expense from the use of the net proceeds from the offering to pay down short term debt (no short term debt was outstanding during the six months ended June 30, 1994). (12) Reflects interest expense on debt incurred in connection with the acquisitions. (13) Reflects amortization of debt issuance costs. (14) Reflects income tax effects of the pro forma adjustments. (15) Reflects the inclusion of dilutive common stock equivalents for earnings per share purposes. (16) The historical results for the year ended December 31, 1994 include the five months of operations of Fremantle from August 1994, the date of the Fremantle Acquisition. (17) Reflects additional amortization of television program costs, as adjusted, acquired in connection with the Fremantle Acquisition. (18) Reflects amortization of goodwill in connection with the Fremantle Acquisition of $50.3 million over 25 years. (19) Reflects the elimination of goodwill amortization recorded by Fremantle prior to the Fremantle Acquisition. (20) Reflects the elimination of anti-dilutive common stock equivalents for earnings per share purposes. (21) Reflects the weighted average number of shares issued in connection with the Fremantle Acquisition. 15 16 (c) Exhibits.
EXHIBIT NO. DESCRIPTION ----------- ----------- 10.1 Asset Purchase Agreement dated as of October 6, 1995 between and among Mark Goodson Productions, L.P., The Child's Play Company, Mark Goodson Productions, LLC, The Interpublic Group of Companies, Inc., the Estate of Mark Goodson and All American Communications, Inc. 10.2 Network License Agreement between All American Goodson, Inc. and Interpublic Game Shows, Inc., dated as of October 6, 1995. 10.3 License Agreement between Mark Goodson Productions, LLC and All American Goodson, Inc. dated as of October 6, 1995. 10.4 Network Production Agreement between Interpublic Game Shows, Inc. and TPIR LLC, dated as of October 6, 1995. 10.5 Operating Agreement between All American Communications, Inc. and All American Goodson, Inc., dated as of September 18, 1995. 10.6 Amended and Restated Operating Agreement among All American Communications, Inc., All American Goodson, Inc., The Interpublic Group of Companies, Inc. and Interpublic Game Shows, Inc., dated as of October 6, 1995. 11.1 Statement re Computation of Per Share Earnings -- Pro Forma Information, Six Months Ended June 30, 1995. 11.2 Statement re Computation of Per Share Earnings -- Pro Forma Information, Year Ended December 31, 1994. 11.3 Statement re Computation of Per Share Earnings -- Pro Forma Information, Six Months Ended June 30, 1994. 99 Press Release dated October 12, 1995.
16 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in New York City, New York, on October 27, 1995. All American Communications, Inc. By: /s/ ANTHONY J. SCOTTI ------------------------- Name: Anthony J. Scotti Title: Chairman 17 EX-10.1 2 ASSET PURCHASE AGREEMENT 1 EXHIBIT 10.1 - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- ASSET PURCHASE AGREEMENT BETWEEN AND AMONG MARK GOODSON PRODUCTIONS, L.P. AND THE CHILD'S PLAY COMPANY, AS SELLERS, AND MARK GOODSON PRODUCTIONS, LLC, THE INTERPUBLIC GROUP OF COMPANIES, INC., AS BUYERS, AND MARVIN GOODSON, RICHARD SCHNEIDMAN AND JEREMY SHAMOS, AS EXECUTORS OF THE ESTATE OF MARK GOODSON AS GUARANTOR AND ALL AMERICAN COMMUNICATIONS, INC. DATED AS OF OCTOBER 6, 1995 - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- 2 TABLE OF CONTENTS
Page ---- ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE 2 PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . 22 2.1 Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 2.3 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 2.4 Contracts to Be Assigned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 ARTICLE 3 ESCROW CLOSING; PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.1 Escrow Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.2 Escrow Closing Deliveries by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.3 Payment of Cash and Stock Portion of Purchase Price After Final Closing . . . . . . . . . . . 28 3.4 No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 3.5 Restrictions on Transferability of Interpublic's Stock. . . . . . . . . . . . . . . . . . . . 30 3.6 Legend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.7 Assignment of Put Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 3.8 Earn-Out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 3.9 Estimated Adjusted Net Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 3.10 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 3.11 Installment Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 3.12 Adjustment For Period Between Escrow Closing and Final Closing . . . . . . . . . . . . . . . . 48 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLERS . . . . . . . . . . . . . . . . . . . . . . . . 49 4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 4.3 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 4.4 Library Physical Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 4.5 Library Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 4.6 Copyrights, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 4.7 Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 4.8 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 4.9 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 4.10 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 4.11 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 4.12 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 4.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 4.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 4.15 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 4.16 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 4.17 Third Party Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 4.18 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 4.19 The Price Is Right Budget. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
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Page ---- 4.20 Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 4.21 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 4.22 Third Party Proposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 4.23 Investment Representation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 4.24 Sony Agreement and Sony Lien. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 4.25 The Representative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND AACI . . . . . . . . . . . . . . . . . . 78 5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 5.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 5.3 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 5.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF INTERPUBLIC . . . . . . . . . . . . . . . . . . . . . . . 81 6.1 Organization of Interpublic and Interpublic Sub . . . . . . . . . . . . . . . . . . . . . . 81 6.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 6.3 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 6.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 6.5 Interpublic Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 ARTICLE 7 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 7.1 Conduct of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 7.2 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 7.3 Filings, Authorizations and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 7.4 Employees, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 7.5 No Shop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 7.6 Notice to Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 7.7 Notice of Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 7.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 7.9 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 7.10 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 7.11 Sales and Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 7.12 Non-Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 7.13 Use of Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 7.14 The Sony Agreement etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 7.15 Interpublic Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 7.16 Delivery of Tax Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 7.17 Other Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 7.18 Satisfaction of Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYERS . . . . . . . . . . . . . . . . . . . . . . . 105 8.1 Representations and Warranties Accurate . . . . . . . . . . . . . . . . . . . . . . . . . . 105 8.2 Performance by the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 8.3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 8.4 Delivery of Assets and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 8.5 Opinions of Counsel for the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 8.6 HSR Act, Etc.; Authorizations; Financing; Legal Prohibition . . . . . . . . . . . . . . . . 109
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Page ---- 8.7 Estate Guaranty, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS . . . . . . . . . . . . . . . . . . . . 111 9.1 Representations and Warranties Accurate . . . . . . . . . . . . . . . . . . . . . . . . . . 111 9.2 Performance by the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 9.3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 9.4 Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 9.5 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 9.6 Opinions of Counsel for the Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 9.7 HSR Act, Etc.; Authorizations; Legal Prohibition. . . . . . . . . . . . . . . . . . . . . 114 ARTICLE 10 POST-CLOSING ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 10.1 Post-Closing Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 10.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 10.3 Determination and Payment of Post-Closing Adjustments . . . . . . . . . . . . . . . . . . . 117 10.4 Expenses of Post-Closing Adjustment or Earn-Out Adjustment . . . . . . . . . . . . . . . . 118 ARTICLE 11 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 11.1 Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 11.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 ARTICLE 12 BULK TRANSFER LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 ARTICLE 13 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 13.1 Indemnification by the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 13.2 Indemnification by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 13.3 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 13.4 Right of Set Off; Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 13.5 Obligations of the Estate and the Partnership . . . . . . . . . . . . . . . . . . . . . . . 133 13.6 Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 13.7 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 ARTICLE 14 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 14.1 Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 14.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 14.3 Limited Survival of Representations and Warranties; Liability . . . . . . . . . . . . . . . 136 14.4 Due Diligence Investigation; Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 14.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 14.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 14.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 14.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 14.9 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 14.10 Binding Effect; Assignment; Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 14.11 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
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Page ---- 14.12 Consent of Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 14.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 14.14 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 Schedules 1.1(a) Agreed Procedures 1.1(b) Domestic Net Profits 1.1(c) Limitations on Library Music Rights 2.1(a) Partnership Assets To Be Transferred 2.1(b) CPC Assets To Be Transferred 2.2 Excluded Assets 2.3 Assumed Liabilities 2.4 Assigned Contracts Requiring Consent 3.3 Purchase Price Allocation 3.5 Assignees of the Partnership 3.8 Earn-Out Allocations 3.8(b)(ix) Allocations Regarding "The Price Is Right" 3.9 Allocation Between Sellers 3.10 Purchase Price Allocation 4.1(a) Limited Partners of the Partnership 4.2 Required Consents 4.3(c) Defaults 4.4(a) Master Tapes 4.4(c) Location of Library Physical Properties 4.5(a) Library Programs 4.5(b) Third Party Obligations, Exceptions to Ownership 4.5(c) Restrictions on Exploitation, Liens, Charges, Encumbrances and Security Interests 4.5(d) Notices of Infringement 4.5(e) Library Music Rights 4.6(a) Validity of Copyrights 4.6(b) Registrations of Copyrights 4.7(a) Marks 4.7(b) Restrictions on Marks 4.7(c) Marks Infringing Third Party Rights 4.7(d) Third Party Infringements of the Marks 4.7(e) Other Users of the Marks "Mark Goodson", "Mark Goodson Company" and "Mark Goodson Productions" 4.7(g) Third Party Licensees of Marks 4.9 Seller Liabilities 4.11 Absence of Certain Changes 4.12(a) Contracts 4.12(b) Contract Defaults and/or Breaches and Required Consents 4.12(d) Invalid or Unenforceable Contracts; Exercisable Renewals of Licenses, Sublicenses; Reports and Material Disputes 4.12(e) Defaulted or Breached Contracts
iv 6 4.13 Litigation 4.14 Withholding Taxes 4.17(b) Guild Encumbrances 4.20 Entities 4.24 Sony Performance 5.2 Exception to Authority; Required Approvals 7.1(b) Permitted Contracts 7.12 Sellers' Affiliates 7.14 Restrictions under the Sony Agreement 8.6(b) Required Governmental Approvals 8.6(c) Sellers' Obligations regarding Governmental and other Approvals 9.4 HSR Act, Etc.; Authorizations; Legal Prohibitions Exhibits 3.2 Escrow Agreement 3.5 Put Agreement 8.4(a)(iv) Partnership General Assignment and Bill of Sale 8.4(a)(v) Partnership Assignment of Copyrights 8.4(a)(vi) Partnership Assignment of Trademarks 8.4(a)(vii) Network Production Agreement 8.4(b)(iv) CPC General Assignment and Bill of Sale 8.4(b)(v) Assignment of Copyright for "Child's Play" 8.4(b)(vi) CPC Assignment of Trademarks 8.5(a) Opinions of Counsel for the Sellers 9.4(a) Assumption 9.4(b) Guild Agreement Assumption - AFTV 9.4(c) Guild Agreements - Directors Guild of America 9.5(a) License Agreement 9.5(b) Network License Agreement 9.6(a) Opinion of Counsel for the Company 9.6(b) Opinion of Counsel for Interpublic 13.1 Seller Letter of Credit 13.5 Estate Guaranty
v 7 ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of October 6, 1995, between and among MARK GOODSON PRODUCTIONS, L.P., a California limited partnership (the "Partnership") and The Child's Play Company, a joint venture ("CPC" and together with the Partnership, the "Sellers") on the one hand, and Mark Goodson Productions, LLC, a New York limited liability company (the "Company") and The Interpublic Group of Companies, Inc., a Delaware corporation ("Interpublic" and together with the Company, the "Buyers") on the other hand, and Marvin Goodson, Richard Schneidman and Jeremy Shamos, as executors of the Estate of Mark Goodson (the "Estate") and All American Communications, Inc., a Delaware corporation ("AACI"). RECITALS The Partnership is engaged in the creation, production and licensing of television game programming, reality based programming and other television programming in the United States and throughout the world. The Partnership desires to sell to the Buyers, and the Buyers desire to purchase from the Partnership, all of the assets of the Partnership other than Excluded Assets (as hereinafter defined), and the Company is willing to assume the Assumed Liabilities (as hereinafter defined), pursuant to the terms and conditions hereinafter set forth. 8 CPC is engaged in the licensing of the right to produce the television game show "Child's Play" throughout the world. CPC desires to sell to the Buyers and the Buyers desire to purchase from CPC, all of the assets of CPC other than Excluded Assets, and the Company is willing to assume the Assumed Liabilities of CPC, pursuant to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements herein contained, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS 1.1 Definitions. The terms defined in this Section 1.1, whenever used herein, shall have the following meanings for all purposes of this Agreement. "AAG" shall mean All American Goodson, Inc., a wholly-owned subsidiary of AACI. "AAG License" shall have the meaning set forth in Section 9.5(a). "Accounts Receivable" shall mean the unpaid amounts, as of the Escrow Closing, which immediately prior to the Escrow Closing are contractually obligated to be paid to or for the account and benefit of the Partnership or CPC on payment dates certain, minus, with respect to such unpaid amounts, the corresponding reserves for bad debts; provided, however, that any 2 9 payments to be received with respect to the Sony Agreement, the 1994-1995 season of "Family Feud" (which payments the Partnership acknowledges have been made) or any Excluded Assets shall not be included in Accounts Receivable. For purposes of determining Adjusted Net Current Assets, Accounts Receivable shall be calculated in accordance with the Agreed Procedures. "Act" shall mean the Securities Act of 1933, as amended, and any rules and regulations promulgated thereunder. "Additional Domestic Net Profits" shall mean all Domestic Net Profits other than Domestic Net Profits-Price is Right Network. "Adjusted Net Current Assets" shall mean, without duplication, the sum of Accounts Receivable and prepaid expenses, but in each case excluding Excluded Assets and any amounts receivable under the Sony Agreement, less, without duplication, (i) current liabilities, if any, assumed by the Company as Assumed Liabilities, (ii) Third Party Costs, Taxes (if any), unpaid collection/distribution expenses and releasing costs included in Assumed Liabilities, and (iii) liabilities which can be quantified associated with Permitted Encumbrances, in each case calculated as of the Escrow Closing Date in accordance with the Agreed Procedures. To the extent not deducted in the calculation of Adjusted Net Current Assets in accordance with the foregoing sentence, there shall be a reduction in Adjusted Net Current Assets for the amount of any payable arising to Grundy 3 10 under the license dated June 28, 1991 in respect of an Account Receivable included in Adjusted Net Current Assets. "Affiliate" shall mean, in respect of any specified Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person; in the case of the Estate, the term "Affiliate" shall exclude the individuals acting as the executors of the Estate solely in their respective individual capacities and, in the case of the Sellers, the term "Affiliate" shall include the Representative. "Agreed Procedures" shall have the meaning specified in Schedule 1.1(a). "Arbitrator" shall have the meaning specified in Section 10.2. "Assets" shall mean all the assets, properties, rights and businesses owned or held by the Partnership or CPC (or any of their respective Related Persons) and any other assets used or useful in the Business and owned or held by the Partnership or CPC (or any of their respective Related Persons), of every kind and description and wherever located, including, without limitation, all property, tangible or intangible, real, personal or mixed; all notes, accounts receivable, all contracts and agreements (including but not limited to the CBS Network License and the related host, announcer and model agreements with Bob Barker and other talent, the Sony Agreement, the license and merchandising agreements with Fremantle International, Inc. and 4 11 the license agreements with Grundy and the other Contracts, including all benefits under any non-assigned contracts or agreements pursuant to Section 2.4); all contract rights and other rights to receive payment; all rights to rebates, recoupment, claims and rights of recovery or setoff, reserves, prepayments, deferred and other charges; all inventory, machinery, fixtures, equipment; all rights in computer software; the Library Rights; all Library Tangible Assets; all Marks; all writings and other works, whether copyrightable or not, in any jurisdiction; all registrations or applications for registration of copyrights in any jurisdiction, and any renewals or extensions thereof; all patents, applications for patents, and any renewals, extensions or reissues thereof, in any jurisdiction; any similar intellectual property rights; all non-public information, trade secrets, confidential information, and rights in any jurisdiction to limit the use or disclosure thereof by any Person; all concepts, formats, marketing and technical data, and all books, records and documents; any and all claims or causes of action arising out of or related to any infringement or misappropriation of any of the foregoing; and any and all past or current claims or future claims relating to the Business, including any claims the Partnership, CPC or any of their respective Related Persons had, have or may have against AACI or Interpublic or any of their Affiliates, except for such rights as expressly arise in favor of either of the Sellers, Representative or Producer solely under this Agreement or the Related Agreements to which any of them is 5 12 a party or as to which any of them is a third party beneficiary; provided, however, that the foregoing shall not include the Excluded Assets. "Assumed Liabilities" shall have the meaning specified in Section 2.3. "Assumption" shall have the meaning specified in Section 9.4. "Bible" shall mean an outline, treatment or format of a particular game show. "Business" shall mean (i) in the case of the Partnership (together with the Partnership Related Persons), the Exploitation of Library Rights and/or Library Physical Properties and (ii) in the case of CPC (together with the CPC Related Persons), the Exploitation of the Library Rights and/or Library Physical Properties relating to the television game show "Child's Play" or any other Program. Without limiting the generality of the foregoing, the Business shall include the entire business of the Partnership relating to television game shows, episodic series, reality based programming, but excluding the Lottery Business. "Business Day" shall mean any day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York, are authorized or required by law or executive order to close. "Buyer Indemnities" shall have the meaning specified in Section 13.1. 6 13 "Claims" shall have the meaning specified in Section 13.1(c). "Closing Adjusted Net Current Assets" shall have the meaning specified in Section 10.2. "Code" shall mean the United States Internal Revenue Code of 1986, as amended from time to time, and, unless the context otherwise requires, the rules and regulations promulgated thereunder from time to time. "Company" shall mean Mark Goodson Productions, LLC, a New York limited liability company. "Competitive Business" shall have the meaning set forth in Section 7.12(a). "Confidentiality Agreements" shall mean the agreements between Interpublic or AACI and the Partnership, dated September 16, 1994 and July 21, 1994, respectively, regarding the confidentiality of the Evaluation Material (as defined therein), as superseded to the extent of any conflict or inconsistent provision, by Section 7.12 hereof. "Copyright" shall have the meaning set forth in Section 4.6(a). "Copyright Law" shall mean the applicable United States copyright law, as amended, the Universal Copyright Conventions, the Berne Convention or any other applicable statutory or common law copyright law in any country in the world. "CPC Related Person" shall mean the Estate. 7 14 "Domestic Net Profits" shall have the meaning specified in Schedule 1.1(b). "Domestic Net Profits-Price Is Right Network" shall have the meaning set forth in Schedule 1.1(b). "Earn-Out Payments" shall have the meaning set forth in Section 3.8(a). "Earn-Out Period" shall have the meaning set forth in Section 3.8(a) as may be extended pursuant to Section 3.8(b). "Episode" shall mean any single audio, visual, or audiovisual production of any kind, whether intended for initial Exploitation by means of television or in or by any other medium, means or manner now known or hereafter developed. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and, unless the context otherwise requires, the rules and regulations promulgated thereunder from time to time. "Escrow Agent" shall mean U.S. Trust Company of California, N.A. or any successor escrow agent pursuant to the Escrow Agreement. "Escrow Agreement" shall mean the escrow agreement among the Partnership, CPC, the Company, Interpublic, the Estate, AACI and the Escrow Agent, substantially in the form of Exhibit 3.2 hereto. "Escrow Closing Date" shall mean the date the Escrow Closing takes place in accordance with Section 3.1. 8 15 "Estate" shall have the meaning specified in the Preamble. "Estate Guaranty" shall have the meaning set forth in Section 8.7. "Estimated Adjusted Net Current Assets" shall have the meaning specified in Section 3.9. "Excluded Assets" shall have the meaning specified in Section 2.2. "Existing Licensee" shall mean, as to any Library Program, Library Literary Property or Library Music Right in a particular territory the Person or Persons to whom the Sellers have granted any rights to Exploit such Library Program, Library Literary Property or Library Music Right as of the date hereof. "Exploit" or "Exploitation" shall mean the sale, lease, production, distribution, ownership, marketing, licensing, sublicensing, use, exercise, broadcasting, transmission, exhibition or other exploitation of the Library Rights, Library Physical Properties, or portions thereof or rights therein. "Exploit" or "Exploitation" includes, without limitation, (i) the right to do any of the foregoing with respect to any Library Right or Library Physical Property so as to give rise to new Programs, Literary Properties or Library Music Rights; and (ii) the right to sell, lease, own, create, develop, produce, license, sublicense, distribute, market, use, exercise, broadcast, transmit, exhibit or otherwise Exploit such new Programs, Literary Properties or Library Music Rights. 9 16 "Final Closing" shall mean the completion of the sale and purchase of the Assets by Buyers upon delivery by the Escrow Agent of the Escrowed Items defined in and pursuant to the Escrow Agreement. "Final Judgment" shall have the meaning set forth in the Estate Guaranty. "Financial Statements" shall have the meaning specified in Section 4.8. "GAAP" shall mean United States generally accepted accounting principles consistently applied. "Grundy" shall mean Grundy International Operations Limited. "Guild Encumbrances" shall have the meaning set forth in Section 4.17(b). "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder. "Interim Period" shall have the meaning set forth in Section 3.12. "Interpublic" shall mean The Interpublic Group of Companies, Inc. "Interpublic Common Stock" shall mean the common stock, par value $0.10 per share, of Interpublic. "Interpublic Sub" shall mean Interpublic Game Shows, Inc., a wholly-owned, special purpose subsidiary of Interpublic. 10 17 "IRS" means the United States Internal Revenue Service. "Library Agreements" shall mean all contracts to which any Seller or any of its Related Persons is a party, whether written or oral, pertaining to the creation, development, production, distribution or other Exploitation of any Library Rights or Library Physical Properties. "Library Episode" shall mean any and all Episodes that either Seller, or any of its Related Persons, owns or for which either Seller, or any of its Related Persons, has a license to Exploit as of immediately prior to the Final Closing. "Library Literary Properties" shall mean any and all Literary Properties that either Seller, or any of its Related Persons, owns or for which either Seller, or any of its Related Persons, has a license to Exploit as of immediately prior to the Final Closing. "Library Music Rights" shall mean all master use, music synchronization, performance, mechanical, publication, soundtrack album, composition, music publishing and other rights in connection with the Business, including all theme songs, incidental music and underscoring, subject only to the composer's share (i.e., the so-called writer's share) of performance rights held by Score Productions, Inc. or Kalehoff Productions, Inc. in those songs set forth on Schedule 1.1(c). "Library Physical Properties" shall mean (i) all audiovisual, audio and visual recordings and other materials 11 18 produced by any technology, manner or means relating to any Library Program, including, without limitation, prints, negatives, duplicating negatives, fine grains, music and sound effects tracks, master tapes and other duplicating materials of any kind, all various language dubbed and titled versions, prints and negatives of stills, trailers and television spots, all promos and other advertising and publicity materials, stock footage, trims, tabs, outtakes, cells, drawings, storyboards, (ii) all physical properties relating to any Library Program, including without limitation sets, props, backdrops, costumes, models, sculptures, puppets, sketches, and continuities, in each case, including, without limitation, any of the foregoing in the possession, custody or control of the Sellers or any Related Persons, or in the possession of its assigns or any film laboratories, storage facilities or other Persons plus (iii) any and all reversionary rights either Seller or any Related Persons has to the master and duplicate masters of any original negative or master tape or elements thereof delivered pursuant to the Sony Agreement (which rights are assigned to Buyers pursuant hereto). "Library Program" shall mean each Program which either Seller, or any of its Related Persons, owns or has a right to Exploit as of immediately prior to the Final Closing, including, without limitation, each Program as listed on Schedule 4.5(a), but excluding the Lottery Business. 12 19 "Library Rights" shall mean, collectively, all Library Programs, Library Literary Properties, Library Music Rights and Library Agreements. "Library Tangible Assets" shall mean, collectively, all Library Physical Properties and all written contracts and other documents to which any Seller, or any of its Related Persons, is a party or a beneficiary evidencing, memorializing or otherwise relating to the Library Rights, including, without limitation, the Library Agreements. "License Agreement" shall mean the license agreement between the Company and AAG substantially in the form of Exhibit 9.5(a). "Lien" shall mean any mortgage, pledge, lien, encumbrance, charge, adverse claim or restriction of any kind affecting title or resulting in an encumbrance against property, real or personal, tangible or intangible (including any Copyright or right under Copyright Law, and any Mark or right under Trademark Law) or a security interest of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell and any filing of or agreement to give, any financing statement under the Uniform Commercial Code (or equivalent statute) of any jurisdiction), other than any Library Agreement and other than Permitted Encumbrances or liens, encumbrances, charges, adverse claims or restrictions that are insubstantial in character and do 13 20 not materially detract from the value or interfere with the present use of the property or asset subject thereto. "Literary Properties" shall mean (i) any and all of the following works and other properties: screenplays, teleplays, stories, adaptations, scripts, outlines, treatments, formats, Bibles, scenarios, characters, titles and any and all other literary, dramatic and other works and properties of any kind and (ii) any and all of the following rights in any and all of the foregoing: remake, sequel, prequel, series, mini-series, spin offs, specials, character, legitimate stage, theme park, installation, live performance, print and electronic publication, interactive, computer-assisted media, merchandising and other subsidiary, derivative, compilation, ancillary, promotional, advertising and publicity rights (in or by any and all media, manner and means now known or hereafter developed), and all rights under any trademark, copyright, trade secret, patent or similar intellectual property rights including, without limitation, any applicable "author's rights", "neighboring rights" and any other rights provided by the law of any country or by industry protocol which provide for payment to rights holders for certain uses of their works; and any and all other rights of any kind in any of the foregoing, whether now known or hereafter recognized. "Lottery Business" shall mean the creation, production, distribution or other exploitation of television programs, games (including game shows) and non-televised 14 21 performances the primary purpose of which is to sell or promote the sale of lottery tickets or which otherwise primarily relates to lotteries; provided that the foregoing shall in any event not include the exploitation of any game show formats or reality-based properties set forth in Schedules 2.1(a) or 2.1(b) or any formats confusingly similar thereto (it being understood that the shows now in distribution entitled "Illinois Instant Riches" and "Bonus Bonanza" are not confusingly similar thereto). "Mark" shall mean trademarks, service marks, brand names, certification marks, trade dress, assumed names, slogans, trade names and other indications of origin owned by or licensed to either Seller or any of its Related Persons, whether or not registered; and to the extent of the foregoing is owned, the associated goodwill and registrations and applications to register in any jurisdiction, the foregoing, including any extension, modification or renewal of any such registration or application. "Market Price Per Share" shall mean (a) the average per share closing price, regular way, of a share of Interpublic Common Stock on the New York Stock Exchange for the ten (10) Business Days immediately following the Final Closing Date or (b) in the case that such closing prices are not available for such period, the average of the reported high bid and low asked prices for the ten (10) Business Days immediately following the Final Closing Date, as reported by The Wall Street Journal, Eastern Edition, or if not so reported, a reputable quotation service. 15 22 "Networks" shall mean the following television networks: ABC, NBC, CBS and FOX. "Network Alternates" shall mean the following television networks: UPN and WBN. "Network License Agreement" shall mean the license agreement between AAG and Interpublic Sub substantially in the form of Exhibit 9.5(b). "Network Production Agreement" shall mean the production agreement between Interpublic Sub and Producer, substantially in the form of Exhibit 8.4(a)(vii). "Non-Assumed Liabilities" shall have the meaning specified in Section 2.3. "Notice of Disagreement" shall have the meaning specified in Section 10.1. "Other Accounts Receivable" shall have the meaning specified in Section 3.9. "Participation" shall mean any right to receive money or other consideration in respect of any asset constituting or relating in any way to any Library Right, including, without limitation, consideration based on the Exploitation of any such asset however measured. "Partnership Related Persons" shall mean Mark Goodson Television Productions, Inc., Celebrity Productions, Inc., Mark Goodson Games, L.P., Goodson TV Enterprises, Inc., Goodson Television Productions, Inc., Strong Productions, Inc., Price Productions, Inc., Mark Goodson Telecasts, Inc., The New Family 16 23 Company, The Trivia Trap Company, The Tattletale Company, The B.B. Company, The Concentration Company, The Card Sharks Company, The MG Company, The Now You See It Company, The TTTT Company, The Super Password Company, The Tattle Tale Company, The Body Language Company, Tattletale Productions, Granny Fannie Trusts, the Estate, FF&E Trust, Mark Goodson Advertising Sales, Producer, Representative and Mark Goodson Promotions. "Permitted Encumbrances" shall mean (i) any lien, encumbrance, charge, adverse claim or restriction of any kind with respect to taxes, assessments and other governmental charges or levies not yet due and payable, (ii) landlords', mechanics', workmen's, materialmen's and similar liens for charges which are not yet delinquent and (iii) the security interest set forth in the Sony Lien. "Person" shall mean any natural person, corporation, division of a corporation, partnership, trust, joint venture, association, company, limited liability company, estate, unincorporated organization or governmental entity. "Post-Closing Adjustment" shall have the meaning specified in Section 10.3. "Producer" shall mean TPIR LLC, a California limited liability company which on the Final Closing Date shall be directly or indirectly controlled and majority-owned by the Estate. "Program" or "Programs" shall mean or refer to a series, set, collection or other group of Episodes produced, 17 24 marketed, broadcast, exhibited, distributed or otherwise Exploited as a so-called "series" or otherwise as a related group of Episodes (whether intended for initial Exploitation by means of television or in or by any other medium, means or manner now known or hereafter developed). Episodes of a Program share some (but not necessarily all) of the following characteristics: the same (or similar) title; the same (or similar) format, Bible, story, outline, treatment, scenario, pilot script, teleplay, screenplay, or other underlying literary or other work upon which such Program is based or from which it is derived; and substantial continuity of production elements among consecutively-produced Episodes, such as on-air personalities (for example, host/master of ceremonies in the case of a game show Program and principal cast in the case of a dramatic Program), sets, props, and theme music. Program shall also mean or refer to the following, whether or not a subsequent or related Episode has been or is hereafter commissioned or produced: a so-called "pilot" Episode; a theatrical, television or other motion picture; a so-called "special"; a so-called "mini-series"; and any other Episode produced, marketed, broadcast, exhibited, distributed or otherwise Exploited as a single production (regardless of length). "Purchase Price" shall mean the sum of (i) $25 million in cash (the "Cash Portion") subject to reduction pursuant to Section 3.9 hereof, (ii) $25 million in restricted shares of Interpublic Common Stock (the "Stock Portion") with the 18 25 purchase price of each such share equal to the Market Price Per Share, and (iii) such amounts, if any, to be paid under Section 3.8 hereof (the "Earn-Out Portion") or Section 3.9 hereof ("Estimated Adjusted Net Current Assets") subject to adjustment pursuant to Article 10 hereof. "Purchase Proposal" shall have the meaning specified in Section 7.5. "Put Agreement" shall have the meaning specified in Section 3.5. "Related Agreements" shall mean the Assumption, the Assignment of Copyright for "Child's Play", the CPC General Assignment and Bill of Sale, the CPC Assignment of Trademarks, the Escrow Agreement, the Estate Guaranty, the License Agreement, the Network License Agreement, the Network Production Agreement, the Partnership General Assignment and Bill of Sale, the Partnership Assignment of Copyrights, the Partnership Assignment of Trademarks, the Put Agreement, the Seller Letter of Credit, the Standby Letter of Credit, and any other contract, agreement or instrument contemplated in this Agreement or in any of the foregoing. "Related Person" shall mean either a CPC Related Person or a Partnership Related Person, or both, as the context requires. "Representative" shall mean the representative of the partners of the Partnership and following the liquidation of the corporate partners of the Partnership, the former stockholders of 19 26 such corporate partner (all as set forth in Schedule 3.5 hereto), who shall receive the Purchase Price payable to the Partnership or any other assets of the Partnership distributed after the Final Closing (subject to the obligations set forth herein), which representative shall be appointed pursuant to Section 3.3 hereof on or prior to the second Business Day following the Final Closing. "Restricted Period" shall have the meaning specified in Section 7.12(a). "Seller Indemnities" shall have the meaning specified in Section 13.2. "Seller Letter of Credit" shall have the meaning specified in Section 13.1. "Sony" shall mean Sony Pictures Cable Ventures I, Inc. or its successor or permitted assigns. "Sony Agreement" shall mean collectively (i) that certain Master Programming Agreement, dated as of November 25, 1992, by and among Sony, Mark Goodson, individually and doing business as "Mark Goodson Productions" ("Goodson"), FF&E Trust and the other parties signatory thereto, as amended by that certain Letter Agreement, dated as of April 13, 1993, by and between Sony and the Estate (as further amended, supplemented or modified to the date hereof as identified in Schedule 4.12(a)) and (ii) that certain Security Agreement (the "Security Agreement"), dated as of November 25, 1992, by and among Sony, Goodson, FF&E Trust, and the other parties signatory thereto, as 20 27 amended by that certain Letter Agreement, dated as of April 13, 1993, between Sony and the Estate (as further amended, supplemented or modified to the date hereof as identified in Schedule 4.12(a)) and the related Copyright Mortgage and Assignment. "Sony Lien" shall mean the security interest and lien in favor of Sony pursuant to the Security Agreement and the related Copyright Mortgage and Assignment. "Sony Receivable" has the meaning set forth in Section 7.14(a). "Standby Letter of Credit" shall mean an irrevocable standby letter of credit in the amount of the Cash Portion of the Purchase Price issued by Chemical Bank or another commercial bank reasonably acceptable to Sellers, on behalf of itself or a syndicate of participating lenders, upon which the Representative may draw in the event that the Company does not pay the Cash Portion of the Purchase Price on or prior to the fifth Business Day after the Final Closing. "Taxes" shall mean all domestic and foreign taxes, charges, fees, levies or other assessments, including, without limitation, all net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, excise, estimated, severance, stamp, renters/occupancy, occupation, property or other taxes, customs duties, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, 21 28 additions to tax or additional amounts imposed by any taxing authority. "Third Party Costs" shall mean any rerun, reuse, or residual costs, license fees, royalties, production costs or other amounts paid or payable to third parties including, without limitation, to the Sellers' Affiliates or to performers, actors, musicians, hosts, writers, directors, producers and other persons employed in the Exploitation of any Library Programs or other Library Rights (including, but not limited to, Participations or other profit sharing arrangements), guilds or unions based on any rights in the Library Programs or other Library Rights or any receipts from the Library Programs on other Library Rights. "WARN" shall mean the Worker Adjustment and Retraining Notification Act of 1988, as amended from time to time, and, unless the context otherwise requires, the rules and regulations promulgated thereunder from time to time. ARTICLE 2 PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES 2.1 Purchase and Sale of Assets. Upon the terms and subject to the conditions contained herein, at the Final Closing (a) Sellers (together with their respective Related Persons) shall sell, convey, assign and transfer to the Buyers, and the Buyers shall purchase and acquire from Sellers (together with their respective Related Persons), all of the Assets, including, but not limited to, those assets of the Partnership listed on Schedule 2.1(a) hereto and those assets of CPC listed 22 29 on Schedule 2.1(b) hereto (which lists are not intended by the parties to be exclusive or to otherwise limit the Assets being acquired by negative implication), free and clear of all Liens, other than the Assumed Liabilities and Permitted Encumbrances. Such Assets being sold, conveyed, assigned and transferred to the Buyers shall include all right, title and interest in and to (i) all items of furniture, fixtures and equipment (except to the extent listed as Excluded Assets), and (ii) the Marks "Mark Goodson", "Mark Goodson Company," "Mark Goodson Productions" or any combination or derivation thereof, and all right, title and interest of Sellers (together with their respective Related Persons) in and to the Mark "Goodson" or any combination or derivation thereof, together, in the case of each such Mark, with all good will associated therewith. Sellers have no rights in the names "The Estate of Mark Goodson," "Jonathan Goodson," "Marvin Goodson," "Goodson and Wachtel" and "The Goodson Newspaper Group" and no rights with respect thereto are being conveyed to Buyers. Each Buyer shall acquire an undivided interest in the Assets being acquired pursuant hereto. Immediately following the Final Closing, Interpublic shall transfer its undivided interest in the Assets to the Company. 2.2 Excluded Assets. The assets of the Sellers listed on Schedule 2.2 hereto and any assets otherwise designated by the Buyers on or prior to the Final Closing as not being transferred to Buyers hereunder (the "Excluded Assets") shall be 23 30 retained by the Sellers and shall not be sold, assigned or transferred to the Buyers pursuant to this Agreement. 2.3 Assumption of Liabilities. Upon the terms and subject to the conditions contained herein: (a) At the Final Closing, the Company shall assume and thereafter pay, discharge, perform or otherwise satisfy in accordance with their respective terms and be responsible for the liabilities and obligations of the Sellers listed on Schedule 2.3 hereto (the "Assumed Liabilities"). Each of the Sellers shall remain liable for, and hold the Company harmless against, all of their respective liabilities other than the Assumed Liabilities and for the other liabilities indemnified herein (e.g. liabilities under the Sony Agreement arising prior to the Final Closing or under the Network Production Agreement even though assumed by Buyers). Except for the Assumed Liabilities, the Company does not assume and shall not be liable or responsible for any liabilities or obligations of either Seller or any of its predecessors, constituent partners, joint venturers, Related Persons or Affiliates, whether now or hereafter due, including liabilities or obligations incurred in connection with, in any way arising out of, or related to, the execution of this Agreement, the purchase of the Business, the ownership or use of any of the Assets or the conduct of the Business prior to the Final Closing (the "Non-Assumed Liabilities"). 24 31 (b) Without limiting the generality of the foregoing clause (a), except for the Assumed Liabilities, the Company expressly shall not assume any liabilities or obligations of Sellers, or any of their respective predecessors, constituent partners, Related Persons or Affiliates for the following (which shall be part of the Non-Assumed Liabilities): (i) for any liability or obligation arising out of or relating to any claims, controversies, litigation or administrative proceedings whether pending, threatened or existing on or prior to the Final Closing Date or based on facts existing on or prior to the Final Closing Date; (ii) for any liability or obligation with respect to any employee, consultant or contractor or former employee, consultant or contractor (including without limitation any performer, actor, musician, host, writer, director, producer or other person employed in the Exploitation of any Library Right or Library Tangible Asset), relating to or arising out of employment with or engagement by either Seller, or any of their respective predecessors, constituent partners, Related Persons or Affiliates whether pursuant to the terms of any contract, agreement, commitment, undertaking, benefit plan or other arrangement or otherwise; (iii) any liability of either Seller to any of their predecessors, constituent partners, Related Persons or Affiliates; or (iv) for any liability or obligation with respect to any environmental damage or any violation or alleged violation of any real estate lease or for any environmental law relating to the Assets to the extent that the foregoing is associated with 25 32 any condition, or based on any fact or circumstances, that occurred or existed on or prior to the Final Closing, whether or not such liabilities or obligations were known on the date hereof or at the Final Closing. (c) Immediately following the Final Closing, Interpublic and/or its Affiliate owning any interest shall transfer all of its undivided interest in the Assets to the Company. Sellers shall hold the Interpublic, such Affiliate, Interpublic Sub and AACI harmless against, any liabilities or obligations of either Seller or any of its predecessors, constituent partners, joint venturers, Related Persons or Affiliates, whether now or hereafter due, including liabilities or obligations incurred in connection with, in any way arising out of, or related to the execution of this Agreement (other than with respect to liabilities arising out of the Interpublic's, Interpublic Sub's or AACI's breach, respectively, of its obligations under this Agreement or the Related Agreements), the purchase of the Business, the ownership or use of any of the Assets or the conduct of the Business prior to the Final Closing. 2.4 Contracts to Be Assigned. To the extent that any of the contracts or agreements which are to be assigned to Buyers pursuant to this Agreement are not assignable without the consent of a third party, which contracts or agreements Sellers represent are limited to those contracts or agreements identified on Schedule 2.4 hereto, the Partnership and CPC, as applicable, shall use their reasonable best efforts to obtain the consent of 26 33 the other such party to the assignment to Buyers, provided that the failure to obtain any such consent (other than consents required to be obtained prior to the Final Closing by Section 8.6(c)), shall not constitute a failure to satisfy a condition to the obligations of the Buyers to consummate the transactions contemplated by this Agreement. If any required consent is not obtained before the Final Closing and the Final Closing is consummated, Sellers agree to use their reasonable best efforts to obtain all such required consents and to enforce, on behalf of Buyers, the rights of either Seller or any of its Related Persons, under any such non-assigned contracts or agreements. Buyers shall reasonably assist Sellers in obtaining all such required consents without derogation of Buyers' rights hereunder in the event any such consents are not obtained. Sellers further agree to cooperate with Buyers after such date in any reasonable arrangement (such as, but not limited to, sub-contracting, sub-licensing or sub-leasing) designed to ensure for Buyers, on terms no less favorable than contemplated hereby, all of the economic benefits (after reflecting the related reasonable and necessary costs) under the applicable contracts without causing any such breach or right of termination. Without limiting the generality of the foregoing, after the Final Closing, the Company shall receive the benefit (subject to all of the obligations arising after the Final Closing) of all Sellers' rights (whether exercisable through Sellers or a Related Person) in "Classic Concentration," "A Fly on the Wall," "House Calls," "Con Man" and 27 34 "I'm Sorry." Sellers shall remain liable for the performance of all duties and obligations relating to any contract or agreement not assigned hereunder. ARTICLE 3 ESCROW CLOSING; PURCHASE PRICE 3.1 Escrow Closing. The Escrow Closing shall be deemed to take place at the offices of Kaye, Scholer, Fierman, Hays & Handler, 425 Park Avenue, New York, New York at 2:00 p.m., local time, on October 6, 1995. The Escrow Closing may be held at such other place, time and date as the parties hereto may agree in writing. 3.2 Escrow Closing Deliveries by Sellers, etc. At the Escrow Closing, the Sellers shall enter into the Escrow Agreement and shall deliver, or cause to be delivered into escrow pursuant to the Escrow Agreement, the opinions, certificates and other documents required to be delivered by or on behalf of the Sellers pursuant to Sections 8.3, 8.4, 8.5, 8.7 and 13.5. 3.3 Payment of Cash and Stock Portion of Purchase Price After Final Closing. (i) At the Fifth Business Day after the Final Closing, the Company shall deliver to, or to the order of Sellers (which, in the instance of the Partnership, shall be through delivery to the Representative), the Cash Portion of the Purchase Price, by wire transfer, in immediately available funds, and (ii) at the Eleventh Business Day after the Final Closing Interpublic shall deliver one or more stock certificates for the Stock Portion of the Purchase Price, in each case, allocated 28 35 between the Sellers as set forth in Schedule 3.3 hereto (such delivery, in the instance of the Partnership, shall be through delivery to the Representative). The Partnership shall appoint or cause to be appointed the Representative on or prior to the second Business Day following the Final Closing, such appointment to be subject to the consent of the Company and Interpublic, which consent shall not be unreasonably withheld or delayed. The Company and Interpublic agree that they shall consent to the appointment of the Producer as Representative. Within three Business Days following the Final Closing, the Sellers shall provide to Buyers sufficient information to enable (x) the Company to transfer funds to a designated account or accounts for the Cash Portion of the Purchase Price and (y) Interpublic to issue such certificate or certificates registered in such name or names as so designated for the Stock Portion of the Purchase Price. At the Escrow Closing, AACI shall deliver the Standby Letter of Credit into escrow pursuant to the Escrow Agreement. The Standby Letter of Credit may be drawn upon by the Representative in accordance with its terms in the event the Company does not pay the Cash Portion of the Purchase Price on the fifth Business Day after the Final Closing. At the Escrow Closing, Sellers will reimburse the Company and AACI for all of its costs and expenses (including bank fees and expenses and reasonable attorneys' fees) relating to the issuance of the Standby Letter of Credit. At the Escrow Closing, each of the Company and Interpublic shall enter into the Escrow Agreement and 29 36 shall deliver, or cause to be delivered into escrow pursuant to the Escrow Agreement the opinions, certificates and other documents required to be delivered by or on behalf of them pursuant to Sections 9.4(a), 9.5(a) and 9.6 and, to the extent practicable, Sections 9.3 and 9.5(b). Notwithstanding anything to the contrary herein, all rights in and to the Assets shall irrevocably vest in Buyers on the Final Closing Date, irrespective of whether the Cash Portion and the Stock Portion of the Purchase Price are delivered in accordance herewith on the fifth Business Day and the eleventh Business Day, respectively, after the Final Closing, as to which Sellers' sole remedy shall be against the Standby Letter of Credit, in the case of non-payment of the Cash Portion of the Purchase Price, or Interpublic, in the case of non-payment of the Stock Portion of the Purchase Price, respectively. 3.4 No Fractional Shares. Interpublic shall not be required to issue any fractional shares of Interpublic's Common Stock, and Interpublic shall pay to the Representative on the eleventh Business Day after the Final Closing, in lieu thereof, cash in an amount equal to the Market Price Per Share multiplied by the fractional portion of a share of Interpublic's Common Stock to which Sellers otherwise would have been entitled. 3.5 Restrictions on Transferability of Interpublic's Stock. The shares of Interpublic's Common Stock to be issued and delivered in accordance with the provisions hereof will not have been registered under the Securities Act of 1933, 30 37 as amended (the "Act"), or under the securities law of any jurisdiction. Each of the Sellers agrees not to (and to cause the Representative and each of the Persons set forth on Schedule 3.5 not to) transfer any of the shares of Interpublic's Common Stock (together with any other shares received pursuant to conversions, exchanges, stock splits, stock dividends or other reclassifications or changes thereof, or consolidations or reorganizations of Interpublic) issued hereunder except (i) pursuant to an effective registration statement covering such shares of Interpublic Common Stock under the Act or (ii) pursuant to an exemption from registration under the Act in connection with an assignment of the Put Agreement, substantially in the form of Exhibit 3.5 hereto, between Interpublic and the Sellers, to be delivered into escrow pursuant to the Escrow Agreement at the Escrow Closing, upon the conditions specified therein and in the Assignment (as such term is defined in Section 3.7 hereof) which conditions are intended to insure compliance with the provisions of the Act. 3.6 Legend. Each certificate representing Interpublic's Common Stock issued hereunder shall be stamped or otherwise imprinted with a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER THE SECURITIES LAW OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE HYPOTHECATED OR DISTRIBUTED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT, OR (B) PURSUANT TO A VALID EXEMPTION FROM SUCH 31 38 REGISTRATION UNDER THE ACT AND UNDER THE SECURITIES LAW OF ANY STATE AND UPON RECEIPT BY THE INTERPUBLIC GROUP OF COMPANIES, INC. OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO IT THAT ANY SUCH SALE IS IN COMPLIANCE WITH THE ACT AND STATE SECURITIES LAWS" 3.7 Assignment of Put Agreement. The Put Agreement may be assigned only in accordance with the assignment provision and the procedures contained therein. Interpublic may require any assignee of the Put Agreement to execute and deliver an assignment (the "Assignment"), substantially in the form attached as Exhibit A to the Put Agreement. 3.8 Earn-Out. (a) In addition to the consideration to be paid to Sellers pursuant to Section 3.3, subject to the provisions hereof (including, but not limited to, Section 3.12) and the occurrence of the Final Closing, with respect to the five-year period following the Escrow Closing (the "Earn-Out Period"), the Company shall pay to the Representative an amount ("Earn-Out Payments") equal to (i) 75% of the Domestic Net Profits-Price Is Right Network following the Final Closing and during the Earn-Out Period plus (ii) 50% of the Additional Domestic Net Profits following the Final Closing and during the Earn-Out Period; provided, however, that in no event shall the Earn- Out Payments, before giving effect to any deductions or offsets provided for herein, be greater than $48.5 million in the aggregate pursuant to this Section 3.8(a) (subject to reduction pursuant to Section 3.12 hereof); provided, further, that, without limiting the rights of the Representative against the Company to the extent of non-payment by the Company or 32 39 Interpublic Sub, (A) it is intended that, subject to and upon the terms and conditions set forth in the Network License Agreement, Interpublic Sub will pay, on behalf of the Company, to the Representative the portion of the Earn-Out Payments due under Section 3.8(a)(i) and (B) the Partnership acknowledges and agrees for itself and on behalf of the Representative that the payments received by the Representative from Interpublic Sub pursuant to the immediately preceding clause (A) will be credited in full against the Company's obligations under Section 3.8(a)(i). (b) All determinations under this Section 3.8 shall be made in accordance with the following provisions: (i) Following the Final Closing, the Company shall cause an estimated amount of the Earn-Out Payments with respect to The Price Is Right under Section 3.8(a)(i) above due in any week following the Final Closing and during the Earn-Out Period (so long as the applicable Network or Network Alternate pays the Company or its licensee or sublicensee on a weekly basis) to be paid to the Representative no later than five Business Days after receipt of the related payment. The Company shall cause an estimated amount of the Earn- Out Payments with respect to Section 3.8(a)(i) above (in the event the applicable Network or Network Alternate does not pay on a weekly basis) and with respect to Section 3.8(a)(ii) above due each month, if any, following the Final Closing and during the Earn-Out Period to be paid to the Representative no later than 15 Business Days after the last day of such month so long as the Company or its licensee 33 40 or sublicensee receives the related payment during such calendar month. In the event that the Company or its Affiliate receives such related payment after the last day of such calendar month, the Company shall cause such estimated amount of Earn-Out Payments to be paid to the Representative in the next succeeding monthly payment. In the event that as of the end of any weekly or monthly period, the Company (or Interpublic Sub) has overpaid the cumulative Earn-Out Payments to date, such amount may be offset against any additional amounts then due or thereafter becoming due to the Partnership or the Representative. At the end of each broadcast year during the Earn-Out Period, the Company shall calculate the total Earn-Out Payment, if any, for such broadcast year or portion of such broadcast year following the Final Closing and within the Earn-Out Period. Subject to Section 3.8(b)(v), on the date 120 days after the end of such broadcast year, the Company shall deliver a final accounting of the Earn-Out Payments for such year. To the extent the total Earn-Out Payment due to the Representative in respect of a broadcast year exceeds the cumulative estimated Earn-Out Payments for such broadcast year, the Company shall pay or cause to be paid such excess to the Representative at such time as it delivers the final accounting. To the extent the total Earn-Out Payment due to the Representative in respect of a broadcast year is less than the cumulative estimated Earn-Out Payments for such broadcast year, the Company shall deduct such deficit from future estimated Earn-Out Payments until such deficit is recouped from 34 41 the Representative or, if the Earn-Out Period has expired, the Partnership or the Representative shall pay such deficit to the Company in cash no later than 10 days after the Partnership receives the final accounting which, in the event of a dispute, shall be according to Article X hereof. (ii) If for any broadcast year (or portion thereof) following the Final Closing and during the Earn-Out Period, 75% of the Domestic Net Profits-Price Is Right Network represents a loss for such broadcast year (or portion thereof), no payment will be made with respect to clause 3.8(a)(i) above and the amount of such loss shall be carried forward to and netted against any amount payable with respect to clause 3.8(a)(i) above for the next succeeding broadcast year (or for the balance of the then current broadcast year) and shall continue to be carried forward until so netted. (iii) If, for any broadcast year (or portion thereof) following the Final Closing and during the Earn-Out Period, 50% of the Additional Domestic Net Profits represent a loss for such broadcast year (or portion thereof), no payment will be made with respect to clause 3.8(a)(ii) above and the amount of such loss shall be carried forward to and netted against any amount payable with respect to clause 3.8(a)(ii) above for the next succeeding broadcast year (or for the balance of the then current broadcast year) and shall continue to be carried forward until so netted. 35 42 (iv) In the event the aggregate Earn-Out Payments, before giving effect to any deductions or offsets provided herein (the "Earned Amounts") payable pursuant to this Section 3.8 with respect to the Earn-Out Period, do not equal $48.5 million (subject to reduction pursuant to Section 3.12 hereof), irrespective of the characterization of such amount as to principal and interest, the Company shall have the option, in its sole discretion, exercisable on or prior to the fifth anniversary of the Escrow Closing Date, either to (x) make an additional payment to the Representative on or prior to the date 30 days after the later of the fifth anniversary of the Escrow Closing and the date the final regular Earn-Out Payment is due which, when added to the Earned Amounts, would equal $48.5 million (as reduced pursuant to Section 3.12 hereof) or (y) extend the Earn-Out Period for an additional five-year period (i.e., until the tenth anniversary of the Escrow Closing Date) on the terms hereof (except that the percentage of Domestic Net Profits-Price Is Right Network used for calculation of the Earn- Out Payments during the extension shall be reduced to 50%); provided that the aggregate Earn-Out Payments during the Earn-Out Period, as extended, shall not be subject to any maximum or minimum amount and provided, further, that in no event shall the Earn-Out Period be extended beyond the tenth anniversary of the Escrow Closing Date. If no election is made on or prior to the fifth anniversary of the Escrow Closing Date, the Company shall 36 43 be deemed to have elected to extend the Earn-Out Period pursuant to clause (y) above. (v) With respect to any Earn-Out Payments, the Company (or Interpublic Sub) may establish a reasonable reserve for related contingencies (e.g., potential make-good obligations with respect to syndication revenues or disgorgements of amounts paid by obligors subject to a bankruptcy or similar proceeding), other than with respect to the (x) Memorandum of Agreement dated as of February 3, 1972 between CBS Television Network and Price Productions, Inc., as amended through February 28, 1995 (the "CBS Network License"), or any extension or modification thereof for The Price Is Right and (y) any other contract with a Network for the broadcast of "The Price Is Right" on such Network during the term of the Network Production Agreement, in each case for which no such reserves will be established. Notwithstanding the foregoing, it is understood that the Company (or Interpublic Sub) shall be entitled to pay any current production or other costs deductible in the calculation of an Earn-Out Payment prior to making the related Earn-Out Payment, and that such deductions may include a reasonable reserve for future production or other costs where the Company (or Interpublic Sub) believes in good faith that such reserve is necessary to assure continuity of production or if the Company (or Interpublic Sub) fails to receive reasonable assurances as to the timely payment of such future production or other costs. It is understood, however, that reserves for future production costs with respect to "The Price 37 44 Is Right" shall be limited during the term of the Network Production Agreement to circumstances in which Producer has not paid any of its material obligations on a timely basis or is in breach in any material respect of the Network Production Agreement (other than any breach of the Network Production Agreement if and to the extent resulting from Interpublic Sub's failure to pay production costs to Producer in material compliance with the terms of the Network Production Agreement). In addition, to the extent provided in and subject to the provisions of Section 13.4(b) hereof, the Company may offset (or cause to be offset) from any Earn-Out Payment any amount payable by either Seller to the Company hereunder (including but not limited to Section 10.3). If the Company is exercising its right of offset, it will give the Partnership and (if payable pursuant to the Network Production Agreement) Interpublic Sub notice of the nature and the amount of such claim and it and/or Interpublic Sub (if payable pursuant to the Network Production Agreement) shall withhold such amount from the Earn-Out Payment or Payments otherwise due. Any dispute with respect to such withholding shall be subject to arbitration in accordance with Article 10. (vi) The Company shall maintain accurate books, records and documents reasonably necessary for the calculation (including, to the extent required, on a Program-by-Program basis) of the Earn-Out Payments and Domestic Net Profits, including records of relevant revenues, costs, and expenses. The Representative and its authorized representatives shall, upon 38 45 request received by the Company in writing, have reasonable access during normal business hours to any books, records and documents relevant to the calculation of any Earn-Out Payment. All calculations of Domestic Net Profits shall be made by the Company or Interpublic Sub in accordance with the Agreed Procedures and, to the extent not governed thereby, by the Company or Interpublic Sub in accordance with GAAP as in effect at the time in question. Any disputes arising under this Section 3.8 as to the calculation of the Earn-Out Payments shall be subject to resolution pursuant to Article 10. (vii) The methodology for characterization of the Earn-Out Payments as to principal and interest is set forth on Schedule 3.8 and has been agreed upon by Buyers and Sellers consistent with the requirements of Proposed Treasury Regulation 1.1275-4. Buyers and Sellers (on behalf of themselves and the Representative) agree that no party will take a position on any income, transfer or any other tax return, or before any governmental agency charged with the collection of any such tax or in any judicial proceeding that is in any manner inconsistent with the methodology set forth on Schedule 3.8. (viii) Producer has received certain consultation and approval rights during the Earn-Out Period under, and subject to the terms of, the Network Production Agreement. If the Network Production Agreement terminates prior to the expiration of the Earn-Out Period, the Company will or will cause its licensee to consult with Producer concerning the 39 46 potential broadcast of "The Price Is Right" domestically and permit representatives of Producer to attend any major meetings with domestic broadcasters concerning such potential domestic broadcast; however, upon such termination of the Network Production Agreement, Producer shall no longer have any approval rights and all decisions concerning the Exploitation (domestically or otherwise) of "The Price Is Right" shall, insofar as the Partnership, Representative or Producer are concerned, be made by the Company. (ix) The parties hereto agree that with respect to the 1995/1996 broadcast year for The Price Is Right, the permitted production costs in the approved budget and the revenues earned and license fees paid in respect of shows produced will be allocated for the period prior to the Escrow Closing and the period after the Escrow Closing as set forth on Schedule 3.8(b)(ix). (c) The following provisions shall apply to the exhibition of new productions of Library Programs included in or based on Library Programs existing prior to the Final Closing in the United States on any Network, a basic or pay cable service provider (each a "U.S. Cable Network") or on first-run syndication ("first-run syndication") following the Final Closing and during the Earn-Out Period: (i) If, following the Final Closing and during the Earn-Out Period, AACI wishes (directly or through any subsidiary or affiliate) to produce, or distribute new episodes 40 47 of any Library Programs included in or based on Library Programs existing prior to the Final Closing (other than "The Price Is Right" so long as it is being produced pursuant to the Network Production Agreement) on a Network or U.S. Cable Network, AACI will or will cause All American Television, Inc. ("AATV") to present a proposal to Representative outlining the proposed costs and Network or U.S. Cable Network license fee for such new production and exhibition, together with the proposed security, if any, to be provided to Representative to ensure payment of any Earn-Out Payment with respect thereto. The Representative shall have 10 days to notify AATV and AACI that it is not satisfied with the proposed security, if any. Subject to Section 3.8(c)(iii), if Representative so notifies AATV and AACI in such 10-day period, Representative will have the right to request that a letter of credit be issued by a commercial bank with respect to any Earn-Out Payments due to Representative with respect thereto. Such letter of credit shall be issuable in a maximum amount reasonably calculated to assure any Earn-Out Payments projected to become due with respect to the then applicable broadcast season based on the budget for the applicable new Library Program and the other assumptions set forth by the Company and AATV. Upon the renewal of such Library Program by such Network or U.S. Cable Network for a subsequent broadcast season or seasons following the Final Closing and during the Earn-Out Period, unless otherwise agreed by Representative, the related letter of credit shall be renewed (or a substitute letter of credit shall 41 48 be obtained) on similar terms. Such letter of credit shall be available to be drawn upon in the event Representative does not receive the Earn-Out Payment relating to such new Library Program within 10 Business Days after the date when due based upon and in accordance with the accounting rendered by the Company. In such event, all costs and fees with respect to the letter of credit shall be deducted from the calculation of "Domestic Net Profits - Other Programs" as set forth in Schedule 1.1(b). It is expressly understood that any letter of credit is not intended to guarantee that Earn-Out Payments will actually be earned by Representative with respect to the applicable Library Program, but only that the Representative shall have recourse to the letter of credit only in the event that Earn-Out Payments are earned and are not paid by the Company when due. (ii) If, following the Final Closing and during the Earn-Out Period, AACI wishes (directly or through any subsidiary or affiliate) to produce, or distribute new episodes of any Library Programs included in or based on Library Programs existing prior to the Final Closing for U.S. domestic exhibition on first-run syndication, AACI will or will cause AATV to present a proposal to Representative outlining the estimated number of episodes to be produced, the estimated revenues and costs of such episodes and the estimated net profit of such episodes, together with the proposed security, if any, to be provided to Representative to ensure payment of any Earn-Out Payment with respect thereto. Subject to Section 3.8(c)(iii), if 42 49 Representative so notifies AATV and AACI in such 10-day period, Representative will have the right to request that a letter of credit be issued by a commercial bank with respect to any Earn-Out Payments due to Representative with respect thereto. Such letter of credit shall be issuable in a maximum amount reasonably calculated to assure any Earn-Out Payments projected to become due with respect to the then applicable broadcast season based on the budget for the applicable new Library Program and the other assumptions set forth by the Company and AATV. If such Library Program is renewed for such first-run syndication, the related letter of credit shall be renewed (or a substitute letter of credit shall be obtained) on similar terms. Such letter of credit shall be available to be drawn upon in the event Representative does not receive the Earn- Out Payment relating to such new Library Program within 10 Business Days after the date when due based upon and in accordance with the accounting rendered by the Company. In such event, all costs and fees with respect to the letter of credit shall be deducted from the calculation of "Domestic Net Profits - Programs" originally produced for "First-Run Syndication" as set forth in Schedule 1.1(b). It is expressly understood that any letter of credit is not intended to guarantee that Earn-Out Payments will actually be earned by Representative with respect to the applicable Library Program, but only that Representative shall have recourse to the letter of credit only in the event that Earn-Out Payments are earned and are not paid by the Company when due. 43 50 (iii) The right of Representative to request a letter of credit shall be made in good faith solely based on the question of security, if any, necessary for any Earn-Out Payments. No letter of credit shall extend beyond the Earn-Out Period. All outstanding letters of credit shall terminate in the event all required Earn-Out Payments have been made under this Section 3.8 relating to all Library Programs or the Library Program to which such letter of credit relates. Any letter of credit may provide for payment to the Company by way of offset against any amount payable by either Seller to the Company hereunder, including but not limited to Section 10.3 or Article 13 hereof. Nothing herein shall require AACI or AATV to proceed with production or distribution of new episodes of any Library Program if either the Company or AATV does not wish to provide a letter of credit to Representative. (d) The Company acknowledges that the provisions of this Section 3.8 are of the essence to this Agreement, and shall use commercially reasonable efforts, subject to the Company's exercise of its business judgment, to exploit the Library Rights. Without limiting the generality of the foregoing, the parties acknowledge their mutual intent that "The Price Is Right" remain the Network or Network Alternate production by Producer under, and subject to the terms of (and Producer's compliance with), the Network Production Agreement for the Earn-Out Period, and the Sellers, the Producer and the Representative will be materially damaged in the event that Interpublic Sub or AAG refuses in 44 51 violation of the Network Production Agreement to approve or enter into a renewal or extension of the current CBS Network License or any other Network or Network Alternate license or takes any other action in violation of their obligations thereunder that frustrates such intentions. Nothing in this Section 3.8(d) shall (i) modify or expand the obligations of the Company, Interpublic Sub or any other Person under the related Agreements, including without limitation, obligations of any of the foregoing to enter into any agreement with respect to "The Price Is Right" or to retain Producer except as expressly required under the Related Agreements or (ii) shall require the Company, Interpublic Sub or any other person to exploit the Library Rights after the Final Closing except as they shall, in their sole discretion, determine. 3.9 Estimated Adjusted Net Current Assets. Not later than five Business Days prior to the Final Closing, the Sellers shall compute an estimate of the Adjusted Net Current Assets as of the Escrow Closing Date (the "Estimated Adjusted Net Current Assets") and provide Buyers with a schedule setting forth the basis of such computation in reasonable detail. Buyers and their representatives shall have the right to review the work papers, schedules, memoranda and other documents and information prepared or reviewed by or for the Sellers and to communicate with the persons conducting such preparation or review by or for the Sellers. Not later than three Business Days prior to the 45 52 Final Closing, following discussions with Buyers and their representatives, the Sellers shall deliver to Buyers a notice containing the Estimated Adjusted Net Current Assets accompanied by a certificate of the general partner of the Partnership and a certificate of the Estate, as managing partner of CPC, to the effect that such estimate represents a good faith effort to determine accurately (neither underestimating or overestimating) the Adjusted Net Current Assets as of the Escrow Closing Date. The Cash Portion of the Purchase Price payable on the fifth Business Day after the Final Closing (and drawing under the related Standby Letter of Credit) shall be decreased by the amount, if any, by which the Estimated Adjusted Net Current Assets as of the Escrow Closing Date is less than zero in accordance with the Agreed Procedures (and also decreased to the extent of collections of Accounts Receivable by Sellers during the Interim Period net of repayment of accounts payable included in the calculation of Estimated Adjusted Net Current Assets). If the Estimated Adjusted Net Current Assets exceeds zero, after taking into account and deducting collections of Accounts Receivable by Sellers during the Interim Period (the "Excess"), the Company shall pay or cause to be paid to the Partnership on behalf of the Sellers, at the Final Closing an amount equal to the aggregate Accounts Receivable due from any Affiliate of AACI at the Escrow Closing Date (and not thereafter paid during the Interim Period) in accordance with the Agreed Procedures but not in excess of the amount of the Excess calculated by Buyers. The 46 53 Partnership acknowledges that AATV has already paid to the Partnership an amount equal to the aggregate accounts receivable ("Other Accounts Receivable") due on or prior to the Escrow Closing Date in accordance with the Agreed Procedures in respect of the 1994-1995 domestic season of Family Feud. The calculation by AACI and its Affiliates of such Accounts Receivable and Other Accounts Receivable due in respect of the period ended June 30, 1995 shall be final and binding provided that the Final Closing has occurred. With respect to such Accounts Receivable and Other Accounts Receivable in respect of the period after June 30, 1995 up to and including the Final Closing and due to Sellers in accordance with the Agreed Procedures, the Sellers shall have a period ending 60 days after the Escrow Closing to deliver a Partnership Notice of Disagreement (as defined in Section 10.1). If the Sellers do not deliver a Partnership Notice of Disagreement within such period, the calculation of such Accounts Receivable and Other Accounts Receivable by AACI shall be final and binding. To the extent that the Excess exceeds the payments set forth above (the "Remaining Excess"), the Company shall pay or cause to be paid to the Partnership, on behalf of the Sellers, when and promptly after receipt by the Company after the Final Closing, on a current basis, any amount it receives with respect to other Accounts Receivables up to the amount of the Remaining Excess. The Company shall not compromise or forgive any such Accounts Receivables without the prior written consent of the Partnership, which will not be unreasonably withheld or delayed. 47 54 To the extent the Company receives payments from third parties, not directly or indirectly affiliated with the Company, who are obligated to pay Accounts Receivable and who have continuing commercial relations with the Company or the Business and have other receivables payable to the Company or the Business, the Company shall apply such payments to the Accounts Receivable unless it has received notice from such third party to apply such payment to another receivable. From time to time until any Remaining Excess is paid in full, upon reasonable notice, the Sellers, at their expense shall have the right to review the Company's records with respect to its application of monies received with respect to Accounts Receivable and only to the extent necessary to confirm that such application is in conformance with this Section 3.9. Any adjustment of the Purchase Price pursuant to this section shall be allocated between the Sellers as the Sellers shall determine, subject to the approval of the Company and consistent with Schedule 3.9. 3.10 Allocation of Purchase Price. The allocation among the Assets of the consideration paid by Buyers for the Assets is set forth on Schedule 3.10 and has been agreed upon by Buyers and Sellers consistent with the requirements of Section 1060 of the Code and the regulations thereunder. Buyers and the Sellers agree (i) jointly to complete and separately file Form 8594 with their respective federal income tax returns for the tax year in which the Final Closing occurs, and (ii) that no party will take a position on any income, transfer or any other tax 48 55 return, or before any governmental agency charged with the collection of any such tax or in any judicial proceeding that is in any manner inconsistent with the terms of the allocation set forth on Schedule 3.10. 3.11 Installment Sale. Sellers will report the sale of an undivided interest in the Assets to the Company as an installment sale for income tax purposes under Section 453 of the Code in exchange for an obligation by the Company to pay (i) the Cash Portion of the Purchase Price and (ii) its allocable portion of the Earn-Out Payments. Sellers also will report the sale of an undivided interest in the Assets to Interpublic as an installment sale for income tax purposes under Section 453 of the Code in exchange for an obligation by Interpublic to (i) deliver the Stock Portion of the Purchase Price and (ii) pay its allocable portion of the Earn-Out Payments. Buyers agree that they will report the transaction for income tax purposes in a manner consistent with the reporting of such transaction by Sellers as an installment sale. 3.12 Adjustment For Period Between Escrow Closing and Final Closing. Subject to the occurrence of the Final Closing, the parties intend that Buyers shall have the benefits of owning the Assets commencing with the Escrow Closing Date through the Final Closing (the "Interim Period"). Accordingly, the Company shall be entitled to receive a payment from the Partnership on or prior to the date five Business Days after the Final Closing equal to 25% of the Domestic Net Profits - Price Is 49 56 Right during the Interim Period (and the $48.5 million maximum Earn-Out Payments referenced in Section 3.8(a) shall be reduced by 75% of the Domestic Net Profits - Price Is Right during the Interim Period), all as if the Final Closing had occurred on the Escrow Closing Date. Notwithstanding any other provisions to the contrary herein but without derogation of the right of the Partnership to retain 75% of the Domestic Net Profits -- Price Is Right during the Interim Period and to receive reimbursement of production costs during the Interim Period with respect to The Price is Right at a rate based upon the 1995/1996 production budget approved by Buyers (as if such budget had been in place as of the Escrow Closing Date), subject to the occurrence of the Final Closing, Buyers shall receive the benefit of any additional Adjusted Net Current Assets arising during the Interim Period. The parties will cooperate with each other in good faith during the Interim Period to determine the applicable amounts to be paid or credited to Buyers and the procedures for implementing the provisions of this Section 3.12. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLERS The Partnership represents and warrants to Buyers and AACI as follows (and, to the extent relating to CPC and to that portion of the Business conducted by CPC, the Partnership and CPC jointly and severally represent and warrant to Buyers and AACI as follows): 50 57 4.1 Organization and Qualification. (a) The Partnership is a limited partnership duly organized, validly existing and in good standing under the partnership laws of the State of California with all requisite partnership power and authority to own, lease and operate its assets and carry on its business as presently owned or conducted. Buyers have been furnished with access to complete and correct copies of the agreement of limited partnership and the certificate of limited partnership of the Partnership as currently in effect and as will be in effect at the Closing. The Partnership is a California limited partnership, the general partner of which is Mark Goodson Television Productions, Inc. and the limited partners of which are set forth on Schedule 4.1(a) hereto. None of the limited partners of the Partnership that do not constitute Partnership Related Persons hold or ever held any of the assets, properties, rights or businesses used or useful in the Business or any other interest in the Business except for their respective limited partnership interests. (b) Mark Goodson Television Productions, Inc., the general partner of the Partnership, is a corporation duly organized, validly existing and in good standing under the laws of the State of California with all requisite corporate power and authority to own, lease and operate its assets, act as general partner of the Partnership, and carry on its business as presently owned or conducted. 51 58 (c) Buyers have been furnished with access to complete and correct copies of the joint venture agreement of CPC as currently in effect. CPC is a joint venture among Jill Bishop, the Estate of Mark Goodson, Majorie Goodson Cutt 1995 Revocable Trust, Royal E. Blakeman as Trustee for the Shamos Children's Trust, Jonathan Goodson and Carol Boas Goodson with all requisite power and authority to own, lease and operate its assets and carry on its business in all respects as presently owned or conducted. None of the venturers of CPC that do not constitute CPC Related Persons hold or ever held any of the assets, properties, rights or businesses used or useful in the Business or any other interest in the Business except for their respective economic interests in the joint venture. 4.2 Authority. (a) Each of the Sellers, the Producer and the Estate has all requisite power and authority to enter into and perform its obligations under this Agreement and under the general assignment and bill of sale and each other assignment to be delivered by it as contemplated by Section 8.4 and under any Related Agreement to which either Seller, the Producer or the Estate is a party, and to consummate the transactions contemplated herein and therein. This Agreement has, and each of the Related Agreements to which it is a party will upon execution and delivery thereof will have been duly executed and delivered by such Person pursuant to all necessary approvals, including any necessary approval by the general partners and the limited partners of the Partnership or the joint 52 59 venturers of CPC, and authorizations, and this Agreement is, and each of the Related Agreements to which such Person is a party upon execution and delivery thereof will be, the legal, valid and binding obligation of the Seller or Related Person party thereto enforceable against it in accordance with its terms. (b) Neither the execution and delivery of this Agreement or the Related Agreements by the Sellers, nor the consummation of the transactions contemplated herein and therein, will (i) conflict with, result in a breach of or constitute a default under (A) the agreement of limited partnership or the certificate of limited partnership of the Partnership or the certificate of incorporation and by-laws of Mark Goodson Television Productions, Inc., (B) the joint venture agreement of CPC or the organizational documents for the entities which formed CPC and the relevant order governing the administration of the Estate, or (C) any court or administrative order or process or any agreement or commitment to which either of the Sellers is a party or by which either of the Sellers (or any of the Assets) is subject or bound; (ii) result in the creation of, or give any party the right to create, any lien, charge, encumbrance or other security interest upon any of the Assets; (iii) except as set forth on Schedule 4.2 hereto, terminate, accelerate or modify, or give any third party the right to terminate or modify, the provisions or terms of any contract or agreement or commitment relating to the Business or the Assets to which either of the Sellers (together with its predecessors, constituent partners, 53 60 joint venturers, Related Persons or Affiliates) is a party or by which either of the Sellers (together with its predecessors, constituent partners, joint venturers, Related Persons or Affiliates), or any of the Assets, is subject or bound; or (iv) except as set forth on Schedule 4.2 hereto, require either of the Sellers (together with their respective predecessors, constituent partners, joint venturers or Affiliates) to obtain any authorization, consent, approval or waiver from, or to make any filing with, any Person, court or public body or authority other than the filings and the expiration or termination of the respective waiting periods under the HSR Act. 4.3 Assets. (a) Together, the Sellers have, and at the Final Closing there will be delivered (subject to receipt of the approvals specified in Schedule 4.2 as to the particular Assets specified in such Schedule 4.2) to Buyers, good and marketable title to, or, to the extent Sellers' interest is limited to a leasehold, valid leasehold interests in, all the Assets free and clear of all Liens, except for (i) the Assumed Liabilities, and (ii) Permitted Encumbrances. The Assets to be sold to Buyers pursuant to this Agreement include all of the assets owned by either Seller or its respective Related Persons necessary for or used in the conduct of the Business in the manner in which it is presently or is contemplated as being or has been conducted by the Sellers (together with their respective Related Persons), and except for assets the absence of which would not interfere in any material respect with the conduct of 54 61 the Business and except for the Sellers' employees, consultants and other personnel. The Sellers (together with their respective Related Persons) do not own fee title to any real property utilized in connection with the Business. (b) The instruments of sale, conveyance, assignment and transfer executed and delivered by each of the Sellers at the Escrow Closing will effectively vest in Buyers the interest of the Sellers (together with their respective Related Persons) in the Assets subject only to the occurrence of the Final Closing. (c) Except as set forth on Schedule 4.3(c) with respect to real property or personal property leased by the Sellers as lessee that is included in the Assets, there exist no defaults by the Sellers (together with their respective predecessors, constituent partners, joint venturers, Related Persons or Affiliates) or, to the knowledge of the Sellers, by any third party that could materially and adversely affect any of the Assets. 4.4 Library Physical Properties. (a) Except as set forth on Schedule 4.4(a), an original negative or master tape of each of the Library Physical Properties (i) has been properly stored, in each case in accordance with standards customarily applied by major theatrical, television and home video distributors, as applicable, in the United States, and (ii) may be used for the purpose of making a first class, fine grain print or broadcast quality master tape and a first class, fine grain or 55 62 digital or one-inch production master. All masters and duplicate masters of any such original or elements thereof that currently exist are included in the Library Rights and Library Tangible Assets, subject to Sony's rights to certain masters and duplicates pursuant to the Sony Agreement described in Schedule 4.4(a). (b) Other than such Library Physical Properties that do not constitute master materials and which are currently in exhibit or distribution, or in the hands of third parties preparing Library Physical Properties for exhibition or distribution, the Library Physical Properties are stored and maintained directly by Sellers or on their behalf by authorized distributors or licensees in storage or post- production facilities in accordance with recognized industry standards for the use and preservation of such materials. (c) Schedule 4.4(c) sets forth a list, which is true, accurate and complete in all material respects, of the physical location of the Library Physical Properties. There are no restrictions on the right to access or remove such materials except as set forth on Schedule 4.4. 4.5 Library Rights. (a) Schedule 4.5(a) sets forth a list of all Library Programs, which is true, accurate and complete. Sellers own, are licensed or otherwise possess the necessary right, title and interest in the Library Rights to permit the Exploitation without restriction, except as expressly set forth herein, for the terms and in the media set forth in 56 63 Schedule 4.5(a) (which schedule also includes Third Party Costs with respect to each Library Program and Library Right). Since January 1, 1993 through the date hereof, none of the Library Programs has been canceled or discontinued nor have any Existing Licensees for any territory been changed except as set forth in Schedule 4.5(a). (b) Except as set forth in Schedule 4.5(b), Sellers are the sole and exclusive owners of the Library Programs, and otherwise have the full right to Exploit the Library Programs as set forth in Schedule 4.5(a). (c) Upon the Final Closing, Buyers will own, or be licensed or otherwise possess the necessary right, title and interest in the Library Rights to permit the Exploitation of such Library Rights without restriction, except as expressly set forth herein or in the Network Production Agreement or on Schedules 4.5(c) or Schedule 7.14(c). (d) (i) Neither the Library Programs, nor any element thereof, as they currently exist, nor the Exploitation thereof by Sellers (together with their respective Related Persons), nor the transfer thereof to Buyers, libels, defames, violates the rights of privacy or publicity, or violates any copyright, patent, trademark, common law or other similar right, of any Person or violates any other applicable law. Sellers have not received any notice of infringement or other violation of any of the foregoing rights, except as set forth on Schedule 4.5(d). Sellers have (x) taken all reasonably prudent actions (in 57 64 accordance with industry custom and practice with respect thereto) necessary to ensure that none of the Library Rights, nor any element thereof, as they currently exist, nor the Exploitation thereof by Sellers (together with their respective Related Persons), nor the transfer thereof to Buyers, libels, defames, violates the rights of privacy or publicity or violates any copyright, patent, trademark, common law or other similar right of any Person or violates any other applicable law, and (y) complied with all requirements of their respective errors and omissions insurance policies necessary to ensure coverage thereunder of any claims of the type described in the preceding clause (x) hereof. (ii) All material contained in the Library Rights is either (A) a wholly original "work made for hire" (as such term is construed under the United States Copyright Law) created by writer(s) duly employed by Sellers or their predecessors and not copied, in whole or in part, from any other work, (B) duly licensed to, or otherwise acquired by, Sellers, (C) in the public domain throughout the world, (D) permitted to be Exploited by Sellers pursuant to the provisions of 17 U.S.C. Section 107, as such provision is construed, for all uses to the full extent of the rights of Sellers (together with their respective Related Persons) with respect thereto or (E) a combination of any of the foregoing. (e) Schedule 4.5(e) sets forth a list of the Library Music Rights. Except as set forth on Schedule 4.5(e), 58 65 all the Library Music Rights are (i) owned by either Seller and licensed to the American Society of Composers, Authors and Publishers ("ASCAP"), Broadcast Music Inc. ("BMI") or the Society of European Stage Authors and Composers ("SESAC"); (ii) in the public domain throughout the world, or duly licensed to either Seller (with public performance licenses); or (iii) otherwise owned by or licensed to the Sellers. (f) The credits that are contained in the Library Programs are complete and accurate in all material respects and include any information required by section 317 of the Federal Communications Act of 1934 (as amended) to be disclosed to the public. The Library Programs that were produced by Sellers (together with their respective Related Persons), and to Sellers' knowledge, the Library Programs that were produced by a third party, do not omit credit owed to any party or entity entitled to any credit for providing services or rights in connection with the Library Programs. No credit accorded in any Library Program that was produced by Sellers (together with their respective Related Persons), and to Sellers' knowledge, no credit provided in any Library Program that was produced by a third party, is inaccurate, improper or insufficient under any applicable law, contract or otherwise. (g) Where required under the Copyright Law to preserve the copyright in such Library Programs, a valid copyright notice which conforms to the requirements of Copyright 59 66 Law relating to the elements, placement and other requirements of such notice appears on each Library Program. (h) The Library Literary Properties include all Literary Properties of any kind on which any of the Library Programs is based. 4.6 Copyrights, Etc. (a) Except as set forth in Schedule 4.6(a), (i) the copyrights in the Library Programs (including any Episode or other Program), and except for material in the public domain throughout the world, the elements thereof, the Library Physical Properties, the Library Music Rights and the Library Literary Properties (including any Bible) (the "Copyrights") that are, in each case, owned or controlled by a Seller (together with its Related Persons) are valid, existing, unexpired and enforceable in the United States and all countries party to the Universal Copyright Convention or the Berne Convention; and (ii) none of the Copyrights owned by a Seller (together with its Related Persons) is in the public domain in the United States or, to the knowledge of Sellers, any country party to the Universal Copyright Convention or the Berne Convention. Sellers have received no notice to the effect that the validity of any Copyright is contested. (b) A registration for each Copyright set forth in Schedule 4.6(b) has been properly issued by the United States Copyright Office in either of the Sellers' names or in the name set forth on Schedule 4.6(b) (and are owned in each case by the Partnership). The application to register each Copyright listed 60 67 in Schedule 4.6(b) was duly and properly filed in the United States Copyright Office, and required materials have been deposited with the Library of Congress and the United States Copyright Office. Schedule 4.6(b) sets forth the registered title, registration number and registration date for each such registered Copyright. 4.7 Marks. (a) Schedule 4.7(a) lists (i) all Marks owned by a Seller (together with its Related Persons), whether or not in its own name, including, where applicable, the registration number and date for each Mark for which a registration has been issued by, or the application number and date for each Mark for which an application for registration is pending in, the United States Patent and Trademark Office or other similar office in any foreign jurisdiction, and (ii) all Marks to which a Seller (together with its Related Persons) has been granted a license to use. The information relating to the Marks presented in Schedule 4.7(a) is true, accurate and complete. The Sellers have all right, title and interest in and to the Marks listed in Schedule 4.7(a), other than the Mark "Goodson." Each Mark that is necessary or useful to the conduct of the Business is valid, subsisting, unexpired, enforceable and has not been abandoned. Each application for the federal registration in the United States of a Mark (including, without limitation, any renewals thereof) has been duly and properly filed, and each registration has been properly issued. Each of the Sellers has all licenses or other rights to use all Marks 61 68 necessary for the conduct of the Business as presently conducted or contemplated by Sellers to be conducted. (b) Except as set forth on Schedule 4.7(b), there are no Liens, administrative or other proceedings or lawsuits, whether pending or, to Sellers' knowledge, threatened, involving or against any of the Marks, and Buyers shall have the same rights in and to the Marks used in connection with the Business as the Sellers (together with their respective Related Persons) have on the date of this Agreement and shall be able to use and exploit the Marks to the full extent provided by applicable law for the term and throughout the territories set forth in Schedule 4.7(a), without any material restriction on such use or exploitation. No holding, decision or judgment has been rendered by any governmental authority which would limit, cancel or question the validity of any Mark. No action or proceeding is pending seeking to limit, cancel or question the validity of any Mark. (c) Except as set forth on Schedule 4.7(c), none of the Marks used in the conduct of the Business, any element thereof as they currently exist, or the exploitation thereof by Sellers (together with their respective predecessors, constituent partners, joint venturers, Related Persons or Affiliates), or the transfer thereof to Buyers, libels, defames, violates the rights of privacy or publicity, or violates any trademark or service mark, common law or other similar right of any Person or violates 62 69 any other applicable law. Sellers have not received any notice relating to any claim thereof. (d) To Sellers' knowledge, except as set forth on Schedule 4.7(d), there are no Marks that conflict with or infringe on the Marks used in the conduct of the Business, third party claims against such Marks, or potential infringements against such Marks. (e) To Sellers' knowledge, except as set forth on Schedule 4.7(e), no other Person uses, has the right to use or claims the right to use the Marks "Mark Goodson", "Mark Goodson Company", "Mark Goodson Productions" or any combination or derivation thereof, and no other Person uses or claims the right to use the Mark "Goodson," in each case in connection with the Business or the entertainment industry. (f) Subject to the immediately succeeding sentence, the Sellers have taken all reasonably necessary steps to secure, protect and maintain the Marks (other than the Mark "Goodson") in the United States and have disclosed to Buyers in a Schedule hereto all infringements or potential infringements, known to Sellers, against the Marks outside the United States. The Buyers acknowledge that the Sellers have not registered the Marks "Mark Goodson", "Mark Goodson Company", "Goodson" and "Mark Goodson Productions". (g) Except as set forth in Schedule 4.7(g), there are no third party licensees of the Marks used in the conduct of the Business. 63 70 4.8 Financial Information. The Sellers have furnished to Buyers (with respect to the combined Business and net assets of the Sellers) in each case including the applicable notes and schedules (i) the combined statements of operating income and cash flows of the Sellers for the years ended December 31, 1994, 1993 and 1992, audited by Coopers & Lybrand, L.L.P. (ii) the unaudited combined statements of operating income and cash flows for the six months ended June 30, 1995 and 1994, which have been reviewed by Coopers & Lybrand L.L.P., (iii) the combined statements of net assets at December 31, 1994 and 1993 audited by Coopers & Lybrand, L.L.P., and (iv) the unaudited combined statements of net assets as at June 30, 1995, which has been reviewed by Coopers & Lybrand L.L.P. The foregoing statements and applicable notes, hereinafter referred to as the "Financial Statements", have been prepared by Seller's management from the books and records of the Seller in accordance with GAAP, accurately reflect in all material respects and fairly present the operating income of the combined Business and net assets, excluding in any event the operations of the Lottery Business and the Sony Game Show Channel and of any other Excluded Assets or Non-Assumed Liabilities, and the financial position, excluding the Lottery Business and the Sony Game Show Channel and any other Excluded Assets or Non-Assumed Liabilities, of the Sellers for the periods and as of the dates set forth above. 4.9 Undisclosed Liabilities. Neither Seller (together, insofar as it relates to the Business, with its 64 71 predecessors, constituent partners, joint venturers, Related Persons or Affiliates) has any debts, obligations or liabilities, whether known or unknown, accrued, absolute, contingent or otherwise, that are not specifically reflected or provided for in the Financial Statements or in the Schedules hereto except those debts, liabilities and obligations arising after June 30, 1995 which (a) (i) were incurred in the ordinary course of the Business as set forth on the Estimated Net Current Assets calculation, in each case in accordance with prior practice or are part of the Non-Assumed Liabilities, and (ii) could not individually or in the aggregate have a material adverse effect on the Business or (b) are reflected on Schedule 4.9. 4.10 Accounts Receivable. The accounts receivable of Sellers reflected in the Financial Statements and the Accounts Receivable of Sellers reflected in the Estimated Adjusted Net Current Assets or the Closing Adjusted Net Current Assets, as the case may be (the accounts receivable, together with the Accounts Receivable, shall be referred to for the purposes of this Section 4.10 only as the "Accounts Receivable") as of the date thereof and all the Accounts Receivable arising after such date are valid and arose from bona fide transactions in the ordinary course of the Business and have been recorded in accordance with historical revenue recognition policy. No Account Receivable has been assigned or pledged to any other Person except to Buyers pursuant to this Agreement. All Accounts Receivable (net of reserves reflected in the Estimated Adjusted Net Current Assets) are or 65 72 are reasonably expected to be collectable in the ordinary course of the Business. 4.11 Absence of Certain Changes or Events. Since December 31, 1994, except as set forth on Schedule 4.11 there has not been: (a) any material adverse change affecting the assets, liabilities, condition (financial or otherwise), results of operations, or prospects of the Business; (b) any damage, destruction or casualty loss not covered by insurance materially and adversely affecting the Business, taken as a whole; (c) any entry into any material agreement, commitment or transaction (including, without limitation, any capital expenditure, but excluding any of the foregoing related to any Excluded Asset which will not have any adverse effect on the transactions contemplated hereby) by either of the Sellers (together, insofar as it relates to the Business, with its predecessors, constituent partners, joint venturers, Related Persons or Affiliates), except agreements, commitments or transactions in the ordinary course of business (none of which are or will be individually, or collectively, material) or as permitted by this Agreement; or (d) any change in the Sellers' accounting methods, principles or practices. 4.12 Contracts. (a) Schedule 4.12(a) hereto lists or describes, and Buyers have been furnished access to true and accurate copies (together with any amendments, modifications, supplements or waivers) of, all contracts to which either of the Sellers 66 73 (together with their respective Related Persons) is a party as of the date hereof with respect to the Business and the Assets (other than contracts solely relating to the Excluded Assets) which are to be assumed by Buyers, and which (A) obligate such Seller (or other Person) to pay more than $10,000 in any year; (B) are agreements providing for the guarantee of the obligations of any party (other than the Sellers), in each case in excess of $10,000; (C) are distributorship, sales agency, marketing or other agreements providing for the Exploitation of the Library Rights or the Library Physical Properties, including any Library Agreement; (D) are contracts to be performed over a period ending later than one year after the date hereof and cancelable only upon more than 90 days' notice without material penalty; (E) are contracts limiting the freedom of such Seller (together with its Related Persons) to engage in any line of business; (F) are leases of real property; or (G) are contracts relating to the licensing of any Mark, by or to either of the Sellers (together with its Related Persons) (the contracts in (A) through (G), collectively, the "Contracts". (b) With respect to all such Contracts, neither the Seller (together with its predecessors, constituent partners, joint venturers, Related Persons or Affiliates) party thereto nor, to the knowledge of such Seller and, except for the Contracts specified on Schedule 4.12(b) hereto, any other party to any such Contract is in breach thereof or default thereunder and, except for the Contracts specified on Schedule 4.12(b) 67 74 hereto, there does not exist under any such Contract any event which, with the giving of notice or the lapse of time, would constitute such a breach or default, except for such breaches, defaults and events as to which requisite waivers or consents have been obtained or which would not, in the aggregate, have a materially adverse effect on the Business, taken as a whole. Except as separately identified on Schedule 4.12(b), no approval or consent of, or notice to or filing with, any Person is needed under the terms of such Contract in order that the Contracts described in this Section 4.12(b) continue in full force and effect (without giving any contractual party the right to modify, accelerate or terminate) following the consummation of the transactions contemplated by this Agreement. (c) The Library Agreements listed in Schedule 4.12(a) constitute (i) all contracts in effect as of the date hereof, whether written or oral, with writers, directors, producers, actors, artists, animators, voice talent or other parties relating to the Exploitation of any of the Library Programs or other Library Rights, whether as licensor, licensee, grantor or grantee or otherwise, relating to the Business, to which either Seller (together with its Related Persons) is a party; and (ii) all contracts in effect as of the date hereof concerning the licensing, exhibition or other Exploitation of the Library Programs or other Library Rights or the Library Physical Properties, whether as licensor, licensee, distributor, grantor 68 75 or grantee or otherwise, relating to the Business, to which either Seller (together with its Related Persons) is a party. (d) Each Contract has been duly executed and delivered by the Seller party thereto (except in the case of oral contracts), is in full force and effect and is valid, binding and enforceable in accordance with its terms against the Seller party thereto and, to Seller's knowledge and, except for the Contracts specified on Schedule 4.12(d) hereto, and assuming the due authorization and execution of such Contract by the other party thereto, any other party thereto. Without limiting the generality of the foregoing, (i) all minimum and other payments required to be made or received by Sellers (together with their respective Related Persons) or which are necessary to extend the term of any Contract have been fully made or received and all options and renewal rights have been duly exercised by Sellers, (ii) all sublicenses and other material actions required to be approved by any Person have been approved by such Person and all material reports required to be provided to such Persons have been timely provided, and (iii) to Sellers' knowledge, and except for the Contracts specified on Schedule 4.12(d), there are no material disputes between the Sellers (together with their respective Related Persons), on the one hand, and any licensor or licensee, on the other hand. (e) Except for the Contracts specified on Schedule 4.12(e), neither the execution and delivery of this Agreement or any Related Agreement nor the consummation of the 69 76 transactions contemplated hereby or thereby, will violate, result in a breach of any of the terms or provisions of, constitute a material default (or any event that, with the giving of notice or the passage of time or both, would constitute a default) under, result in any right of termination under, increase any material amounts payable under, or conflict with any Contract, including the Sony Agreement and the CBS Network License. The Assets and the Business constitute substantially all of the assets of the Partnership. No amounts are owed by the Sellers or any of their respective Related Persons under the CBS Transfer Agreement. (f) Notwithstanding the other provisions of this Section 4.12, neither the Partnership nor CPC nor any of their respective Affiliates makes any representations or warranties pursuant to this Section 4.12 or Section 4.2(b)(iii) or (iv) with respect to Contracts between either Seller and Fremantle International, Inc. or AACI (or their respective Affiliates), or any sublicenses by Fremantle International, Inc. pursuant to its contract with the Partnership. 4.13 Litigation. Except as set forth on Schedule 4.13 or Schedule 4.5(d), as of the date hereof there is no suit, claim, action, proceeding or investigation pending or, to the knowledge of either of the Sellers, threatened against or relating to the Assets or the Business at law or in equity before any court, arbitrator, mediator, administrator or governmental or regulatory authority or body, domestic or foreign. As of the date hereof, there is no significant possibility of a 70 77 determination including, without limitation, with respect to the matters listed on Schedule 4.13 or any other suit, claim, action, proceeding or investigation brought prior to the date hereof (whether or not now pending), which would reasonably be expected to (a) have a materially adverse effect on the Assets or the Business, taken as a whole, or (b) prevent or delay the transactions contemplated in this Agreement. As of the date hereof, neither the Partnership, CPC nor any of their respective predecessors, constituent partners, joint venturers, Related Persons or Affiliates is subject to any outstanding judgment, stipulations, order, writ, injunction or decree affecting the Assets or the Business. 4.14 Taxes. All Federal, state, local, foreign and other tax returns and reports required to be filed by the Sellers (together with their respective predecessors, constituent partners, joint venturers, Related Persons or Affiliates) in connection with the Business or the Assets have been duly filed by Sellers and all Taxes owed in connection with the business of the Sellers (together with their respective predecessors, constituent partners, joint venturers, Related Persons or Affiliates) or the Business or the Assets have been paid by Sellers. Each of CPC and the Partnership is properly characterized as a partnership for federal income tax purposes. Except as provided on Schedule 4.14 with respect to withholding in Canada on certain distribution contracts identified on such Schedule and under certain of the contracts referenced in 71 78 Section 4.12(f), all payments received or receivable under any of the Contracts being assumed by Buyers are payable to Buyers free of the withholding of any Taxes. All Taxes which either Seller (together with its predecessors, constituent partners, joint venturers, Related Persons or Affiliates) is or was required by law to withhold, to deposit or to collect in connection with amounts paid or owing to any employee, independent contractor, creditor. stockholder or other third party have been duly withheld, deposited or collected and, to the extent required, have been paid to the relevant taxing authority. There are no Liens for Taxes upon the Assets other than Liens for Taxes not yet due and payable. No Tax is required to be withheld pursuant to section 1445 of the Code as a result of the transfers contemplated by this Agreement. 4.15 Compliance with Law. The Sellers (together with their respective predecessors, constituent partners, joint venturers, Related Persons or Affiliates) have conducted, and are now conducting, the Business substantially in compliance with all applicable laws, rules, regulations and court or administrative orders and processes, domestic or foreign, except for violations, if any, which singly, or in the aggregate, do not, and are not reasonably likely to, have a material adverse effect on the Business, taken as a whole. 4.16 ERISA. As a result of the consummation of the transactions contemplated herein (including, without limitation, the execution by AAG of certain assumption agreements as set 72 79 forth in Section 9.4(b)), (a) neither Buyers nor AACI nor AAG nor Interpublic Sub shall become an "employer" as defined in Section 3(5) of ERISA with respect to any plans subject to Title IV of ERISA (the "Plans"), (b) neither Buyers nor AACI nor AAG nor Interpublic Sub shall become subject to any provision of the collective bargaining agreements pursuant to which contributions are made to any Plans (other than the obligations expressly assumed by AAG as set forth in section 9.4(b)) and (c) neither the Sellers nor Buyers nor AACI (nor AAG) nor Interpublic Sub shall be liable for any withdrawal or other liability under Title IV of ERISA with respect to any Plans. 4.17 Third Party Costs. (a) All Third Party Costs payable that have been or should be accrued have been paid in full or accrued in accordance with GAAP by Sellers in their books and records and are reflected on the Financial Statements and will be reflected in the Estimated Adjusted Net Current Assets and in the Closing Adjusted Net Current Assets. Sellers have paid or accrued on the appropriate books and records all amounts that are due and payable (and all amounts that have accrued but are not yet payable) under all applicable collective bargaining agreements with any union or guild or otherwise by reason of any past or current television re-runs or theatrical, home video, television or other exhibitions or Exploitation of any of the Library Rights. (b) Schedule 4.17(b) lists (i) each guild, union or other collective bargaining agreement (true, accurate and 73 80 complete copies of which have been furnished to Buyers to the extent reasonably available to Sellers), including any outstanding obligations for residuals or otherwise under such agreements ("Guild Encumbrances") to which either Seller (together with its predecessors, constituents partners, joint venturers, Related Persons or Affiliates) is a party which is applicable to the Exploitation of any Library Rights by the Sellers (together with their respective predecessors, constituents partners, joint venturers, Related Persons or Affiliates) and (ii) a list of all union, collective bargaining and guild agreements to which either Seller (together with its predecessors, constituents partners, joint venturers, Related Persons or Affiliates) is a party or relating to, or that may restrict in any way, the right to Exploit any Library Rights. There are no claims or foreclosures under any Guild Encumbrance. 4.18 Brokers. Other than Lazard Freres & Co. L.L.C. ("Lazard"), the fees and expenses of which shall be paid by the Sellers, there is no broker, finder, investment banker or other similar intermediary which has been retained by or is authorized to act on behalf of the Sellers (together with their respective predecessors, constituents partners, joint venturers, Related Persons or Affiliates) who might be entitled to any fee or commission from Buyers or any of their Affiliates upon consummation of the transactions contemplated by this Agreement. In connection therewith, Sellers have delivered to Buyers the letter specified in Section 8.4(a)(ix). 74 81 4.19 The Price Is Right Budget. Sellers have delivered the budget for the 1995/1996 season of "The Price Is Right" on the CBS Network. The budget has been reasonably prepared in good faith and on bases reflecting the best current available estimates and judgments of the management of Sellers, including assumptions as to the continued payment or reimbursement by the CBS Network of allotted prize overages, promotional costs and other "below the line" costs but, except as specifically identified therein, without overhead or contingency costs. The budget does not and shall not exceed $3,229,000 for balance of the 1995/1996 production year commencing with the Escrow Closing Date. 4.20 Reorganization. Sellers have taken all necessary actions to ensure that good and marketable title to (i) all of the assets related to the Business previously held or owned by any of the entities specified on Schedule 4.20, including any predecessor, constituent partner, joint venturer, Related Persons or Affiliate of either Seller, or any entity which has ever held or owned any rights with respect to the Assets or the Business and (ii) all of the Assets have been transferred to the Partnership or CPC prior to the Closing. Without limiting the generality of the foregoing, the Assets transferred to Buyers include all rights under Contracts entered into by predecessors or Partnership Related Persons (whether purported to have been entered into prior or subsequent to the reorganization). None of such transfers is subject to a claim or 75 82 challenge (x) as to the validity of such transfer or (y) which would result, if successful, in the creation of a Lien against any of the Assets. Such entities represent all of such Persons who held any assets used or useful in the Business immediately prior to such transfer. 4.21 Disclosure. No representation or warranty by the Sellers in this Agreement nor any of the Related Agreements, nor any certificate, schedule, document or instrument delivered or to be delivered to Buyers pursuant hereto or thereto contains or will contain an untrue statement of any material fact or omits or will omit to state any material fact required to be stated herein or therein or necessary to make the statements contained herein or therein not false or misleading. 4.22 Third Party Proposals. Neither Seller nor any of their respective Affiliates, venturers, officers, directors, employees, representatives or agents are engaged in any existing activities, discussions or negotiations with any third party or entity with respect to a Purchase Proposal. 4.23 Investment Representation. The Partnership represents and warrants as to itself, the Representative and the Persons set forth on Schedule 3.5 (on behalf of itself and each of the foregoing Persons) that each such Person is taking Interpublic Common Stock for investment only and not with a view towards distribution in violation of the Act. It is understood that the Put Agreement and the shares constituting the Stock Portion of the Purchase Price (or the right to receive such 76 83 shares) will be assigned initially to the Persons set forth on Schedule 3.5 and thereafter to Lazard Freres & Co., L.L.C. promptly following the Final Closing and the Partnership represents and warrants that each of the foregoing assignments is in compliance with the Act and any applicable state securities laws and will not require registration of such shares under the Act or such state securities laws. Schedule 3.5 is a true, accurate and complete list setting forth the name, type of entity and, in the case of any Person other than a corporation, the beneficial owner who will be the assignee of the shares (or the right to receive the shares) of the Stock Portion of the Purchase Price prior to the assignment of the foregoing shares or right to Lazard. 4.24 Sony Agreement and Sony Lien. The grant of the security interest to Sony in respect of the collateral described in the Sony Lien and the exercise by Sony of any its rights or remedies in respect of such collateral does not presently and shall not upon exercise prevent, hinder, impair, infringe or otherwise adversely affect the Buyers' ability to Exploit the Assets, subject only to the restrictions set forth in Schedule 7.14. Except as set forth on Attachment 2 to Schedules 2.1(a) and 2.1(b) and Schedule 7.14, Sellers are not in breach of the Sony Agreement and have fully performed all obligations required to be performed by Sellers prior to the expiration of the Sony Agreement (including obtaining and fully paying for all clearances (including talent consents) required to be obtained in 77 84 connection therewith) and, upon the Company's assumption of the Sony Agreement in the Assumption, the Company will have no liability to Sony for any act or omission prior to the Final Closing. Sellers represent and warrant that as of the date hereof, they have received license and reimbursement payments in the aggregate amount of $2,500,000 pursuant to the Sony Agreement. 4.25 The Representative. Each Buyer shall be entitled to rely on the Partnership's instruction to direct the Cash Portion and the Stock Portion, respectively, of the Purchase Price to the Representative, and neither Buyer shall have any obligation with respect to the liquidation of the Partnership or distribution of its assets. The instruction by the Partnership to direct the Purchase Price to the Representative constitutes a representation that such liquidation or distribution has occurred. 78 85 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND AACI The Company and AACI each represents and warrants to the Sellers as follows: 5.1 Organization. The Company is a limited liability company duly organized, validly existing and in good standing under the laws of New York with the power and authority to own its properties and carry on its business in all material respects as presently owned or conducted. Each of AACI and AAG is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation with all requisite corporate power and authority to own its properties and carry on its business in all material respects as presently owned or conducted. 5.2 Authority. (a) Each of the Company, AACI and AAG has all requisite power and authority to enter into and perform its obligations under this Agreement and the Related Agreements to which it is a party, and to consummate the transactions contemplated herein and such Related Agreements. This Agreement has, and each of the Related Agreements to which the Company, AACI or AAG is a party will, upon execution and delivery thereof, have been duly executed and delivered by each of the Company, AACI or AAG pursuant to all necessary authorization, and this Agreement is, and each of such Related Agreements upon execution and delivery thereof will be, the legal, valid and binding obligation of the Company, AACI or AAG 79 86 as the case may be, enforceable against it in accordance with its terms. The Assumption, upon execution and delivery thereof, will be duly executed and delivered by the Company and will be the legal, valid and binding obligation of the Company in accordance with its terms. (b) Neither the execution and delivery of this Agreement or the Related Agreements by the Company, AACI or AAG to the extent that it is a party hereto or thereto, nor the Assumption by the Company, nor the consummation of the transactions contemplated herein or therein or in the Assumption will (i) conflict with, result in a breach of or constitute a default under (A) the organizational documents of the Company, AACI or AAG, or (B) any court or administrative order or process or any material agreement or commitment to which the Company, AACI or AAG is a party or by which it (or any of its properties or assets) is subject or bound; (ii) terminate or modify, or give any third party the right to terminate or modify, the provisions or terms of any material agreement or commitment to which the Company, AACI or AAG is a party or by which it (or any of its properties or assets) is subject or bound; or (iii) except as set forth on Schedule 5.2 hereto, require the Company, AACI or AAG to obtain any authorization, consent, approval or waiver from, or to make any filing with, any Person, court or public body or authority other than the filings and the expiration or termination of the respective waiting periods under the HSR Act. 80 87 5.3 Brokers. There is no broker, finder, investment banker or other similar intermediary which has been retained or is authorized to act on behalf of the Company or AACI (and its Affiliates) who might be entitled to any fee or commission from the Sellers upon consummation of the transactions contemplated by this Agreement. 5.4 Litigation. As of the date hereof, there is no suit, claim, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against or relating to the Company or AACI (and its Affiliates) before any court, arbitrator, mediator, administrator or governmental or regulatory authority or body, domestic or foreign, with respect to which there is a substantial possibility of a determination which would prevent or delay the transactions contemplated in this Agreement; and as of the date hereof the Company, AACI or AAG are not subject to any outstanding judgment, stipulation, order, writ, injunction or decree which would prevent or delay the transactions contemplated in this Agreement. 5.5 Standby Letter of Credit. On the Escrow Closing Date the Company and AACI shall have delivered into escrow pursuant to the Escrow Agreement the duly executed Standby Letter of Credit in respect of the Cash Portion of the Purchase Price subject to reduction pursuant to the express terms hereof. 81 88 ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF INTERPUBLIC Interpublic represents and warrants to the Sellers as follows: 6.1 Organization of Interpublic and Interpublic Sub. Interpublic is a corporation organized, validly existing and in good standing under the laws of Delaware with all necessary corporate power and authority to own its properties and carry on its business in all material respects as presently owned or conducted. As of the Escrow Closing Interpublic Sub will be a wholly owned subsidiary of Interpublic. Prior to the Escrow Closing Sellers will be furnished with access to complete and correct copies of the organizational documents of Interpublic Sub. All consents which are required for Interpublic Sub to enter into the transactions contemplated in this Agreement, the Network License Agreement and the Network Production Agreement will be obtained prior to the Final Closing. 6.2 Authority. (a) Interpublic has all requisite power and authority to enter into and perform its obligations under this Agreement and the Related Agreements to which it is a party, and to consummate the transactions contemplated herein and therein. As of the Final Closing Interpublic Sub will have all requisite power and authority to enter into and perform its obligations under the Network Production Agreement and the Network License Agreement and to consummate the transactions contemplated thereby. This Agreement 82 89 has, and the Network License Agreement, the Network Production Agreement and the Put Agreement will, upon execution and delivery thereof, have been duly executed and delivered by Interpublic pursuant to all necessary authorization, and this Agreement is, and the Network License Agreement, the Network Production Agreement and the Put Agreement upon execution and delivery thereof will be the legal, valid and binding obligations of Interpublic or Interpublic Sub party thereto enforceable against it in accordance with its terms. (b) Neither the execution and delivery of this Agreement and the Related Agreements to which Interpublic or Interpublic Sub is a party, nor the consummation of the transactions contemplated herein or therein will (i) conflict with, result in a breach of or constitute a default under (A) its certificate of incorporation or by laws, or (B) any court or administrative order or process or any material agreement or commitment to which Interpublic is a party or by which it (or any of its properties or assets) is subject or bound; (ii) terminate or modify, or give any third party the right to terminate or modify, the provisions or terms of any material agreement or commitment to which Interpublic is a party or by which it (or any of its properties or assets) is subject or bound; or (iii) require Interpublic or Interpublic Sub to obtain any authorization, consent, approval or waiver from, or to make any filing with, any Person, court or public body or authority other than the filings 83 90 and the expiration or termination of the respective waiting periods under the HSR Act. 6.3 Brokers. There is no broker, finder, investment banker or other similar intermediary which has been retained or is authorized to act on behalf of Interpublic or Interpublic Sub who might be entitled to any fee or commission from the Sellers upon consummation of the transactions contemplated by this Agreement. 6.4 Litigation. As of the date hereof, there is no suit, claim, action, proceeding or investigation pending or, to the knowledge of Interpublic, threatened against or relating to Interpublic or any of its subsidiaries before any court, arbitrator, mediator, administrator or governmental or regulatory authority or body, domestic or foreign, with respect to which there is a substantial possibility of a determination which would prevent or delay the transactions contemplated in this Agreement; and as of the date hereof, neither Interpublic nor Interpublic Sub is subject to any outstanding judgment, stipulation, order, writ, injunction or decree which would prevent or delay the transactions contemplated in this Agreement. 6.5 Interpublic Common Stock. The Interpublic Common Stock to be issued and delivered in accordance with the provisions hereof has been duly authorized, will be validly issued, fully paid and non-assessable upon delivery to Representative in accordance herewith, and will be delivered by 84 91 Interpublic free and clear of all Liens other than Liens created or consented to by Sellers or the holders thereof. ARTICLE 7 COVENANTS 7.1 Conduct of the Business. Except as expressly permitted or contemplated by this Agreement until the Final Closing, unless Buyers shall otherwise agree in writing, each Seller shall conduct the Business in the ordinary and usual course of business and consistent with past practice and use its reasonable best efforts to preserve intact its business organization and goodwill, and preserve the goodwill and business relationships with suppliers, distributors, customers, licensors, licensees and others having business relationships with such Seller. Without limiting the generality of the foregoing, each of the Sellers (on behalf of itself and their respective Related Persons) agree that, except as contemplated in this Agreement or with prior written consent of Buyers: (a) each of the Sellers shall prior to the Final Closing: (i) except as prohibited by Section 7.1(b), conduct its business and operations, including (without limitation) the maintenance of books, accounts and records, only in the usual and ordinary course of business and consistent with past custom and practice; 85 92 (ii) use its reasonable best efforts to keep in full force and effect or timely renew all governmental licenses and permits relating to the Business; (iii) notify Buyers of any emergency or other change in the normal course of its business or in the operation of its properties and of any Tax audits, Tax claims, governmental or third party complaints, investigations or hearings (or communications indicating that the same may be contemplated); (iv) maintain its tangible assets in customary repair, order and condition, replace in accordance with past practice its inoperable, worn out or obsolete assets with assets of quality at least comparable to the original quality of the assets being replaced; (v) maintain and preserve in full force and effect the existence of, and its ownership of or other rights to, all Assets, and not waive any material license or other right with respect thereto; (b) each of the Sellers shall not: (i) sell, transfer, hypothecate or pledge, any Asset material to the Business or which has a value in excess of $10,000; (ii) lease or license any Assets or interests therein, outside the ordinary course of business; (iii) except as set forth on Schedule 7.1(b), enter into, amend, terminate, renew (or in the event that Buyers request that a contract or transaction be renewed, fail to use 86 93 its reasonable best efforts to renew, provided that, Sellers shall not be obligated to renew any contract with AACI or any of its affiliates or licensees prior to the Final Closing solely by reason of this Agreement or the Related Agreements) or renegotiate any contract, or transaction, in each case which is not in the usual and ordinary course of the Business or that is material (whether or not in the ordinary course of business); (iv) make any capital expenditure or commit itself to make any capital expenditure in excess of $10,000 in the aggregate except in accordance with the 1995/1996 Price Is Right Production Budget approved by the Buyers; (v) make any change in its accounting practices; (vi) fail to comply in any material respect with any laws and contract obligations applicable to it or to the conduct of the Business and to pay all applicable Taxes when due; (vii) waive, modify, amend, release, settle or terminate any rights, debts or claims of substantial value, including infringement claims (all of which infringement claims shall accrue to the benefit of Buyers); (viii) incur any indebtedness for borrowed money or issue any debt securities, guarantees, indemnities or similar obligations; (ix) whether prior to or after the Final Closing, adopt a plan of complete or partial liquidation (other than, in the case of the Partnership, a plan of liquidation 87 94 consistent with the provisions hereof but not effective prior to the Final Closing), dissolution, merger, consolidation, restructuring, recapitalization or reorganization it being acknowledged by the Buyers, however, that the Partnership intends to distribute the right to receive the Purchase Price immediately subsequent to the Final Closing; (x) fail to pay any obligation relating to the Business upon its becoming due, consistent with the past practices of the Business, except if and to the extent that such obligation is subject to a bona fide dispute, in which event the detailed circumstances of such failure to pay shall be promptly related in a notice to Buyers; and (c) neither Seller (on behalf of itself and its respective Related Persons) shall take any action, including authorizing or entering into a contract, that could reasonably be expected to prevent any of the events referred to in Section 7.1(a) or result in any of the events referred to in Section 7.1(b). 7.2 Access to Information. (a) During the period from the date of this Agreement to the Final Closing, each Seller will, during regular business hours and on reasonable prior notice, allow Buyers and AACI and their respective authorized representatives such reasonable access to employees, books, records, offices and other facilities and properties of the Sellers (together with their respective Related Persons) related to the Business as Buyers and AACI deem appropriate in 88 95 the circumstances, provided that any such access shall not unreasonably interfere with the businesses or operations of the Sellers. (b) Any non-public information provided to or obtained by Buyers or AACI pursuant to paragraph (a) above, or otherwise in connection with this Agreement, shall be "Evaluation Material" under the Confidentiality Agreement, and shall be held by Buyers in accordance with and be subject to the terms of the Confidentiality Agreement until the Escrow Closing. 7.3 Filings, Authorizations and Consents. Each of the Sellers and each of Buyers, within five Business Days after the date hereof, shall (i) file or supply, or cause to be filed or supplied, at their own expense, all notifications and information required to be filed or supplied by such Seller or Buyer pursuant to the HSR Act in connection with the sale and transfer of the Assets pursuant to this Agreement; and (ii) request early termination of the waiting period under the HSR Act. Each of the Sellers and each of Buyers, as promptly as practicable, shall (i) make, or cause to be made, all such other filings and submissions under laws, rules and regulations applicable to such Seller or Buyer, as may be required for it to consummate the transfer of the Assets in accordance with the terms of this Agreement; (ii) use its reasonable best efforts to obtain, or cause to obtain, all authorizations, approvals, consents and waivers from all persons and governmental authorities necessary to be obtained by it, or its subsidiaries 89 96 or Affiliates (including, in the case of Sellers, their respective predecessors, constituent partners and joint venturers), in order for it so to consummate such transfer and for the preservation of all of its contracts, licenses and other rights which may be affected by such transfer; and (iii) use its reasonable best efforts to take, or cause to be taken, all other actions necessary, proper or advisable in order for it to fulfill its obligations hereunder. In addition, the Sellers shall use their reasonable best efforts to obtain (and Buyers will reasonably cooperate in order to obtain) the consent of the American Federation of Television and Radio Artists and the Directors Guild of America, Inc., as applicable, to such changes in the form of assumption agreements to be executed by AAG as set forth in Section 9.4(b) as may be deemed necessary or desirable by Buyers. The Sellers and Buyers shall coordinate and cooperate with one another in exchanging such information and supplying such reasonable assistance as may be reasonably requested by each of the other in connection with obtaining governmental or regulatory authorizations, approvals, consents and waivers. 7.4 Employees, Etc. (a) Neither any Buyer nor AACI shall be required to hire or offer employment to any employee of either Seller or any of its predecessors, constituent partners, joint venturers or Affiliates or to engage any consultant or independent contractor of either Seller or any of their respective predecessors, constituent partners, joint venturers or Affiliates and neither any Buyer nor AACI will be 90 97 responsible or liable for any employment, consultant or independent contractor arrangements or agreements entered into by either Seller or any of their respective predecessors, constituent partners, joint venturers or Affiliates, whether written or oral, or with individuals or any unions or guilds, or for any salaries, severance pay, vacation accruals, medical benefits, pension or retirement benefits or any other benefits, compensation or remuneration owed current or future employees, consultants or contractors (including, without limitation, performers, actors, musicians, hosts, writers, directors, producers or other persons employed in the Exploitation of the Library Programs or other Library Rights) of either Seller or any of their respective predecessors, constituent partners, joint venturers or Affiliates at any time (other than the obligations expressly assumed by AAG as set forth in Section 9.4(b)). However, nothing contained herein shall be deemed to preclude Buyers or any of their Affiliates from hiring or offering employment to employees of either Seller or any of their respective predecessors, constituent partners, joint venturers or Affiliates or engaging consultants or independent contractors of either Seller or any of their respective predecessors, constituent partners, joint venturers or Affiliates. (b) With respect to all employees of either Seller (together with their respective predecessors, constituent partners, joint venturers and Affiliates), Buyers shall have no responsibility to comply with WARN as to such employees of 91 98 Sellers and Sellers shall hold Buyers harmless with respect to any claim incurred or arising under WARN relating to such employees of Sellers. 7.5 No Shop. Unless and until this Agreement is terminated in accordance with Section 11.1 hereof, Sellers and the Estate agree that neither of them nor any of their predecessors, constituent partners or corporate Affiliates, shall, and each of Seller and the Estate will use its reasonable best efforts to cause its officers, directors, executors, employees, representatives and agents not to directly or indirectly initiate or solicit any inquiries or the making of any proposal with respect to any purchase of all or any significant portion of the Business or the Assets (a "Purchase Proposal") or engage in discussions or negotiations with, or provide any non-public information to or otherwise cooperate with, or enter into any agreement with or grant any option to, any third party or entity relating to a Purchase Proposal. Sellers and the Estate will notify Buyers immediately if any Purchase Proposals are received by, any information is requested from, or any negotiations or discussions are sought to be initiated or continued with either Seller or the Estate or, to Sellers' knowledge, any other Person identified in this Section. 7.6 Notice to Escrow Agent. Each of the Sellers, the Company and Interpublic agrees to promptly execute joint instructions (in one or several counterparts) pursuant to the Escrow Agreement to the Escrow Agent to such effect in the event 92 99 that each condition precedent under Articles 8 or 9 of this Agreement to their respective obligations to consummate the transactions contemplated hereby at the Final Closing have been satisfied or waived. In the event that this Agreement is terminated pursuant to the terms hereof, each of such parties agrees to promptly execute joint instructions (in one or several counterparts) pursuant to the Escrow Agreement to the Escrow Agent to such effect. 7.7 Notice of Events. During the period from the date of this Agreement to the Final Closing Date, the Sellers shall give prompt notice to Buyers and AACI, and Buyers and AACI shall give prompt notice to the Sellers, of (i) the occurrence or non-occurrence of any event of which it has knowledge, the occurrence or non occurrence of which would be likely (x) to cause any of its or their representations or warranties contained in this Agreement to be untrue or inaccurate in any material respect at or prior to either the Escrow Closing or the Final Closing, or (y) to result in any of the conditions it is or they are required to satisfy not being satisfied in any material respect so as to permit the consummation of the transfer of the Assets on the time schedule contemplated by this Agreement; and (ii) any material failure on its or their part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 7.7 shall not 93 100 limit or otherwise affect the remedies available hereunder to any party. 7.8 Further Assurances. From time to time after the Final Closing, the Sellers shall, at their own expense, execute and deliver, or cause to be executed and delivered, such documents to Buyers and do such other things as Buyers may reasonably request in order to vest in Buyers good title to the Assets more effectively and to otherwise carry out the intent of this Agreement, and from time to time after the Final Closing, Buyers shall, at their own expense, execute and deliver such documents to the Sellers and do such other things as either of the Sellers may reasonably request in order to consummate the sale of the Assets and, in the case of the Company only, the assumption by the Company of the Assumed Liabilities pursuant to this Agreement more effectively and to otherwise carry out the intent of this Agreement. 7.9 Public Announcements. The Sellers and Buyers shall consult with one another before issuing any press release with respect to this Agreement and the transactions contemplated hereby, and shall not issue any such press release without prior approval of the other party, except as required by applicable law, stock exchange or NASDAQ rule or legal process, in which case the party required to make such disclosure shall give prior notice to the other party hereto of the nature of such requirement and shall consult with such party prior to issuing such press release. Sellers acknowledge that Buyers intend to 94 101 issue a press release immediately following the Escrow Closing, which release shall be subject to the approval of the Sellers (which approval shall not be unreasonably withheld or delayed beyond the close of business on the date of execution hereof by the Sellers). AACI intends to file a copy of this Agreement with the Securities and Exchange Commission and National Association of Securities Dealers Automated Quotation System promptly after the execution and delivery hereof, together with a summary of the transaction showing the pro forma effect of the combination. 7.10 Records. With respect to the records, files and other information of the Sellers either delivered to Buyers or retained by the Sellers hereunder relating to matters on or prior to the Final Closing Date: (a) to the extent that the Sellers or Buyers, as the case may be, have retained such information in the ordinary course of business; and (b) where there is a legitimate purpose, including, without limitation, an audit of any of the Sellers or Buyers or any of their respective Affiliates by the IRS or any other Taxing Authority, upon reasonable written notice Buyers and Sellers shall allow each other and their respective representatives and Affiliates reasonable access to, and shall allow them to make copies of, such books, records, files and other information during regular business hours, provided that any such access shall not materially interfere with the businesses or operations of the party permitting such access. 95 102 7.11 Sales and Transfer Taxes. All sales and transfer Taxes, and all similar Taxes and charges, incurred in connection with this Agreement and the transactions contemplated hereby, including, without limitation, any recording charges, will be borne one-half by Buyers and one-half by Sellers; provided, however, that any such Taxes incurred in connection with the transfer by Interpublic of its undivided interest in the Assets to the Company will be borne by Buyers. Buyers shall be responsible for filing all necessary Tax Returns and other documentation with respect to all such transfer Taxes and, if required by applicable law, the Sellers shall join in the execution of any such tax return or other documentation. 7.12 Non-Competition. (a) (i) For a period of three years after the Final Closing Date or (ii) so long as the Company or any of its Affiliates shall engage in the Business or any portion thereof whichever is shorter (the "Restricted Period"), neither of the Sellers (together with their respective Related Persons and corporate Affiliates) nor the Estate nor any Person in its capacity as an employee, representative or agent of either Seller (or any of their respective Related Persons) or the Estate shall, and Sellers and the Estate shall use their reasonable best efforts to cause their respective corporate Affiliates listed on Schedule 7.12 not to, directly or indirectly, anywhere in the world, own, manage, operate, participate in, consult or perform services for or otherwise carry on or assist any business that engages in the business of 96 103 creating, producing, distributing or licensing television programming (the "Competitive Business"); provided, however, that nothing contained in this Section 7.12(a) shall prohibit Sellers, the Estate or their Affiliates from (x) engaging in any activities relating to the Lottery Business or from performing its obligations under the Sony Agreement or the Network Production Agreement or (y) acquiring for investment not more than 5% of any class of any stock of a company which is engaged in a Competitive Business and which stock is publicly traded. For purposes of this Section 7.12, Jonathan Goodson shall not be considered to be an Affiliate to the extent he acts in his individual capacity or in any capacity other than on behalf of the Sellers or any of their predecessors, constituent partners, joint venturers, Related Persons or Affiliates or the Estate. (b) Sellers and Buyers recognize that the laws and public policies of various jurisdictions may differ as to the validity and enforceability of covenants similar to those set forth in this Section 7.12. It is the intention of Sellers and Buyers that the provisions of this Section 7.12 be enforced to the fullest extent permissible under the laws and policies of each jurisdiction in which enforcement may be sought, and that the unenforceability (or the modification to conform to such laws or policies) of any provision hereof shall not render unenforceable, or impair, the remainder of the provisions hereof. Accordingly, if any provision of this Section 7.12 shall be determined to be invalid or unenforceable, either in whole or in 97 104 part, this Section 7.12 shall be deemed to be amended so as to delete or modify, as necessary, the offending provision in order to render this Section 7.12 valid and enforceable, such amendment to apply only with respect to the operation of this Section 7.12 in the particular jurisdiction in which such determination is made. (c) From and after the Escrow Closing, Sellers (together with their respective predecessors, constituent partners, joint venturers, Related Persons and Affiliates), except pursuant to and in compliance with the terms of this Agreement or as required by legal process, shall not use for any purpose, shall not disclose to others, and shall use all reasonable efforts to prevent others (including without limitation their and their respective Affiliates' respective directors, officers, employees, agents or representatives) from using or disclosing to any Person, any non-public information included in, or concerning, the Assets or the Business, other than the Excluded Assets and the Lottery Business or as required to perform its obligations under the Sony Agreement or the Network Production Agreement; provided, however, that nothing in this Section 7.12 shall apply to any information that Sellers demonstrate is now known to the public or which becomes known to the public other than by acts or omissions by Sellers or their respective Affiliates in breach of this Agreement. (d) Buyers and their respective Affiliates recognize and acknowledge that they may have access to certain 98 105 confidential information of Sellers prior to and subsequent to the Escrow Closing relating to matters other than the Business, the Assets, this Agreement, the Related Agreements and the transactions contemplated hereby or thereby. Buyers agree that neither of them will disclose, and that they will use their reasonable best efforts to prevent disclosure by their respective Affiliates or any other person of, any such confidential information for any purpose whatsoever, except to authorized representatives of Sellers and except as required by applicable law, stock exchange or NASDAQ rule or legal process or otherwise permitted to be disclosed if such information were subject to the Confidentiality Agreements; provided, however, that nothing in this Section 7.12 shall apply to any information that Buyers demonstrate is now known to the public or which becomes known to the public other than by acts or omissions by Buyers or their respective Affiliates in breach of this Agreement or the Confidentiality Agreements. (e) Each of the Sellers (on behalf of itself and its Related Persons) and Buyers expressly agrees that the remedy at law for any breach of the provisions of this Section 7.12 would be inadequate, and each Seller and Buyers hereby consent, and shall cause their respective Affiliates to consent, that each of Buyers and Sellers should be entitled, upon the proof of breach of the provisions of this Section 7.12, to provisional or permanent injunctive or other equitable relief, in addition to any other remedies and damages available to it at law or 99 106 otherwise, without the necessity of actual monetary loss being proved, and without the necessity of any Buyer's or Seller's posting a bond or other security, in order that any breach of such provisions may effectively be restrained. 7.13 Use of Name. The parties shall take such reasonable steps as shall be necessary (including, without limitation, appropriate notices and disclaimers) to ensure that any use of the Sellers' Marks included with or on any of the Assets or other conduct of Business shall not suggest that the Sellers or their Affiliates continue to provide services with respect to the operations of the Business (other than with respect to the network production of "The Price Is Right" during the term of the Network Production Agreement or any extension thereof); provided, however, that such obligation shall not limit Buyers' right to use the Marks "Goodson," "Mark Goodson," "Mark Goodson Company" or "Mark Goodson Productions" or any combination or derivation of such words (in the case of the Mark "Goodson", insofar as Sellers, their respective predecessors, Related Persons or corporate Affiliates have any rights thereto). Sellers and their Affiliates shall not use the Marks "Mark Goodson" "Mark Goodson Company" or "Mark Goodson Productions" or any combination or derivation thereof in connection with any business or activity (other than the use of the name "Mark Goodson" in connection with the sale of the art collection of Mark Goodson or the ongoing administration of the Estate) and Buyers shall have the exclusive rights to use such words or 100 107 combination of such words (except that Buyers shall not use the Mark "Mark Goodson" or any combination or derivation thereof in connection with the Lottery Business). Subject to the immediately following sentence, Sellers and their Related Persons shall not use the Mark "Goodson" or any combination or derivation thereof in connection with any business or activity and, insofar as Sellers and their Related Persons are concerned, Buyers shall have the exclusive rights to use such words or combination of such words (except that Buyers shall not use the Mark "Goodson" or any combination or derivation thereof in connection with the Lottery Business). Simultaneous with the Final Closing, or as soon as practicable thereafter, the Company shall enter into a trade mark license agreement with the Partnership or, at the direction of the Partnership, Jonathan Goodson pursuant to which the Partnership or, at the direction of the Partnership, Jonathan Goodson shall be granted an exclusive license, to the extent of the Company's rights therein, to use the Mark "Goodson" solely in connection with the Lottery Business; provided, however, that each Seller and its Affiliates shall not use the Mark "Goodson" in any manner confusingly similar to the business conducted by the Company or its successors, including without limitation the Exploitation of any of the Library Rights. Sellers and its Affiliates shall take all such action as is necessary to change their names effective promptly following the Final Closing so as to comply with this Section. 101 108 7.14 The Sony Agreement etc. (a) All rights of Sellers under the Sony Agreement (including but not limited to the right to receive after the date hereof additional license fee or reimbursement payments), and all rights to enter into any renewals or new agreements with Sony or any amendment of the Sony Agreement or to sue Sony in connection with any breach of the Sony Agreement, shall be transferred to Buyers as Assets pursuant hereto. License fee or reimbursement payments received by the Company after the date hereof in respect of the Sony Agreement (but not as to any extension or renewal thereof), up to $2,500,000 in the aggregate (prior to any offset or similar adjustment by Sony except as a result of the breach by the Company of the restrictions set forth in Schedule 7.14(c)) (the "Sony Receivable") shall be paid, when and promptly after receipt by the Company after the Final Closing, to the Partnership, subject to the provisions of Section 13.4. Any additional license fee or reimbursement payments under the Sony Agreement (but not as to any extension or renewal thereof) shall be divided equally, when and as received, between the Partnership and the Company, without deduction and shall not be considered to be Domestic Net Profits for the purpose of Earn-Out Payments. (b) As between Sellers and the Company, the Company shall not be primarily responsible for (and the Partnership shall perform all obligations under) the Sony Agreement, except as set forth on Schedule 7.14(c). Except as set forth in Schedule 7.14(c), the Company shall not be subject 102 109 to any restrictions under, the Sony Agreement with respect to the operation of the Business after the Final Closing. The Partnership shall not purport to enter into any amendment of or purport to grant any waiver under the Sony Agreement after the date hereof, and the Partnership (together with the Partnership Related Persons) shall have no right to any extension or renewal of the Sony Agreement or any other rights under the Sony Agreement (except for the right to payment from the Company pursuant to Section 7.14(a)). The Sellers shall have no liability or obligations in respect of any amendments of the Sony Agreement entered into by the Company after the Final Closing (as to which the Company shall indemnify and hold the Sellers harmless); provided that no such amendment shall release Sellers from any liabilities under the Sony Agreement arising prior to the Final Closing or under the Network Production Agreement. Upon termination of the Sony Agreement, to the extent requested by the Company, the Partnership shall cooperate with the Company to obtain at a place designated by the Company for such purpose all masters and duplicate masters of any original negative or master tape or elements thereof that are included in the Library Rights or Library Tangible Assets and that are required to be delivered to pursuant to and upon termination of the Sony Agreement. (c) Buyers and the Partnership acknowledge that from and after the Escrow Closing Date, the Partnership shall continue to perform all acts and discharge all liabilities and execute all instruments reasonably necessary and proper to 103 110 fulfill the Partnership's obligations under the Sony Agreement and shall indemnify and hold Buyers harmless from any and all costs and expenses incurred in connection therewith and any liability or any claims thereunder. 7.15 Interpublic Sub. From and after the Escrow Closing Date and for so long as the Network Production Agreement is in effect, without the consent of the Partnership (which shall not be unreasonably withheld or delayed) Interpublic shall cause the Interpublic Sub not to, (i) engage, directly or indirectly, in any business other than the ownership of the Assets and engaging in the activities contemplated to be engaged in by it pursuant to this Agreement or the Related Agreements, (ii) guaranty any material obligation of any Person, (iii) incur, create, assume or allow to remain outstanding, any material indebtedness or obligation other than any indebtedness or obligations arising as a result of the formation of Interpublic Sub and any indebtedness or obligations arising under on in connection with the transactions contemplated by this Agreement or the Related Agreements, (iv) make or permit to remain outstanding any material loan or advance to, or own or acquire any stock in securities of, any Person, and (v) create or cause to be created, and will promptly discharge, or cause to be discharged, any material lien, encumbrance or charge upon the assets of Interpublic Sub. 7.16 Delivery of Tax Certificate. Sellers each agree to provide to Buyers a certificate that, as of the Escrow 104 111 Closing Date, such Seller is not a foreign person within the meaning of section 1445 of the Code and the Treasury regulations thereunder. If such certificate is not delivered to Buyers, Buyers shall be entitled to withhold 10% of the Purchase Price as required by section 1445 of the Code. 7.17 Other Taxes. Except as otherwise provided in this Agreement, as among the parties hereto, (i) Sellers shall be responsible for and pay all Taxes (including real property Taxes, personal property Taxes and similar ad valorem obligations, if any) levied or imposed upon, or in connection with, the Assets or the conduct or operation of the Business on or before the Final Closing Date (including the days on or prior to the Final Closing Date in any tax year or other tax period that ends after the Final Closing) but not including (a) the period beginning on the day after the Final Closing, (b) any Taxes resulting from transactions not in the ordinary course of business which occur on the day of the Final Closing but after the Final Closing and (c) Taxes levied or imposed upon, or in connection with the transfer by Interpublic of its undivided interest in the Assets to the Company); (ii) Buyers shall be responsible for and pay all Taxes levied or imposed upon, or in connection with, the Assets or the conduct or operation of the Business for the period beginning on the day after the Final Closing (including the days after the Final Closing); and (iii) Sellers and the Company will each be responsible for its own income and franchise Taxes, if 105 112 any, arising from the transactions contemplated by this Agreement. 7.18 Satisfaction of Conditions Precedent. Each party hereto agrees to use their respective best efforts so that the conditions precedent to their respective obligations under Articles 8 and 9 of this Agreement are fully satisfied at or prior to the Final Closing; provided, however, without limiting the foregoing, that nothing herein shall require (i) Interpublic to take any action in connection with the Company's and AACI's obligation to tender the Cash Portion of the Purchase Price or the Standby Letter of Credit with respect thereto (it being understood and agreed that only AACI shall be liable for any breach by the Company of its obligation to tender the Cash Portion of the Purchase Price or the Standby Letter of Credit with respect thereto) or the (ii) Company or AACI to take any action in connection with Interpublic's obligation to tender the Stock Portion of the Purchase Price. ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYERS The obligation of the Buyers under this Agreement to consummate the purchase of the Assets and the obligation of the Company to consummate the assumption of the Assumed Liabilities at the Final Closing shall be subject to the satisfaction, at or prior to the Final Closing, of all of the following conditions, any one or more of which may be waived by the Buyers by written notice to the Sellers: 106 113 8.1 Representations and Warranties Accurate. All representations and warranties of each of the Sellers contained in this Agreement shall be true and correct in all material respects at and as of the Escrow Closing Date. 8.2 Performance by the Sellers. Each of the Sellers shall have performed and complied in all material respects with all agreements, obligations, covenants and conditions required by this Agreement to be performed and complied with by it prior to or on the Final Closing. 8.3 Certificates. The Buyers shall have received certificates, dated the Escrow Closing Date (and a second set of certificates dated the Final Closing), signed on behalf of each of the Sellers reasonably satisfactory in form and substance to each Buyer, to the effect that the conditions set forth in Sections 8.1 and 8.2 as to such Seller have been satisfied. 8.4 Delivery of Assets and Documents. (a) The Partnership shall have delivered (or constructively delivered in the case of (iii)) to the Buyers the following: (i) access to the Library Physical Properties and inventories pertaining thereto by way of delivery of laboratory access agreements (and notifications of assignment of Sellers' rights) in a mutually acceptable form in those cases where the Library Physical Properties and inventories pertaining thereto are in the possession or custody of third parties and, in those cases where such are in possession or custody of the Partnership, by delivery of the Library Physical Properties and inventories 107 114 pertaining thereto to a place designated by Buyers for such purpose; (ii) all certificates of registration for the registered Copyrights and registered Marks included in the Assets or related to the Business; (iii) all the Contracts, and all books, records, formats, Bibles, other Literary Properties, and other documents included in the Assets or related to the Business; (iv) a duly executed general assignment and bill of sale on behalf of the Partnership and the Partnership Related Persons substantially in the form of Exhibit 8.4(a)(iv) hereto; (v) a duly executed assignment of Copyrights on behalf of the Partnership and the Partnership Related Persons substantially in the form of Exhibit 8.4(a)(v) hereto; (vi) a duly executed assignment of Marks on behalf of the Partnership and the Partnership Related Persons substantially in the form of Exhibit 8.4(a)(vi) hereto; (vii) a duly executed Network Production Agreement substantially in the form of Exhibit 8.4(a)(vii) hereto; (viii) such other instruments and documents as Buyers may reasonably request in connection with the transactions contemplated hereby; (ix) a letter duly executed by Lazard, in a form satisfactory to Buyers, to the effect that Lazard will look only 108 115 to the Sellers for payment and indemnification in connection with services rendered to Sellers in connection with the transaction contemplated by this Agreement and shall release Buyers from any claims with respect thereto; (x) a duly executed Escrow Agreement substantially in the form of Exhibit 3.2 hereto (countersigned by the Estate); and (xi) reasonably satisfactory evidence of the release of all liens on the Assets other than the Sony Lien and other liens disclosed in UCC lien searches furnished to or obtained by the Buyers on or prior to the date hereof to the extent Sellers have provided reasonable evidence to Buyers that all related obligations have been fully discharged on or prior to the Final Closing. (b) CPC shall have delivered (or constructively delivered in the case of (iii)) to the Buyers the following: (i) access to the Library Physical Properties and inventories pertaining thereto by way of delivery of laboratory access agreements (and notifications of assignment of Sellers' rights) in a mutually acceptable form in those cases where the Library Physical Properties and inventories pertaining thereto are in the possession or custody of third parties and, in those cases where such are in possession or custody of CPC, by delivery of the Library Physical Properties and inventories pertaining thereto to a place designated by Buyers for such purpose; 109 116 (ii) all certificates of registration for the registered Copyrights and registered Marks included in the Assets or related to the Business; (iii) all the Contracts, and all books, records, formats, Bibles, other Literary Properties, and other documents included in the Assets or related to the Business; (iv) a duly executed general assignment and bill of sale on behalf of CPC and the CPC Related Persons substantially in the form of Exhibit 8.4(b)(iv) hereto; (v) a duly executed assignment of the Copyright on behalf of CPC and the CPC Related Persons for the "Child's Play" Bible for Television Programming substantially in the form of Exhibit 8.4(b)(v); (vi) a duly executed assignment of Marks on behalf of CPC and the CPC Related Persons substantially in the form of Exhibit 8.4(b)(vi) hereto; (vii) a duly executed Escrow Agreement substantially in the form of Exhibit 3.2 hereto; and (viii) such other instruments and documents as Buyers may reasonably request in connection with the transaction contemplated thereby. 8.5 Opinions of Counsel for the Sellers. The Buyers shall have received from counsel for the Sellers one or more written opinions, dated the Escrow Closing Date, in form and substance satisfactory to the Buyers and as specified in Exhibit 8.5(a) hereto, with respect to the matters set forth therein 110 117 (and, to the extent reasonably requested by Buyers, a bring-down as to such opinions at the Final Closing). 8.6 HSR Act, Etc.; Authorizations; Financing; Legal Prohibition. (a) With respect to the transactions contemplated hereby, all applicable waiting periods under the HSR Act shall have expired or been terminated. (b) Each of the Buyers shall have obtained all other governmental authorizations, and all approvals, consents, waivers, permits, exemptions, licenses or other approvals necessary or required for the consummation of the transactions contemplated hereby set forth in Schedule 8.6(b) and none of the foregoing shall contain any conditions, which individually or in the aggregate could be reasonably expected to have a material adverse effect on the Business or the Assets. (c) Each of the Sellers shall have obtained or made all other governmental authorizations, and all approvals, consents, waivers, permits, exemptions, licenses or other approvals specified in Schedule 8.6(c), and none of the foregoing shall contain any conditions, which individually or in the aggregate could be reasonably expected to have a material adverse effect on the Business or the Assets. (d) As of the Final Closing, there shall not exist any temporary, preliminary or permanent injunction or other order issued by a court or governmental or regulatory agency of competent jurisdiction which would prohibit the purchase and sale of the Assets contemplated by this Agreement or the consummation 111 118 of any of the Related Agreements and no action, suit or proceeding shall have been instituted by any Person which would reasonably be likely to prohibit any of the foregoing. (e) With respect to Interpublic's obligation to consummate the transactions contemplated hereby, the Company or AACI shall have delivered at the Escrow Closing to the Escrow Agent the Standby Letter of Credit in respect of the Cash Portion of the Purchase Price. (f) With respect to the Company's and AACI's obligation to consummate the transactions contemplated hereby, Interpublic shall have entered into the Put Agreement with respect to the Stock Portion of the Purchase Price on the Escrow Closing Date. 8.7 Estate Guaranty, etc. Buyers shall have received a duly executed guaranty of the Estate in the form of Exhibit 13.5 (the "Estate Guaranty") and Buyers shall have received the Seller Letter of Credit in the form of Exhibit 13.1, each of which shall have been delivered on the Escrow Closing Date into escrow pursuant to the Escrow Agreement. ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS The obligation of the Sellers under this Agreement to consummate the sale of the Assets to be sold by it shall be subject to the satisfaction, at or prior to the Final Closing, of all of the following conditions, any one or more of which may be waived by the Sellers by written notice to the Buyers: 112 119 9.1 Representations and Warranties Accurate. All representations and warranties of each of the Buyers contained in Articles 5 and 6 shall be true and correct in all material respects at and as of the Escrow Closing Date. 9.2 Performance by the Buyers. Each of the Buyers shall have performed and complied in all material respects with all agreements, obligations, covenants and conditions required by this Agreement to be performed and complied with by it prior to or on the Final Closing. 9.3 Certificate. The Sellers shall have received certificates, dated the Escrow Closing Date (and a second set of certificates dated the Final Closing), signed on behalf of each of the Buyers reasonably satisfactory in form and substance to each Seller, to the effect that the conditions set forth in Sections 9.1 and 9.2 have been satisfied. 9.4 Assumption. (a) The Sellers shall have received from the Company a duly executed assumption of the Assumed Liabilities substantially in the form of Exhibit 9.4(a) hereto (the "Assumption"), which shall have been delivered on the Escrow Closing Date into escrow pursuant to the Escrow Agreement. (b) The Sellers shall receive from AAG duly executed assumption agreements regarding certain obligations of the Sellers with respect to the Exploitation of Library Programs or other Library Rights pursuant to the American Federation of Television and Radio Artists National Code of Fair Practice for Network Television Broadcasting 1994-1997 and the Directors Guild 113 120 of America, Inc. Freelance Live and Tape Television Agreement of 1995 substantially in the form of Exhibit 9.4(b) and (c) with such changes as may be deemed necessary or desirable by Buyers. It is understood that Sellers hereby waive such receipt as a condition to the Final Closing but Sellers shall use their reasonable best efforts and AACI shall cause AAG to continue to use its reasonable best efforts after the Final Closing to obtain such agreements and Sellers shall continue to perform the applicable obligations until such receipt has been obtained. 9.5 Other Agreements. (a) The Company shall have entered into, and delivered on the Escrow Closing Date into escrow pursuant to the Escrow Agreement, (i) the License Agreement, (ii) the Network License Agreement, (iii) the Put Agreement, (iv) the Network Production Agreement, and (v) the Escrow Agreement substantially in the forms of Exhibits 9.5(a), 9.5(b), 3.5, 8.4(a)(vii) and 3.2 hereto respectively, and such agreements shall be in full force and effect. (b) Buyers shall have delivered such other instruments and documents as the Sellers may reasonably request in connection with the transactions contemplated hereby. 9.6 Opinions of Counsel for the Buyers. The Sellers shall have received from counsel for each of the Buyers written opinions, dated the Escrow Closing Date, in form and substance satisfactory to the Sellers and as specified in Exhibits 9.6(a) and 9.6(b) hereto, with respect to the matters set forth therein 114 121 (and, to the extent reasonably requested by the Sellers, a bring-down at the Final Closing as to such opinions as have been duly executed and delivered as of the Escrow Closing Date). 9.7 HSR Act, Etc.; Authorizations; Legal Prohibition. (a) With respect to the transactions contemplated hereby, all applicable waiting periods under the HSR Act shall have expired or been terminated. (b) The Sellers shall have obtained or made the governmental authorizations, approvals, consents and waivers specified on Schedule 9.7(b). (c) As of the Final Closing, there shall not exist any temporary, preliminary or permanent injunction or other order issued by a court or government or regulatory agency of competent jurisdiction which would prohibit the purchase and sale of the Assets contemplated by this Agreement or the consummation of any of the Related Agreements, and no action, suit or proceeding shall have been instituted by any Person which would reasonably be likely to prohibit any of the foregoing. ARTICLE 10 POST-CLOSING ADJUSTMENT 10.1 Post-Closing Computations. (a) As soon as practicable following the Final Closing and in any event within 90 calendar days thereafter, the Company may provide written notice to Sellers of any disagreement ("Company Notice of Disagreement") with any amounts set forth in the notice containing the Estimated Adjusted Net Current Assets delivered 115 122 pursuant to Section 3.9 hereof. Any such Company Notice of Disagreement shall specify in reasonable detail the nature of any disagreement so asserted. (b) No later than 30 Business Days following the rendering by the Company (or Interpublic Sub) of an accounting of an Earn-Out Payment, the Partnership (together with the Representative) may provide written notice to the Company (with a copy to Interpublic Sub if pursuant to Network Price is Right) of any disagreement ("Partnership Notice of Disagreement") (both a Company Notice of Disagreement and a Partnership Notice of Disagreement, a "Notice of Disagreement")) with any calculation set forth in the accounting delivered pursuant to Section 3.8 hereof. Any such Partnership Notice of Disagreement shall specify in reasonable detail the nature of any disagreement so asserted. 10.2 Arbitration. (a) During a period of 20 Business Days following receipt of a Notice of Disagreement, the Company and the Sellers (as to whose position the Company may rely without regard to the Representative or any Related Persons or Affiliates of either of the Sellers) shall attempt to resolve any differences which they may have with respect to any matter specified in any Notice of Disagreement. If at the end of such 20-Business-Day period the Company and the Sellers have failed to reach agreement on all or any of the matters set forth in the Notice of Disagreement (the "Disputed Matters"), the Disputed Matters shall be submitted to and reviewed by an arbitrator (the 116 123 "Arbitrator"), which shall be the accounting firm of Price Waterhouse LLP or such other accounting firm as the parties may mutually designate; provided that the Company can defer or cause to be deferred resolution of any dispute with respect to an Earn-Out Payment to the conclusion of the broadcast season relating to the relevant Program other than "The Price is Right" pursuant to the Network Production Agreement. In the event of any such deferral permitted by the preceding sentence, any related Earn-Out Payments shall be made in escrow with a financial institution or trust company having assets in excess of $5 billion as escrow agent, other than Chemical Bank or a bank which is then part of AACI's current loan syndicate. All issues with respect to Disputed Matters specified in the Notice of Disagreement and any issue related to the arbitration thereof, including any questions arising with respect to the procedures described in this Article 10, shall be resolved by the Arbitrator, and the Arbitrator's authority shall be limited to resolving such matters. The parties hereto and the Arbitrator shall have the power to compel testimony and the production of documents reasonably necessary in any proceeding under this Section 10.2 and the parties shall make available to the Arbitrator all work papers and other information in their possession or control relating to the Disputed Matters. The Arbitrator shall resolve all Disputed Matters specified in the Notice of Disagreement within 30 Business Days of the date that such matters are referred to the Arbitrator, and its decision with respect to all Disputed Matters shall be final and 117 124 binding upon the Sellers and their Affiliates (including the Representative) and the Company and their Affiliates (including Interpublic). (b) The computation of Adjusted Net Current Assets immediately prior to the Escrow Closing, as modified by agreement between Buyers and Sellers or as determined by the Arbitrator, as set forth in Section 10.2(a), shall be the "Closing Adjusted Net Current Assets" hereunder. 10.3 Determination and Payment of Post-Closing Adjustments. (a) If the Estimated Adjusted Net Current Assets exceeds the Closing Adjusted Net Current Assets and the Sellers have received payments from the Company pursuant to Section 3.9 in an amount in excess of the Closing Adjusted Net Current Assets, then Sellers shall immediately make a cash payment to the Company in the amount of such excess. (b) If the Closing Adjusted Net Current Assets exceeds the Estimated Adjusted Net Current Assets and the Sellers have not received payments from the Company pursuant to Section 3.9 in an amount equal to the Closing Adjusted Net Current Assets, Buyers shall continue to make payments of Accounts Receivable to the Partnership as received in accordance with Section 3.9 until the Sellers have received pursuant to Section 3.9 and this Section 10.3 aggregate payments equal to the Closing Adjusted Net Current Assets. (c) Any payment made by Sellers pursuant to Section 10.3(a) shall be allocated between the Sellers as they shall 118 125 determine and the Partnership shall be liable to make such payment. (d) If the Earn-Out Payments due to Representative are determined pursuant to Section 10.2 to exceed the amounts paid by the Company or Interpublic Sub, the Company or Interpublic Sub, as appropriate, shall make a cash payment to Representative on its behalf in the amount of such excess plus interest from the date such payment was due at the rate of 10% per annum. If the Earn-Out Payments due to Representative are determined pursuant to Section 10.2, or as a result of a true-up, to be less than the amounts paid by the Company, the Partnership shall make or cause the Representative to make a cash payment to the Company (or the Company may apply an offset against future payments) in the amount of such deficiency plus interest from the date such deficiency payment was made at the rate of 10% per annum. 10.4 Expenses of Post-Closing Adjustment or Earn-Out Adjustment. The fees and expenses of the Arbitrator, if any, incurred in connection with its review and determination of any Disputed Matter specified in the Notice of Disagreement and any other matters under Section 10.2 shall be apportioned between the parties as determined by the Arbitrator based on the relative merits of the positions of the parties. 119 126 ARTICLE 11 TERMINATION 11.1 Termination Events. This Agreement may be terminated and abandoned by mutual written consent of the Sellers and Buyers, or by written notice given at or prior to the Final Closing in the manner hereinafter provided: (a) By either Buyer if a material default or breach shall be made by the Sellers or the other Buyer with respect to the due and timely performance of any Sellers' or other Buyer's covenants and agreements contained herein, and such default or breach shall not have been cured within ten Business Days after receipt by such Sellers or other Buyer of notice of such default; (b) By the Sellers if a material default or breach shall be made by either Buyer with respect to the due and timely performance of any of such Buyer's covenants and agreements contained herein, and, subject to clause (d) below, such default or breach shall not have been waived or shall not have been cured within ten Business Days after receipt by such Buyer of notice of such default; (c) If the Final Closing shall not have occurred on or before the earlier of (i) date 65 days after the date hereof and (ii) five Business Days following the expiration or termination of the waiting period under the HSR Act (subject to an extension of up to an additional five Business Days by either Buyer or either Seller if consummation of the Final 120 127 Closing in such five Business Day period is not practicable), or such later date as may be unanimously agreed upon by the parties, by (i) either of the Sellers, unless the Final Closing shall not have occurred through failure of any Seller to comply in all material respects with its obligations hereunder; or (ii) either of the Buyers, unless the Final Closing shall not have occurred through failure of the terminating Buyer to comply in all material respects with its obligations hereunder. Each party's right of termination under this Section 11.1 is in addition to any other rights it may have under this Agreement or otherwise. 11.2 Effect of Termination. In the event this Agreement is terminated pursuant to Section 11.1, all further obligations of the parties hereunder shall terminate, except that the obligations set forth in Sections 7.2(b), 7.6 and 7.8 and in Article 13 shall survive; provided, however, that if this Agreement is so terminated by any party hereto because one or more of the conditions to the obligations of any other party hereunder is not satisfied as a result of such other party's failure to comply with its obligations under this Agreement, it is expressly agreed and understood that the right of the party terminating to pursue all legal remedies for breach of contract and damages shall also survive such termination unimpaired. If either of the Buyers terminates because the other Buyer has failed to comply with its obligations under this Agreement, it is expressly agreed and understood that the right of the Sellers to 121 128 sue the breaching Buyer shall remain unimpaired. No termination of this Agreement shall act to terminate or otherwise impair the Confidentiality Agreement. ARTICLE 12 BULK TRANSFER LAWS The parties hereto agree and acknowledge that neither the Buyers nor the Sellers shall be required to comply with the bulk transfer laws of any jurisdiction. The Partnership and CPC shall indemnify each Buyer and hold each Buyer harmless from and against any and all claims, costs, losses and damages which may be incurred by such Buyer with respect to any claim made by any creditors of the Partnership or CPC (other than by creditors with respect to Assumed Liabilities) against or in respect of such Buyer or any of the Assets arising out of the failure to comply with any such bulk transfer or bulk sales laws. ARTICLE 13 INDEMNITY 13.1 Indemnification by the Sellers. Each of the Sellers and the Estate will jointly and severally indemnify and hold harmless each Buyer, their respective Affiliates, and each of the respective officers, directors, employees, consultants, agents and representatives of each of the foregoing (together, "Buyer Indemnities"): (a) with respect to any Claim (as hereinafter defined) which the Buyer Indemnities, may incur or suffer as 122 129 a result of any breach or inaccuracy of any of the representations or warranties in this Agreement as of the Escrow Closing Date or in any certificate, schedule, exhibit or other document required to be delivered under this Agreement or the Estate Guaranty, or any failure to perform or comply with any covenant or agreement of either of the Sellers set forth herein or of the Estate pursuant to the Estate Guaranty; (b) with respect to any Claim arising out of the failure of either of the Sellers to comply with the bulk transfer or bulk sales laws of any jurisdiction in accordance with Article 12; (c) with respect to any and all claims, demands, causes of action, proceedings, losses, damages, expenses (including without limitation, reasonable attorneys' fees and expenses), liabilities, fines, excise taxes, penalties, deficiencies, judgments or costs, including, without limitation, reasonable accountants' and attorneys' fees, court costs, amounts paid in settlement and expenses of investigation (collectively, "Claims") at any time asserted against or incurred by the Buyer Indemnities insofar as such Claims arise out of (i) any Permitted Encumbrance, (ii) the Sony Agreement (including but not limited to the Sony Lien) except to the extent arising out of the Company's failure to comply with the restrictions on and obligations of the Company set forth on Schedule 7.14, 123 130 (iii) any claim by any union or guild or any other Person for residuals or other Third Party Costs (except to the extent assumed or to be assumed by AAG pursuant to Section 9.4(b) or relating to Programs (other than "The Price Is Right" during the term of the Network Production Agreement) produced or delivered after the Final Closing), (iv) any liability or obligation of either of the Sellers to repay advances or to refund any amount received by Sellers prior to the Closing or (v) any liability or obligation of either of the Sellers other than a liability or obligation which is included in the Assumed Liabilities; (d) in the case of the Partnership, with respect to any Claim in connection with items described on Schedule 4.13 hereto or any suit, claim, action, proceeding or investigation brought prior to the date hereof (whether or not now pending); (e) other than with respect to certain obligations expressly assumed or to be assumed by AAG as set forth in Section 9.4(b), (i) with respect to any Claims arising from or in connection with the maintenance or contribution by either Seller or any predecessors, constituent partners, joint venturers, Related Persons or Affiliates of either Seller, at any time, of or to any employee benefit plan (as defined in Section 3(3) of ERISA), including, without limitation, any liability to the Pension Benefit Guaranty Corporation, any plan subject to Title IV 124 131 of ERISA, employees or former employees (or their beneficiaries) of either Seller (together with their respective predecessors, constituent partners, joint venturers, Related Persons and Affiliates), guilds or unions arising out of or relating to the maintenance, administration, contribution or termination or any other reason of or with respect to any such plans, the trusts related to such plans, or employment with either Seller (together with their respective predecessors, constituent partners, joint venturers, Related Persons and Affiliates), and (ii) with respect to any Claims made by or with respect to employees, consultants or contractors or former employees, consultants or contractors (including without limitation performers, actors, musicians, hosts, writers, directors, producers or other persons employed in the Exploitation of Library Programs or other Library Rights) of either Seller (together with their respective predecessors, constituent partners, joint venturers, Related Persons and Affiliates) relating to or arising out of employment with or engagement by either Seller (together with their respective predecessors, constituent partners, joint venturers, Related Persons and Affiliates), including without limitation any Claims for severance pay, welfare and fringe benefits or for wrongful discharge by any employee, consultant or contractor or former employee, consultant or contractor of either Seller (together with their predecessors, constituent 125 132 partners, joint venturers, Related Persons and Affiliates) relating to or arising out of employment with or engagement by either Seller (together with their respective predecessors, constituent partners, joint venturers, Related Persons and Affiliates) or which relates to any unpaid wages, salaries, commissions, bonuses, vacation pay, retiree medical payments or any other compensation or benefits, or any Claims made by any union or guild or pursuant to any collective bargaining agreement. (f) with respect to Taxes for which Sellers are liable pursuant to Sections 7.11 and 7.17 hereof. Notwithstanding the foregoing, on and after the Final Closing the Sellers shall not be required to make any indemnification payments pursuant to the terms of clause (a) of this Section 13.1 (x) until the aggregate Claims with respect to which the Buyer Indemnities are entitled to indemnification thereunder shall have exceeded $250,000 (the "Threshold Amount"), but then shall be required to pay the full amount of such Claims including the Threshold Amount; or (y) with respect to any Claim of which the Sellers shall not have received notice prior to the expiration and termination of the representation, warranty, covenant or agreement the breach of which forms the basis for indemnification hereunder (it being understood that such notice shall be adequate if it specifies the event or circumstance which is reasonably anticipated to cause an 126 133 indemnifiable loss, but without specifying the actual amount of such loss if such amount cannot at the time be finally determined); provided, however, that the limitations set forth in this Section shall not apply to any Claim against any Seller that is based upon fraud or willful or deliberate wrongdoing by any Seller or its Affiliates. The foregoing indemnity obligations and the other obligations of Sellers, the Estate or their Related Persons pursuant hereto or the Related Agreements shall be supported by an irrevocable letter of credit (the "Seller Letter of Credit") from The Bank of New York or another commercial bank reasonably acceptable to Buyers in favor of the Buyer Indemnities in the form attached hereto as Schedule 13.1 and to be delivered on the Escrow Closing Date in escrow pursuant to the Escrow Agreement. The Seller Letter of Credit shall be in continuous effect for five years after the Final Closing (and thereafter, so long as all claims in such period have not been resolved unless the Seller Letter of Credit can be drawn upon with respect to such claims) and shall be issued on the Escrow Closing Date in an amount of $5,000,000. (g) with respect to any Claim resulting from any alleged or actual violation, breach, default, termination or acceleration under the Sony Agreement as a result of the failure of the Company, AAG, IPG Sub or Producer to obtain any agreement as to television exclusivity from the CBS Network in connection with any 127 134 extension or renewal of "The Price Is Right" after the 1995/1996 broadcast season. 13.2 Indemnification by the Company. The Company will indemnify and hold harmless each of the Sellers, their respective Affiliates, and each of the respective officers, directors, employees, consultants, agents and representatives of each of the foregoing (together, "Seller Indemnities"): (a) with respect to any Claim which the Seller Indemnities may incur as a result of any breach or inaccuracy of any of the representations or warranties of the Company in this Agreement as of the Escrow Closing Date or in any certificate, schedule, exhibit or any other document required to be delivered by the Company under this Agreement, or any failure to perform or comply with any covenant or agreement of the Buyers (including without limitation the restrictions on and obligations of the Company set forth in Schedule 7.14 hereto) set forth herein; (b) with respect to any Claims at any time asserted against or incurred by either of the Seller Indemnities insofar as such Claims arise out of any of the Assumed Liabilities; and (c) with respect to Taxes for which Buyers are liable pursuant to Section 7.11 and 7.17 hereof. Notwithstanding the foregoing, on and after the Closing Date the Company shall not be required to make any indemnification payments pursuant to the terms of clause (a) of this Section 13.2 128 135 (x) until the aggregate Claims of Seller Indemnities with respect to which Sellers are entitled to indemnification thereunder shall have exceeded the Threshold Amount, but then shall be required to pay the full amount of such losses, costs and expenses, including the Threshold Amount; or (y) with respect to any Claim of which the Company shall not have received notice prior to the expiration and termination of the representation, warranty, covenant or agreement the breach of which forms the basis for indemnification hereunder (it being understood that such notice shall be adequate if it specifies the event or circumstance which is reasonably anticipated to cause an indemnifiable loss, but without specifying the actual amount of such loss if such amount cannot at the time be finally determined); provided, however, that the limitations set forth in this Section shall not apply to any claim against the Company that is based upon fraud or willful or deliberate wrongdoing by the Company or its Affiliates (including Interpublic). 13.3 Procedure for Indemnification. (a) In connection with any claim giving rise to indemnity under this Agreement resulting from or arising out of any claim or legal proceeding by a Person who is not a party to this Agreement, promptly after the receipt by any party hereto of notice of any such claim or legal proceeding such party will give the indemnifying party written notice of such claim or legal proceeding, provided, however, that if such party fails to give notice of such claim to the indemnifying party, such failure to 129 136 give notice shall not limit the indemnified party's right to be indemnified hereunder except to the extent that the indemnifying party can show material prejudice arising from such failure and then only to the extent of such material prejudice. The indemnifying party at its sole cost and expense and with counsel reasonably satisfactory to the indemnified party (it being agreed that Schulte Roth & Zabel and Kaye, Scholer, Fierman, Hays & Handler are reasonably satisfactory) may, upon written notice to the indemnified party, assume the defense of any such claim or legal proceeding if (a) the indemnifying party acknowledges to the indemnified party in writing, within fifteen (15) days after receipt of notice from the indemnified party, its obligations to indemnify the indemnified party with respect to all elements of such claim based upon the facts then reasonably known to such indemnifying party, (b) the indemnifying party provides the indemnified party with evidence reasonably acceptable to the indemnified party that the indemnifying party will have the financial resources to defend against such third-party claim and fulfill its indemnification obligations hereunder, (c) the third-party claim involves only money damages and does not seek an injunction or other equitable relief, and (d) settlement or an adverse judgment of the third-party claim is not, in the good faith judgment of the indemnified party, likely to establish a pattern or practice materially adverse to the continuing business interests of the indemnified party. The indemnified party shall be entitled to participate in (but not control) the defense of 130 137 any such action, with its counsel and at its own expense; provided, however, that if there are one or more legal defenses available to the indemnified party that conflict with those available to the indemnifying party, or if the indemnifying party fails to take promptly reasonable steps necessary to defend diligently the claim after receiving notice from the indemnified party that it believes the indemnifying party has failed to do so (specifying in reasonable detail the alleged basis for such failure), the indemnified party may assume the defense of such claim; provided, further, that the indemnified party may not settle such claim without the prior written consent of the indemnifying party, which consent may not be unreasonably withheld. If the indemnified party assumes the defense of the claim, the indemnifying party shall reimburse the indemnified party for the reasonable fees and expenses of one firm of counsel retained by the indemnified party and the indemnifying party shall be entitled to participate in (but not control) the defense of such claim, with its counsel and at its own expense. The parties agree to render, without compensation, to each other such assistance as they may reasonably require of each other in order to insure the proper and adequate defense of any action, suit or proceeding, whether or not subject to indemnification hereunder. No indemnifying party shall settle, compromise or consent to the entry of any judgment in any pending or threatened claim or legal proceeding unless such settlement, compromise or consent shall contain an unqualified release from any and all liability related 131 138 to such claim in favor of the indemnified party and be, in all reasonable respects, satisfactory to the indemnified party. (b) If the indemnification of Seller Indemnities or Buyer Indemnities provided for in this Article 13 is for any reason held unenforceable, the party against whom indemnification was sought agrees to contribute to the Claims for which such indemnification is unenforceable in such proportion as is appropriate to reflect the relative fault of such party, on the one hand, and the Buyer Indemnities or Seller Indemnities, as the case may be, on the other hand, as well as any other relevant equitable considerations. 13.4 Right of Set Off; Escrow. (a) Notwithstanding anything to the contrary herein or in any of the Related Agreements, if the Company or its licensees at any time during the Earn-Out Period Exploits a Library Program or a Bible that either Seller or its respective Related Persons owned or had a license to Exploit as of immediately prior to the Final Closing but that was not on Network, Network Alternative or in U.S. first-run syndication immediately prior to the Final Closing (other than Family Feud), the Company shall be entitled, without limitation of its rights under Section 13.4(b), to hold back or cause to be held back for a period of two years from the initial exhibition of such Library Program or Program based on such Bible 50% of any Earn-Out Payments otherwise due to Sellers with respect to such Library or Program based on such Bible pursuant to Section 3.8. In the event of expiration of such two-year 132 139 period without the assertion of any Claim by any Buyer Indemnitee with respect to such Program or Programs, any such amount held back, together with interest actually earned thereon, shall be paid to Representative. (b) If the Company or any other Buyer Indemnitee notifies Sellers of a claim for indemnification or any other claim pursuant to this Agreement or any Related Agreement to which a Seller is a party, the Company shall thereafter be entitled to hold back or cause to be held back 100% of any and all payments otherwise due to Sellers or their Affiliates (including Representative) pursuant to Section 3.8(a)(ii). If the Company or any other Buyer Indemnitee notifies Sellers of any claim pursuant to Section 4.24, Section 7.14 or Section 13.1(g) or otherwise relating specifically to the Sony Agreement, the Company shall thereafter be entitled to hold back or cause to be held back 100% of all or any portion of the Sony Receivable or any other amounts received from Sony which may be payable to Sellers hereunder. If the Company exercises its right of set off in this Section 13.4(a) or (b), it shall deposit the payments it would otherwise be required to pay pursuant to Section 3.8(a)(ii) into an interest-bearing escrow account, pending resolution of the hold-back period or the claim, as the case may be, with a financial institution or trust company having assets in excess of $5 billion as escrow agent, other than Chemical Bank or a bank which is then part of AACI's current loan syndicate pending resolution of the matter. 133 140 (c) In the event that a court of competent jurisdiction renders a Final Judgment against either Seller or any of its Affiliates in respect of a Company claim for indemnification or other claim under or pursuant to this Agreement or any Related Agreement to which a Seller is a party, the Company shall be entitled to offset or cause to be offset the entire amount of such Final Judgment from (i) any Earn-Out Payments then due or that thereafter become due hereunder, (ii) any payments due on Accounts Receivable as specified in Section 3.9, (iii) any amount held in escrow pending resolution of Claims hereunder, or (iv) any other amount due or becoming due to Sellers or their Affiliates pursuant to any provision hereof or of any Related Agreement (other than payment of production costs pursuant to the terms of the Network Production Agreement). (d) The set-off rights set forth herein are intended, absent fraud or wilful or deliberate wrongdoing, to set forth the exclusive sources of, and the exclusive manner in which, set-off rights may be exercised; provided, however, that such rights shall not be in limitation in any way of, any other rights which Buyers or any other Person may have, including but not limited to recourse under the Estate Guaranty and/or the Seller Letter of Credit, and nothing herein or in any Related Agreement or otherwise shall require Buyers or any other Person to seek recourse in any particular manner or order, all of which each of the foregoing may pursue and/or elect not to pursue or to waive in their sole discretion, without release of any other 134 141 Person or obligation, all of which shall remain in full force and effect. 13.5 Obligations of the Estate and the Partnership. (a) The Estate has guaranteed the obligations of the Sellers pursuant to the Estate Guaranty substantially in the form of Exhibit 13.5, which shall be delivered on the Escrow Closing Date. (b) Notwithstanding anything to the contrary herein, the distribution of all or any portion of the Purchase Price by the Partnership to its partners (and, in the case of corporate partners, the distribution to their stockholders) as set forth on Schedule 3.5 following the Final Closing shall be subject to Representative assuming the obligations of the Partnership and Representative hereunder and under the Related Agreements on its own behalf and on behalf of the other Persons set forth on Schedule 3.5 (which, in the latter case, shall be recourse solely to the distributed proceeds), in form and substance satisfactory to Buyers. Representative agrees not to liquidate prior to the tenth anniversary of the Escrow Closing and the Partnership shall not liquidate prior to the Final Closing. The Partnership shall, and shall cause the Representative to, from time to time designate a joint representative, satisfactory to the Company (it being agreed that any of the current executors of the Estate and David Hurwitz are satisfactory), who will have full power and authority to deal with the Company, Interpublic, Interpublic Sub, AACI and their Affiliates as to all post-closing matters under 135 142 this Agreement and the transactions contemplated hereby. The Partnership represents and warrants that said representative shall initially be Jeremy Shamos. (c) Notwithstanding anything to the contrary hereunder or under any law, including, without limitation, Section 11-4.7 of the New York State Powers and Trusts Law, or any successor statute, (a) the obligations of the Estate hereunder shall not constitute a debt or any obligation whatsoever of any of the executors of the Estate in their personal capacities in any action to collect any amounts due under, or otherwise in respect of, this Agreement or any Related Agreement to which the Estate is a party, (b) none of such executors shall be personally liable for any amount due under this Agreement and neither the Buyers nor any other Person shall seek a deficiency or personal judgment against any of the executors in their personal capacities for payment of the obligations evidenced by this Agreement or any Related Agreement to which the Estate is a party and (c) no property or assets of any of the executors other than the property of the Estate shall be sold, levied upon or otherwise used to satisfy any judgment rendered in connection with any action brought with respect to this Agreement or any Related Agreement to which the Estate is a party. 13.6 Purchase Price Adjustment. The parties agree that any payment made under this Article 13 shall be treated by such parties as an adjustment to the Purchase Price. 136 143 13.7 Exclusive Remedy. The indemnification provisions of this Article 13 shall constitute the exclusive remedy after the Closing of each party hereto with respect to the breach or inaccuracy of any representation or warranty made by any other party hereto in this Agreement; provided, however, that the indemnification provided for in this Article 13 shall not be the sole and exclusive remedy of the parties with respect to provisions of Sections 3.8, 7.5, 7.12, 7.13, Article 10 and Section 13.5 hereof and with respect to any matter that is based upon fraud or wilful or deliberate wrongdoing. 13.8 Limitation of Sellers' Indemnification. In the event of a breach of any representation or warranty made by Sellers in Article IV or in any document or other instrument delivered pursuant hereto ("Claims"), the maximum aggregate dollar amount for which the Sellers and the Estate shall be liable under Section 13.1 shall not exceed the sum of $50,000,000 plus the sum of all Earn-Out Payments paid or payable by the Company or Interpublic Sub pursuant to Section 3.8 plus the sum of all other amounts, including payments pursuant to Section 3.9, 7.14(a) or 10.3 hereof, paid or payable to Sellers or the Representative hereunder. Notwithstanding the foregoing, the Sellers and the Estate shall not be liable in respect of Claims not initially asserted by any Buyer Indemnitee until after the fifth anniversary of the Escrow Closing Date in an aggregate amount in excess of the sum of $10,000,000 plus the sum of all Earn-Out Payments paid or payable by the Company or Interpublic 137 144 Sub with respect to the Library Program or Programs, if any, to which any such Claim relates. Notwithstanding the foregoing, the indemnification limitations set forth above shall not apply to any claim against Sellers or any of their Affiliates, including the Estate, that is based upon fraud by Sellers or any of their Affiliates, including the Estate. ARTICLE 14 MISCELLANEOUS 14.1 Expenses, Etc. Each party to this Agreement shall pay its own costs and expenses (including all legal, accounting, financial adviser, broker, finder and investment banker fees) relating to this Agreement, the negotiations leading up to this Agreement and the transactions contemplated by this Agreement. 14.2 Amendment. This Agreement shall not be amended or modified except by a writing duly executed by each of the Sellers and the Buyers. 14.3 Limited Survival of Representations and Warranties; Liability. All representations and warranties contained in Articles 4, 5 and 6 shall expire and be terminated and extinguished upon the close of business on the second anniversary of the Escrow Closing Date (absent fraud or willful breach or misrepresentation, the existence of which will extend such representations or warranties indefinitely); except that the representations and warranties contained in Section 4.14 shall extend through the applicable statute of limitations period and 138 145 the representations and warranties contained in Sections 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.12, 4.16, 5.2, 6.2 and 6.5 shall survive for ten years from the Escrow Closing Date; each and every covenant contained in Article 7 (except for the covenants that are operative on or after the Final Closing) shall expire and be terminated and extinguished upon consummation of the Final Closing (absent fraud or willful breach or misrepresentation, the existence of which will extend such covenants indefinitely) and in all such cases, except as provided herein, neither the Buyers nor the Sellers shall have any liability whatsoever with respect to any such representation, warranty or covenant after the termination or expiration thereof as provided in this Agreement. Notwithstanding anything contained in this Agreement, including, without limitation, this Section 14.3, any claims with respect to representations and warranties made by the Sellers or the Buyers in this Agreement or in any document or instrument relating hereto shall survive and continue following the expiration of the respective survival periods stated above if such claim is submitted in writing to Sellers or the Estate, or Buyers, as the case may be, prior to the end of the respective survival periods stated in this Section 14.3 and identified as a claim for indemnification pursuant to this Agreement. In such event, such claims shall survive until they are resolved. 14.4 Due Diligence Investigation; Knowledge. All representations and warranties contained herein that are made to the knowledge of a party shall require that such party make 139 146 reasonable investigation and following inquiry with respect thereto to ascertain the correctness and validity thereof. Without limiting the foregoing sentence, when any fact is stated to be to the "knowledge of the Sellers," such reference shall mean that one or more Sellers actually know of the existence or non-existence of such fact based upon a reasonable investigation and following inquiry of (i) the management of Sellers and their respective partners and (ii) the following employees of Sellers or executors of the Estate: Jeremy Shamos, Marvin Goodson, Richard Schneidman, Alan Sandler, Michael Brockman, Royal E. Blakeman, and David Hurwitz; provided, however, that if the Sellers do not conduct such reasonable investigation and inquiry, then such references shall mean what one or more Sellers should have known based upon such reasonable investigation and inquiry. 14.5 Entire Agreement. This Agreement, including the Schedules and the Exhibits hereto which are incorporated herein by this reference, the Related Agreements and the other documents delivered pursuant to this Agreement or the Related Agreements, contain all of the terms, conditions and representations and warranties agreed upon or made by the parties relating to the subject matter of this Agreement and the Business, the Assets and the Assumed Liabilities and supersede all prior and contemporaneous agreements, negotiations, correspondence, undertakings and communications of the parties or their representatives, oral or written, respecting such subject matter. This Agreement shall be given fair and reasonable 140 147 construction in accordance with the intentions of the parties hereto, and without regard to or aid of canons requiring construction against the Sellers or the party drafting this Agreement. 14.6 Headings. The headings contained in this Agreement are intended solely for convenience and shall not affect the rights of the parties to, or the interpretation of, this Agreement. 14.7 Notices. Any notice or other communication required or permitted under this Agreement shall be in writing and shall be delivered personally, telecopied, or sent by certified, registered or overnight mail or courier, postage prepaid, and shall be deemed given when so delivered in person or telecopied or, if given by mail or courier, on the earlier of the day actually received and the close of business on the second Business Day next following the day when deposited with an overnight courier or the close of business on the fifth Business Day when deposited in the United States mail, postage prepaid, certified or registered, addressed to the party at the address set forth below, with copies sent to the persons indicated: If to the Partnership or the Estate to it at: Mark Goodson Productions, L.P. 5750 Wilshire Blvd. Los Angeles, California 90036 Attention: General Partner 141 148 with copies to: Schulte Roth & Zabel 900 Third Avenue New York, New York 10022 Attention: Stuart D. Freedman, Esq. and Goodson & Wachtel 10940 Wilshire Blvd. Suite 1400 Los Angeles, California 90024 Attention: Marvin Goodson, Esq. If to CPC: 5750 Wilshire Boulevard Los Angeles, California 90036 Attention: General Partner Fax No. (213) 965-6666 with copies to: Schulte Roth & Zabel 900 Third Avenue New York, New York 10022 Attention: Stuart D. Freedman, Esq. and Goodson & Wachtel 10940 Wilshire Blvd. Suite 1400 Los Angeles, California 90024 Attention: Marvin Goodson, Esq. If to the Company: Mark Goodson Productions, LLC c/o All American Television, Inc. 1325 Avenue of the Americas New York, New York 10019 Attention: Chief Executive Officer 142 149 with copies to: The Interpublic Group of Companies, Inc. 1271 Avenue of the Americas New York, New York 10020 Attention: William S. Keating and Kaye, Scholer, Fierman, Hays & Handler 1999 Avenue of the Stars Suite 1600 Los Angeles, California 90067-6048 Attention: Barry L. Dastin, Esq. If to Interpublic: The Interpublic Group of Companies, Inc. 1271 Avenue of the Americas New York, New York 10020 Attention: William S. Keating with copies to: Cleary, Gottlieb, Steen & Hamilton One Liberty Plaza New York, New York 10006 Attention: Richard Cooper If to AACI: All American Communications, Inc. 2114 Pico Boulevard Santa Monica, California 90405 Attention: Thomas Bradshaw with copies to: Kaye, Scholer, Fierman, Hays & Handler 1999 Avenue of the Stars Suite 1600 Los Angeles, California 90067l-6048 Attention: Barry L. Dastin, Esq. Such addresses may be changed, from time to time, by means of a notice given in the manner provided in this Section 14.7. 14.8 Severability. If any provision of this Agreement, or the application thereof to any person or 143 150 circumstance, is invalid, prohibited or unenforceable in any jurisdiction, (i) a substitute and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable in such jurisdiction, the intent and purpose of the invalid, prohibited or unenforceable provision; and (ii) the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected by such invalidity, prohibition or unenforceability, nor shall such invalidity, prohibition or unenforceability of such provision affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. 14.9 Waiver. Waiver of any term or condition of this Agreement by any party shall only be effective if in writing and shall not be construed as a waiver of any subsequent breach or failure of the same term or condition, or a waiver of any other term or condition of this Agreement. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof. 14.10 Binding Effect; Assignment; Release. (a) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their permitted successors and assigns. Except as set forth in Section 14.10(b), 14.10(c) or otherwise specified herein, no party to this Agreement may assign or delegate, by operation of law or otherwise, all or any portion of its rights, obligations or liabilities under this Agreement without the prior written consent of each other party to this 144 151 Agreement which consent will not be unreasonably withheld; provided, however, that, immediately following the Final Closing: (i) Interpublic and/or its Affiliate shall assign its undivided interest in the Assets to the Company in exchange for a 50% equity interest in the Company; (ii) the Company will assume all of Interpublic's obligations (and/or all of the obligations of Interpublic's Affiliate assignee) under this Agreement (other than the obligations under Section 3.3, 3.4, Article 6 and Section 7.15) and (iii) the Partnership shall assign an undivided interest in the right to receive its portion of the Purchase Price (including the Earn-Out Portion) to the Persons and in the sequence set forth on Schedule 3.5. (b) Without the consent of any other party hereto (i) Interpublic may assign its rights and obligations (other than the obligations under Section 3.3, 3.4, Article 6 and Section 7.15) under this Agreement to any of its majority-owned Affiliates and (ii) the Company may assign its rights under this Agreement to AACI or Interpublic or any other entity directly or indirectly controlling, controlled by or under common control with one or more such Persons, and on, or after the Final Closing, to any of its lenders or the lenders of its members or to any Person which acquires substantially all of the Business or the Assets, but, in such case, the assignor shall remain obligated hereunder to the extent it would otherwise have been so obligated and in the case of clause (ii) any such assignee shall assume the Company's obligations under this Agreement (other than 145 152 in the case of any assignment to lenders). Neither the Company nor any such assignee shall sell substantially all of the Business or Assets without expressly assuming all of the Company's obligations hereunder. A change in control or ownership of the Company (or of any of its members) after the Escrow Closing shall not be deemed an assignment and shall not require the written consent of Sellers. (c) Immediately following the Final Closing, but subject to the continuing obligations of Interpublic under Sections 3.3, 3.4 and 7.15 hereof, each of the Sellers, on behalf of itself and its respective predecessors, constituent partners, joint venturers and Affiliates and successors and assigns, the respective officers, directors and employees of each of the foregoing and the Representative (together, the "Releasors") shall release and discharge (and shall be deemed to have released and discharged) each of AACI, Interpublic, their respective Affiliates and successors and assigns (other than the Company) and the respective officers, directors and employees of each of the foregoing (together, the "Releasees") from all actions, suits, debts, sums of money, liens, security interests, encumbrances, bonds, bills, covenants, contracts, obligations, controversies, agreements, promises, damages, judgments, executions, claims, and demands whatsoever, in law or equity, against any Releasee, which any Releasor ever had, now has or hereafter shall or may have, for, upon, or by reason of any matter, cause or thing whatsoever arising out of or in any way 146 153 related to a Releasee's obligations under this Agreement or any of the Related Agreements; it being the intent of this clause that such Persons will look solely to the Company for all remedies relating to the breach of Buyers' obligations hereunder (except that such Person shall look solely to Interpublic with respect to Sections 3.3, 3.4 and 7.15 hereof) or under the Related Agreements (provided further, in the case of the Related Agreements, each party thereto shall be obligated to comply with its agreements as expressly provided for therein). 14.11 No Third Party Beneficiaries. Except for the provisions of Section 7.2(b) with respect to the Confidentiality Agreement and the access to records under Section 7.8, nothing in this Agreement shall confer any rights upon any person or entity not a party or a permitted assignee of a party to this Agreement. 14.12 Consent of Buyers. Any provision of this Agreement that requires any consent, agreement, waiver, designation or other determination or decision (together a "Consent") of Buyers prior to the Final Closing shall require the Consent of both of the Buyers, unless such provision expressly specifies that the Consent need be given or made by only one of the Buyers or unless both Buyers jointly instruct otherwise. 14.13 Counterparts. This Agreement may be signed in any number of counterparts with the same effect as if the signatures to each counterpart were upon a single instrument, and 147 154 all such counterparts together shall be deemed an original of this Agreement. 14.14 Governing Law and Jurisdiction. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, applicable to contracts made and to be fully performed within such State, without giving effect to the principles of conflict of laws thereof. (b) To the extent permitted by law, each of the Buyers and the Sellers hereby irrevocably submits to the exclusive jurisdiction of any New York State court or United States federal court, in either case sitting in the City of New York, Borough of Manhattan over any suit, action or other proceeding brought by any party arising out of or relating to this Agreement, and each of the Sellers and the Buyers hereby irrevocably agrees that all claims with respect to such suit, action or other proceeding shall be heard and determined in such courts, other than with respect to the enforcement of any judgment. The Company hereby irrevocably appoints Kaye, Scholer, Fierman, Hays & Handler, 425 Park Avenue, New York, New York 10022 (Attention: Managing Attorney), and the Sellers hereby irrevocably appoint Schulte Roth & Zabel, 900 Third Avenue, New York, New York 10022 (Attention: Stuart D. Freedman, Esq.), as their respective agents to receive service of summons and complaints and any other process which may be served in any such suit, action or proceeding. 148 155 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. MARK GOODSON PRODUCTIONS, LLC By: All American Communications, Inc., its Operator By: /s/ THOMAS BRADSHAW ------------------------------ Name: Thomas Bradshaw Title: Chief Financial Officer THE INTERPUBLIC GROUP OF COMPANIES, INC. By: /s/ THOMAS J. VOLPE ------------------------------ Name: Thomas J. Volpe Title: Senior Vice President -- Financial Operation MARK GOODSON PRODUCTIONS, L.P. By: Mark Goodson Television Productions, Inc., its General Partner By: /s/ RICHARD SCHNEIDMAN ------------------------------ Name: Richard Schneidman Title: Secretary 149 156 THE CHILD'S PLAY COMPANY By: Estate of Mark Goodson, its Managing Partner By: /s/ RICHARD SCHNEIDMAN ---------------------------- Name: Richard Schneidman Title: Executor THE ESTATE OF MARK GOODSON (on behalf of itself and as a Related Person) By: /s/ RICHARD SCHNEIDMAN ------------------------------- Name: Richard Schneidman Title: Co-Executor ALL AMERICAN COMMUNICATIONS, INC. By: /s/ THOMAS BRADSHAW ------------------------------- Name: Thomas Bradshaw Title: Chief Financial Officer /s/ MARVIN GOODSON ----------------------------------- Marvin Goodson, as Co-Executor of the Estate of Mark Goodson /s/ RICHARD SCHNEIDMAN ----------------------------------- Richard Schneidman, as Co-Executor of the Estate of Mark Goodson /s/ JEREMY SHAMOS ----------------------------------- Jeremy Shamos, as Co-Executor of the Estate of Mark Goodson 150 157 The foregoing is hereby acknowledged and agreed to: PARTNERSHIP RELATED PERSONS By: /s/ RICHARD SCHNEIDMAN ------------------------------ Goodson Television Productions, Inc. REPRESENTATIVE: By: ------------------------------ TPIR LLC By: The Estate of Mark Goodson Its: Managing Member By: /s/ RICHARD SCHNEIDMAN ------------------------- Name: Richard Schneidman Title: Secretary and CFO Treasurer THE FF&E TRUST By: /s/ MARVIN GOODSON ------------------------------ Name: Marvin Goodson Its: Co-Trustee THE ESTATE OF MARK GOODSON By: /s/ RICHARD SCHNEIDMAN ------------------------------ Name: Richard Schneidman Its: Co-Executor CELEBRITY PRODUCTIONS, INC. By: /s/ ROYAL E. BLAKEMAN ------------------------------ Name: Royal E. Blakeman Its: Secretary MARK GOODSON GAMES, L.P. By: Goodson TV Enterprises, Inc. Its: General Partner 151 158 By: /s/ ROYAL E. BLAKEMAN ---------------------------- Name: Royal E. Blakeman Its: Secretary GOODSON TV ENTERPRISES, INC. By: /s/ ROYAL E. BLAKEMAN -------------------------------- Name: Royal E. Blakeman Its: Secretary THE NEW FAMILY COMPANY By: Goodson Television Productions, Inc. Its: General Partner By: /s/ ROYAL E. BLAKEMAN ---------------------------- Name: Royal E. Blakeman Its: Secretary GOODSON TELEVISION PRODUCTIONS, INC. By: /s/ ROYAL E. BLAKEMAN -------------------------------- Name: Royal E. Blakeman Its: Secretary STRONG PRODUCTIONS, INC. By: /s/ ROYAL E. BLAKEMAN -------------------------------- Name: Royal E. Blakeman Its: Secretary PRICE PRODUCTIONS, INC. By: /s/ ROYAL E. BLAKEMAN -------------------------------- Name: Royal E. Blakeman Its: Secretary MARK GOODSON TELECASTS, INC. By: /s/ ROYAL E. BLAKEMAN -------------------------------- Name: Royal E. Blakeman Its: Secretary 152 159 THE TATTLETALE COMPANY By: The Estate of Mark Goodson Its: General Partner By: /s/ RICHARD SCHNEIDMAN ----------------------------- Name: Richard Schneidman Title: Co-Executor THE TRIVIA TRAP COMPANY By: The Estate of Mark Goodson Its: General Partner By: /s/ RICHARD SCHNEIDMAN ------------------------------ Name: Richard Schneidman Title: Co-Executor THE B.B. COMPANY By: Goodson Television Productions, Inc. Its: General Partner By: /s/ ROYAL E. BLAKEMAN ------------------------------ Name: Royal E. Blakeman Title: Secretary THE CONCENTRATION COMPANY By: Goodson Television Productions, Inc. Its: General Partner By: /s/ ROYAL E. BLAKEMAN ------------------------------ Name: Royal E. Blakeman Title: Secretary THE CARD SHARKS COMPANY By: Goodson Television Productions, Inc. Its: General Partner By: /s/ ROYAL E. BLAKEMAN ------------------------------ Name: Royal E. Blakeman Title: Secretary 153 160 THE MG COMPANY By: Goodson Television Productions, Inc. Its: General Partner By: /s/ ROYAL E. BLAKEMAN ------------------------------- Name: Royal E. Blakeman Title: Secretary THE NOW YOU SEE IT COMPANY By: Goodson Television Productions, Inc. Its: General Partner By: /s/ ROYAL E. BLAKEMAN ------------------------------- Name: Royal E. Blakeman Title: Secretary THE TTTT COMPANY By: Goodson Television Productions, Inc. Its: General Partner By: /s/ ROYAL E. BLAKEMAN ------------------------------- Name: Royal E. Blakeman Title: Secretary MARK GOODSON TELEVISION PRODUCTIONS, INC. (Formerly MGTV, Inc.) By: /s/ RICHARD SCHNEIDMAN ----------------------------------- Name: Richard Schneidman Its: Secretary 154 161 THE SUPER PASSWORD COMPANY By: THE ESTATE OF MARK GOODSON ----------------------------- Its: Managing Partner By: /s/ MARVIN GOODSON ----------------------------- Name: Marvin Goodson Its: Co-Executor GOODSON GAMES, INC. By: /s/ MARVIN GOODSON ----------------------------- Name: Marvin Goodson Its: Secretary 155 162 Schedule 1.1(b) Domestic Net Profits "Domestic Net Profits" shall be comprised of the following: (a) "Domestic Net Profits - The Price Is Right Network" shall mean the gross receipts received by Interpublic Sub (or, without duplication of receipts, the Company) after the Final Closing which were earned during the Earn-Out Period with respect to the game show "The Price Is Right", from any Network and relating to initial U.S. exhibition (and the initial Canadian transmission thereof in the English language) of episodes delivered during the Earn-Out Period to such Network and replays of existing Library Episodes of "The Price Is Right" (whether or not produced during the Earn-Out Period) exhibited by the Network as part of the series commitment, less (i) with respect to such programs, all production costs (including actual direct overhead), as generally understood within the entertainment industry, attributable to the game shows and/or series, which shall in any event include and, during the term of such agreement, be limited to all such costs (other than the per episode production fee otherwise credited and deducted against Earn-out Payments as set forth in the Network Production Agreement which shall not be deducted from Domestic Net Profits) paid by Interpublic Sub (or the Company) to the Partnership or its Affiliates pursuant to the Network Production Agreement (as amended from time to time); (ii) all residual, re-use, supplemental market and/or replay fees and/or other similar actual out-of-pocket costs paid by the Company, Interpublic Sub or their respective Affiliates and directly attributable to such programs, including Third Party Costs; and (iii) without duplication to the extent already deducted, any unrecouped prior period deficits following the Escrow Closing. Notwithstanding anything to the contrary herein or in the Agreement, for purposes of "Domestic Net Profits - The Price Is Right Network," (i) the term "Network" shall also include Network Alternates, except that the applicable percentage of related Domestic Net Profits - Price Is Right Network during the Earn-Out Period referenced in Section 3.8(a) of the Agreement with respect to all gross receipts received from any Network Alternate shall be deemed to be 50% (in lieu of 75%) and (ii) immediately 156 163 following the termination of the Network Production Agreement, any additional gross receipts thereafter earned during the Earn-Out Period with respect to the game show "The Price Is Right" from a Network (or Network Alternate) shall no longer constitute "Domestic Net Profits - The Price Is Right Network." (b) "Domestic Net Profits - Other Programs originally produced for Networks" shall mean, computed on a Program-by-Program basis and then aggregated except as provided below, the gross receipts received by the Company after the Final Closing which were earned during the Earn-Out Period with respect to game shows and/or series included in or based on existing Library Programs (other than the game show "The Price Is Right" so long as it is produced pursuant to the Network Production Agreement) from any Network and relating to initial U.S. exhibition (and the initial Canadian transmission thereof in the English language) of episodes delivered during the Earn-Out Period on such Network, and replays of existing Library Programs of such game show (whether or not produced during the Earn-Out Period) exhibited by the Network as part of the series commitment, less the following, deducted in the following order: (i) with respect to such programs, all production costs (including actual direct overhead), as generally understood within the entertainment industry, attributable to such game shows and/or series; (ii) with respect to such programs, all residual, re-use, supplemental market and/or replay fees and/or other similar actual out-of-pocket costs directly attributable to the game shows and/or series, including Third Party Costs; and (iii) without duplication to the extent already deducted, any unrecouped prior period deficits following the Escrow Closing (excluding recoupment of prior year(s)' distribution fees other than arising from the same game show and/or series that were not previously fully included in the calculation in a prior period due to the Zero Limitation set forth below or otherwise with respect to such Program); and (iv) a distribution fee equal to 10% of gross receipts with respect to such Program but only to the extent that the aggregate of gross receipts received during the relevant period less the sum of the amounts specified in clauses (i), (ii) and (iii) and this clause (iv) is not less than zero (the "Zero Limitation"). 157 164 (c) "Domestic Net Profits - Programs originally produced for First-Run Syndication" shall mean, computed on a Program-by-Program basis and then aggregated, the gross receipts received by the Company after the Final Closing which were earned during the Earn-Out Period from the production and distribution during the Earn-Out Period of game shows and/or series included in or based on existing Library Programs, and replays of existing Library Programs of such game show (whether or not produced during the Earn-Out Period) exhibited as part of the series commitment, with respect to the initial U.S. domestic exhibition on first-run syndication of such Programs, less the following, deducted in the following order: (i) all marketing and distribution expenses (but excluding any distribution fee) directly attributable to the distribution of such game shows and/or series; (ii) with respect to such programs, all production costs (including actual direct overhead), as generally understood within the entertainment industry, attributable to such game shows and/or series; (iii) all residual, re-use, supplemental market and/or replay fees and/or other similar actual out-of-pocket costs directly attributable to such game shows and/or series, including Third Party Costs; and (iv) without duplication to the extent already deducted, any unrecouped prior period deficits after the Escrow Closing (excluding recoupment of prior year distribution fees other than arising from the same game show and/or series that were not previously fully included in the calculation in a prior period due to the Zero Limitation set forth below or otherwise with respect to such Program); and (v) a distribution fee equal to 30% of gross receipts with respect to such Program but only to the extent that the aggregate of gross receipts received during the relevant period less the sum of the amounts specified in clauses (i), (ii), (iii) and (iv) and this clause (v) is not less than the Zero Limitation. (d) "Domestic Net Profits - Library Sales" shall mean, computed on a Program-by-Program basis and then aggregated, except as provided below, other than pursuant to the Sony Agreement, the gross receipts received by the Company after the Final Closing which were earned during the Earn-Out Period from the distribution during the Earn-Out Period of game shows and/or series 158 165 included in or based on existing Library Programs with respect to re-run syndication in the United States or other sales of U.S. exhibition rights of existing Library Programs (excluding sales governed by clauses (a), (b), (c), (e) or (f) hereof), less the following, deducted in the following order: (i) all marketing and distribution expenses directly attributable to the distribution of such game shows and/or series; (ii) with respect to such programs, all production costs (including actual direct overhead), as generally understood within the entertainment industry, attributable to such game shows and/or series; (iii) with respect to such programs, all residual, re-use, supplemental market, rerun and/or replay fees and/or other similar actual out-of-pocket costs directly attributable to such game shows and/or series, including Third Party Costs; (iv) without duplication to the extent already deducted, any unrecouped prior period deficits after the Escrow Closing (excluding recoupment of prior year distribution fees other than arising from the same game show and/or series that were not previously fully included in the calculation in a prior period due to the Zero Limitation set forth below or otherwise with respect to such Program); and (v) a distribution fee equal to 25% of gross receipts from such Library Sales of such Program but only to the extent that the aggregate of gross receipts received during the relevant period less the sum of the amounts specified in clauses (i), (ii), (iii) and (iv) and this clause (v) is not less than the Zero Limitation. (e) "Domestic Net Profits - Sony Extended Term" shall mean, computed on an aggregate basis, the gross receipts received by the Company after the Final Closing which were earned during the Earn-Out Period from the exhibition of Programs on the Sony Game Show Channel after the expiration of the initial term of the Sony Agreement as in effect on the date hereof (it being understood that the Company shall have no obligation to Sellers to renew or extend the Sony Agreement), less the following, deducted in the following order or priority: (i) all marketing and distribution expenses directly attributable to such gross receipts; 159 166 (ii) all residual, re-use, supplemental market, rerun and/or replay fees and/or all other similar actual out-of-pocket costs directly attributable to such game shows and/or series, including Third Party Costs, annual payments of $250,000 (as amended from time to time) to Bob Barker commencing with the fifth year of exhibition of "The Price is Right" on the Sony Game Show Channel and payments to certain models if 3,000 or more episodes are exhibited (as amended from time to time); (iii) without duplication to the extent already deducted, any unrecouped prior period deficits after the Escrow Closing (excluding recoupment of prior year distribution fees other than arising from the same game show and/or series that were not previously fully included in the calculation in a prior period due to the Zero Limitation set forth below or otherwise with respect to such Program); and (iv) a distribution fee equal to 25% gross receipts from such extended term but only to the extent that the aggregate of gross receipts received during the relevant period less the sum of the amounts specified in clauses (i), (ii), (iii) and this clause (iv) is not less than the Zero Limitation. (f) "Domestic Net Profits - Ancillary" shall mean, computed on a Program-by-Program basis and then aggregated, the gross receipts received by the Company after the Final Closing which were earned during the Earn-Out Period, other than with respect to items within subparagraphs (a)-(e) above, from the exploitation during the Earn-Out Period in the United States of game shows and/or series included in or based upon existing Library Programs, paid by Persons in the United States, less the following, deducted in the following order of priority: (i) all marketing and distribution expenses directly attributable to such gross receipts; (ii) with respect to such programs, all residual, re-use, supplemental market, rerun and/or replay fees and/or all other similar actual out-of-pocket costs directly attributable to such game shows and/or series, including Third Party Costs; (iii) without duplication to the extent already deducted, any unrecouped prior period deficits after the Escrow Closing (excluding recoupment of prior year distribution fees other than arising from the same game show and/or series that were not fully 160 167 included in the calculation in a prior period due to the Zero Limitation set forth below or otherwise with respect to such Program); and (iv) a distribution fee equal to 10% of such gross receipt from such Program but only to the extent that the aggregate of gross receipts received during the relevant period less the sum of the amounts specified in clauses (i), (ii) and (iii) and this clause (iv) is not less than the Zero Limitation. In calculating "Domestic Net Profits, (a) any receipts or costs arising from any receivable or payable included in the calculation of Closing Adjusted Net Current Assets (as well as any Domestic Net Profits during the Interim Period) shall be excluded, (b) gross receipts received by the Company from the exploitation in the United States following the Final Closing and during the Earn-Out Period of music rights included in the Assets transferred to Buyers pursuant to this Agreement less Third Party Costs and other related costs shall be allocated among and added to the appropriate gross receipts under subdivisions (a) through (e) above, (c) gross receipts shall include, without duplication, gross receipts of the Company or any of its Affiliates or direct or indirect licensees, (d) the Company (or Interpublic Sub) shall receive a credit (and may deduct) against the Earn-Out Payments the per episode production fee payable under and upon the terms and conditions set forth in the Network Production Agreement of the Agreement and (e) there shall be no duplication of receipts or costs counted towards the calculation of "Domestic Net Profits." In addition, Domestic Net Profits shall not include any gross receipts from the sale of any securities of, or all or substantially all of the assets of, or any merger or consolidation of the Company or any of its Affiliates. 161 EX-10.2 3 LICENSE AGREEMENT 1 EXHIBIT 10.2 "THE PRICE IS RIGHT" NETWORK LICENSE AGREEMENT 1. IDENTIFICATION: This license (the "Agreement") agreement is dated as of the 6th day of October, 1995 and is entered into between All American Goodson, Inc. ("Sublicensor" or "AAG"), a wholly owned subsidiary of All American Communications, Inc. ("AACI"), whose address is 1325 Avenue of the Americas, New York, N.Y. 10019, and Interpublic Game Shows, Inc. ("Sublicensee" or "Sub"), a wholly-owned subsidiary of The Interpublic Group of Companies, Inc., whose address is 1271 Avenue of the Americas, New York, N.Y. 10020, with respect to the program entitled "The Price Is Right" (the "The Price Is Right" or the "Program"). Capitalized terms used herein without definition shall have the respective meanings set forth in the Asset Purchase Agreement dated as of October 6, 1995 among Mark Goodson Productions, L.P. and The Child's Play Company, as Sellers, and Mark Goodson Productions, LLC and The Interpublic Group of Companies, Inc. as Buyers, among certain other parties (the "Asset Purchase Agreement"). 2. GRANT OF RIGHTS: Subject to the terms and conditions of this Agreement and the existing licenses set forth in Schedule I hereto, during the Term and within the Territory (as hereinafter defined), Sublicensor hereby grants to Sub the following: a. An exclusive license: i. To arrange for the production of New Episodes based on the format or formats for "The Price Is Right" (the "Licensed Format"), which right includes the right to allow the producer of "The Price Is Right" to modify the Licensed Format or Licensed Formats to the extent necessary to arrange for the production of the New Episodes; and ii. To arrange for the distribution of New Episodes (together with replays of Library Episodes of the Program as part of a series commitment to the extent required by a Network or Network Alternate) for telecast on a Network or Network Alternate; 2 b. A nonexclusive license, for the sole purpose of promoting and advertising the New Episodes: i. To make and publish, or arrange for the making and publication of, in any and all languages, synopses of the New Episodes; and ii. To make, exhibit and market, or to arrange for the making, exhibition and marketing, television motion picture trailers, sound records or stills based upon or adapted from the New Episodes; and c. A nonexclusive license to use the trademark "The Price Is Right" (the "Licensed Trademark"), in connection with the production and licensing of the New Episodes (and replays) in the Territory as permitted by clauses (a) and (b) above. All of Sub's rights under this Agreement are explicitly stated herein, and nothing in this Agreement shall be construed to grant any implied rights to Sub. Sub acknowledges that all rights granted to it by Sublicensor hereunder are granted pursuant to the license agreement dated as of October 6, 1995 between Mark Goodson Productions, LLC (the "LLC") and AAG (the "Main License Agreement"). Notwithstanding anything else contained in this Agreement, in the event of the termination of the Main License Agreement during the Term hereof, unless and until such time as the LLC has entered into a new license agreement with Sub substantially in the form of this Agreement (unless otherwise agreed by Producer), Sublicensor shall be deemed to have assigned all of its rights pursuant to this Agreement after such termination to the LLC and the LLC shall automatically be deemed to have entered into this license on the terms hereof for the remaining period hereof after such termination in favor of Sub as Licensee. 2A. ASSIGNMENT OF RIGHTS; PRODUCTION AGREEMENTS: a. Sublicensor hereby irrevocably assigns its rights under and assigns its obligations under the CBS network license for "The Price Is Right" for the 1994/1995 and 1995/1996 broadcast seasons (the "CBS Network License") to Sub and Sub hereby assumes such rights and obligations. Notwithstanding the foregoing, Sublicensor retains certain joint rights of approval of renewals and extensions of the CBS Network License pursuant to Section 3(b) hereof. Sub shall on behalf of the LLC make certain payments out of Accounts -2- 3 Receivable under the CBS Network License received after the Final Closing, net of any costs and expenses incurred or paid by Sub related thereto, to or to the order of the Partnership (or its permitted assigns) pursuant to and subject to the terms of Section 3.9 of the Asset Purchase Agreement. b. During the term of this Agreement, Sublicensee shall not enter into a production agreement with respect to the Program without Sublicensor's consent, which will not be unreasonably withheld or delayed. If Sublicensor does not consent to the entering into of a production agreement, Sublicensee may terminate this Agreement without incurring any liability for such termination. Sublicensor hereby approves the Network Production Agreement with TPIR LLC ("Producer") and agrees to the provisions to be performed by AAG thereunder. For so long as the Network Production Agreement is in effect, Sublicensor and Sublicensee agree, for the benefit of Producer, without the Producer's prior written consent, not to be unreasonably withheld or delayed, that they shall not amend, modify or terminate this Agreement (other than expressly in accordance with the terms of this Agreement as in effect on the date hereof and as modified in accordance herewith) or waive any rights or consent to any of the foregoing, under this Agreement, which in any case would have a material adverse effect on Producer's rights under the Network Production Agreement. 3. TERM; NETWORK EXTENSIONS OR RENEWALS: a. The term hereof (the "Term") for the Program shall be for so long as the Program is in continuous annual (i.e., broadcast year) Network or Network Alternate production (i.e., each broadcast year must consist of at least 130 new and original episodes unless otherwise approved by the Network or Network Alternate), but shall in no event exceed the Earn-Out Period (including any extension thereof) as defined in the Asset Purchase Agreement. In the event the Program does not remain in continuous annual Network or Network Alternate production, or the Network Production Agreement is terminated, this Agreement shall terminate. Upon the termination of this Agreement pursuant to the foregoing provision, Sublicensor shall continue to have the right, through the Main License Agreement, to produce, record, distribute, license, market, broadcast, -3- 4 transmit, exhibit or otherwise exploit the Program for commercial purposes. b. Sublicensor and Sublicensee shall have the sole right in their business judgment to agree or refuse to agree to any Network or Network Alternate license, extension or renewal of the Program relating to the Program remaining in continuous annual production, subject to the following provisions: i) Sublicensor and Sublicensee shall each agree to (and Sublicensee shall execute) any extension or renewal of the current CBS Network License which expires on or before the last day of the Term so long as (x) the LLC will receive at least $1.0 million, net of expenses (such expenses shall include amounts payable by Sublicensee pursuant to the Network Production Agreement and costs and expenses payable by Sublicensee pursuant to this Agreement), including Earn-Out Payments and the Production Fees, annually in respect of such license during its term based on the approved production budget (including host fees and reasonably anticipated prize and "below the line" overages not reimbursed by the Network or Network Alternate) and (y) there are no other changes from the current CBS Network License that Sublicensor or Sublicensee believes in good faith could have a material adverse effect on Sublicensor or Sublicensee. ii) Sublicensor and Sublicensee will jointly attend every meeting with CBS (unless the parties otherwise agree) with respect to any extension or renewal of the current CBS Network License and reasonably consult with each other prior to and after such meeting. In the event that for any reason the CBS Network License is canceled or it is determined that the Program will not be renewed or extended (the "Non-Renewal Event"), Sublicensee will have a 45-day period from such date, jointly with Sublicensor, to negotiate with other Networks or Network Alternates. Sublicensor shall agree to approve Sublicensee's entering into a Network or Network Alternate license (or an executed binding deal memorandum setting forth the material terms of such license) during such period so long as (x) the LLC will receive at least $1.0 million, net of expenses (such expenses shall include amounts payable by Sublicensee pursuant to the Network Production Agreement and costs and expenses payable by Sublicensor pursuant to this Agreement), including Earn-Out -4- 5 Payments and Production Fees, annually in respect of such license during its term based on the approved production budget (including host fees and reasonably anticipated prize and "below the line" overages not reimbursed by the Network or Network Alternate) and (y) there are no other changes from the CBS Network License, or any other Network or Network Alternate license agreement then in effect with respect to the Program, that Sublicensor or Sublicensee believes in good faith could have a material adverse effect on Sublicensor or Sublicensee. iii) If Sub's negotiations with CBS for an extension or renewal of the CBS Network License for The Price Is Right shall terminate unsuccessfully and Sub shall receive an offer from a Network or Network Alternate with respect to the broadcast of The Price Is Right, which offer is acceptable to Sub and AAG but is subject to a CBS first refusal, Sub shall have the right to transmit such offer to CBS, and if CBS does not accept such offer, to accept such Network or Network Alternate offer within five business days after the expiration of the CBS first refusal. Anything herein to the contrary notwithstanding, Sub's 45-day period within which to secure a commitment for an extension of the Network or Network Alternate broadcasts of The Price Is Right shall be extended accordingly. iv) In the event that Sublicensor does not agree to Sublicensee's entering into a new Network or Network Alternate license (or an executed binding deal memorandum setting forth the material terms of such license) not expressly required by the terms hereof within 45 days after the Non-Renewal Event, this Agreement shall terminate (and the Term shall expire) for all periods after the then current broadcast year and all rights in and to the Program shall revert to the LLC, subject to AAG's rights under the Main License Agreement. 4. TERRITORY: Sublicensee's rights shall be limited to the following territory (the "Territory"): The United States, its territories and possessions on the Networks or the Network Alternates (and retransmission thereof in Canada in the English language only). 5. LICENSING AND COLLECTIONS: Except as otherwise provided herein, Sublicensee shall be responsible for entering into -5- 6 all Network and Network Alternate license agreements covering the Program during the Term and shall bill and collect all revenues in connection with its exploitation of the Program during the Term. 6. DELIVERY: Sublicensor shall deliver and make available to Sublicensee copies of such tape material in its possession or under its control with regard to the Program as Sublicensee may reasonably require and all available promotional elements, including diagrams, blue prints, advertising material and the like for purposes of creating sales materials for the distribution efforts. 7. DIVISION OF REVENUES; ASSUMPTION OF EARN-OUT: Subject to the terms and conditions set forth below, Sublicensee shall remit to Sublicensor all monies received by Sublicensee from its licensing of the Program in the Territory (excluding Earn-Out Payments made by Sublicensee and payments to the Producer in accordance with the Network Production Agreement), such amounts not being subject to any fee or to any reimbursement not approved by Sublicensor. Notwithstanding the foregoing, Sublicensee will be reimbursed by the Sublicensor for its out-of-pocket expenses, administrative costs (including the cost of any personnel dedicated solely to Sub and the direct and indirect incremental cost of any personnel who are not dedicated solely to Sub) and other of its organizational expenses, including, without limitation, reasonable legal fees incurred after the effective date hereof relating to the license granted hereunder, but excluding over-head expenses. In addition, Sublicensee shall receive from Sublicensor a sublicense fee equal to $1,000 per episode, with respect to New Episodes of "The Price Is Right" produced and delivered by Producer (the "License Fee"). The License Fee shall in no way effect the calculation of the Earn-Out Payments owed to Sellers. Sublicensee hereby agrees to make Earn-Out Payments to Sellers due under Section 3.8(a)(i) of the Asset Purchase Agreement to the extent described in "Domestic Net Profits - Price Is Right Network" in Schedule 1.1(b) to the Asset Purchase Agreement, but only to the extent of the net receipts Sublicensee receives from the Network or Network Alternate in connection with the exploitation of the Program as further provided in the Network Production Agreement. 8. REPRESENTATION AND WARRANTIES: a. Sublicensor represents, warrants to (in each case to the best of Sublicensor's knowledge and except as -6- 7 disclosed in the Asset Purchase Agreement and the Schedules thereto) and agrees with Sublicensee as follows: i) That Sublicensor has the right to grant the rights herein granted, and that there are no liens, claims or encumbrances whatsoever adversely affecting or that would in any way prejudice Sublicensor's grant of rights to Sublicensee herein; ii) That neither the Licensed Formats nor any part thereof (including without limitation its titles), nor the exploitation of the rights granted herein, will defame or constitute unfair competition with any third party, violate any law or violate or infringe upon the trademark, trade name, copyright, right of privacy, right of publicity or any other right of any third party; iii) That Sublicensor has acquired and will maintain all literary, dramatic, musical and other rights required for the full and quiet enjoyment of all of the rights granted herein, and that performance rights to all musical compositions contained in the Program shall be (i) controlled by ASCAP, BMI, SESAC or their affiliates, (ii) in the public domain, or (iii) controlled by Sublicensor; iv) That Sublicensor has not and will not make or purport to make any grant, license, assignment or other transfer inconsistent with or that would in any way prejudice Sublicensor's grant of rights to Sublicensee herein; v) That Sublicensor has the right to enter into this agreement and to grant all rights herein granted and to perform fully all of Sublicensor's obligations hereunder; vi) That Sublicensor has the right to assign its rights under the CBS Network License for "The Price Is Right" to Sublicensee; and vii) That Sublicensor shall remain responsible for the payment and discharge in a timely manner of any obligations under any and all union, guild or residual agreements arising in connection with the production, distribution, licensing or other -7- 8 exploitation after the effective date hereof of the Library Episodes and New Episodes of the Program to the extent such obligations are not fully discharged by Producer (or any other producer of the New Episodes); it being understood that to the extent Sublicensor is ultimately unable to recoup such payments with respect to Library Episodes, Sublicensor shall be indemnified by the LLC with respect thereto. b. Sublicensee represents, warrants and agrees as follows: i) That Sublicensee has the right to enter into this Agreement and to perform fully all of Sublicensee's obligations hereunder; and ii) That the credits appearing on the New Episodes, as delivered, shall be correct and consistent with all credit obligations to third parties. 9. COPYRIGHTS a. Pursuant to this Agreement, Sublicensor has commissioned Sub to arrange for the production and licensing to Networks and Network Alternates of the New Episodes; and to the extent necessary for distribution in certain jurisdictions, to allow for the modification of the Licensed Formats (to create Modified Formats); and to create materials to advertise and promote the foregoing. To the extent permitted by applicable law, Sub acknowledges and agrees that the LLC shall be the sole and original owner of, and shall have sole and exclusive right, title and interest in and to, the New Episodes, the Modified Formats, the advertising and promotional materials relating thereto, and all copyright rights therein throughout the world, including without limitation, all extensions and renewals thereof and all causes of action related to any infringement of such rights (the "New Copyrights"). In addition, the LLC shall have the sole and exclusive right, title and interest in and to, all media (including without limitation videotapes, master tapes, prints, negatives and duplicating negatives) in which any New Episode, Licensed Format (including any Modified Format), or, in each case, any portion thereof, is rendered, subject to the rights of AAG under the Main License Agreement. Other than as set forth in this Agreement, Sub shall have no right, title -8- 9 or interest in any New Episode, Licensed Format (including Modified Format) or New Copyright. b. Without limiting the foregoing, Sub hereby assigns and agrees to assign, and to the extent necessary, agrees to cause its employees, consultants, agents or sublicensees to assign, to the LLC or its nominee at any time and without additional compensation and all right, title and interest, whether now existing or hereafter arising, that Sub, or any of its employees, consultants, agents or sublicensees, may have in or to any New Episode, Modified Format, New Copyright, or related advertising and promotional material. In the event that Sub is unwilling or unable to execute any documents necessary to assign any such rights, Sub hereby grants to the LLC an irrevocable power of attorney to execute on behalf of Sub any and all such documents. To the extent legally permitted, all works included in the New Episodes, Modified Formats and related advertising and promotional material shall constitute works made for hire, as that term is used in the Copyright Act of 1976, as amended, and any registration of this Agreement as a copyright assignment shall not stop the LLC from asserting that such work is a work made for hire and shall not be evidence that such work is not a work made for hire. c. In the event that the applicable law in any jurisdiction prevents the ownership of any New Copyright (or any portion thereof) by the LLC, Sub shall grant, and to the extent necessary, shall cause its affected employees, consultants, agents or sublicensees to grant, an exclusive (even as to Sub), irrevocable, royalty-free, worldwide license to use, modify, distribute, publicly display and publicly perform, and to otherwise exploit all copyright rights in and to, the affected New Episode or Modified Format or related advertising and promotional material, for any lawful purpose, which license shall expire upon the expiration of the copyright term for the New Copyright in the affected work and shall include the right to grant sublicenses with respect to the licensed rights. 10. TRADEMARKS Sub agrees that the Licensed Trademark is the exclusive property of the LLC. Any goodwill associated with Sub's use of the Licensed Trademark shall inure to the exclusive benefit of the LLC. Sub shall not take any actions -9- 10 inconsistent with the LLC's ownership of the Licensed Trademark, and shall promptly notify the LLC of any unauthorized use of the Licensed Trademark of which it becomes aware. 11. NO LIENS Sub shall not permit any claims, liens, security interests or encumbrances to be placed upon any of Sub's rights in any New Episode, Licensed Format (including any Modified Format), advertising and promotional material related thereto, or any New Copyright or Licensed Trademark, except for liens approved by the LLC. 12. ACCOUNTING AND STATEMENTS; BOOKS AND RECORDS: a. Sublicensee shall render accountings and statements to Sublicensor concurrently with or promptly following its delivery of Earn-Out Payments, if any, to the Representative pursuant to the Asset Purchase Agreement. Each statement shall be accompanied by payment of Sublicensor's share of all revenues due and payable to Sublicensor hereunder. Each statement shall become final unless objection is made thereto within two years after Sublicensor's receipt thereof. Sublicensee shall also render accountings and statements to Sublicensor concerning any payments out of Accounts Receivable pursuant to Section 2A hereof and periodic accountings in the event no Earn-Out Payments are made. b. Sublicensee shall maintain, at its address above, complete and accurate books of account and records respecting the licensing of the Program hereunder. c. On a quarterly basis, Sub shall permit an auditor selected by Sublicensor (whose expenses shall be paid by Sublicensor) to inspect and make copies of all Sub's books of account and records relevant to the calculation of "Domestic Net Profits-Price is Right Network". 13. INSPECTION RIGHTS a. Sub agrees that at all times during the term of this Agreement, Sub shall adhere to the production standards and other standards of quality then specified by the LLC, which standards the LLC may amend from time to time (the "Standards"). The Standards in effect as of -10- 11 the date of this Agreement are set forth in Exhibit A hereto. In addition, Sub shall comply with all applicable laws and the prevailing standards of public decency. b. Upon the LLC's request, Sub shall permit representatives of the LLC to inspect the relevant parts of its premises during normal business hours to ensure that the Standards are met. In the event that the LLC notifies Sub that Sub is not in compliance with the Standards, Sub shall promptly, but in no event later than three weeks from the date such notice is received, cure the noticed nonconformity. 14. APPROVALS: The 1995/1996 production budget for the Program, which is limited to $3,229,000 for the balance of the 1995/1996 production year commencing on the Escrow Closing Date (subject to reduction in the amount of 30% of all payments from the CBS Network to the Partnership during the Interim Period ending at the Final Closing) shall consist of the production budget approved pursuant to the Asset Purchase Agreement. Sublicensee shall provide Sublicensor in writing with a detailed production budget prior to the commencement of production for the 1996/1997 broadcast season (which budget shall not exceed $5,000,000 for the entire 1996/1997 broadcast season) and each applicable broadcast season thereafter. Sublicensor shall have a right of approval, not to be unreasonably withheld, over all such production budgets, it being understood that the LLC, as licensor of the Rights to the Sublicensor, must approve each production budget to the extent not in compliance herewith including, in the case of a broadcast season, if any, after 1996/1997, to the extent that there are more than 5% annual increases (on a compounded basis) over the 1996/1997 production budget, exclusive of increases in the Bob Barker (or other to-be-selected host) host fees or increases in the prize budget or "below the line" costs covered by the first paragraph of Section 5 of the Network Production Agreement. 15. INDEMNIFICATION: Sublicensor and Sublicensee shall indemnify the other party and hold the other party free and harmless from and against any and all costs, claims, losses, liabilities and expenses (including reasonable attorney's fees) resulting from or arising out of any breach or alleged breach of any representations, warranties, agreements or obligations of the indemnifying party hereunder. In addition, Sublicensor shall, to the fullest extent permitted by law, indemnify and hold harmless Sublicensee -11- 12 from and against any loss, liability, damage, obligation, cost or expense (including reasonable legal fees and expenses and any amount paid in settlement) resulting from a claim, demand, lawsuit, action or proceeding, including any appellate or bankruptcy proceeding, relating to or arising from or in connection with the current, former or prospective employment, retention or compensation of any person (including, without limitation, any performer, actor, musician, host, writer, director, producer or any person retained in any capacity as an independent contractor) in connection with the production, distribution, licensing or other exploitation of any and all of the Library Episodes or New Episodes of the Price is Right, including, without limitation, any obligation under any union, guild or residual agreement, to the extent that the foregoing arises as a result of the licensing of rights to the Program to Sublicensee or the entering into by Sublicensee of the Network Production Agreement with the Producer. 16. ASSIGNMENTS ETC.: a. This agreement may not be assigned by either party without the other party's prior written approval, with the understanding that no such assignment shall relieve the assigning party of its obligations hereunder. b. The parties agree that any direct or indirect change in control of the ownership of the Sublicensor shall not constitute a change in the rights of the Sublicensee. c. Sublicensor and Sublicensee hereby assign to Producer, to the full extent permitted by applicable law, and irrevocably constitute and appoint Producer (and any of Producer's officers or employees or agents) as Sublicensor's and Sublicensee's true and lawful attorney-in-fact to execute any and all documents and instruments, and to perform any and all acts for and on behalf of Sublicensor and Sublicensee, in each case at Producer's expense, which Producer reasonably deems necessary or advisable, for the limited purpose, and only for the purpose, of asserting or retaining any rights of Sublicensor and Sublicensee arising under 11 U.S.C. Section 365(n) in order to affirm this agreement in the event of the bankruptcy of Sublicensor. Producer agrees not to exercise any of the rights set forth in this clause in the event Producer receives effective assurance that such rights will be protected by the appropriate party or parties hereto. -12- 13 17. CONFIDENTIALITY: Neither party shall disclose any portion of this agreement to any third party except to the extent necessary to enforce, construe or carry out any term or provision of this agreement (including any suit, action or claim, whether involving Sublicensor, Sublicensee or any third party) or to the extent required by any governmental or judicial order. 18. THIRD PARTY BENEFICIARIES: The parties hereto agree that the LLC is an intended third- party beneficiary of the provisions of this Agreement and the Producer is an intended third party beneficiary of only the last sentence of Section 2A(b) and Sections 3(b) and 16(c) of this Agreement. 19. MISCELLANEOUS: This agreement shall be governed by the laws of the State of New York applicable to agreements executed and to be wholly performed therein and shall not be modified except by a written document executed by both parties hereto. This agreement expresses the entire understanding of the parties hereto and replaces any and all former agreements or understandings, written or oral, relating to the subject matter hereof. Paragraph headings are for convenience of the parties only and shall have no legal effect whatsoever. All notices hereunder, unless specified otherwise, shall be in writing and shall be given at the addresses set forth in Section 1 either by personal delivery, telegram, telefax or telex (toll prepaid) or by registered or certified mail (postage prepaid) and shall be deemed given on the date delivered, telegraphed, telefaxed or telexed or the date mailed. 20. EXCLUSIVE REMEDY: Notwithstanding anything herein to the contrary, the exclusive remedy for any breach of this Agreement by Sub, other than a breach of its Earn-Out obligations or a breach of its payment obligations to Sublicensor or Producer pursuant to Section 7(a) hereunder, is termination of this agreement, except as otherwise agreed between Sublicensor and Sublicensee. 21. DEFINITIONS "Library Episodes" shall mean those audiovisual productions of the Program constituting Assets acquired by the LLC at the Final Closing of the Asset Purchase Agreement and licensed to Sublicensor under the Master License Agreement, including any modifications thereof. -13- 14 "Licensed Formats" shall mean the outlines, treatments or formats for "The Price Is Right" shows in the Territory, including any modifications thereof made by Sub. "Licensed Trademark" shall mean the trademark "The Price Is Right". "Modified Format" shall mean the work resulting from any modification by Sub of the Licensed Formats. Each Modified Format shall also be deemed a Licensed Format. "New Copyrights" shall have the meaning specified in Paragraph 9(a) of this Agreement. "New Episodes" shall mean any audiovisual production based on the Licensed Formats (including any Modified Format) produced by Sub or its sublicensees pursuant to this Agreement. 22. EFFECTIVENESS: This agreement shall become effective at the Final Closing of the Asset Purchase Agreement and shall be of no force or effect if the Asset Purchase Agreement is terminated in accordance with its terms. -14- 15 IN WITNESS WHEREOF, the parties have executed this agreement as of the date first above written. ALL AMERICAN GOODSON, INC., as SUBLICENSOR By: /s/ THOMAS BRADSHAW ------------------------------ Name: Thomas Bradshaw Its: Chief Financial Officer Date: October 6, 1995 INTERPUBLIC GAME SHOWS, INC., as SUBLICENSEE By: /s/ THOMAS J. VOLPE ------------------------------ Name: Thomas J. Volpe Its: Chairman and President Date: October 6, 1995 The undersigned acknowledge the assumption by Interpublic Game Shows, Inc. of certain obligations as set forth herein. MARK GOODSON PRODUCTIONS, L.P. By: Mark Goodson Television Productions, Inc., its General Partner By: /s/ RICHARD SCHNEIDMAN ------------------------------ Its: ----------------------------- Date: October 6, 1995 TPIR LLC By: /s/ RICHARD SCHNEIDMAN ------------------------------ Its: ----------------------------- Date: October 6, 1995 -15- 16 Schedule I 1. CBS Network License -16- 17 EXHIBIT A PRODUCTION STANDARDS AND STANDARDS OF QUALITY PRODUCTION STANDARDS To be substantially consistent with the standards in effect prior to the date hereof. OTHER STANDARDS Sub shall adhere to the following standards at all times: 1. No information of any sort with respect to questions to be asked or materials to be used on any New Episode shall be supplied or suggested in any way to, or asked or, contestants or participants in any game or contest recorded in any New Episode in advance of broadcast. 2. No favoritism shall be exercised in the treatment of any contestant or participant. 3. The winning contestant or participant shall be offered in full the exact or substantially the same prize which is announced on the program in accordance with the provisions of the contestant release form. 4. No game or contest, or any element thereof, shall involve any unfair treatment of any contestant, participant or any member of the public. 5. No ambiguous statement or representation that might be misleading to the public shall be made, nor shall the game or contest be conducted in a manner that might be misleading to the public. 6. No element of any program shall be injurious or prejudicial to the interest of the public, Sublicensor, or honest programming or reputable business in general. -17- EX-10.3 4 LICENSE AGREEMENT 1 EXHIBIT 10.3 LICENSE AGREEMENT 1. IDENTIFICATION: This license agreement (this "Agreement") is dated as of the 6th day of October, 1995 and is entered into between Mark Goodson Productions, LLC, a New York limited liability company ("Licensor") (presently directly or indirectly owned jointly by All American Communications, Inc. ("AACI") and The Interpublic Group of Companies, Inc. ("Interpublic")); and All American Goodson, Inc., a wholly-owned subsidiary of AACI ("AAG"), whose address is 1325 Avenue of the Americas, New York, N.Y. 10019 ("Licensee"), with respect to the Library Rights, Library Physical Properties, Programs or portions thereof or rights therein being acquired pursuant to the Asset Purchase Agreement referred to below. All numbered schedules set forth herein correspond to the numbered schedules contained in the Asset Purchase Agreement dated as of October 6, 1995 between Licensor, Interpublic and AACI on the one hand, and Mark Goodson Productions, L.P., The Child's Play Company and the Estate of Mark Goodson, on the other hand (the "Asset Purchase Agreement"). Capitalized terms used herein without definition shall have the respective meanings set forth in the Asset Purchase Agreement. 2. RIGHTS: GRANT OF RIGHTS. Subject to the terms and conditions of this Agreement and the existing licenses listed on Schedule I hereto (the "Existing Agreements"), during the Term and within the Territories (as defined below), Licensor hereby grants to Licensee the following: a) An exclusive license: i. To produce and record New Episodes based on the Licensed Formats in the Territories, which right includes the right to modify the Licensed Formats to the extent necessary to produce and record the New Episodes; ii. To distribute New Episodes and Library Episodes by any means of broadcast or exhibition, which distribution right includes the right to copy, modify, distribute, license, publicly display and publicly perform the New Episodes and the Library Episodes; and 2 iii. To market, broadcast, transmit, exhibit or otherwise exploit for commercial purposes New Episodes and Library Episodes. b) A nonexclusive license, for the sole purpose of promoting and advertising the New Episodes or the Library Episodes: i. To make and publish, in any and all languages, synopses of the New Episodes or Library Episodes; and ii. To make, exhibit and market television motion picture trailers, sound records or stills based upon or adapted from the New Episodes or Library Episodes. c) A nonexclusive license to use the Licensed Trademarks in connection with the production of the New Episodes and the distribution of the New Episodes and the Library Episodes in the Territories as permitted by clauses (a) and (b) above. During the term of this Agreement, Licensee shall have the right to sublicense to Affiliates as provided in paragraphs 4(b) and 4(c) and to sublicense nonaffiliated third parties to exploit the rights granted in clauses (a) through (c) above, which sublicense may be on an exclusive basis to the extent Licensee has exclusive rights hereunder. Licensee agrees that any such sublicense shall not conflict with the terms of this Agreement, and further agrees that in the case of sublicenses relating to the AAFI Territory, unless Licensor shall otherwise agree (which agreement will not be unreasonably withheld or delayed), such sublicenses shall contain provisions that indemnify Licensee from and against all taxes and excises (other than income taxes) imposed on or levied against Licensee under any applicable law of the AAFI Territory from time to time relating to the granting and the exploitation of the rights granted to the sublicensee under any such sublicense agreement. Prior to entering into any sublicense of its rights hereunder, Licensee shall obtain Licensor's approval, which approval shall not be unreasonably withheld or delayed. Licensor shall have 10 business days to approve a draft of the sublicense and if Licensor shall not have disapproved such sublicense within such time period such sublicense shall be deemed to have been approved by Licensor. In connection with the foregoing, the Network Production Agreement, the Network License Agreement (each as defined in the Asset 2 3 Purchase Agreement) and the licenses referenced in paragraphs 4(b) and 4(c) are hereby approved by Licensor. 3. TERM: The term of this Agreement (the "Term") commences on the effective date hereof and, unless and until this Agreement is terminated as provided in paragraph 24, shall continue for a term of ninety (90) years, and thereafter, shall be automatically renewed for additional periods of thirty (30) years unless terminated by notice from either party hereto. Notwithstanding anything else contained in this Agreement, in the event of the termination of this Agreement during the "Term" of the Network License Agreement, unless and until such time as Licensor has entered into a new license agreement with Interpublic Sub substantially in the form of the Network License Agreement (unless otherwise agreed by Producer), AAG shall be deemed to have assigned all of its rights pursuant to the Network License Agreement after such termination to Licensor and Licensor shall automatically be deemed to have entered into a license on the terms of the Network License Agreement with respect to "The Price Is Right" for the remaining period thereof after such termination in favor of Interpublic Sub as licensee. Licensor shall use its reasonable best efforts to provide Producer, with the personnel, including on-screen talent, to produce "The Price Is Right" during the Term of the Network License Agreement. 4. TERRITORIES: AAG's territorial rights hereunder shall consist of the entire universe (the "Territories"). Concurrently herewith, AAG is entering into three sublicenses: (a) a network license agreement with Interpublic Sub with respect to "The Price Is Right" attached as Exhibit 8.4(a)(vii)(a) to the Asset Purchase Agreement (it being understood that Licensor has assigned all of its rights and obligations under the CBS Network License, through AAG, to Interpublic Sub); (b) a license with All American Television II, Inc. ("AATV") limited to the following territories (the "AATV Territories"): the United States, its territories and possessions and Canada attached as Exhibit A hereto; and (c) a license with All American Fremantle II, Inc. ("AAFI") limited to the following territories (the "AAFI Territories"): the world, excluding the United States, 3 4 its territories and possessions and Canada attached as Exhibit B hereto. 5. AFFILIATED TRANSACTIONS: Except as provided in paragraphs 4(b) and 4(c), Licensee shall not enter into any agreement or engage in any transaction with any Affiliate with respect to the production, distribution, licensing or other exploitation of the Library Rights, Library Physical Properties, Programs or portions thereof or rights therein being acquired pursuant to the Asset Purchase Agreement without the prior written consent of Licensor (such consent not to be unreasonably withheld or delayed). Notwithstanding the foregoing, if Licensee does enter into sublicenses with its Affiliates, such affiliated sublicensees (including AATV and AAFI) shall not be entitled to any fees or other compensation, including, without limitation, any distribution fees, under or in connection with their respective sublicenses. 6. BEST EFFORTS: Licensee undertakes to use its reasonable best efforts to actively promote and to distribute any New Episodes and the Library Episodes and to maximize the amount of profits generated by the production, distribution, licensing or other exploitation of the Programs in the AATV and the AAFI Territories. 7. LICENSING AND COLLECTIONS: Licensee shall, and shall use reasonable best efforts to cause its sublicensees (other than Interpublic Sub) to, enter into license agreements covering the Programs and to bill and collect all revenues in connection with the exploitation of the Programs. Licensee shall notify Licensor of any material breach, including, without limitation, a breach of a payment obligation, by any sublicensee of such license agreements. Such notice shall set forth the actions, if any, that Licensee proposes to take in respect of curing such breach. If the breach has not been cured within 15 days of the date of such breach, Licensor shall have the right to act on behalf of Licensee to remedy such breach and Licensee shall use its reasonable best efforts to assist Licensor in connection therewith. 8. MARKETING AND DISTRIBUTION: Licensee shall be, and shall use reasonable best efforts to cause its sublicensees (other than Interpublic Sub) to be, responsible for the marketing and physical distribution of the Programs and shall discharge and pay for all costs in connection therewith (e.g., tapes, editing, traffic, shipping, convention expenses, travel and entertainment, advertising and 4 5 promotion, collection costs, station compensation, residuals, etc.). 9. DELIVERY: Licensor shall deliver to Licensee or, at Licensee's direction, its sublicensees copies of such tape material in its possession or under its control with respect to each Program as Licensee may reasonably require, which material may be duplicated at Licensee's sole cost (such reproductions hereinafter referred to as "Videotapes"). Licensor shall deliver to Licensee or, at Licensee's direction, its sublicensees all available promotional elements (including diagrams, blueprints, advertising material and the like) for purposes of creating sales materials for the distribution efforts. 10. DIVISION OF REVENUES: The division of revenues between Licensor and Licensee shall be in accordance with Schedule II hereto which is incorporated by reference herein. 11. EDITING AND MODIFICATIONS: Licensee shall not have the right to edit any Library Episode in any material respect unless Licensee shall have first described to Licensor in writing the desired edits, and received from Licensor its prior consent to the proposed edits, which consent shall not be unreasonably withheld. Licensor's prior consent shall not be necessary, however, where the desired edits are made solely for the purpose of ensuring that the Library Episode complies with the applicable statute, regulation, rules, standards, orders, requests or other requirements of any competent governmental body within the Territory. Notwithstanding the foregoing, Licensee shall not have right to delete the credits or copyright notices that appear in any Library Episode. 12. REPRESENTATION AND WARRANTIES: a. Licensor represents, warrants and agrees as follows: i) To the best of Licensor's knowledge and except as disclosed in the Asset Purchase Agreement and the Schedules thereto, Licensor owns or controls the copyrights to the Programs to the extent herein granted, and, to the best of Licensor's knowledge, that there are no liens, claims or encumbrances whatsoever adversely affecting or that would in 5 6 any way prejudice Licensor's grant of rights to Licensee herein; ii) To the best of Licensor's knowledge and except as disclosed in the Asset Purchase Agreement and the Schedules thereto, neither the Programs nor any part thereof (including without limitation their titles), nor the exploitation of the rights granted herein, defames or constitutes unfair competition with any third party, violates any law or violates or infringes upon the trademark, trade name, copyright, right of privacy, right of publicity or any other right of any third party; iii) To the best of Licensor's knowledge and except as disclosed in the Asset Purchase Agreement and the Schedules thereto, (a) Licensor has acquired all literary, dramatic, musical and other rights required for the full and quiet enjoyment of all of the rights granted herein, and (b) performance rights to all musical compositions contained in the Programs are (1) controlled by ASCAP, BMI, SESAC or their affiliates, (2) in the public domain, or (3) controlled by Licensor; iv) To the best of Licensor's knowledge and except as disclosed in the Asset Purchase Agreement and the Schedules thereto, the credits appearing on the Library Episodes, as delivered, are correct and consistent with all credit obligations to third parties; v) To the best of Licensor's knowledge and except as disclosed in the Asset Purchase Agreement and the Schedules thereto, Licensor has not made or purported to make any grant, license, assignment or other transfer consistent with or that would in any way prejudice Licensor's grant of rights to Licensee and its sublicensees herein; and vi) To the best of Licensor's knowledge and except as disclosed in the Asset Purchase Agreement and the Schedules thereto, Licensor has the right to enter into this Agreement and to grant all rights herein granted and to perform fully all of Licensor's obligations hereunder. For purposes of these representations and warranties, Licensee is deemed to have knowledge of all matters disclosed to Licensor by the 6 7 Sellers in the Asset Purchase Agreement and the Schedules thereto. b. Licensee represents, warrants and agrees as follows: i) That Licensee has the right to enter into this Agreement and to perform fully all of Licensee's obligations hereunder; ii) That Licensee and its sublicensees, other than Interpublic Sub, shall fully pay and discharge in a timely manner any obligations under any and all union, guild and/or residual agreements arising in connection with the production, distribution, licensing or other exploitation of the Programs other than guild and/or residual obligations arising prior to the effective date hereof or under the license referred to in paragraph 4(a) which shall be assumed by the Partnership. iii) To the extent that Licensee makes any union, guild and/or residual payments and is ultimately unable to recoup such payments with respect to Library Episodes, Licensee shall be indemnified by Licensor with respect thereto. 13. COPYRIGHTS: (a) Pursuant to this Agreement, Licensor has commissioned Licensee to produce and record the New Episodes; and to the extent necessary for distribution in certain jurisdictions, to modify the Licensed Formats (to create Modified Formats) and Library Episodes (to create Modified Library Episodes); and to create materials to advertise and promote the foregoing. To the extent permitted by applicable law, Licensee acknowledges and agrees that Licensor shall be the sole and original owner of, and shall have sole and exclusive right, title and interest in and to, the New Episodes, the Modified Formats, the Modified Library Episodes, the advertising and promotional materials relating thereto, and all copyright rights therein throughout the world, including without limitation, all extensions and renewals thereof and all causes of action related to any infringement of such rights (the "New Copyrights"). In addition, Licensor shall have the sole and exclusive right, title and interest in and to, all media (including without limitation videotapes, master tapes, prints, negatives and duplicating negatives) in which any New Episode, Licensed Format, 7 8 Modified Format, Library Episode or Modified Library Episode, or, in each case, any portion thereof, is rendered. Other than as set forth in this Agreement, Licensee shall have no right, title or interest in any New Episode, Licensed Format, Modified Format, Library Episode or Modified Library Episode or New Copyright. (b) Without limiting the foregoing, Licensee hereby assigns and agrees to assign, and to the extent necessary, agrees to use its reasonable best efforts to cause its employees, consultants, agents or sublicensees to assign, to Licensor or its nominee at any time and without additional compensation any and all right, title and interest, whether now existing or hereafter arising, that Licensee, or any of its employees, consultants, agents or sublicensees, may have in or to any New Episode, Modified Format, Modified Library Episode, New Copyright, or related advertising and promotional materials. In the event that Licensee is unwilling or unable to execute any document necessary to assign any such rights, Licensee hereby grants to Licensor an irrevocable power of attorney to execute on behalf of Licensee any and all such documents. To the extent legally permitted, all works included in the New Episodes, Modified Formats, Modified Library Episodes, and related advertising and promotional material shall constitute works made for hire, as that term is used in the Copyright Act of 1976, as amended, and any registration of this Agreement as a copyright assignment shall not stop Licensor from asserting that such work is a work made for hire and shall not be evidence that such work is not a work made for hire. (c) In the event that the applicable law in any jurisdiction prevents the ownership of any New Copyright (or any portion thereof) by Licensor, Licensee shall grant, and to the extent necessary, shall cause its affected employees, consultants, agents or sublicensees to grant, an exclusive (even as to Licensee), irrevocable, royalty- free, worldwide license to use, modify, distribute, publicly display and publicly perform, and to otherwise exploit all copyright rights in and to, the affected New Episode or Modified Format or Modified Library Episode or related advertising and promotional material, for any lawful purpose, which license shall expire upon the expiration of the copyright term for the New Copyright in the affected work and shall include the right to grant sublicenses with respect to the licensed rights. 8 9 14. TRADEMARKS: Licensee agrees that the Licensed Trademarks are the exclusive property of Licensor. Any goodwill associated with Licensee's use of the Licensed Trademarks shall inure to the exclusive benefit of Licensor. Licensee shall not take any actions inconsistent with Licensor's ownership of the Licensed Trademarks, and shall promptly notify Licensor of any unauthorized use of the Licensed Trademarks of which it becomes aware. 15. THIRD PARTY RIGHTS: Licensee shall obtain all rights, licenses (including all licenses to use music) and clearances necessary for Licensee and its sublicensees to perform their obligations with respect to any New Episode, Modified Format, or Modified Library Episode. The scope of any such right or license shall be broad enough to permit Licensor (or its sublicensees) to exploit its copyrights in any New Episode, Modified Format, or Modified Library Episode following the termination of this Agreement without the necessity of obtaining further rights or licenses. The New Episodes, and to the extent modified, the Modified Formats and Modified Library Episodes, shall not violate any law, or infringe the rights of any third party. 16. NO LIENS: Licensee shall not permit any claims, liens, security interests or encumbrances to be placed upon any of Licensee's rights in any New Episode, Library Episode, Modified Library Episode, Licensed Format, Modified Format, advertising and promotional material related thereto, or any New Copyright or Licensed Trademark, except for liens approved by Licensor. Licensor has approved the assignment of Licensee's rights granted to Chemical Bank, as Agent under the Chemical Facility (including a refinancing thereof if such refinancing does not increase the principal amount outstanding at the time of such refinancing). 17. STORAGE: Licensee shall properly store each master or original negative of each New Episode, Library Episode or Modified Library Episode in accordance with standards customarily observed by major television producers in the United States. 9 10 18. PAYMENTS; ACCOUNTINGS AND STATEMENTS; BOOKS AND RECORDS: (a) Not later than 30 days after the end of each calendar quarter or earlier if necessary to comply with the next succeeding sentence, Licensee shall pay to Licensor in cash, by wire transfer to an account or accounts specified by Licensor, Licensor's share of all revenues due and payable to Licensor hereunder except as otherwise set forth in this paragraph (a). Licensee shall make such payments in a timely manner sufficient to allow Licensor to comply with its remittance obligations set forth in the Asset Purchase Agreement in a timely manner. Notwithstanding anything to the contrary herein, payments to Licensor hereunder shall be subject to the provisions of the Intercreditor Agreement between Licensor and Chemical Bank, as Agent, and any payment not made as a result of Section 3b of such Intercreditor Agreement shall not constitute a breach of this Agreement or a failure to pay any amount due and payable by it, including but not limited to Licensee's payment obligations under this paragraph. In addition, so long as Tranche E of the Credit Facility (or, if Tranche E is not in place the portion of AACI's working capital facility utilized to fund the Cash Portion of the Purchase Price) remains outstanding, any application of funds in the LLC Funds Account by Chemical Bank, as agent, pursuant to Secton 3b the Intercreditor Agreement shall be deemed to discharge the obligations of Licensee to Licensor pursuant hereto in an equal dollar amount. (b) Each payment shall be accompanied by a statement setting forth in reasonable detail the calculation of Domestic Net Profits (as defined in Schedule II hereto) for the applicable period (on a cash and accrual (GAAP) basis) and an accounting and statement for each Program substantially in the form heretofore provided by Interpublic to AACI. Each statement of the calculation of Domestic Net Profits shall become final, in the absence of manifest error, unless objection is made thereto within two years after Licensor's receipt thereof. Licensor shall be responsible for making any Earn-Out Payments from its receipt of Domestic Net Profits to the "Representative" pursuant to the Asset Purchase Agreement. In the event the revenues are derived from licenses used outside of the United States, the calculation of the division of revenues for such licenses will be separately set forth in the accounting statements accompanying such payments. 10 11 (c) In the event that Licensee shall fail to pay any amount due and payable within 30 days of the end of each quarter (the "Due Date"), Licensee shall be liable to Licensor for the sum of the amount so due and payable plus interest on the amount due and payable pursuant to clause (a) above from and including such Due Date to but excluding the date of payment thereof calculated at the rate per annum equal to Licensee's borrowing rate plus 1%. Licensee shall indemnify Licensor against any loss, liability, damage (or action in respect thereof), including, but not limited to, out-of-pocket legal fees and expenses, suffered or incurred in connection with the enforcement, preservation or protection of any rights against Licensee under this paragraph 18, other than in connection with a bona-fide dispute, which shall be subject to arbitration pursuant to paragraph 24 hereof. (d) Licensor and Licensee agree to report the amounts due to Licensor hereunder derived from AAFI's licensing of the Programs as foreign source income within the meaning of section 862 of the Internal Revenue Code, regardless of the fact that books and records are kept in New York as described in (c) below. (e) Licensee shall maintain, at its address above, complete and accurate books of account and records respecting the licensing of the Programs hereunder. (f) On a quarterly basis, Licensee shall permit an auditor selected by Licensor to inspect and make copies of all Licensee's books of account and records relevant to the calculation of Domestic Net Profits. 19. PRODUCTION STANDARDS; INSPECTION RIGHTS: (a) Licensee agrees that at all times during the term of this Agreement, Licensee shall adhere to the production standards and other standards of quality then reasonably specified by Licensor, which standards Licensor may amend from time to time (the "Standards"). The Standards in effect as of the date of this Agreement with respect to production in the United States are set forth in Exhibit A hereto. Licensee shall comply in all material respects with all applicable laws with respect to production outside the United States. (b) Upon Licensor's request, Licensee shall (i) provide to Licensor, at Licensee's expense, samples of the 11 12 Modified Formats, New Episodes, Library Episodes, Modified Library Episodes, and advertising and promotional material relating thereto, and (ii) permit representatives of Licensor to inspect at any time during normal business hours the production facilities used to produce the New Episodes and to create Modified Library Episodes, and (iii) permit representatives of Licensor to inspect during normal business hours the storage facilities in which are maintained any videotape, master tape, print, negative, duplicating negative or other copy of a New Episode, Library Episode, or any related advertising or promotional material. In the event that Licensor notifies Licensee that Licensee is not in compliance with the Standards, Licensee shall promptly, but in no event later than three weeks from the date such notice is received, cure the noticed nonconformity to the extent curable. 20. INSURANCE: Licensee shall obtain and maintain in full force and effect, at its sole cost and expense, during the Term of this Agreement insurance of the type and for the minimums set forth below, all to the extent available at a reasonable premium: (a) Comprehensive General Liability Insurance. Combined Bodily Injury Liability, Including for Death, and Property Damage Liability, with a limit of not less than $3,000,000 per occurrence, including: Contractual Liability (to cover the indemnification provisions contained in this Agreement); Products & Completed Operations Liability, which will be maintained for not less than one year following termination of this Agreement; Bailee's Liability; Independent Contractor's Liability, and Broad Form Property Damage liability; (b) Physical Damage or Property Insurance. Covering nonowned property in the custody of Licensee, including but not limited to any copy in any media of any New Episode or Library Episode, from physical damage, theft or loss with a limit of not less than $1,000,000 per occurrence with respect to Licensee. Each sublicensee other than Interpublic Sub shall be required to carry Physical Damage or Property Insurance covering nonowned property in such sublicensee's custody with a limit of not less than $1,000,000 per occurrence; (c) Errors and Omissions Insurance. Limit of not less than $1,000,000 per occurrence with respect to Licensee. 12 13 Each sublicensee other than Interpublic Sub shall be required to carry Errors and Omissions Insurance with a limit of not less than $1,000,000 per occurrence; and (d) Television Producer's Liability Insurance. Covering the New Episodes and Library Episodes, bearing a minimum of $3,000,000 per occurrence. Standard coverage, including but not limited to coverage with respect to defamation, infringement of common law or statutory copyright, infringement of privacy rights, and unauthorized use of material in any New Episode or Modified Library Episode. None of the premiums paid by Licensee for the insurance policies listed above may be recouped from Licensor. Licensor shall be named as an Additional Insured on each required policy. Each required policy will be primary without right of contribution from any other insurance maintained by Licensor, unless due to Licensor's gross negligence or willful misconduct. All provisions in each required policy, except the limits of liability, will operate in the same manner as if there were a separate policy covering each insured. Each required policy shall be issued by a reputable insurer approved by Licensor, which approval shall not be unreasonably withheld. Licensee shall furnish to Licensor certificates of insurance for each required policy prior to the commencement of the first production under this Agreement, and shall furnish certificates for each policy renewal during the Term. Such policy shall include a provision requiring the insurer to give Licensor prompt notice of any revision, modification or cancellation thereof. Promptly after securing such policy, Licensee shall furnish Licensor with a copy thereof. 21. APPROVALS: As soon as practicable after Licensee concludes a deal with respect to production of a New Episode, Licensee shall discuss the proposed production budget with Licensor. Prior to commencing the production of any New Episode in any jurisdiction within the Territory, Licensee shall provide to Licensor a detailed production budget in writing. Neither Licensee, any of its sublicensees, AATV nor AAFI shall have the right to commence production of any New Episode unless Licensor shall have first approved the production budget for that New Episode, which approval shall not be unreasonably withheld or delayed. All increases to an approved production budget shall require Licensor's written approval not to be unreasonably withheld or delayed. Any unapproved production budget overages shall not be deducted from gross 13 14 receipts but shall only be deducted from Licensee's share of net revenues. Licensor shall be deemed to have approved all such production budgets not disapproved to Licensee within ten business days of Licensor's receipt of such production budget. For so long as the Network Production Agreement is in effect, Licensor and Licensee agree, for the benefit of Producer, without Producer's consent not to be unreasonably withheld or delayed, that they shall not amend, modify, terminate this Agreement (except in accordance with this Agreement, the Network License Agreement or the Network Production Agreement) or waive any rights or consents to any of the foregoing under this Agreement insofar as it relates to "The Price Is Right" which would have a material adverse effect on Producer's rights under the Network Production Agreement. 22. TERMINATION OF RELATED LICENSES: If the license agreement described in paragraph 4(a) above is terminated for any reason, all rights licensed to Interpublic Sub pursuant thereto shall revert to the Licensor, subject to the rights of Licensee hereunder. 23. INDEMNIFICATION: Licensor and Licensee shall indemnify the other party and hold the other party free and harmless from and against any and all costs, claims, losses, liabilities and expenses (including reasonable attorney's fees) resulting from or arising out of any breach or alleged breach of any representations, warranties, agreements or obligations of the indemnifying party hereunder. In addition, Licensee shall, to the fullest extent permitted by law, indemnify and hold harmless Licensor from and against any loss, liability, damage, obligation, cost or expense (including reasonable legal fees and expenses and any amount paid in settlement) resulting from a claim, demand, lawsuit, action or proceedings, including any appellate or bankruptcy proceeding, relating to or arising from or in connection with the current, former or prospective employment, retention or compensation of any person (including, without limitation, any performer, actor, musician, host, writer, director, producer or any person retained in any capacity as an independent contractor) in connection with the production, distribution, licensing or other exploitation of any and all of the Programs by the Licensee. 14 15 24. TERMINATION: (a) Licensor shall have the right to terminate this Agreement at any time in the event that (i) Licensee commits a breach of its payment obligations under paragraph 10 of this Agreement, and fails to cure such breach (including any interest owed on any amount that is unpaid) within 90 days of receiving a written notice of default from Licensor, (ii) Licensee commits a material breach of any of its other obligations under this Agreement, other than a breach of its payment obligation pursuant to paragraph 10, and fails to cure such breach within 90 days of receiving a written notice of default from Licensor, or (iii) a petition is filed by or against Licensee for voluntary or involuntary bankruptcy or pursuant to any other insolvency law (which, in the case of an involuntary petition, remains undismissed for a period of 60 days), or Licensee makes or seeks to make a general assignment for the benefit of its creditors or applies for or consents to the appointment of a trustee, receiver or custodian for it or a substantial part of its property. (b) Any dispute relating to whether this License Agreement may be terminated in accordance with this paragraph 24(a)(i) or 24(a)(ii) or amounts owed hereunder (a "Dispute") shall be settled exclusively and finally by arbitration. It is specifically understood and agreed that any Dispute may be submitted to arbitration irrespective of the magnitude thereof, the amount in controversy or whether such Dispute would otherwise be considered justiciable or ripe for resolution by a court. Such Arbitration shall be conducted in accordance with and subject to the terms of Article XIV of the Amended and Restated Operating Agreement among Interpublic, its Affiliate, AACI and AAG with respect to the formation and operation of the LLC. (c) Upon the expiration or termination of this Agreement, the licenses granted to Licensee shall immediately terminate, and Licensee and its sublicensees shall immediately discontinue the use or other exploitation (including telecast) of the Licensed Formats, any Modified Format, the New Episodes, the Library Episodes, Modified Library Episode, the Licensed Trademarks, the New Copyrights, and any advertising or promotional material relating thereto. Following the expiration or termination of this Agreement, Licensee and its sublicensees shall not produce, record or telecast, or permit to be produced, recorded or 15 16 telecast, any audiovisual production of a similar format or title to the New Episodes, Library Episodes, Licensed Formats or Licensed Trademarks. Upon request of Licensor, Licensee shall, at its expense, deliver to Licensor at a location specified by Licensor, all copies (including any video tape and master) of the New Episodes, Library Episodes, Modified Library Episodes, Licensed Formats, Modified Formats, and related advertising and promotional material in the possession of Licensee or any of its sublicensees. The provisions of this Agreement concerning copyrights and trademarks shall survive the expiration or termination of the Agreement. (d) Notwithstanding anything to the contrary herein, in the event of the expiration of this Agreement or its termination pursuant to paragraph 24(a)(iii) as a result of an involuntary bankruptcy or other similar involuntary proceeding, Licensee shall continue to have certain rights and obligations to the extent set forth in the side letter between the parties dated as of the date hereof. 25. ASSIGNMENTS: (a) This Agreement may not be assigned by either party without the other party's prior written approval; provided that no consent shall be required in the event Licensor sells all or substantially all of its assets or merges or consolidates with another party and further provided that Licensee may assign its rights hereunder to Chemical Bank as provided for in the Intercreditor Agreement. No such assignment shall relieve the original party of its obligations hereunder. (b) The parties agree that any direct or indirect change of control of AAG (other than as a result of a change of control of AACI) shall be deemed to constitute an assignment of Licensee's rights hereunder and shall require the Licensor's prior written approval. 26. CONFIDENTIALITY: Neither party shall disclose any portion of this Agreement to any third party except to the extent necessary to enforce, construe or carry out any term or provision of this Agreement (including any suit, action or claim, whether involving Licensor, Licensee or any third 16 17 party) or to the extent required by any governmental or judicial order. 27. MISCELLANEOUS: This Agreement shall be governed by the laws of the State of New York applicable to agreements executed and to be wholly performed therein and shall not be modified except by a written document executed by both parties hereto. This Agreement, together with the related documentation entered into simultaneously herewith, expresses the entire understanding of the parties hereto and replaces any and all former agreements or understandings, written or oral, relating to the subject matter hereof (other than the Existing Agreements). Paragraph headings are for convenience of the parties only and shall have no legal effect whatsoever. All notices hereunder, unless specified otherwise, shall be in writing and shall be given at the addresses set forth in paragraph 1 either by personal delivery, telegram, telefax or telex (toll prepaid) or by registered or certified mail (postage prepaid) and shall be deemed given on the date delivered, telegraphed, telefaxed or telexed or the date mailed. 28. DEFINITIONS: "Affiliate" shall mean, with respect to any person or entity, (i) any person or entity directly or indirectly controlling, controlled by, or under common control with such person or entity, (ii) any person or entity owning or controlling twenty-five percent (25%) or more of the outstanding voting securities of such person or entity, (iii) any officer, director, or general partner of such person or entity, or (iv) any person or entity who is an officer, director, general partner, trustee, or holder of twenty- five percent (25%) or more of the voting securities of any person or entity described in clauses (i) through (iii) of this sentence. For the purposes of this definition, the terms "control," "is controlled by," or "is under common control with" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract or otherwise. The exceptions to the definition of "Affiliate" in the Asset Purchase Agreement are incorporated herein. "Licensed Formats" shall mean the outlines, treatments or formats for the shows constituting Assets acquired by Licensor at the Final Closing of the Asset Purchase Agreement, including any modifications thereof made by Licensee. "Library Episodes" shall mean those audiovisual productions constituting Assets acquired by Licensor at the Final Closing of 17 18 the Asset Purchase Agremeent, including any modifications thereof made by Licensee. "Licensed Trademarks" shall mean the titles, trademarks and service marks used in connection with the New Episodes and the Library Episodes. "Modified Format" shall mean the work resulting from any modification by Licensee of any of the Licensed Formats. Each Modified Format shall also be deemed a Licensed Format. "Modified Library Episode" shall mean the work resulting from any modification by Licensee of a Library Episode. Each Modified Library Episode shall also be deemed a Library Episode. "New Copyrights" shall have the meaning specified in paragraph 13(a) of this Agreement. "New Episodes" shall mean any audiovisual production based on the Licensed Formats (including any Modified Format) produced by Licensee or its licensees pursuant to this Agreement. "Programs" shall mean Library Episodes and New Episodes. "Standards" shall have the meaning specified in paragraph 19(a) of this Agreement. "Term" shall have the meaning specified in paragraph 3 of this Agreement. 29. EFFECTIVENESS: This Agreement shall become effective at the Final Closing of the Asset Purchase Agreement and shall be of no force or effect if the Asset Purchase Agreement is terminated in accordance with its terms. 18 19 IN WITNESS WHEREOF, the parties have executed this agreement as of the date first above written. MARK GOODSON PRODUCTIONS, LLC., as LICENSOR By: ALL AMERICAN COMMUNICATIONS, INC. Its: OPERATOR By: /s/ THOMAS BRADSHAW ---------------------------- Name: Thomas Bradshaw Its: Chief Financial Officer Date: October 6, 1995 ALL AMERICAN GOODSON, INC., as LICENSEE By: /s/ THOMAS BRADSHAW ------------------------------------ Name: Thomas Bradshaw Its: Chief Financial Officer Date: October 6, 1995 19 20 SCHEDULE I 1. Memorandum of Agreement, dated as of February 3, 1972, between CBS Television Network and Price Productions, Inc. (as heretofore amended, supplemented, extended or modified). 2. Master Programming Agreement, dated as of November 25, 1992, among Sony Pictures Cable Venturers I and certain predecessors and constituent members of Mark Goodson Productions, L.P. 3. Agreement, dated June 28, 1991, between Goodson Television Productions, Inc. and Grundy International Operations Limited. 4. Agreement, dated October 17, 1989 between the Family Company and Grundy International Operations Limited. 5. Fremantle International Inc. Licenses i.e., "Goodson Agreements" as defined under the Acquisition Agreement, dated August 3, 1994, between Interpublic and All American. 6. Letter Agreement, dated February 4, 1994, between Direction Video Inc. and Price Productions, Inc. (as heretofore amended, supplemented, extended or modified). 7. Letter Agreement, dated April 7, 1994, between Colm O'Shea Limited and Conscient, Inc. (as heretofore amended, supplemented, extended or modified). 8. Letter Agreement, dated April 7, 1994, between Colm O'Shea Limited and Price Productions, Inc. (as heretofore amended, supplemented, extended or modified). 9. Letter Agreement, dated as of January 1, 1995, between Mark Goodson Productions and Pressman Toy Corporation, extending the Trademark License Agreement, dated as of November, 1989, between Pressman Toy Corporation and The New Family Company. 10. License Agreement, dated July 1, 1994, between Interactive Network, Inc. and Mark Goodson Productions, L.P. 11. License Agreement, dated May 23, 1994, between Interactive Network Inc. and Mark Goodson Productions, L.P. 12. License Agreement Deal Memo of Agreement between Gametek, Inc. and The New Family Company. 1 21 Schedule II (a) Pursuant to Paragraph 18 of the License Agreement, AAG shall remit to Licensor (and shall use its reasonable best efforts to cause its sublicensees to remit to it) the Domestic Net Profits, as defined below, derived from AATV's exploitation of the Programs in the AATV Territories. "Domestic Net Profits" shall mean the sum of the following: (i) "Domestic Net Profits - Programs originally produced for Networks" (to include the ABC, CBS, NBC, FOX and all U.S. Cable Television Networks) shall mean the gross receipts received by AATV or Licensee after the Final Closing under the Asset Purchase Agreement from the production and distribution pursuant to the rights granted in this license agreement (which shall in any event exclude rights granted pursuant to the license referred to in paragraph 4(a) for so long as such license is in effect) of New Episodes in the AATV Territories from either ABC, CBS, NBC, FOX or any U.S. Cable Television Network less the following, which, in the case of items (b), (c) and (d) below, must be within the budget approved by Licensor (which approval shall not be unreasonably withheld) or otherwise approved by Licensor in writing: (a) a distribution fee to AATV equal to 10% of gross receipts, (b) all production costs, as generally understood within the entertainment industry, attributable to the game shows and/or series, and (c) all residual, re-use, supplemental market and/or replay fees and/or other actual out-of-pocket costs directly attributable to the game shows, and/or series, including Third Party Costs, and (d) any unrecouped prior period deficits following the Final Closing (excluding recoupment of prior year distribution fees arising from the same game show and/or series to the extent such recoupment would cause 1 22 such game show and/or series to have a loss on a cumulative basis). (ii) "Domestic Net Profits - Programs originally produced for First-Run Syndication" shall mean the gross receipts received by AATV or Licensee after the Final Closing from the production or distribution pursuant to the rights granted in this license agreement of New Episodes with respect to the initial exhibition in the AATV Territories on first-run syndication, less the following, which, in the case of items (b), (c), (d) and (e) below, must be within the budget approved by Licensor (which approval shall not be unreasonably withheld) or otherwise approved by the Licensor in writing: a) a distribution fee payable to AATV equal to 25% of gross receipts, b) all marketing and distribution expenses directly attributable to the distribution of the game shows and/or series, c) all production costs as generally understood within the entertainment industry, attributable to the game shows and/or series, d) all residual, re-use, supplemental market and/or replay fees and/or other actual out-of-pocket costs directly attributable to the game shows and/or series, including Third Party Costs, e) any unrecouped prior period deficits after the Final Closing (excluding recoupment of prior year distribution fees arising from the same game show and/or series to the extent such recoupment would cause such game show and/or series to have a loss on a cumulative basis), and f) fifty (50%) percent of the balance remaining, after the deduction of items (a)-(e) above. (iii) "Domestic Net Profits - Library Sales" shall mean the gross receipts received by AATV or Licensee after the Final Closing from the distribution of Programs with respect to re-run syndication in the AATV Territories, less the following, which, in 2 23 the case of items (b), (c), (d) and (e) below, must be within the budget approved by Licensor (which approval shall not be unreasonably withheld) or otherwise approved by the Licensor in writing: a) a distribution fee payable to AATV equal to 25% of gross receipts, b) all marketing and distribution expenses directly attributable to the distribution of the game shows and/or series, c) all reformatting and duplicating costs, d) all residual, re-use, supplemental market, rerun and/or replay fees and/or other actual out-of- pocket costs directly attributable to the game shows and/or series, including Third Party Costs, and e) any unrecouped prior period deficits after the Final Closing (excluding recoupment of prior year distribution fees arising from the same game show and/or series to the extent such recoupment would cause such game show and/or series to have a loss on a cumulative basis). (iv) Merchandising Licensing Activities: Receipts received, net of expenses approved by Licensor, are split 50% to AATV and 50% to Licensor (except in the case of merchandising revenue, where the split of the net will be 25% to AATV and 75% to Licensor). (v) Other Licensing Activities: Receipts received, net of expenses approved by Licensor, from any licensing activity not addressed in clauses (i) through (iv) above and entered into pursuant to Licensee's grant of rights under paragraph 2 of this Agreement shall be split 50% to AATV and 50% to Licensor (except, in the case of licensing activities, when a third party shares in the revenue, where the split of the net will be 25% to AATV and 75% to Licensor). (b) Pursuant to paragraph 18 of this license agreement, AAG shall remit to Licensor (and shall use its reasonable best efforts to cause its sublicensees to remit to it) 3 24 the following applicable percentages of revenues derived from AAFI's below-delineated licensing of the Programs in the AAFI Territories: (i) Local Co-Productions - "Local Co-Productions" are defined as the production of local versions of the Programs where AAFI provides creative supervision on an ongoing basis but is not directly responsible for the production budget. Said revenues from each Program are divided in the following order of priority: a) AAFI recoups its actual out-of-pocket production costs to the extent set forth in the production budget for such Programs that have been approved by Licensor, including its per episode producer's fees but excluding any overhead for production offices, except to the extent within the production budget approved by Licensor (which approval shall not be unreasonably withheld). b) AAFI receives a fee of 10% of remaining revenues from production of such Program until such time as the $25 million principal amount comprising Tranche E of the Chemical Facility (or, until Tranche E is consummated, the equivalent amount of AACI's Working Capital Line), together with all accrued interest thereon is fully paid, or if the Chemical Facility is refinanced, until the earlier of repayment of such new facility and April 13, 1999 whereupon AAFI shall no longer be entitled to such fee. c) Remainder is split: 50% to AAFI and 50% to Licensor. (ii) Local Full Productions - "Local Full Productions" are defined as the production of local versions of the Programs which are produced either by AAFI alone or in association with the local production partner for which AAFI is directly or indirectly responsible for the production budget. Said revenues are divided in the following order of priority: a) AAFI recoups its actual out-of-pocket production costs to the extent set forth in the production budget for such Programs, 4 25 including, but not limited to, all above-the-line and below-the-line production budget items (as such items are customarily understood in the industry but only to the extent set forth in the production budget approved by Licensor (which approval shall not be unreasonably withheld)), allocation of overhead for specific production offices (provided, that in no case may overhead exceed 100% of AAFI's direct costs) supervisory executive producers' fees, studio costs at pre- agreed fixed day rate card (provided, that AAFI shall not recoup any costs associated with its failure to satisfy any studio volume discount requirements or other production-related discount requirements) and local legal fees that relate solely to the production of local versions of the Programs. b) AAFI receives a fee of 10% of remaining revenues. c) Remainder is split: 50% to AAFI and 50% to Licensor (iii) Format Licenses (i.e., the licensing of the right to produce the Programs) where AAFI does not provide any creative or other supervisory services: receipts received, net of expenses approved by Licensor, are split 50% to AAFI and 50% to Licensor (iv) Tape Licenses (i.e., the licensing of U.S. productions (existing tapes) of the Programs): receipts received, net of expenses approved by Licensor, are split 35% to AAFI and 65% to Licensor (v) Merchandising and Ancillary Licensing Activities: receipts received, net of expenses approved by Licensor, are split 50% to AAFI and 50% to Licensor (except, in the case of merchandising, when the broadcaster shares in merchandising revenue, the split of the net will be 25% to AAFI and 75% to Licensor) 5 26 (vi) Other Licensing Activities: receipts received, net of expenses approved by Licensor, from any licensing activity not addressed by clauses (i) through (v) above and entered into pursuant to Licensee's grant of rights under Paragraph 2 of this Agreement are split 50% to AAFI and 50% to Licensor (except, in the case of licensing activities, when a third party shares in the revenue, the split of the net will be 25% to AAFI and 75% to Licensor). (c) During the term of the license agreement referred to in Paragraph 4(a), the division of revenues relating to such license agreement shall be subject to and governed by the provisions of said license agreement. Licensee agrees to remit 100% of the receipts received by it as Sublicensor under said license agreement to the Licensor hereunder. 6 27 EXHIBIT C U.S. PRODUCTION STANDARDS AND STANDARDS OF QUALITY PRODUCTION STANDARDS To be substantially consistent with the standards in effect prior to the date hereof. OTHER STANDARDS Licensee shall adhere to the following standards at all times: 1. No information of any sort with respect to questions to be asked or materials to be used on any New Episode shall be supplied or suggested in any way to, or asked of, contestants or participants in any game or contest recorded in any New Episode in advance of broadcast. 2. No favoritism shall be exercised in the treatment of any contestant or participant. 3. The winning contestant or participant shall be offered in full the exact or substantially the same prize which is announced on the program in accordance with the provisions of the contestant release form. 4. No game or contest, or any element thereof, shall involve any unfair treatment of any contestant, participant or any member of the public. 5. No ambiguous statement or representation that might be misleading to the public shall be made, nor shall the game or contest be conducted in a manner that might be misleading to the public. 6. No element of any program shall be injurious or prejudicial to the interests of the public, Licensor, or honest programming or reputable business in general. 1 EX-10.4 5 PRODUCTION AGREEMENT 1 EXHIBIT 10.4 "THE PRICE IS RIGHT" NETWORK PRODUCTION AGREEMENT 1. IDENTIFICATION This production agreement (the "Agreement") is dated as of the 6th day of October, 1995 and is entered into between Interpublic Game Shows, Inc., a wholly-owned subsidiary of The Interpublic Group of Companies, Inc., whose address is 1271 Avenue of the Americas, New York, N.Y. 10020 ("Sub"), and TPIR LLC, a California limited liability company, directly or indirectly controlled and majority-owned by the Estate of Mark Goodson, whose address is 5750 Wilshire Blvd., Los Angeles, CA 90036 ("Producer"), with respect to the program entitled "The Price Is Right" (the "The Price Is Right" or the "Program"). 2. THE SERIES "The Price Is Right" is a game show series currently produced by Mark Goodson Productions, L.P. and aired on the CBS Network. Pursuant to an Asset Purchase Agreement dated as of October 6, 1995 between Mark Goodson Productions, L.P., The Child's Play Company, and the Estate of Mark Goodson on the one hand, and Mark Goodson Productions, LLC (the "LLC"), The Interpublic Group of Companies, Inc., and All American Communications, Inc. on the other hand (the "Asset Purchase Agreement") and certain license agreements, specifically the Main License Agreement from the LLC to All American Goodson, Inc. ("AAG") as licensee and the Sublicense from AAG to Sub as sublicensee (the "Network License Agreement"), Sub has the right to produce and license new episodes of the Program (together with replays as part of the series commitment) to either the CBS, NBC, ABC or FOX Television Networks (each a "Network") or to the UPN or WBN Television Network (each a "Network Alternate"), in the United States, its territories and possessions (and to license retransmission thereof in Canada in the English language) during the Term. The Program is currently being produced through the 1995/1996 broadcast season on the CBS Network pursuant to a network license agreement (the "CBS License") the rights and obligations under which have been assigned from the LLC to AAG to Sub. Without limiting the generality of the foregoing AAG has irrevocably assigned its 2 right to collect receivables earned under the CBS License to Sub. It is currently anticipated that Sub may from time to time enter into a license agreement for the Program with one or more of the Networks or Network Alternates for the period after the 1995/1996 broadcast season and during the Earn-Out Period referenced in the Asset Purchase Agreement whereby Sub shall be responsible for causing the production of the Program in accordance with the content, approval and delivery requirements set forth in the Network License Agreement. For so long as this Agreement is in effect, without the Producer's prior written consent, which shall not be unreasonably withheld or delayed, Sub shall not amend, modify, terminate (other than expressly in accordance with the Network License Agreement's terms as in effect on the date hereof and as thereafter modified in accordance therewith) the Network License Agreement or waive any rights or consent to the foregoing, under the provisions of the Network License Agreement, which would have a material adverse effect on Producer's rights under this Agreement. 3. PRODUCTION FEE Pursuant to this Agreement, Producer shall receive a production fee (the "Production Fee") equal to $1,000 per episode, payable weekly during the Term, with respect to New Episodes of "The Price Is Right" produced and delivered during such week provided that in no event shall such fees in the aggregate exceed $6,000 per week in any given week and; provided further that the Production Fee shall be due and payable only if and when the Earn-Out Payments due and payable are in excess of the Production Fee then due. The LLC or Sub shall credit against the Earn-Out Payments (including the maximum Earn-Out Payments payable under Section 3.8(a) of the Asset Purchase Agreement) any Production Fees paid under this Agreement. Producer shall not receive any Production Fees with respect to any week during which New Episodes are not produced. No Production Fee will be paid with respect to replays. 4. PRODUCTION Sub hereby engages Producer and Producer hereby agrees to produce the Program as a work-for-hire within the definition of the United States Copyright Act of 1976, as amended, for the LLC and exclusively for Network or Network Alternate exploitation and retransmission in Canada in the English language only. Sub derives its rights to "The Price Is Right" from AAG pursuant to the Network License Agreement. AAG in turn derives its rights in "The Price Is Right" from the LLC, which is the sole and exclusive owner of the 2 3 copyright, trademark and other intellectual property rights in and to "The Price Is Right". Therefore, because the LLC commissions the work made for hire by Licensee, the LLC shall directly own the New Episodes of "The Price Is Right" as a "work made for hire". Producer shall produce the Program consistent with past practices of Mark Goodson Productions, L.P. and shall discharge all above-the-line and below-the-line costs in connection therewith (as such terms are generally understood in the entertainment industry and set forth in the approved budget), in accordance with the content, approval and delivery requirements (inclusive of number of episodes of the Program to be produced) set forth in the Network License Agreement. For the 1995/1996 broadcast year, Producer will be responsible for paying any increases in the prize budget or other "below the line" costs or host fees not reimbursed by CBS in excess of the approved production budget amounts. For subsequent broadcast years, if any, during the term hereof, any increases in the prize budget or "below the line" costs or host fees for which the Producer is responsible and not reimbursed by the Network or Network Alternate would be considered increased production costs which would reduce the Domestic Net Profits and the resulting computation of Earn-Out Payments, if any, due to the Representative under the Asset Purchase Agreement. Producer will comply with all applicable requirements under the CBS License as then in effect or other Network or Network Alternate license agreement relating to the Program. NOTE: Each broadcast year must contain at least 130 new and original episodes except as approved from time to time by the Network or Network Alternate. Producer agrees to fully pay and discharge all fees, expenses, costs and other obligations incurred in connection with the production, distribution, licensing or other exploitation of the Library Episodes and the New Episodes of the Program, including without limitation, any and all obligations under any union, guild and/or residual agreement. 5. PRODUCTION BUDGET The 1995/1996 production budget of the Program, which is limited to $3,229,000 for the balance of the 1995/1996 broadcast season after the Escrow Closing Date referred to in the Asset Purchase Agreement, is attached as Exhibit A hereto (the "1995/1996 Budget"). The portion of the 1995/1996 Budget applicable following the Final Closing shall be equal to $3,229,000 less 30% of all payments from the CBS Network to the Partnership during the Interim Period ending at the Final Closing. The 1996/1997 production 3 4 budget for the Program (if renewed on a Network or Network Alternate in accordance with the terms hereof) shall be limited to $5,000,000 for the entire broadcast season. Production budgets for subsequent broadcast years, if any, of the Program shall have increases only to the extent reasonably necessary based on increased out- of-pocket costs but in any event no more than 5% in annual increases (on a compounded basis) over the 1996/1997 Budget, exclusive of increases in the Bob Barker (or other to-be-selected host) host fees or increases in the prize budget or "below the line" costs covered by the first paragraph of Section 5 hereof. The production budget shall contain no overhead reimbursement to the Producer, other than actual direct overhead consistent in all material respects with the 1995/1996 Budget or as otherwise approved by Sub, and no contingency amounts, unless approved in writing by Sub and AAG. Except for Bob Barker, whose fees shall be subject solely to Network approval, the host (and the fees for the host) shall be subject to the approval of Sub and the Network (which approval, in the case of Sub, shall not be unreasonably withheld or delayed). Producer shall invoice Sub weekly for Programs produced during that week up to an aggregate amount in any broadcast year of the amount of the approved production budget for that year (or portion thereof in accordance herewith), incurred in connection with the production of the Program plus any amounts incurred by Producer that are reimbursable by the Network or Network Alternate apart from and in addition to the Network or Network Alternate license fee ("Reimbursements"). With respect to the 1995/1996 broadcast year, unless Sub shall reasonably adjust the payment procedure in light of a change in circumstances, each payment from the CBS Network (exclusive of Reimbursements) shall be divided by Sub as follows: 30% shall cover production costs, 52.5% shall be remitted as Earn-Out Payments pursuant to Section 3.8(a)(i) of the Asset Purchase Agreement (less Production Fees credited against such payments) and 17.5% shall be retained by Sub, for remittance to AAG in accordance with the terms of the Network License Agreement. Nothing herein shall reduce or increase the total production costs payable to Producer for the balance of the 1995/1996 broadcast year, and the above payments shall be adjusted from time to time accordingly. Producer shall provide Sub with appropriate documentation (i.e., copies of receipts for 4 5 out-of-pocket expenses if requested by Sub) in connection with such out-of-pocket costs. Producer shall be responsible for all production budget overages (except as expressly provided herein) and Producer shall retain all production budget underages calculated for the broadcast year. Sub's obligation to reimburse Producer's production budget costs and Reimbursements and to pay Producer its Production Fees shall be subject to, and payable from, its receipt of license fee payments and related Reimbursements from the Network or Network Alternate. Within five Business Days of receipt of such license fee payments and related Reimbursements from the Network or Network Alternate, Sub shall reimburse Producer for its applicable production budget cost and the Production Fees in accordance with paragraph 3. To the extent that Producer's costs and expenses and Reimbursements exceed the Network or Network Alternate license fee payments (and related Reimbursements) to Sub, Producer shall not be reimbursed for such excess. Sub shall, on behalf of the LLC, make certain Earn-Out Payments to Representative in accordance with, and subject to the terms of, Section 3.8(a)(i) of the Asset Purchase Agreement to the extent described in the Network License Agreement, but only to the extent of receipts it receives from CBS or another Network or Network Alternate net of any costs and expenses permitted to be incurred by it under the Network License Agreement as in effect on the date hereof and as thereafter modified in accordance herewith in connection with the exploitation of the Program. Representative and its authorized representatives shall, upon request received by the Sub in writing, have reasonable access during normal business hours to any books, records and documents relevant to the calculation by the Sub (or, if in Sub's possession, the LLC) of any Earn-Out Payment under Section 3.8(a)(i) of the Asset Purchase Agreement with respect to Domestic Net Profits - Price Is Right Network (as defined in the Asset Purchase Agreement). All calculations of Domestic Net Profits - Price is Right Network shall be made by the LLC or the Sub in accordance with the Asset Purchase Agreement. Any disputes as to the calculation of the Earn-Out Payments shall be subject to resolution pursuant to Article 10 of the Asset Purchase Agreement. 5 6 6. TERM; NETWORK EXTENSIONS OR RENEWALS a. The term (the "Term") of this agreement shall be for a period coterminous with the Program remaining in continuous annual (i.e., broadcast year) production (i.e., each broadcast year must consist of at least 130 new and original episodes unless otherwise approved from time to time by the Network or Network Alternate), but not to exceed the Earn-Out Period, including any extension thereof, as defined in and in accordance with the Asset Purchase Agreement. In the event that the Program does not remain in continuous annual Network or Network Alternate production, this Agreement shall terminate. b. Sub and AAG, as Licensor under the Network License Agreement, shall have the right in their business judgment to mutually agree or refuse to agree to any Network or Network Alternate license, extension or renewal of the Program relating to the Program remaining in continuous annual production, subject to the following provisions: Sub and AAG shall each agree to any extension or renewal of the current CBS License or any license, extension or renewal which ends on or before the last day of the Earn-Out Period (including any extension thereof the reasonable likelihood of which the parties will consider in good faith at the relevant time of extension or renewal) to be in effect during the term of this Agreement so long as (x) the LLC will ultimately receive at least $1.0 million, net of expenses (such expenses shall include amounts payable by Sub pursuant hereto and pursuant to the Network License Agreement) , including Earn-Out Payments and the Production Fees, annually in respect of such license during its term based on the approved production budget (including host fees and together with reasonably anticipated overages for increased prize costs or other "below the line" costs reimbursable to Producer in accordance herewith) and (y) there are no other changes from the current CBS License or any other Network or Network Alternate license then in effect with respect to such Program that Sub or AAG believes in good faith could have a material adverse effect on Sub or AAG. 6 7 Producer and Sub will jointly attend every meeting with the CBS Network (unless the parties agree otherwise) with respect to any extension or renewal of the current CBS License and reasonably consult with each other prior to and after such meeting (it being agreed that failure of Producer to notify Sub of every meeting or to consult with Sub following every meeting will not constitute a material breach hereof except to the extent Sub, AAG or the LLC is materially damaged thereby). In the event that for any reason the CBS License is canceled or it is determined that the Program will not be renewed or extended (the "Non-Renewal Event"), Producer will have a 45-day period from such date (subject to extension in accordance with the penultimate paragraph under this paragraph 6), jointly with Sub, to negotiate with other Networks or Network Alternates (provided that Sub shall control any negotiations with UPN, subject to consultation rights in favor of Producer). Sub shall enter into a Network or Network Alternate license (or an executed binding deal memorandum setting forth the material terms of such license) to be in effect during the term of this Agreement so long as (x) the LLC will receive at least $1.0 million, net of expenses (such expenses shall include amounts payable by Sub pursuant hereto and pursuant to the Network License Agreement), including Earn-Out Payments and the Production Fees, annually in respect of such license during its term based on the approved production budget (including host fees and together with reasonably anticipated overages for increased prize or other "below the line" costs reimbursable to Producer in accordance herewith) and (y) there are no other changes from the CBS License or any other Network or Network Alternate license then in effect with respect to such Program that Sub or AAG believes in good faith could have a material adverse effect on Sub or AAG. If Producer's negotiations with CBS for an extension or renewal of the CBS License shall terminate unsuccessfully and Producer shall receive an offer from another Network or Network Alternate with respect to the continuous Network or Network Alternate broadcast of The Price Is Right, which offer complies with the provisions of this paragraph 6(b) or is otherwise acceptable to Producer, Sub and AAG but is subject to a CBS 7 8 first refusal, Producer shall have the right to transmit such offer to the CBS Network, and if the CBS Network does not accept such offer, to accept such Network or Network Alternate offering within five business days after the expiration of the CBS Network first refusal (subject to Sub's right to control negotiations, if any, with UPN). Anything herein to the contrary notwithstanding, Producer's 45-day period within which to secure a commitment for an extension of the Network or Network Alternate broadcasts of "The Price Is Right" shall be extended accordingly. In the event that Sub does not enter into a new Network or Network Alternate license (or any executed binding deal memorandum setting forth the material terms of such license) not expressly required by the terms hereof within 45 days after the Non-Renewal Event, this agreement shall terminate (and the Term shall expire) for all periods after the then current broadcast year. 7. COPYRIGHT The LLC shall own all right, title and interest in and to all copyrights in all New Episodes, the Licensed Formats and any Modified Format and shall also own all right, title and interest in and to the New Copyrights. Sub shall assign or otherwise convey to the LLC any intellectual property ownership rights to any New Episode of the Program that it may have or hereafter acquire pursuant to the terms of Network License Agreement. 8. TRADEMARKS Producer agrees that the Licensed Trademark is the exclusive property of the LLC. Any goodwill associated with Producer's use of the Licensed Trademark shall inure to the exclusive benefit of the LLC. Producer shall not take any actions inconsistent with LLC's ownership of the Licensed Trademark, and shall promptly notify LLC, AAG and Sub of any unauthorized use of the Licensed Trademark of which it becomes aware. 9. NO LIENS Producer shall not permit any claims, liens, security interests or encumbrances to be placed upon any of Producer's rights in any New Episode, Library Episode Modified Library Episode, Licensed Format Modified Format, 8 9 advertising and promotional material related thereto, or any New Copyright or Licensed Trademark, except for any of the foregoing approved by the LLC and the Sony Lien. 10. STORAGE Producer shall properly store each master or original negative of each new Episode or Library Episode in accordance with standards customarily observed by major television producers in the United States and, to the extent applicable, as required by the Sony Agreement. 11. DELIVERY Producer shall deliver the final master tapes of the Program in accordance with the content, approval and delivery requirements to be provided to Producer by the Network or Network Alternate. During the term of the Sony Agreement, Producer shall deliver copies of such tapes, at its expense, to the extent required by the Sony Agreement and shall inform the LLC of the time, quantity and content of such deliveries. 12. APPROVALS Sub shall have a right of approval in regard to the principal production elements of the Program (i.e., the producer, director and host of the Program). Sub acknowledges that the principal production elements used for the 1994/1995 broadcast season are approved by it for the 1995/1996 and subsequent broadcast seasons, if any. Sub shall have a right of mutual approval in regard to all key creative elements of the Program but not the production budget to the extent it is in conformity with paragraph 5. Sub shall have the right to have a representative present during all phases of the production of the Program and at all significant production meetings. 13. MUSIC Producer shall cause all original music (compositions and master tapes, collectively the "Original Music") used or embodied in the Program to be composed and produced as a work-for-hire within the definition of the United States Copyright Act of 1976, as amended, for the LLC. The LLC shall have the right to approve all agreements relating to the music. Sub shall own all right, title and interest in the Original Music subject to the composer's (i.e., the so-called writer's) share of performance rights in which Score 9 10 Productions, Inc. or Kalehoff Productions, Inc. has an interest as set forth in the Asset Purchase Agreement. 14. PROMOS If requested by the Network or Network Alternate and either included as part of the approved production budget or reimbursed by the Network or Network Alternate, Producer shall be responsible for producing and discharging the cost of a number (agreed upon with the Network or Network Alternate) of on-air promos for the Program, consistent with the Network's or Network Alternate's requirements. 15. RESIDUALS Producer, as part of the production budget, shall be responsible for all residual and replay fees arising in connection with the Network License Agreement during the Term. 16. NO PARTNERSHIP OR JOINT VENTURE This Agreement shall not be construed to create a partnership or joint venture between Producer and Sub. 17. INSURANCE Producer shall procure or cause to be procured and maintain the customary insurance carried by producers of television programs, including Errors and Omissions Insurance or Broadcasters Liability Insurance covering the exploitation of the program naming Sub as an additional insured and insuring Producer, and the network broadcasting the Program, the limits of such insurance being $1,000,000 for a single claim and $3,000,000 for all claims in the aggregate. Such insurance policy (policies) shall not contain any unusual exclusions or deductions. Producer may not cancel, terminate, amend, modify or otherwise alter such policy (policies) without thirty days' prior written notice to Sub and without Sub's prior written consent, which consent shall not be unreasonably withheld. Producer shall supply certificates of insurance evidencing the above coverage to Sub promptly upon execution of this agreement. 18. WARRANTIES, REPRESENTATIONS AND COVENANTS Producer represents, warrants and agrees (i) that it has the full right and power to enter into this Agreement and to perform all its obligations hereunder; (ii) that neither the Program nor any parts thereof including the titles shall 10 11 contain any materials which will violate any law or infringe on or violate any right of any third party, including, without limitation, any copyright, trademark or trade name, patent or any contract or agreement, any civil, personal or property right; right of privacy or any other right whatsoever belonging to or constituting a slander or libel against any person, firm or corporation whatsoever; (iii) that all payments and rights clearances required to be made or secured in connection with the production and exhibition of the Program in accordance with this Agreement will have been fully made by Producer including but not limited to, residuals, clip rights and fees, and music rights and fees; (iv) Producer has not and will not, while this agreement is in effect, grant any rights with respect to Library Episodes of the Program in contravention of the rights herein granted except for those rights which have already been previously granted pursuant to the Sony Agreement; (v) Producer will deliver each Episode of the Program during the Term to the applicable Network free and clear of any and all claims, liens or encumbrances other than those created by a party other than Producer; (vi) all credits appearing on the New Episodes, as delivered to the network, shall be correct and consistent with all credit obligations to third parties; (vii) Producer shall fully pay and discharge in a timely manner any and all obligations under any union, guild, and residual agreement arising during the Term in connection with the Network or Network Alternate production, distribution, licensing or other exploitation of Library Episodes or New Episodes of the Program; (viii) Producer shall indemnify and hold harmless Sub, its officers and directors, from any claim resulting from any breach by Producer of the representations, warranties and covenants herein made. In addition, Producer shall indemnify and hold harmless Sub from and against any loss, liability, damage, obligation, cost or expense (including reasonable legal fees and expenses and any amount paid in settlement) resulting from a claim, demand, lawsuit, action or proceeding, relating to or arising from or in connection with (i) the current, former or prospective employment, retention or compensation of any person (including, without limitation, any performer, actor, musician, host, writer, director, producer or any person retained in any capacity as an independent contractor) in connection with the Network or Network Alternate production, distribution, licensing or other exploitation of Library Episodes or New Episodes of the Program during the Term, including, without limitation, any obligation under any union, guild or residual agreement or (ii) any obligation or liability of the LLC, AAG or Sub under the Sony Agreement 11 12 except to the extent arising from the LLC's breach of the provisions of Schedule 7.14 of the Asset Purchase Agreement to be performed by it. Sub represents and warrants: that it has full right and power to enter into this Agreement; that it shall pay all sums for which it is expressly responsible hereunder; Sub is, and during the term of this Agreement shall continue to be, a wholly owned subsidiary of Interpublic; no consents are required for Sub to enter into the transactions contemplated by this Agreement or the Network License Agreement; and that it shall indemnify and hold harmless Producer from any claim resulting from any breach by Sub of its representations and warranties herein made. Producer shall, to the fullest extent permitted by law, indemnify and hold harmless the LLC, AAG and Sub from and against any loss, liability, damage, obligation, cost or expense (including reasonable legal fees and expenses and any amount paid in settlement) resulting from a claim, demand, lawsuit, action or proceeding, relating to or arising from or in connection with the Assumed Contracts or otherwise in connection with the employment, retention or compensation of any person (including, without limitation, any performer, actor, musician, host, writer, director, producer or any person retained in any capacity) in connection with The Price Is Right or the other obligations of Producer arising during the Term hereof. For purposes hereof, the term "Assumed Contracts" shall mean the agreements with Bob Barker (dated 4/9/91, as amended), Rod Roddy (dated 6/1/94, as amended, between Trior Entertainment f/so/o Rod Roddy and the Partnership, Holly Hallstrom (dated 3/16/94, as amended) and Janice Pennington (dated 2/11/94, as amended), which contracts have been assigned to the LLC. 19. MUSIC RIGHTS Producer represents and warrants that it has secured or will secure all necessary music rights, including without limitation, music synchronization licenses in all musical compositions contained in the Program and that all performing rights are: (a) controlled by American Society of Composers, Authors and Publishers; SESAC, Inc., BMI; or (b) in the public domain; or (c) controlled by Producer. Producer agrees to indemnify and hold harmless Sub from and against any damages or expenses which may arise out of the performance of any music in the Program in connection with the exercise of its rights hereunder, the performing rights of which come within category (c) above. Producer agrees to furnish Sub with all information reasonably requested by Sub 12 13 concerning the title, composer and publisher of all such music. 20. THIRD PARTY BENEFICIARIES The parties hereto agree that AAG and LLC are intended third-party beneficiaries of the provisions of this Agreement. 21. TERMINATION Sub shall have the right to terminate this Agreement at any time in the event that (i) Producer commits a material breach of any of its obligations under this Agreement and fails to cure such breach within 60 days of receiving a written notice of default from Sub, (ii) a petition is filed by or against Producer for voluntary or involuntary bankruptcy or pursuant to any other insolvency law, or Producer makes or seeks to make a general assignment for the benefit of its creditors or applies for or consents to the appointment of a trustee, receiver or custodian for it or a substantial part of its property, (iii) subject to the provisions set forth in paragraph 6 hereof, the CBS License terminates, or any other Network or Network Alternate license terminates. In the case of termination of this Agreement pursuant to the foregoing provision, AAG shall continue to have the right, through the Main License Agreement and the Network License Agreement (if such Network License Agreement is still in effect), to produce, record, distribute, market, broadcast, transmit, exhibit or otherwise exploit the Program for commercial purposes. 22. ASSIGNMENTS This Agreement may not be assigned by either party without the other party's prior written approval (which consent will not be unreasonably withheld or delayed). The parties agree that any direct or indirect change of control of Producer prior to the completion of the 1997/1998 broadcast season shall be deemed to constitute an assignment of Producer's rights hereunder and shall require Sub's prior written approval. The parties further agree that prior to any direct or indirect change of control of Producer, whether or not prior to the completion of the 1997/1998 broadcast season, the LLC and Sub shall be given 30 days prior written notice of such proposed direct or indirect change of control (disclosing the identity of the new controlling party and the material terms of such proposed change of control) and AACI shall have the right of first refusal to acquire control of the Producer on the same terms proposed in such 13 14 notice. In the event AACI does not exercise its right of first refusal, but subject to any consent required in the second sentence of this paragraph, Producer shall have the right to consummate such direct or indirect change in control on terms no more favorable to the transferee of such control than set forth in such notice within the 90 day period following non- exercise by AACI of such right of first refusal. The parties acknowledge that a direct or indirect change of control shall not be deemed to have occurred (x) as of a result of any change in the identity of the Executors of the Estate in accordance with the terms of the will of Mark Goodson or (y) so long as any of Richard Schneidman, Jeremy Shamos, Marvin Goodson, David Hurwitz or Royal E. Blakeman, or any combination of them, have direct or indirect control of the Producer. 23. MISCELLANEOUS This Agreement shall be governed by the laws of the State of New York applicable to agreements executed and to be wholly performed therein and shall not be modified except by a written document executed by both parties hereto. This agreement expresses the entire understanding of the parties hereto and replaces any and all former agreements or understandings, written or oral, relating to the subject matter hereof. Paragraph headings are for convenience of the parties only and shall have no legal effect whatsoever. All notices hereunder, unless specified otherwise shall be in writing and shall be given at the addresses set forth in Paragraph 1 either by personal delivery, telegram, telefax or telex (toll prepaid) or by registered or certified mail (postage prepaid) and shall be deemed given on the date delivered, telegraphed, telefaxed or telexed or the date mailed. 24. DEFINITIONS Capitalized terms used in this Agreement without definition shall have the meanings set forth in the Asset Purchase Agreement. "Library Episodes" shall mean the audiovisual productions of the Program constituting Assets acquired by the LLC at the Final Closing of the Asset Purchase Agreement and licensed to Sub, directly or indirectly by AAG through the Network License Agreement, including any modifications thereof. "Licensed Formats" shall mean the outlines, treatments or formats for "The Price Is Right" shows in the Territory, including any modifications thereof made by Sub. 14 15 "Licensed Trademark" shall mean the trademark "The Price Is Right". "Modified Format" shall mean the work resulting from any modification by Sub of the Licensed Formats. Each Modified Format shall also be deemed a Licensed Format. "New Copyrights" shall have the meaning specified in paragraph 9(a) of the Network License Agreement. "New Episodes" shall mean any audiovisual production based on the Licensed Formats (including any Modified Format) produced by Sub or its sublicensees pursuant to this Agreement. 25. EFFECTIVENESS This Agreement shall become effective at the Final Closing of the Asset Purchase Agreement and shall be of no force or effect if the Asset Purchase Agreement is terminated in accordance with its terms. 15 16 IN WITNESS WHEREOF, the parties have executed this agreement as of the date first written above. INTERPUBLIC GAME SHOWS, INC. ("SUB") By: /s/ THOMAS VOLPE ---------------------------- Its: Chairman and President Date: October 6, 1995 TPIR LLC ("PRODUCER") By: /s/ RICHARD SCHNEIDMAN ---------------------------- Name: Richard Schneidman Title: Vice President 16 EX-10.5 6 OPERATING AGREEMENT 1 EXHIBIT 10.5 OPERATING AGREEMENT OF MARK GOODSON PRODUCTIONS, LLC DATED AS OF SEPTEMBER 18, 1995 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1. "Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2. "Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.3. "Articles of Organization" . . . . . . . . . . . . . . . . . . . . . . . 2 1.4. "Bankruptcy" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.5. "Capital Contribution" . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.6. "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.7. "Majority-in-Interest of Members" . . . . . . . . . . . . . . . . . . . 2 1.8. "Membership Percentage Interest" . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II ORGANIZATION OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.1. Formation; Qualification . . . . . . . . . . . . . . . . . . . . . . . . 2 2.2. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.3. Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.4. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.5. Principal Place of Business: Registered Office and Agent . . . . . . . . 3 2.6. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.7. Organization Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE III MEMBERS AND MEMBERS' INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3.1. Names, Percentage Interest and Capital Contribution of Members . . . . . 4 3.2. Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE IV MANAGEMENT OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE V CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
i 3 ARTICLE VII TRANSFER OF MEMBER INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE VIII DISSOLUTION OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 9.1. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 9.2. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 9.3. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 9.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 9.5. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 9.6. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 9.7. Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 9.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 9.9. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 9.10. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ii 4 OPERATING AGREEMENT OF MARK GOODSON PRODUCTIONS, LLC This Operating Agreement of Mark Goodson Productions, LLC, a New York limited liability company (the "Company"), dated as of September 18, 1995, is made by and between All American Goodson, Inc., a Delaware corporation ("AAG") and All American Communications, Inc., a Delaware corporation ("AACI") (individually, a "Member" and, collectively, together with any additional members hereafter admitted to the Company in accordance with this Agreement, the "Members"). W I T N E S S E T H: WHEREAS, the parties hereto desire to enter into this Agreement to define and express all of their respective rights and obligations with respect to the formation and operation of the Company as a limited liability company; WHEREAS, the parties hereto desire to be bound by the terms of this Agreement. NOW, THEREFORE, in consideration of the promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the meanings specified (terms in the singular to have the correlative meaning in the plural and vice versa): 1.1. "Act" means the New York Limited Liability Company Law, as amended from time to time. 1.2. "Agreement" means this operating agreement (including the Exhibits hereto), as originally executed and as amended from time to time, and the terms "hereof", "hereto" and "hereunder", when used in reference to this Agreement, refer to this Agreement as a whole, unless the context otherwise requires. 1 5 1.3. "Articles of Organization" means the Articles of Organization of the Company to be filed with the New York Department of State in the form of Exhibit A hereto, as the same may be amended from time to time in accordance with the Act. 1.4. "Bankruptcy", when used with reference to any Member, shall be deemed to occur (a) when the Member (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent or has entered against him or her an order for relief in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for himself or herself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against him or her in any proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief or (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial part of his properties, or (b) (i) 120 days after the commencement of any proceeding against the Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, the proceeding has not been dismissed, or (ii) 90 days after the appointment without his or her consent or acquiescence of a trustee, receiver or liquidator of the Member or of all or any substantial part of his or her properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated. 1.5. "Capital Contribution" for each Member means the aggregate of sums contributed by such Member pursuant to Section 3.1 and Article V hereof. 1.6. "Code" means the Internal Revenue Code of 1986, as amended. 1.7. "Majority-in-Interest of Members" means Members whose aggregate Membership Percentage Interests exceed 50 percentage points. In the case of determinations to be made by a Majority-in-Interest of Members upon admission of a new Member, such percentage shall be calculated without giving effect to the Membership Percentage Interest of the new Member. 1.8. "Membership Percentage Interest" means, as to any Member, the percentage of the capital and profits interests in the Company. See Exhibit B. ARTICLE II ORGANIZATION OF THE COMPANY 2.1. Formation; Qualification. The Company shall be formed under the laws of the State of New York on the date of the filing of the Articles of Organization with the 2 6 New York Department of State. The Members shall cause to be executed and filed the Articles of Organization and such other documents and instruments with such appropriate authorities as may be necessary or appropriate from time to time to comply with all requirements for the formation and operation of a limited liability company in New York. In addition, the Members shall execute and file all requisite documents and instruments to enable the Company to qualify to do business as a foreign limited liability company in each jurisdiction in which, in the reasonable judgment of the Members, such qualification may be necessary or appropriate for the conduct of the business of the Company. 2.2. Name. The business of the Company shall be conducted under the name "Mark Goodson Productions, LLC." 2.3. Purposes. The purpose for which the Company is formed is to engage in any lawful business, purpose or other activity subject to the provisions of section 202 of the Act. 2.4. Powers. The Company shall possess and may exercise all powers necessary or convenient to the conduct, promotion or attainment of its business, purposes or activities, to the fullest extent provided in the Act. 2.5. Principal Place of Business: Registered Office and Agent. (a) The principal place of business of the Company shall be located at such place as shall be determined by the Members. (b) The Company's registered office shall be at the office of its registered agent located at 1633 Broadway, New York, NY 10019 and the registered agent at such address shall be CT Corporation. The registered office and agent may be changed from time to time by the Members by amending the Articles of Organization in accordance with the provisions of this Agreement and the Act. 2.6. Term. The term of the Company shall be fifty (50) years from the date of the filing of the Articles of Organization with the New York Department of State, unless the Company is earlier dissolved in accordance with the provisions of this Agreement or the Act. 2.7. Organization Expenses. The Company shall pay all expenses incurred in connection with the formation and organization of the Company. Such expenses shall include, without limitation, fees of legal counsel, fees of a registered agent, registration fees and other like expenses. Each Member, however, shall bear its own expenses in connection with its consideration of an investment and its acquisition of a membership interest in the Company, including, without limitation, the fees of any attorney, financial advisor or other consultant. 3 7 ARTICLE III MEMBERS AND MEMBERS' INTERESTS 3.1. Names, Percentage Interest and Capital Contribution of Members. The names of the Members, their respective Membership Percentage Interests in the Company and their initial Capital Contributions to the Company are set forth on Exhibit B hereto. 3.2. Limitation on Liability. No Member shall be liable under a judgment, decree or order of any court, or in any other manner, for a debt, obligation or liability of the Company, except as provided by law or as specifically provided otherwise herein. ARTICLE IV MANAGEMENT OF THE COMPANY The Company shall be managed exclusively by the Members of the Company in their membership capacity. ARTICLE V CAPITAL CONTRIBUTIONS The Members shall make the Capital Contributions set forth on Exhibit B. ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS The profits and losses shall be allocated and distributions shall be made between the Members in accordance with their Membership Percentage Interests. ARTICLE VII TRANSFER OF MEMBER INTERESTS No Member shall have the right to confer upon a non-member all the attributes of the Member's interests in the Company without the consent of the non-transferring Member. No Member may transfer its interest in the Company or any interest therein, and any attempt to do so will be null and void. 4 8 ARTICLE VIII DISSOLUTION OF THE COMPANY (a) The Company shall be dissolved, its assets disposed of and its affairs wound up upon the first to occur of the following: (i) the expiration of the Company's term as stated in Section 2.6 hereof; (ii) the death, insanity, retirement, resignation, expulsion, incapacity, withdrawal, Bankruptcy or dissolution of a Member; (iii) a determination by the unanimous written consent of all the Members that the Company should be dissolved; (iv) the sale of all or substantially all of the assets of the Company; (v) the entry of a decree of judicial dissolution under section 702 of the Act; and (vi) at such earlier time as may be required by applicable law. (b) Notwithstanding the foregoing, a Majority-in-Interest of Members (determined on the basis solely of the remaining Members) may, within 90 days of any event described in (a) hereof (i) continue the Company or (ii) transfer the assets of the Company to a newly organized company and accept an interest in the Company in exact proportion to their respective interests in the Company at the time of dissolution. ARTICLE IX MISCELLANEOUS 9.1. Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed given when (a) delivered by hand, (b) transmitted by telecopier (and confirmed by return facsimile), or (c) delivered, if sent by Express Mail, Federal Express or other express delivery service, or registered or certified mail, return receipt requested, to the addressee at the following addresses or telecopier numbers (or to such other addresses, telex number or telecopier number as a party may specify by notice given to the other party pursuant to this provision): 5 9 If to Mark Goodson Productions, LLC: 2114 Pico Boulevard Santa Monica, CA 90405 Attention: All American Communications, Inc. (Operator) Telecopier No.: (310) 452-9053 with a copy to: Kaye, Scholer, Fierman, Hays & Handler 1999 Avenue of the Stars Los Angeles, CA 90067 Attention: Barry Dastin, Esq. Telecopier No.: (310) 788-1200 If to All American Goodson, Inc. 2114 Pico Boulevard Santa Monica, CA 90405 Attention: Thomas Bradshaw Telecopier No.: (310) 452-9053 with a copy to: Kaye, Scholer, Fierman, Hays & Handler 1999 Avenue of the Stars Los Angeles, CA 90067 Attention: Barry Dastin, Esq. Telecopier No.: (310) 788-1200 If to All American Communications, Inc. 2114 Pico Boulevard Santa Monica, CA 90405 Attention: Thomas Bradshaw Telecopier No.: (310) 452-9053 6 10 with a copy to: Kaye, Scholer, Fierman, Hays & Handler 1999 Avenue of the Stars Los Angeles, CA 90067 Attention: Barry Dastin, Esq. Telecopier No.: (310) 788-1200 9.2. Amendments. Except as otherwise provided herein, this Agreement may be amended, modified or revised, in whole or in part, by the consent of a Majority-In-Interest of Members. 9.3. Binding Effect. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective personal representatives, heirs, successors and permitted assigns; provided, however, that nothing contained in this Section 9.3 shall be construed to permit any attempted assignment or other transfer which would be prohibited or void pursuant to any other provision of this Agreement. 9.4. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. 9.5. Headings. All headings contained in this Agreement are inserted as a matter of convenience and for ease of reference only and shall not be considered in the construction or interpretation of any provision of this Agreement. 9.6. Exhibits. All exhibits annexed hereto are expressly made a part of this Agreement, as fully as though completely set forth herein, and all references to this Agreement herein or in any of such exhibits shall be deemed to refer to and include all such exhibits or schedules. 9.7. Terms. Common nouns and pronouns shall be deemed to refer to masculine, feminine, neuter, singular or plural, as the identity of the person or persons may require. 9.8. Severability. Each provision hereof is intended to be severable. If any term or provision is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity of the remainder of this Agreement. 9.9. Entire Agreement. This Agreement, including all Exhibits hereto, constitutes the entire agreement of the parties hereto with respect to the matters hereof and supersedes any prior oral and written understandings or agreements. 7 11 9.10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles thereof. IN WITNESS WHEREOF, this Operating Agreement has been executed as of the date first above written. ALL AMERICAN GOODSON, INC. A Delaware corporation /s/ THOMAS BRADSHAW ---------------------------------------- Name: Thomas Bradshaw Title: Senior Executive Vice President ALL AMERICAN COMMUNICATIONS, INC. A Delaware corporation /s/ THOMAS BRADSHAW ---------------------------------------- Name: Thomas Bradshaw Title: Senior Executive Vice President 8 12 EXHIBIT A ARTICLES OF ORGANIZATION 9 13 EXHIBIT B MEMBERS
Initial Capital Membership Name Contribution Percentage Interest ---- --------------- ------------------- All American Goodson, Inc., $25.00 25% a Delaware corporation All American Communications, Inc., $75.00 75% a Delaware corporation
10 EX-10.6 7 OPERATING AGREEMENT 1 EXHIBIT 10.6 Amended and Restated Limited Liability Company Operating Agreement of Mark Goodson Productions, LLC This Amended and Restated Limited Liability Company Operating Agreement of Mark Goodson Productions, LLC, a New York limited liability company (the "Company"), made and entered into as of October 6, 1995 (the "Agreement"), by and between The Interpublic Group of Companies, Inc., a Delaware corporation ("Interpublic"), Infoplan International, Inc., a Delaware corporation ("Infoplan"), All American Communications, Inc., a Delaware corporation ("All American"), and All American Goodson, a Delaware corporation ("All American Goodson"), as members (each, a "Member" and collectively, with any other persons that hereinafter become a party to this Agreement pursuant to the terms of this Agreement, the "Members"). WITNESSETH: WHEREAS, the Company was formed as a limited liability company under the laws of the State of New York pursuant to the Articles of Organization of the Company filed with the Department of State of the State of New York on September 13, 1995; WHEREAS, All American and All American Goodson executed an Operating Agreement, dated as of September 18, 1995, with respect to the Company (the "Original Agreement"); WHEREAS, pursuant to an Asset Purchase Agreement, dated as of October 6, 1995, Interpublic has purchased an undivided interest in the Assets (as hereinafter defined) and the Company has purchased an undivided interest in the Assets; WHEREAS, Interpublic has assigned a portion of its undivided interest in the Assets to Infoplan; WHEREAS, Interpublic and Infoplan desire to contribute their respective undivided interests in the Assets to the Company; WHEREAS, in exchange for Interpublic's and Infoplan respective contribution of their undivided interests in the Assets and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, All American and All American Goodson desire to admit Interpublic and Infoplan as additional Members in the Company, and Interpublic and Infoplan desire to be so admitted; and WHEREAS, All American, All American Goodson, Interpublic and Infoplan desire to amend and restate the Original Agreement in the manner set forth herein, and to continue the business of the Company pursuant to this Agreement. NOW THEREFORE, the undersigned hereby agree as follows: 1 2 ARTICLE I DEFINITIONS SECTION 1.1 Definitions. The following terms used in this Agreement shall have the following meanings (all terms defined in the singular have the correlative meanings when used in the plural and vice versa). "Acceleration Event" shall mean any of the following acts or events provided that such acts or events occur prior to the Third Ordinary Distribution Period: (i) the dissolution or liquidation of the Company, (ii) the Transfer by the All American Members of their respective Interests to Persons other than to any direct or indirect wholly-owned subsidiary of All American unless consented to in writing by Interpublic, (iii) the liquidation of any All American Member, (iv) the occurrence and continuance of any Tranche E Event of Default or the breach by Chemical of any material term of the Intercreditor Agreement, including, without limitation, the seizure, taking or realization upon the IPG Collateral by Chemical or any bank party to the Chemical Credit Facility other than in accordance with the Intercreditor Agreement or (v) the Distributable Cash of the Company is less than one million ($1,000,000) for any consecutive twelve month period, commencing on September 30, 1996 and measured at the end of each calendar quarter. "Acceleration Request" shall have the meaning set forth in Section 4.2. "Acceptance" shall have the meaning set forth in Section 6.2. "Act" shall mean the New York Limited Liability Company Act, as amended from time to time. "Advisory Committee" shall have the meaning set forth in Section 3.1. "Advisory Committee Members" shall have the meaning set forth in Section 3.2.1. "Affiliate" means, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by, or under common control with such Person, (ii) any Person owning or controlling twenty-five percent (25%) or more of the outstanding voting securities of such Person, (iii) any officer, director, or general partner of such Person, or (iv) any Person who is an officer, director, general partner, trustee, or holder of twenty-five percent (25%) or more of the voting securities of any Person described in clauses (i) through (iii) of this sentence. For purposes of this definition, (a) the term "control," "is controlled by," or "is under common control with" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person or Entity, whether through the ownership of voting securities, by contract or otherwise, (b) Fremantle shall be deemed to be an Affiliate of All American and not an Affiliate of Interpublic, (c) Interpublic (or its designee on All American's Board of Directors) shall be deemed not to be an Affiliate of All American and (d) the Company 2 3 shall be deemed not to be an Affiliate of any Member and any Member shall be deemed not to be an Affiliate of the Company. "Agent" shall mean Chemical Bank or any successor agent under the Chemical Credit Facility. "Agreement" shall mean this Amended and Restated Operating Agreement, as originally executed and as modified, amended or supplemented from time to time. "All American" shall mean All American Communications, Inc., a Delaware corporation. "All American Class A Common Stock" shall mean All American's class of voting Common Stock, $.0001 par value per share, or any shares of any class of voting stock resulting from any reclassification thereof which have no preference in respect of dividends or of amounts payable in the event of liquidation, dissolution or winding-up of All American. "All American Class B Common Stock" shall mean All American's class of non-voting Common Stock, $.0001 par value per share, or any shares of any class of non-voting stock resulting from any reclassification thereof which have no preference in respect of dividends or of amounts payable in the event of liquidation, dissolution or winding-up of All American. "All American Fremantle II" shall mean All American Fremantle II, Inc., a Delaware corporation. "All American Goodson" shall mean All American Goodson, Inc., a Delaware corporation. "All American Members" shall mean All American and All American Goodson. "All American TV" shall mean All American Television, Inc., a Delaware corporation. "All American Television II" shall mean All American Television II, Inc., a Delaware corporation. "Arbitration Committee" shall have the meaning set forth in Section 3.8. "Articles of Organization" shall mean the Articles of Organization of Mark Goodson Productions, LLC as filed with the Secretary of State of the State of New York, as the same may be modified, amended or supplemented from time to time. "Assets" shall have the meaning specified in the Asset Purchase Agreement. 3 4 "Asset Purchase" shall mean the transaction pursuant to which the Company and Interpublic each purchased an undivided interest in the Assets from the Sellers. "Asset Purchase Agreement" shall mean the Asset Purchase Agreement, dated as of October 6, 1995, by and among Goodson, Childs Play, the Company, All American, Interpublic and the Estate of Mark Goodson as modified, amended or supplemented from time to time. "Assumption and Assignment Agreement" shall mean the Assumption and Assignment Agreement, to be dated as of the Final Closing Date among Interpublic, Infoplan and the Company. "Bona Fide Offer" shall mean, with respect to an offer from a Person pursuant to Section 6.2, an offer from a Person who (i) in the reasonable view of the recipient of such offer makes such offer in good faith and (ii) is not an Affiliate of the Person receiving the offer. "Business Day" shall mean any day on which commercial banks are open for business in New York, New York. "Call Notice" shall have the meaning set forth in Section 6.4. "Call Notice Date" shall have the meaning set forth Section 6.4. "Call Purchase Price" shall have the meaning set forth in Section 6.4. "Capital Account" shall mean, as of any given date, the account established for each Member pursuant to and adjusted in accordance with Section 4.3. "Capital Contribution" shall mean any contribution to the capital of the Company in cash or property by a Member whenever made. "Cause" shall mean the occurrence and continuation of any of the following with respect to the Operator (or any of the Operator's executive officers performing, directly or indirectly, functions under this Agreement or any of the Transaction Documents on behalf of the Company): (i) a material breach of the Operator's obligations under this Agreement if such breach is not cured within thirty (30) days after receiving notice of such breach; (ii) any act of fraud, misappropriation, embezzlement or similar conduct involving or affecting the Company; (iii) a Sale of All American; (iv) a Change in Ownership; (v) the Transfer by any All American Member of its Interests other than to a direct or indirect wholly-owned subsidiary of All American; (vi) the failure of the Company to make Ordinary Distributions in accordance herewith for two (2) consecutive quarters when there are sufficient funds to be distributed and there are no legal or contractual restrictions on making such distributions; or (vii) the declaration of a Tranche E Event of Default unless such Tranche E Event of Default shall have been waived or rescinded. 4 5 "Change in Ownership" shall mean the occurrence of any of the following events: (i) the beneficial ownership of Anthony Scotti and Related Parties prior to any conversion of any of the Debentures or exchange or conversion of Class B Common Stock for or into Class A Common Stock is less than twenty percent (20%) of All American's outstanding Class A Common Stock; (ii) the beneficial ownership of Anthony Scotti and Related Parties following the conversion of any of the Debentures or exchange or conversion of any shares of Class B Common Stock for or into Class A Common Stock is less than ten percent (10%) of All American's outstanding Class A Common Stock; or (iii) a Sale of All American. "Chemical Credit Facility" shall mean the loan agreement among All American, Chemical Bank, as Agent, and the Banks named therein, dated as of April 13, 1995 as modified, amended or supplemented from time to time. "Childs Play" shall mean The Child's Play Company, a joint venture among MG Productions Inc., Jill Shamos, Elizabeth Martin, Estate of Mark Goodson, Marjorie Goodson Grantor Trust, Jerry Shamos, Jonathan Goodson and Toasty Productions, Inc. "Claims" shall have the meaning set forth in Section 10.2. "Code" shall mean the Internal Revenue Code of 1986 as amended, and the rules and regulations thereunder. "Company" shall have the meaning set forth in the Introduction to this Agreement. "Contractual Obligation" shall mean, with respect to any Person, any contract, agreement, deed, mortgage, lease, license, commitment or understanding, whether or not in writing, pursuant to which such Person is bound or otherwise legally obligated. "Debentures" shall mean All American's 6.5% Convertible Subordinated Debentures due 2003. "Default Rate" shall mean interest at the rate which is three (3) basis points above Chemical Bank's Alternate Base Rate as from time to time in effect. "Distributable Cash" shall mean all cash and cash equivalents (including interest earned on any Permitted Investments) received by the Company (including, for such purposes, funds deemed to be paid pursuant to the Intercreditor Agreement from the LLC Funds Account referred to therein) other than any moneys received by the Company pursuant to the Asset Purchase Agreement, including without limitation, moneys received pursuant to indemnification claims and as result of a decrease in the purchase price for the Assets, less all amounts paid or set aside (excluding distributions to the Members) by the Company (including, without limitation, amounts paid or set aside for Earn-Out Payments) to operate its business or satisfy its obligations under the Transaction Documents (other than pursuant to indemnification claims arising thereunder). 5 6 "Earn-Out Payments" shall mean, for the Earn-Out Period, the obligation of the Company to make payments to the Sellers as required by Section 3.8 of the Asset Purchase Agreement. "Earn-Out Period" shall mean the five or ten year period following the closing of the Asset Purchase in which Earn-Out Payments may be due as required by Section 3.8 of the Asset Purchase Agreement. "Entity" shall mean any general partnership, limited partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association or any foreign trust or foreign business organization. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended and the rules and regulations thereunder. "Final Closing" shall have the meaning set forth in the Asset Purchase Agreement. "Final Closing Date" shall mean the date of the Final Closing of the Asset Purchase Agreement. "First Ordinary Distribution Period" shall have the meaning set forth in Section 5.3. "Fiscal Year" shall mean the Company's fiscal year, which shall be the calendar year. "Fremantle" shall mean Fremantle International, Inc., a New York corporation. "GAAP" shall mean United States generally accepted accounting principles. "Goodson" shall mean Mark Goodson Productions, LLP, a California limited partnership, including its successors and assigns. "Governmental Authority" shall mean any court, government (federal, state, local or foreign), department, commission, board, agency, official or other regulatory, administrative, judicial or governmental authority. "Guarantee Agreements" shall mean the Guarantee provided by All American Goodson in favor of Interpublic to be dated as of the Final Closing Date, the Guarantee provided by All American Television II in favor of Interpublic to be dated as of the Final Closing Date; and the Guarantee provided by All American Fremantle II in favor of Interpublic to be dated as of the Final Closing Date. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder. 6 7 "Indemnified Person" and "Indemnified Persons" shall have the meanings set forth in Section 10.2. "Infoplan" shall mean Infoplan International, Inc., a Delaware corporation. "Intercreditor Agreement" shall mean the agreement among the Company, Interpublic, the Agent, All American, AAG, All American Fremantle II and All American Television II, to be dated as of October 6, 1995. "Interest" shall mean each Member's interest as a Member in the Company, including any and all rights and benefits to which the Member may be entitled under this Agreement and the obligations of the Member under this Agreement. "Interpublic" shall mean The Interpublic Group of Companies, Inc., a Delaware corporation. "Interpublic Members" shall mean Interpublic and Infoplan. "Interpublic Shares" shall mean the number of shares of Interpublic Common Stock, $.10 par value, delivered to Sellers at the closing of the Asset Purchase (as adjusted as a result of any stock split, stock dividend, reclassification, combination or similar event). "Interpublic Game Shows" shall mean Interpublic Game Shows, Inc., a Delaware corporation. "Interpublic's Costs of Funds" shall mean, as of any date, Interpublic's average annual borrowing rate under its long term debt obligations for the immediately preceding fiscal year as determined by Interpublic in good faith. "IPG Collateral" shall have the meaning set forth in the Intercreditor Agreement. "IPG Sub License Agreement" shall mean "The Price is Right" Network License Agreement between All American Goodson and Interpublic Game Shows dated as of October 6, 1995. "Legal Requirement" shall mean any federal, state, local or foreign law, statute, standard, ordinance, code, order, rule, regulation, resolution or promulgation, or any order, judgment, requirement or decree of or binding agreement with any Governmental Authority, or any applicable license, franchise permit or similar right granted under any of the foregoing, or any similar provision having the force and effect of law. "License Agreement" shall mean the License Agreement dated October 6, 1995, between the Company and All American Goodson, a copy of which is attached hereto as Exhibit A. "Liquidating Agent" shall have the meaning set forth in Section 8.3. 7 8 "LLC Funds" shall have the meaning set forth in the Intercreditor Agreement. "LLC Funds Account" shall have the meaning set forth in the Intercreditor Agreement. "Loss" shall have the meaning set forth in Section 10.2. "Make Whole Amount" shall mean, as of any date, the sum of (i) all Ordinary Distributions and Special Distributions distributed to the All American Members as of such date minus the amount of Ordinary Distributions and Special Distributions distributed to the Interpublic Members as of such date plus (ii) interest on fifty percent (50%) of the average outstanding amount calculated pursuant to clause (i) (from the date of the first of such distributions until the Make Whole Amount is distributed to the Interpublic Members in full) at a rate equal to Interpublic's Cost of Funds applicable to such periods. "Make Whole Default" shall have the meaning set forth in Section 4.2. "Member" and "Members" shall have the meanings set forth in the Introduction to this Agreement. "Membership Percentage" shall mean each Member's percentage interest in the Company for purposes of voting as a Member and receiving allocations or profit and loss and distributions. "Nasdaq" shall mean the National Association of Securities Dealers Automated Quotation System. "Network Production Agreement" shall mean "The Price is Right" Network Production Agreement between Interpublic Game Shows and TPIR LLC dated as of October 6, 1995. "Notice Date" shall have the meaning set forth in Section 6.2. "Notice of Offer" shall have the meaning set forth in Section 6.2. "Operator" shall mean All American or its legal successor. "Ordinary Default Distributions" shall have the meaning set forth in Section 5.3. "Ordinary Distributions" shall have the meaning set forth in Section 5.3. "Original Agreement" shall have the meaning set forth in the recitals. "Payment" shall have the meaning set forth in Section 8.2. "Permitted Investments" shall mean (i) those investments unanimously 8 9 consented to by the Members; (ii) negotiable certificates of deposit, demand deposits (whether interest bearing or not) and time deposits having maturities of not more than six (6) months from the date of acquisition; (iii) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than six (6) months from the date of acquisition; (iv) corporate obligations rated P-1 by Moody's Investors Service, Inc. or A-1 by Standard & Poor's Corporation having maturities not more than six (6) months from the date of acquisition; and (v) investments in money market funds substantially all of the assets of which are comprised of securities of the type described in clauses (ii) through (iv) above. "Person" shall mean any individual or Entity, and the heirs, executors, administrators, legal representatives, successors, and assigns of such Person where the context so permits. "Pledge Agreement" shall mean the pledge agreement between the All American Members and Interpublic, to be dated as of the Final Closing Date. "Prospective Purchaser" shall have the meaning set forth in Section 6.2. "Public Float Requirements" shall mean, as of the date the Interpublic Members are to receive shares of All American Class B Common Stock pursuant to Section 4.2, that the following is true: (i) the number of shares of All American Class B Common Stock issued and outstanding (not including treasury shares or shares held by All American or its Affiliates) is at least equal to twice the number of such shares that are to be issued to the Interpublic Members pursuant to Section 4.2(a); and (ii) that the shares of All American Class B Common Stock are registered under the Exchange Act and listed on or admitted to trading on an authorized stock exchange or quoted on Nasdaq at the time of such issuance. "Put Notice" shall have the meaning set forth in Section 6.4. "Put Notice Date" shall have the meaning set forth Section 6.4. "Put Purchase Price" shall have the meaning set forth in Section 6.4. "Related Agreements" shall have the meaning set forth in the Asset Purchase Agreement. "Related Parties" shall mean members of Anthony Scotti's immediate family (including Benjamin J. Scotti), Persons for whom Anthony Scotti, from time to time, holds an irrevocable proxy (while he holds such proxy), the estate of Anthony Scotti, trusts established for the benefit of Anthony Scotti or his immediate family and Interpublic. "Remaining Members" shall have the meaning set forth in Section 6.2. 9 10 "Restricted Period" shall mean the period commencing on the date hereof and ending on the date the Make Whole Amount has been distributed to Interpublic and Ordinary Distributions are being made to the Members pursuant to Section 5.3(a)(iii). "Sale of All American" shall mean the occurrence of any of the following events: (i) any Person or group (as defined under the Section 13(d)(3) of the Exchange Act) other than Anthony Scotti or any Related Party beneficially owns more than fifty percent (50%) of All American's Class A Common Stock; or (ii) All American merges or consolidates with another Entity and All American is not the surviving Entity. For purposes of this Agreement, the term "beneficial ownership" shall have the meaning set forth in Rule 13d-3 of the Exchange Act "Sale of All American Call Notice" shall have the meaning set forth in Section 7.2. "Sale of All American Call Notice Date" shall have the meaning set forth Section 7.2. "Sale of All American Call Purchase Price" shall have the meaning set forth in Section 7.2. "Sale of All American Put Notice" shall have the meaning set forth in Section 7.1. "Sale of All American Put Notice Date" shall have the meaning set forth Section 7.1. "Sale of All American Put Purchase Price" shall have the meaning set forth in Section 7.1. "Second Ordinary Distribution Period" shall have the meaning set forth in Section 5.3. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Sellers" shall mean, collectively, Goodson and Childs Play. "Selling Member" shall have the meaning set forth in Section 6.2. "Special Distributions" shall have the meaning set forth in Section 5.3. "Tag-Along Rights" shall mean the rights of the Members pursuant to Section 6.2. "Tax Matters Partner" shall have the meaning set forth in Section 9.5. 10 11 "Taxes" shall mean all taxes, assessments, imposts and other charges of every kind and nature arising under or imposed by any applicable law, rule, regulation, ruling or order of any Governmental Authority including, without limitation, all interest, penalties and additions assessed with respect to any of the foregoing. "Third Ordinary Distribution Period" shall have the meaning set forth in Section 5.3. "Tranche E Event of Default" shall have the meaning specified in the Intercreditor Agreement. "Transaction Documents" shall mean the Asset Purchase Agreement; the License Agreement; the IPG Sub License Agreement; the Network Production Agreement; the Intercreditor Agreement; the Put Agreement by and among Interpublic, Goodson and Childs Play dated as of October 6, 1995; the Pledge Agreement; the Guarantee Agreements; the letter agreement among Interpublic, Infoplan, Interpublic Game Shows, All American, All American Goodson, All American Fremantle II, All American Television II and the Company dated as of October 6, 1995; and any of the Related Agreements. "Transfer" shall have the meaning set forth in Section 6.1. "Treasury Regulations" shall mean proposed, temporary and final regulations promulgated under the Code in effect as of the date of filing the Articles of Organization and the corresponding sections of any regulations subsequently issued that amend or supersede such regulations. SECTION 1.2 Interpretation. For all purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires: (a) words importing gender include all genders; (b) any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Agreement; and (c) all references to this Agreement and the words "herein", hereof", "hereto" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. SECTION 1.3 Effectiveness. This Agreement shall not be effective until the Final Closing Date. If the Final Closing Date does not occur by December 5, 1995, this Agreement shall terminate and be null and void unless the parties hereto agree in writing to extend such date. 11 12 ARTICLE II ORGANIZATION SECTION 2.1 Office of the Company. The Company shall have its principal office at the Operator's New York office and may establish such other offices or places of business for the Company as the Members may deem appropriate. SECTION 2.2 Purposes of the Company. The purposes of the Company shall be (i) to own and license the rights in its library of television programs, including, without limitation, its rights in the Library Rights and Library Tangible Assets (both terms as defined in the Asset Purchase Agreement), to licensees, (ii) to exploit opportunities presented to the Company pursuant to Section 3.10 and (iii) to engage in any other lawful business the Company is permitted to under the Act with the consent of the Members. SECTION 2.3 Term of the Company. The existence of the Company commenced on the date the Articles of Organization were filed with the Department of State of the State of New York and shall continue until October 6, 2085, unless sooner terminated in accordance with this Agreement or the Act. ARTICLE III MANAGEMENT OF COMPANY SECTION 3.1 Management Generally. (a) The business and affairs of the Company will be managed by the Members. The Members, acting in their capacity as Members under the Act, shall have full, complete and exclusive authority, power and discretion to manage and control the business of the Company. Unless authorized to do so by this Agreement or by the Members acting in accordance with this Agreement, no attorney-in-fact, employee or other agent of the Company shall have the authority to (i) manage the business and affairs of the Company or (ii) contract for or incur on behalf of the Company any debts, liabilities or other obligations. (b) The Members shall direct, manage and control the business of the Company to the best of their ability, and each Member shall perform its duties as Member in good faith, in a manner it reasonably believes to be in the best interests of the Company and with such care as an ordinary prudent Person in a like position would use under similar circumstances. As of the effective date of this Agreement, the All American Members and the Interpublic Members each have equal Membership Percentages. (c) The Members shall appoint an advisory committee to assist in the management of the Company (the "Advisory Committee") through which the Members will exercise their authority, power and discretion to manage and control the business of the Company. (d) All decisions and actions taken by the Members under the authority of 12 13 this Article III will be binding upon all the Members and the Company. SECTION 3.2 The Advisory Committee; General Powers. There shall be an Advisory Committee which shall have all powers of the Members except for those set forth in Section 402 (c) and Section 402(d) of the Act including, without limitation, the following powers and duties: (a) Review of the performance of the Operator; (b) Review and submission to the Members of a report prepared by the Operator which sets forth the business activities of the Company each fiscal quarter, submitted to the Members within forty-five (45) days after the end of the fiscal quarter to which it corresponds; (c) Review of any audits performed by the Members pursuant to Section 9.2; (d) Establishment of investment guidelines from time to time in connection with investment of license payments received from any licensee; (e) The taking of any action on behalf of the Members that they may deem appropriate resulting from the actions set forth in paragraphs (a) - (d) above; and (f) Such other powers and duties as the Members may, from time to time, delegate to it. 3.2.1 Number and Term of Office. The members of the Advisory Committee ("Advisory Committee Members") shall be appointed by the Members. The number of Advisory Committee Members which shall constitute the entire Advisory Committee shall be two; one nominee of the Interpublic Members and one nominee of the All American Members. Each Advisory Committee Member shall have an alternate member to act in his stead when he is absent. The Interpublic Members shall appoint Joseph Studley as their initial nominee for the Advisory Committee and Thomas Volpe as his alternate and the All American Members shall appoint Lawrence E. Lamattina as their initial nominee for the Advisory Committee and Lou Festa as his alternate (and such alternates shall be considered to be the Advisory Committee Members when acting in such alternate capacity). Appointments made pursuant to this Section 3.2.1 and Section 3.2.9 (other than the initial appointments designated in this Section 3.2.1) shall be evidenced by an instrument in writing signed by the appointing Members and delivered to the other Members and to the Operator. Each Advisory Committee Member (and alternate) shall hold office until his successor is appointed and qualified or until his earlier resignation, removal or death. 3.2.2 Quorum and Manner of Acting. The presence of both Advisory Committee Members shall constitute a quorum for the transaction of business. In the absence of a quorum, the Advisory Committee Member present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum 13 14 shall be present. The unanimous affirmative vote of each Advisory Committee Member present at a meeting at which a quorum is present shall be an act of the Advisory Committee. 3.2.3 Place of Meetings. The Advisory Committee may hold its meetings at such place or places as the Advisory Committee may from time to time determine. 3.2.4 Regular Meetings. Regular meetings of the Advisory Committee shall be held not less than one (1) time each fiscal quarter. Any business which properly may be transacted by the Advisory Committee may be transacted at any regular meeting thereof. 3.2.4 Special Meetings. Special meetings of the Advisory Committee shall be held whenever called by a Member. Unless otherwise agreed to by all of the Advisory Committee Members present at a special meeting, the business to be transacted at any special meeting shall be limited to that stated in the notice of meeting. 3.2.5 Notice. Notice of all meetings of the Advisory Committee shall be mailed by first class mail postage prepaid to each member of the Advisory Committee addressed to him at his usual place of business, at least ten (10) Business Days before the date on which the meeting is to be held, or shall be sent to him at such place by telefax or express mail not later than the fifth (5th) Business Day before the day on which such meeting is to be held. Such notice shall state the place, date, and hour of the meeting and the purpose or purposes for which it is called. In lieu of the notice to be given as set forth above, a waiver thereof in writing, signed by the member or members of the Advisory Committee entitled to receive such notice, whether before or after the meeting, shall be deemed equivalent thereto for purposes of this Agreement. Attendance of a Person at a meeting shall constitute a waiver of notice of such meeting, except when the Person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not properly called or convened. 3.2.6 Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Advisory Committee may be taken without a meeting if all members of the Advisory Committee consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the committee. 3.2.7 Telephonic Meetings. Members of the Advisory Committee may participate in a meeting of the Advisory Committee by means of a conference telephone or similar communication equipment by means of which all Persons participating in the meeting can hear each other. Participation in a meeting pursuant to this paragraph shall constitute presence in Person at such meeting. 3.2.8 Resignation. Any Advisory Committee Member may resign at any time by giving written notice to the Advisory Committee or to the Members, which initially appointed such Advisory Committee Member. The resignation of any Advisory Committee Member shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and unless otherwise specified therein, the acceptance of such 14 15 resignation shall not be necessary to make it effective. 3.2.9 Vacancies. Unless otherwise provided in this Agreement, any vacancies resulting from the death, resignation or removal of any Advisory Committee Member shall be promptly filled, in a manner consistent with this Agreement, by the Members which initially appointed such Advisory Committee Member. Each Advisory Committee Member so chosen shall hold office until his successor is elected and qualified, or until his earlier resignation, removal or death. When any Advisory Committee Member shall resign effective at a future date, the Member which appointed such Advisory Committee Member shall have the power to fill such vacancy, in a manner consistent with this Agreement, and the appointment of a successor Advisory Committee Member shall take effect when such resignation shall have become effective. 3.2.10. Removal. Any one or more Advisory Committee Members may be removed, with or without cause, at any time upon the written direction of the Member or Members which appointed such Advisory Committee Member, effective upon the delivery of such written direction by the removing Members to the other Members and to the Operator. 3.2.11. Compensation of Advisory Committee Members. No Advisory Committee Member shall be entitled to any compensation from the Company in respect of his service on such committee; provided, however, that the out-of-pocket expenses of each Advisory Committee Member shall be reimbursed by the Company if the Advisory Committee unanimously agrees that the Company shall so reimburse such member. SECTION 3.3 Appointment and Authority of Operator. (a) All American is hereby appointed as the Operator. Subject to Section 3.3(b), the Operator and its employees are hereby delegated the right, power and authority to take all actions which it deems necessary, useful or appropriate for the day-to-day management and conduct of the Company's business. The Operator shall not be entitled to any fee, commission or other compensation for its services as Operator other than as provided herein. (b) Notwithstanding anything herein to the contrary and subject to Sections 10.4 and 11.1 and paragraphs (c) and (d) below, the following actions shall not be taken by the Company (or the Operator or any Member acting on its behalf) either directly or indirectly, without receiving the prior unanimous written consent of the Members: (i) approve (which approval shall not be unreasonably withheld or delayed) any production costs associated with programming assets owned by the Company whether such expenditures are by third parties or the Company; (ii) acquire any asset (tangible or intangible); 15 16 (iii) enter into or assume any contract or amend, modify, terminate, suspend performance or waive any rights in respect thereof; provided that the Transaction Documents as entered into as of the date hereof or to be entered into by the Company pursuant to the Asset Purchase Agreement or the Related Agreements are deemed to be approved; (iv) merge the Company into another Person, consolidate the Company with another Person or enter into any other similar kind of business combination with another Person; (v) incur or guarantee any indebtedness; (vi) commence any suit or action in the name of the Company, seek injunctive relief or specific performance with respect to material matters or agree to any settlement of any suit or claim involving the Company, provided that the Company may join the Operator in defending the Company's title to its assets free from the claim of third parties; (vii) distribute any cash or assets of the Company to the Members or any of their respective Affiliates, other than as provided for in this Agreement; (viii) make, execute or deliver any assignment for the benefit of creditors, or commence a voluntary case seeking liquidation, dissolution, reorganization or adjustment of debts pursuant to the provisions of any state or federal bankruptcy or insolvency act, or consent to the institution of an involuntary case with respect to the same, or ask for or consent to the appointment of a receiver, liquidator, custodian, trustee, or similar official for all or any part of the Company's property, except in accordance with this Agreement; (ix) use the name, credit or property of the Company for any purpose other than a proper corporate purpose or engage in any business other than those specified in this Agreement; (x) pledge, create a security interest or lien on or otherwise encumber any assets of the Company; (xi) assign, transfer, pledge, compromise or release any claim of the Company except for full payment; (xii) sell, assign, transfer, exchange, grant or otherwise dispose of any assets of the Company except (a) for distributions of cash to Members as provided in Article V or (b) pursuant to agreements previously approved by the Member in accordance with the terms hereof, 16 17 including without limitation, the Transaction Documents as entered into as of the date hereof or to be entered into by the Company pursuant to the Asset Purchase Agreement or the Related Agreements; (xiii) engage in any transaction not in the ordinary course of business; (xiv) cause the Company to indemnify any Person (other than by operation of law); (xv) approve or file the annual tax returns of the Company, make or change any and all elections for federal, state and local tax purposes including, without limitation, any election, if permitted by applicable law (i) to adjust the basis of the Company's properties or (ii) to extend the statute of limitations for assessment or tax deficiencies against Members with respect to adjustments to the Company's federal, state or local tax returns, represent the Company before the taxing authorities or courts of competent jurisdiction in tax matters affecting the Company and the Members in their capacity as Members, and execute any agreements or other documents that bind the Members with respect to such tax matters or otherwise affect the rights of the Company or the Members; (xvi) change any accounting principle or practice, including the method of accounting for, and reporting of, the Company's assets (tangible or intangible), except as required by GAAP applied on a consistent basis; (xvii) use or approve the use of the name of, or any information regarding, either Member or any Affiliate of either Member, in any advertising materials or public relations campaigns for the Company without the consent of the affected Member; (xviii) cause securities of the Company to be registered under the Securities Act or state, local or foreign securities laws, or register the Company or any affiliate as a broker-dealer under applicable securities laws; (xix) employ or retain any employees or consultants or approve, adopt or implement any pension, health, savings or welfare plan or provide any similar types of benefits; (xx) engage in any restricted transaction referred to in Section 3.8; (xxi) approve or make any loan or investment except for Permitted Investments; (xxii) enter into any agreement or understanding pursuant to which it shall become obligated to any Person pursuant to any collective bargaining 17 18 agreement, including, without limitation, to any union, guild or residual agreement arising in connection with the Assets, whether or not contemplated by the Transaction Documents; and (xxiii) agree or commit to agree to any of the foregoing. (c) Notwithstanding anything herein to the contrary, so long as All American and Interpublic are Members the Operator shall act at the direction of Interpublic with respect to any action taken under or required by the Transaction Documents or any future agreement (including any consent, approval, amendment, waiver, release or other action contemplated by such agreements) that All American or any Affiliate of All American is a party on the one hand and the Company is a party on the other hand. Actions taken under this Section 3.3(c) do not require approval under Section 3.3(b). (d) Notwithstanding anything herein to the contrary, so long as All American and Interpublic are Members the Operator shall act at the direction of All American with respect to any action taken under or required by the Transaction Documents or any future agreement (including any consent, approval, amendment, waiver, release or other action contemplated by such agreements) that Interpublic or any Affiliate of Interpublic is a party on the one hand and the Company is a party on the other hand. Actions taken under this Section 3.3(d) do not require approval under Section 3.3(b). SECTION 3.4 Duties of Operator. The Operator shall perform all duties necessary to operate the Company's day-to-day activities including, but not limited, to the following: (a) taking all reasonable steps necessary or desirable in the Operator's business judgment after consulting with the Advisory Committee, within or outside the United States, to ensure that (i) the Company's copyrights do not enter the public domain before their statutory expiration, its patents and material trademarks are not deemed abandoned, and its confidential business information does not lose trade secret status, (ii) the Company has, at all times, all authorizations and approvals necessary to exploit fully all of its rights in the Library Rights and Library Tangible Assets (both terms as defined in the Asset Purchase Agreement) and in any new program (whether produced or yet to be produced), (iii) the Company makes all filings with any Governmental Authority necessary or desirable to preserve or protect its material rights in any intellectual property, whether owned or licensed, such filings may include, without limitation, an application for the registration of an owned copyright or trademark, the recordation of the Company's interest in the intellectual property rights of a third party, and the registration of the Company as a registered user of a third party's intellectual property rights, and (iv) no copyright, trademark, patent, trade secret or similar intellectual property right of the Company is infringed by any third party; (b) monitoring performance by third party licensees under all licensing agreements; (c) overseeing new programs; (d) investing the proceeds received from any license agreement as such proceeds become available, subject to the terms of this Agreement and the guidelines established by the Advisory Committee from time to time; and (e) preparing all Tax returns and filings. SECTION 3.5 Expenses. 18 19 (a) The Operator shall be responsible for the payment of (i) salaries and fringe benefits of any of its personnel, (ii) the cost of maintaining any office space used by the Operator in connection with the performance of its obligations under this Agreement, including rent, utilities and the cost of office equipment and supplies, (iii) travel and entertainment expenses of personnel of the Operator and (iv) any other overhead charges or expenses of the Operator, except as may otherwise be approved by Interpublic in writing. Any such expenses paid by the Operator shall not be accounted for as expenses of, contributions to or income of the Company and shall in no way affect the capital accounts or capital contributions of the Members. (b) The Company shall pay (or reimburse the Operator for) all costs, expenses and obligations of the Company other than those specified in Section 3.5(a). SECTION 3.6 Removal and Withdrawal of the Operator: (a) Upon not less than thirty (30) days prior notice, the Operator may be removed by Interpublic for Cause. Such removal for Cause shall not be effective until and unless Interpublic agrees to perform the duties of the Operator. (b) All American shall not have the right to withdraw from its duties as Operator unless removed pursuant to Section 3.6(a) or unless the All American Members Transfer all of their respective Interests other than a Transfer to a direct or indirect wholly-owned subsidiary of All American. SECTION 3.7 Meetings of Members. Any action taken by the Members, in their capacity as Members, shall be authorized by a vote of the Members. With respect to any such vote, each Member shall vote in accordance with such Member's Membership Percentage. In the event the Operator wishes to take an action that requires the consent or approval of the Members, it shall promptly call a meeting of the Members or obtain the written consent or approval of the Members pursuant to Section 3.7.7. Minutes of any meeting shall be prepared and kept by a Person designated by the Members (which designee may be a Member) and shall be delivered to the Members within thirty (30) days of any such meeting. 3.7.1. Quorum and Manner of Acting. The presence of all of Members shall constitute a quorum for the transaction of business. In the absence of a quorum, the Members present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. The unanimous affirmative vote of all of Members present at a meeting at which a quorum is present shall be an act of the Members. 3.7.2. Place of Meetings. The Members may hold their meetings at such place or places as the Members may from time to time determine. 3.7.3. Annual Meeting. An annual meeting of the Members shall be held each year, commencing in July 1996. Such meeting shall be held on such date and time as 19 20 shall be designated jointly by the Members, and specified in a notice given as hereinafter provided for meetings of the Members or in a waiver of notice thereof signed by each of the Members. 3.7.4. Regular Meetings. Regular meetings of the Members may be held at such time and place as shall from time to time be determined by the Members. Any business which properly may be transacted by the Members may be transacted at any regular meeting thereof. 3.7.5. Special Meetings. Special meetings of the Members shall be held whenever called by either Member, any member of the Advisory Committee or the Operator. Unless otherwise agreed to by all of the Members present at a special meeting, the business to be transacted at any special meeting shall be limited to that stated in the notice of meeting. 3.7.6. Notice. Notice of all meetings of the Members shall be mailed by first class mail postage prepaid to each Member addressed to it at its usual place of business or shall be delivered personally or sent to it at such place by telefax or express mail not less than ten (10) nor more than sixty (60) days before the date on which the meeting is to be held. Such notice shall state the place, date, and hour of the meeting and the purpose or purposes for which it is called. In lieu of the notice to be given as set forth above, a waiver thereof in writing, signed by the Members entitled to receive such notice, whether before or after the meeting, shall be deemed equivalent thereto for purposes of this Agreement. Attendance of a Member at a meeting shall constitute a waiver of notice of such meeting, except when the Member attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not properly called or convened. 3.7.7. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Members may be taken without a meeting if all of the Members consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Members. 3.7.8. Telephonic Meetings. Members may participate in a meeting of the Members by means of a conference telephone or similar communication equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this paragraph shall constitute presence in person at such meeting. SECTION 3.8 Transactions with Affiliates. The Company may not engage in any transaction, directly or indirectly, with a Member or any Affiliate of a Member unless it receives prior written approval from the other Member; provided that the Company, All American, Interpublic and their respective Affiliates may engage in the activities contemplated by the Transaction Documents in accordance with the terms thereof. All transactions (except transactions expressly contemplated by the Transaction Documents or the agreements approved in accordance with this Section 3.8) between the Company and any Member or any Affiliate of any Member shall be conducted on terms no less favorable 20 21 to the Company than might be obtained in an arm's length transaction from a Person who is not a Member or an Affiliate of a Member. If the Company is (i) negotiating a transaction among the Company and a Member or an Affiliate of a Member or (ii) settling any pending or threatened claim or proceeding relating to or arising out of transactions among the Company and a Member or an Affiliate of a Member, the non-affiliated disinterested Members, if any, shall act on behalf of the Company. Nothing herein shall prohibit transactions between a Member and its own Affiliates. SECTION 3.9 Business Activities of Members. Pursuant to the License Agreement, the Company will grant to All American and certain of its Affiliates, certain rights to produce, license, sublicense and distribute the Company's programming assets. SECTION 3.10 Non-Competition with Company Activities. (a) Each Member agrees that, prior to exploiting any new opportunity (other than opportunities contemplated by existing contracts, including the Fremantle license from Goodson) that involves the ownership, production, distribution, marketing, licensing or exploitation of television game shows with the financial and other assistance or participation of an unaffiliated third party (other than a commercial bank or similar financial institution or the public issuance by a Member of its securities or a private placement for general corporate purposes) it shall consult with the other non-affiliated Members and offer such other Members the opportunity to provide such assistance or participation or transact such business through the Company or through some alternative arrangements with such Members. If the other non-affiliated Members do not agree to participate in such business on the terms presented within thirty (30) days from notice thereof, the Member or Members seeking to exploit such opportunity or engage in such activities may exploit such opportunity or enter into such engagement on those terms with such third party; provided that in no event shall such opportunity or engagement adversely affect in any material respect the Company's business, operations, condition (financial or other) or prospects and provided further that it may not exploit such opportunity on any other terms without first offering the other Members the opportunity to participate in such transaction on such other terms as provided in this Section 3.10(a). (b) Notwithstanding Section 3.10(a), any Member is free to exploit any new game show opportunity covered by Section 3.10(a) that such Member develops without the financial and other assistance or participation of an unaffiliated third party (other than a commercial bank or similar financial institution or the public issuance by a Member of its securities or a private placement for general corporate purposes) without offering the other Members the opportunity to participate in such opportunity through the Company or through some alternative arrangements with such Members, provided that such new game show opportunity does not infringe upon the Company's intellectual property rights. Prior to the exploitation of any such opportunity that might infringe upon the Company's intellectual property rights, the Member seeking to exploit such opportunity shall consult with the other non-affiliated Members regarding such opportunity. If the non-affiliated Member or Members believes that the exploitation of such opportunity would infringe upon 21 22 the Company's intellectual property rights, the Members shall consult with the three member committee of the Board of Directors of All American (the "Arbitration Committee") set forth on Schedule C regarding such disagreement. If the Arbitration Committee does not agree that such opportunity does not infringe upon the Company's intellectual property rights within thirty (30) days of it being advised of such opportunity in writing, the Members shall promptly bring the dispute to arbitration for resolution and the Member or Members seeking to exploit such opportunity shall refrain from exploiting such opportunity pending the issuance of the arbitral panel's determination regarding the issue. If the arbitral panel determines in accordance with Article XIV that such opportunity infringes upon the Company's intellectual property rights, the Member seeking to exploit such opportunity shall not exploit such opportunity. If the Arbitration Committee or the arbitral panel determines that such opportunity does not infringe upon the Company's intellectual property rights, the Member seeking to exploit such opportunity may exploit such opportunity. (c) Each Member acknowledges that money damages would be both incalculable and an insufficient remedy for any breach of this provision by it and that any such breach would cause the Members and the Company irreparable harm. Accordingly, each Member agrees that in the event of any breach or threatened breach of this provision, both the non-breaching Members and the Company, in addition to any other remedies at law or in equity they may have, shall be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance. ARTICLE IV CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND RELATED PROVISIONS SECTION 4.1 Capital Contributions. The Interpublic Members' and the All American Members' initial capital contribution shall be the amount shown for such Members on Schedule A of this Agreement. In consideration for the foregoing contribution, the Interpublic Members and the All American Members each will hold a Membership Percentage equal to fifty percent (50%). The Members shall not be required to make any additional capital contributions, except as otherwise provided with respect to All American's obligation regarding a Make Whole Amount. 22 23 SECTION 4.2. The Make Whole Amount. (a) Following the occurrence and during the continuation of an Acceleration Event, All American shall, at the request of the Interpublic Members (an "Acceleration Request"), make a payment in either (or in a combination of) (i) cash, (ii) All American Class A Stock or (iii) All American Class B Stock, all at All American's sole option, to the Interpublic Members in an amount equal to a Make Whole Amount as of the Business Day immediately prior to the date of such payment; provided that All American may only elect to distribute All American Class B Common Stock to the Interpublic Members to the extent that the Public Float Requirements are met as of such date. The payment to the Interpublic Members of a Make Whole Amount shall be made on the sixtieth (60th) day following the date of the Acceleration Request. After a Make Whole Amount is received by the Interpublic Members, then, notwithstanding anything herein to the contrary, all Ordinary Distributions shall be made to Members pursuant to Section 5.3(a)(iii); provided, however that if the $25 million principal amount comprising Tranche E of the Chemical Credit Facility and all accrued interest thereon remains outstanding, distributions shall continue to be made in accordance with Section 5.3(a)(i) until such principal and interest is repaid and, upon the occurrence of an Acceleration Event, the Make Whole Amount may, at the Interpublic Members' option, be accelerated again by the Interpublic Members. The principal component of the Make Whole Amount paid by All American to the Interpublic Members pursuant to this Section 4.2 shall reduce the Interpublic Members' Capital Accounts in accordance with their respective Membership Percentages. All American's payment of the interest component of any Make Whole Amount shall be considered income to the Interpublic Members and either a loss or a deduction to All American. (b) If All American fails to make a Make Whole Amount payment required by Section 4.2(a), and such failure continues unremedied for sixty (60) days after the Interpublic Members shall have provided an Acceleration Request, such failure unless and until cured shall be deemed to constitute a "Make Whole Default" and the following shall apply: (i) subject to the Chemical Credit Facility, any amounts payable to All American or any of its Affiliates pursuant to the License Agreements shall be paid to the Interpublic Members and applied against such Make Whole Default as if All American had made a Make Whole Amount contribution pursuant to Section 4.2(a); (ii) interest on the Make Whole Default shall accrue from the date on which the amount of the Make Whole Default becomes due until the date on which such Make Whole Default is paid in full, at an annual rate equal to the Default Rate (as in effect from time to time) (which interest shall be reflected in the Interpublic Members' Capital Accounts in accordance with their Membership Percentages as a deemed special allocation of net profit pursuant to Section 5.2(a)(ii)); and 23 24 (iii) the provisions of Section 6.4 shall apply mutatis mutandis. 4.2.1 Required Collateral. (a) Until such time that a Make Whole Amount is distributed to Interpublic in full and Ordinary Distributions have been made by the Company pursuant to Section 5.3(a)(iii), each of All American and All American Goodson hereby (i) grants to Interpublic a second priority security interest in its Interest, (ii) subject and subordinated to the rights of Chemical Bank (or any other agent under the Chemical Credit Facility or any other facility refinancing such facility but only if such refinancing does not increase the principal amount of Tranche E of the Chemical Credit Facility outstanding at the time of such refinancing) as the holder of a first priority security interest in such Interest, appoints Interpublic as its attorney-in-fact, with power to sign its name on any financing statement, mortgage, notice of assignment or other document or certificate as may be necessary or appropriate to evidence and maintain its security interest in its Interest in accordance with applicable law and (iii) agrees that Interpublic shall have such rights and privileges that are available to a secured party under applicable law with respect to its Interest. The appointment of Interpublic as attorney-in-fact as provided hereunder shall (A) be deemed to be coupled with an interest and is irrevocable until the Make Whole Amount has been fully paid, including interest pursuant to Section 4.2(b)(ii), in accordance with the terms hereof, (B) not be affected by the subsequent dissolution, termination or bankruptcy of All American or its subsidiaries or the Transfer of all or any portion of any Members' Interest in the Company and (C) extend to All American's and its subsidiaries' successors and assigns. Interpublic's security interest in All American's and its subsidiaries' Interests shall be recorded on the books of the Company. (b) Until such time that the Make Whole Amount is distributed to Interpublic in full and Ordinary Distributions have been made by the Company pursuant to Section 5.3(a)(iii), Interpublic shall have the right to receive All American Class A Common Stock upon the occurrence and during the continuation of a Make Whole Default. All American hereby agrees to deliver to Interpublic newly issued shares of All American Class A Common Stock, together with endorsed stock powers, equal in value to and in satisfaction of the total amount of the then unpaid Make Whole Amount as of the date immediately prior to the date of delivery. The purchase price for such shares shall be the satisfaction of a Make Whole Amount plus the par value of such shares. SECTION 4.3 Capital Accounts. (a) The Company shall establish and maintain a separate account (the "Capital Account") for each Member. The initial balance of the Capital Account for each Member shall be such Member's initial Capital Contribution to the Company. The Capital Account of each Member shall be increased by: (i) the dollar amount of any additional cash contributions made by such Member; 24 25 (ii) the fair market value of any property (other than cash) contributed to the Company by such Member; and (iii) allocations to such Member with respect to net profit hereunder (determined as provided under Article V hereof). The Capital Account of each Member shall be decreased by: (iv) the dollar amount of any cash distributions made to such Member; (v) the fair market value of any property (other than cash) distributed to such Member, and (vi) allocations to such Member of net loss pursuant to Article V hereof. (b) The provisions of this Section 4.3 and the other provisions of this Agreement are intended to comply with Code Section 704(b) and the Treasury Regulations thereunder in respect of the maintenance of capital accounts. SECTION 4.4 No Interest. No interest will be paid by the Company on any capital contribution (excluding interest to be paid pursuant to a Make Whole Amount) or on the balance of any Capital Account. SECTION 4.5 Partnership Classification for Tax Purposes. Each Member recognizes and intends that for federal income tax purposes, the Company will be classified as a partnership and that the Members shall take all necessary action to make any election by the Company necessary for such treatment. ARTICLE V ALLOCATIONS AND DISTRIBUTIONS SECTION 5.1 Calculation of Net Profits and Net Losses. The net profits and net losses of the Company shall be determined for each Fiscal Year in accordance with U.S. GAAP applied on a consistent basis. SECTION 5.2 Allocation of Net Profits and Net Losses. (a) Except as provided in Section 8.3(b)(i), all items of income and loss shall be allocated among the Members in proportion to their Membership Percentages, except that in any year in which the interest component of the Make Whole Amount is paid to the Interpublic Members then an amount of income equal to such amount so paid to the Interpublic Members shall be allocated to the Interpublic Members instead of to the All American Members (b) Notwithstanding any other provision of this Agreement, in the event that at the end of any Fiscal Year any Member's Capital Account is adjusted for, or such Member is allocated, or there is a distribution to such Member of, any item described in Section 25 26 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations in an amount not reasonably expected at the end of the prior Fiscal Year, and such treatment creates a deficit balance in that Member's Capital Account, then such Member shall be allocated all items of income and gain of the Company for such Fiscal Year and for all subsequent Fiscal Years of the Company until such deficit balance has been eliminated. Any special allocations of items of income or gain pursuant to this Section 5.2(b) shall be taken into account in computing subsequent allocations pursuant to this Section 5.2 so that the net amount of any item so allocated and all other items allocated pursuant to this Section 5.2 shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member pursuant to the provisions of this Section 5.2 if such unexpected adjustments, allocations or distributions had not occurred. (c) Any income or gain in an amount equal to a decrease in "partnership minimum gain" of the Company shall be allocated to the Members that were allocated nonrecourse deductions or received distributions or proceeds attributable to "nonrecourse liabilities" of the Company in accordance with the "minimum gain chargeback" provisions of Section 1.704-2 of the Treasury Regulations. The terms used in the preceding sentence shall have the meanings set forth in Section 1.704-2 of the Treasury Regulations. Any special allocations of items of income or gain pursuant to this Section 5.2(c) shall be taken into account in computing subsequent allocations of items of income or gain pursuant to this Section 5.2 so that the net amount of any item so allocated and all other items allocated to each Member pursuant to this Section 5.2 shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member pursuant to the provisions to this Section 5.2 if the allocations under this Section 5.2(c) had not been made. (d) The Capital Accounts of the Members shall be adjusted in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect the gross fair market value of the Company's property as determined by the Members, as of the following times: (i) the admission of a new Member to the Company or acquisition by an existing Member of an additional Interest in the Company from the Company; (ii) the distribution by the Company of money or property to a retiring or continuing Member in consideration for the retirement of all or a portion of such Member's Interest in the Company; (iii) the termination of the Company for federal income tax purposes pursuant to Section 708(b)(1)(B) of the Code; and (d) such other times as determined by the Members. (e) Notwithstanding any other provision in this Agreement, income, gain, loss and deductions with respect to property contributed to the Company by a Member shall be allocated under the principles of Treasury Regulations Section 1.704-3(b) and with respect to cash contributions allocated under the principles of Treasury Regulation Section 1.704-1(b). 26 27 SECTION 5.3 Distributions. (a) Except as provided in Section 8.3 and subject to Sections 5.3(b) and 5.3(c), Distributable Cash shall, from time to time (but in no event less frequently than once each quarter), be distributed to the Members by the Operator (or deemed to be distributed to the Members from the LLC Funds Account pursuant to the Intercreditor Agreement) as follows ("Ordinary Distributions"): (i) first, to the All American Members until they have received the amount of cash required to satisfy all principal and interest payments required under Tranche E of the Chemical Credit Facility (as such payments are required as of the date of the signing of this Agreement) (the period when such distributions are being made hereinafter referred to as the "First Ordinary Distribution Period"); (ii) second, to the Interpublic Members up to the then unpaid Make Whole Amount (but excluding the interest component of such Amount set forth in clause (ii) of the definition of Make Whole Amount) (the period when such distributions are being made hereinafter referred to as the "Second Ordinary Distribution Period"); and (iii) thereafter, to the Members in proportion to their Membership Percentages (the period when such distributions are being made being hereinafter referred to as the "Third Ordinary Distribution Period"). (b) Prior to the Company making any Ordinary Distributions, but subject to the terms of the Intercreditor Agreement, Distributable Cash shall be distributed to the Members as follows ("Special Distributions"): (i) during the First Ordinary Distribution Period, (A) at the end of each calendar quarter, (x) the Interpublic Members shall receive a Special Distribution equal to the sum of (1) 22.5% of the Company's estimated net United States source taxable income for such calendar quarter; plus (2) 5% of the Company's estimated net foreign source taxable income for such calendar quarter; and (y) the All American Members shall receive a Special Distribution equal to 22.5% of the Company's estimated net taxable income for such calendar quarter, and (B) on or prior to December 31 of each year, Interpublic shall receive a Special Distribution equal to the annual cash dividends paid by Interpublic out of Interpublic's regular earnings on the Interpublic Shares during the preceding year; (ii) during the Second Ordinary Distribution Period, (A) at the end of each calendar quarter, (x) the Interpublic Members shall receive a Special Distribution equal to 22.5% of the Company's estimated net taxable income for such calendar quarter; and (y) the All American Members 27 28 shall receive a Special Distribution equal to 22.5% of the Company's estimated net taxable income for such calendar quarter, and (B) on or prior to December 31 of each year, Interpublic shall receive a Special Distribution equal to the annual cash dividends paid by Interpublic out of Interpublic's regular earnings on the Interpublic Shares during the preceding year; and (iii) during the Third Ordinary Distribution Period, (A) the Members shall receive Special Distributions pursuant to clause (ii) above mutatis mutandis and (B) the Interpublic Members shall receive the unpaid interest component of any Make Whole Amount previously paid as set forth in clause (ii) of the definition of Make Whole Amount plus interest on such sum from the date of the commencement of the Third Ordinary Distribution Period until the date such sum is paid in full, at a rate equal to Interpublic's Cost of Funds, payable from, and in priority to, All American's share of Ordinary Distributions during such period. If the Interpublic Members shall not have received the full amount of such sum by the first anniversary of the date of the commencement of the Third Ordinary Distribution Period, All American shall thereafter immediately pay such unpaid amount in cash. In the event that the Distributable Cash available for Special Distributions is insufficient to satisfy the Company's Special Distribution obligations to the Members and a Tranche E Event of Default has not occurred and is not continuing, the Company shall make Special Distributions to the Interpublic Members and the All American Members from the Distributable Cash on a pro rata basis. (c) Any LLC Funds withdrawn from the LLC Funds Account by the Agent and not distributed to the LLC (other than funds withdrawn by the Agent to pay Sellers Earn-Out Payments) shall be deemed to have been distributed to the All American Members pursuant to this Section 5.3 (i) as Ordinary Distributions if a Tranche E Event of Default has not occurred and is not continuing and (ii) as Ordinary and Special Distributions if a Tranche E Event of Default has occurred and is continuing. (d) Notwithstanding anything in this Section 5.3 to the contrary, the Company shall not make any Ordinary Distributions or Special Distributions until payments required to be made to Sellers pursuant to Section 3.8 of the Asset Purchase Agreement, if any, are made and the Earn-Out Payments, if any, in respect of the prior month have been paid to Sellers by the Agent as required by the Intercreditor Agreement or otherwise reserved or provided for in a manner satisfactory to the Members; provided, however, that (i) if Interpublic Game Shows fails to make Earn-Out Payments when due as required by the IPG Sub License Agreement, the Company may make Ordinary Distributions and Special Distributions to the All American Members but not to the Interpublic Members and (ii) if the Agent fails to make Earn-Out Payments when due as required by the Intercreditor 28 29 Agreement, the Company may make Ordinary Distributions and Special Distributions to the Interpublic Members but not to the All American Members. (e) Distributions as between the Interpublic Members shall be made in proportion to their respective Membership Percentages and distributions as between the All American Members shall be made in proportion to their respective Membership Percentages. ARTICLE VI TRANSFERABILITY SECTION 6.1 Transfer of Interests of Members. (a) Except as provided in Section 4.2, Section 6.1(c), Section 6.2, Article VII or pursuant to the Pledge Agreements, no Member may, directly or indirectly, transfer, assign, sell, pledge, hypothecate, encumber or otherwise dispose (voluntarily or involuntarily) of its Interest (or any part thereof), or any right or interest therein (a "Transfer"), without the other Members' consent, which consent may be withheld in such non-transferring Members' sole and absolute discretion. For purposes of this Section 6.1(a), a sale of Interpublic or All American shall not be deemed to be a Transfer. Any attempted disposition or substitution without such consent shall be void. No such transfer or substitution (other than pursuant to the Pledge Agreements) shall be valid unless the transferee agrees to be bound by this Agreement and to assume all of the obligations of the transferring Member under this Agreement with respect to such transferred Interest and executes such documents as may be necessary, in the reasonable opinion of the non-transferring Members, to assume such obligations including, without limitation, an amendment to the Articles of Organization. If, notwithstanding the immediately preceding sentence, any such transfer is held by a court of competent jurisdiction to be effective, then the provisions of this Agreement shall apply to the transferee and to any subsequent transferee as fully as if such transferee were a party hereto. (b) Each Member hereby agrees that any Transfer of Interests permitted under this Agreement shall result in the Transfer of all of the rights, benefits and privileges of the transferor Member under this Agreement with respect to such Interest. (c) Each Member may Transfer all, but not less than all, of its Interest to any direct or indirect wholly-owned subsidiary of All American or Interpublic; provided, however, that prior to such Transfer (i) any such Affiliate shall (A) execute and deliver to the Company a written agreement, satisfactory in substance and form to the non-transferring Members, assuming all of the obligations of the transferor Member and (B) agree that it will not cease to be an Affiliate of such transferor Member unless, prior to the time the transferee ceases to be such an Affiliate, such transferee transfers to such Member its Interest and (ii) the transferring Member executes and delivers one or more written agreements, reasonably satisfactory to the non-transferring Members, pursuant to which it agrees to remain liable for the obligations of the transferee hereunder and, if the transferring Member is an All American Member, to grant to the Interpublic Members a second priority 29 30 security interest in such All American subsidiary's Interest until such time as the Make Whole Amount has been paid to the Interpublic Members. (d) No Transfer of any Interest, or any right or interest in such Interest, shall release the transferring Member from those liabilities to the Company which such Member has as of the date of such Transfer. (e) The Company agrees that it will record the Transfer of an Interest and the admission of a new Member on its books only in accordance with the terms and conditions of this Agreement. Any purported Transfer of an Interest by a Member that is not in compliance with the terms and conditions of this Agreement will be null and void, and the transferee under any such purported Transfer will acquire no title or ownership thereby. SECTION 6.2 Right of First Refusal and Tag-Along Rights. If at any time after the Restricted Period has ended, a Member has a Bona Fide Offer to purchase all, but not less than all, of its Interest (a "Selling Member") from a third party purchaser (a "Prospective Purchaser") and such Selling Member desires to accept such Offer, such Selling Member shall give prompt written notice (a "Notice of Offer") to the remaining Members which are not Affiliates of the Selling Member (the "Remaining Members"), which Notice shall contain, (i) a true and complete copy of the Offer, (ii) the proposed purchase price and all other material terms and conditions of the Offer, (iii) the identity of the Prospective Purchaser and (iv) the intended closing date of any such sale. The date on which the Notice is actually received by the Remaining Member is referred to hereinafter as the "Notice Date". Each of the All American Members and the Interpublic Members agrees that in the event it wishes to sell its Interest to a Prospective Purchaser, the other All American Member or Interpublic Member, as the case may be, shall sell its Interest to such Person on the same terms and conditions and on the same date. The Notice of Offer shall be deemed an irrevocable offer to sell, on the terms set forth in such Notice of Offer and herein, and the Remaining Members shall have an exclusive right, as hereinafter provided, either to buy the Interest that the Selling Member (and its Affiliated Member) wishes to sell on the terms set forth in such Notice of Offer (in proportion to their Membership Percentages unless otherwise agreed by such Members) or to elect to exercise their Tag-Along Rights. (i) Within thirty (30) days following the Notice Date, the Remaining Members shall notify in writing the Selling Members that they elect either to purchase such Selling Members' Interests (in proportion to their Membership Percentages unless otherwise agreed by such Members) or exercise their Tag-Along Rights (an "Acceptance"). If the Selling Members do not receive an Acceptance within such thirty-day (30-day) period, the Remaining Members shall be deemed to have declined to purchase the Selling Members' Interests and to have elected not to exercise their Tag-Along Rights. The Acceptance shall be deemed to be an irrevocable commitment either to purchase from 30 31 the Selling Members such Selling Members' Interests on the terms contained in such acceptance or to have the Prospective Purchaser purchase the Remaining Members' Interests at the same price and on the same terms and conditions as are set forth in the Notice of Offer, as the case may be. (ii) If the Remaining Members do not elect to purchase the Selling Members' Interests as set forth in the Notice of Offer or to exercise their Tag-Along Rights, the Selling Members may Transfer all, but not less than all, of their Interests set forth in the Notice of Offer to the Prospective Purchaser specified in the Notice of Offer upon the terms and conditions set forth in such Notice, provided such Transfer is consummated within 180 days of the Notice Date. In no event shall the Selling Members Transfer their Interests to a Prospective Purchaser if such Prospective Purchaser shall not have delivered to the Company an executed agreement, reasonably satisfactory in substance and form to the Remaining Members, assuming all of the obligations of the Selling Members contained in this Agreement and in the Articles of Organization. If the Selling Members do not complete the contemplated sale within the 180-day period, the provisions of this Section 6.2 shall again apply, and no Transfer of an Interest shall be made otherwise than in accordance with the terms of this Agreement. (iii) If any Remaining Member elects to exercise its Tag-Along Rights, the closing of the sale of the Selling Members' Interests to the Prospective Purchaser hereunder shall be conditioned on the simultaneous purchase by the Prospective Purchaser of the Interests from such Remaining Member. Notwithstanding the foregoing, in the event any Member breaches its obligations under this Section 6.2 or under any purchase agreement with the Prospective Purchaser with respect to its Interest, the non-breaching Members shall be free to sell their Interests to the Prospective Purchaser without liability to such breaching Member. (iv) If the Remaining Members elect to purchase the Selling Members' Interests as set forth in the Notice of Offer, the closing of the purchase of the Selling Members' Interests by the Remaining Members pursuant to this Section 6.2 shall take place (subject to the expiration of any waiting period under the HSR Act) within thirty (30) days after the termination of the thirty-day (30-day) period following the Notice Date, at 11:00 a.m. at the principal offices of the Company, or at such other time or place as the parties may agree. At such closing, the Selling Members shall sell to the Remaining Members full right, title and interest in and to the Interests so purchased in proportion to the Remaining Members Membership Percentages (unless otherwise agreed by such Members), free and clear of all liens, security interests 31 32 or adverse claims of any kind and nature. At the closing, the Remaining Members shall deliver to the Selling Members, in full payment of the purchase price of the Interests purchased, cash payable by wire transfer of immediately available funds to the account or accounts of the Selling Members designated by the Selling Members in writing not less than three (3) Business Days prior to the closing of such purchases. SECTION 6.3 Admission of Members. Upon the consent of each Member, which consent may be withheld in its sole discretion, the Members may admit to the Company any Person as a Member. Any Person proposed to be admitted as a Member shall, in connection with such admission, execute a counterpart of this Agreement and an amendment to the Articles of Organization showing the admission of such Member and agree to make a Capital Contribution to the Company in such amount as shall be required by the Members. SECTION 6.4 Put Right. (a) Subject to the last sentence of this Section 6.4(a), following the termination of the Second Ordinary Distribution Period or upon a Change in Ownership, the Interpublic Members shall have the right (but not the obligation) to require All American to purchase their respective Interests for an amount equal to fifty percent (50%) of the product of (i) six (6) multiplied by (ii) the sum of the average operating income (as reflected in the Company's financial statements) of the Company during the fiscal year immediately preceding the date the put right is exercised by the Interpublic Members and during the fiscal year immediately following the date the put right is exercised by the Interpublic Members (the "Put Purchase Price"). This put right will become immediately exercisable for a sixty (60) day period on the occurrence of a Make Whole Default as provided in Section 4.2. Notwithstanding the foregoing, the Interpublic Members shall irrevocably waive their rights to put their Interest to All American pursuant to this Section 6.4(a) (but not pursuant to Section 7.1(a)) if, pursuant to Section 6.5(d), they have rejected the All American Members' request to purchase their Interests. (b) If the Interpublic Members choose to exercise their put right they shall give prompt written notice (a "Put Notice") to All American, which Notice shall state that the Interpublic Members wish to have All American purchase all of their Interests for an amount equal to the Put Purchase Price. The date on which the Notice is actually received by All American is referred to hereinafter as the "Put Notice Date". The Put Notice shall be deemed to be an irrevocable offer to sell, on the terms set forth in such Put Notice and herein, and All American shall have the obligation to purchase, on the terms set forth in such Put Notice and herein, the Interpublic Members' Interests. Notwithstanding the foregoing, the Interpublic Members may not send a Put Notice if they have previously received the All American Members' Call Notice or a Notice of Offer from an All American Member pursuant to Section 6.2. (c) The closing of the purchase of the Interpublic Members' Interests by All 32 33 American pursuant to this Section 6.4 shall take place (subject to the expiration of any waiting period under the HSR Act) within thirty (30) days after the Put Notice Date, at 11:00 a.m. at the principal offices of the Company, or at such other time or place as the parties may agree. At such closing, the Interpublic Members shall sell to All American full right, title and interest in and to their Interests so purchased, free and clear of all liens, security interests or adverse claims of any kind and nature. All American shall deliver to the Interpublic Members, in payment of the Interpublic Members' Interests, (i) at the closing of such transaction, 50% of (A) the Put Purchase Price (based on the prior fiscal year's operating income) and (B) the then unpaid Make Whole Amount by wire transfer of immediately available funds to an account or accounts designated by the Interpublic Members in writing not less than three (3) business days prior to the closing of such purchase and (ii) after such closing, the balance of (A) the Put Purchase Price (including any increase or decrease in the Put Purchase Price resulting from averaging the two fiscal year's operating income) and (B) the remaining 50% of the then unpaid Make Whole Amount plus (C) interest on such sum from the date immediately following the closing of the purchase until the date such sum is paid in full, at a rate equal to Interpublic's Cost of Funds plus 3%, shall be delivered to the Interpublic Members, such sum to be payable in three equal annual installments commencing on the first anniversary of the closing. SECTION 6.5 Call Right. (a) Subject to Section 6.5(d), following the second anniversary of the date hereof, the All American Members shall have the right (but not the obligation) to require the Interpublic Members to sell their Interests to such Members for an amount equal to the sum of (i) $25 Million plus (ii) an amount equal to the then unpaid Make Whole Amount as of the date of the exercise of the call right (the "Call Purchase Price"). (b) If the All American Members choose to exercise their call right they shall give prompt written notice (a "Call Notice") to the Interpublic Members, which Notice shall state that the All American Members wish to have the Interpublic Members sell all of their Interests to them for an amount equal to the Call Purchase Price. The date on which the Notice is actually received by All American is referred to hereinafter as the "Call Notice Date". The Call Notice shall be deemed an irrevocable offer to purchase, on the terms set forth in such Call Notice and herein, and, subject to Section 6.5(d), the Interpublic Members shall have the obligation to sell, on the terms set forth in such Call Notice and herein, the Interpublic Members' Interests. Notwithstanding the foregoing, the All American Members may not send a Call Notice if they have previously received the Interpublic Members' Put Notice or a Notice of Offer from an Interpublic Member pursuant to Section 6.2. (c) The closing of the purchase of the Interpublic Members Interests by the All American Members pursuant to this Section 6.5 shall take place (subject to the expiration of any waiting period under the HSR Act) within thirty (30) days after the Call Notice Date, at 11:00 a.m. at the principal offices of the Company, or at such other time or place as the parties may agree. At such closing, the Interpublic Members shall sell to the 33 34 All American Members full right, title and interest in and to their Interests so purchased, free and clear of all liens, security interests or adverse claims of any kind and nature. The All American Members shall deliver to the Interpublic Members, in full payment of the Interpublic Members' Interests, the Call Purchase Price payable by wire transfer at the closing of immediately available funds to an account or accounts designated by the Interpublic Members in writing not less than three (3) business days prior to the closing of such purchase. (d) Notwithstanding paragraphs (b) and (c) above, the Interpublic Members may reject the Call Notice whereupon the Interpublic Members shall not be obligated to sell their respective Interests to the All American Members and such rejection shall constitute an irrevocable waiver of the Interpublic Members put rights set forth in Section 6.4. ARTICLE VII TRANSFERS UPON A SALE OF ALL AMERICAN SECTION 7.1 Sale of All American Put Right (a) Upon the occurrence of a Sale of All American if such Sale of All American is publicly announced prior to the second anniversary of the Final Closing Date, the Interpublic Members shall have the right (but not the obligation) to require All American to purchase their respective Interests for a cash amount (the "Sale of All American Put Purchase Price") equal to the sum of (i) all Capital Contributions made by the Interpublic Members (with the initial Capital Contribution being considered to be $25 million) to the Company through the date of such Sale of All American plus (ii) an amount equal to interest on the average outstanding Capital Contribution made by the Interpublic Members to the Company computed at an annual rate of 12% less (iii) the sum of all amounts distributed to the Interpublic Members by the Company prior to the payment of the Sale of All American Put Purchase Price. For these purposes, the average outstanding Capital Contribution of the Interpublic Members shall be an amount equal to the Capital Contributions made by the Interpublic Members (computed as provided above) reduced by the aggregate distributions to the Interpublic Members theretofore made. (b) If the Interpublic Members choose to exercise their put right upon a Sale of All American they shall provide written notice (a " Sale of All American Put Notice") within sixty (60) days from the closing of such event to All American, which Notice shall state that the Interpublic Members wish to have All American purchase all of their Interests for an amount equal to the Sale of All American Put Purchase Price. The date on which the Notice is actually received by All American is referred to hereinafter as the "Sale of All American Put Notice Date". The Sale of All American Put Notice shall be deemed to be an irrevocable offer to sell, on the terms set forth in such Sale of All American Put Notice and herein, and All American shall have the obligation to purchase, on the terms set forth in such Sale of All American Put Notice and herein, the Interpublic Members' Interests. (c) The closing of the purchase of the Interpublic Members Interests by the All American Members pursuant to this Section 7.1 shall take place (subject to the 34 35 expiration of any waiting period under the HSR Act) within thirty (30) days after the Sale of All American Put Notice Date, at 11:00 a.m. at the principal offices of the Company, or at such other time or place as the parties may agree. At such closing, the Interpublic Members shall sell to the All American Members full right, title and interest in and to their Interests so purchased, free and clear of all liens, security interests or adverse claims of any kind and nature. The All American Members shall deliver to the Interpublic Members, in full payment of the Interpublic Members' Interests, the Sale of All American Put Purchase Price payable by wire transfer at the closing of immediately available funds to an account or accounts designated by the Interpublic Members in writing not less than three (3) business days prior to the closing of such purchase. SECTION 7.2 Sale of All American Call Right. (a) Upon the occurrence of a Sale of All American if such Sale of All American is publicly announced prior to the second anniversary of the Final Closing Date, the All American Members shall have the right (but not the obligation) to require the Interpublic Members to sell their respective Interests for a cash amount (the "Sale of All American Call Purchase Price") equal to the sum of (i) all Capital Contributions made by the Interpublic Members (with the initial Capital Contribution being considered to be $25 million) to the Company through the date of such Sale of All American plus (ii) an amount equal to interest on the average outstanding Capital Contribution made by the Interpublic Members to the Company computed at an annual rate of 12% less (iii) the sum of all amounts distributed to the Interpublic Members by the Company prior to the payment of the Sale of All American Call Purchase Price. For these purposes, the average outstanding Capital Contribution of the Interpublic Members shall be an amount equal to the Capital Contributions made by the Interpublic Members (computed as provided above) reduced by the aggregate distributions to the Interpublic Members theretofore made. (b) If the All American Members choose to exercise their Sale of All American right they shall provide written notice (a "Sale of All American Call Notice") within sixty (60) days from the closing of such event to the Interpublic Members, which Notice shall state that the All American Members wish to have the Interpublic Members sell all of their Interests to them for an amount equal to the Sale of All American Call Purchase Price. The date on which the Notice is actually received by All American is referred to hereinafter as the "Sale of All American Call Notice Date". The Sale of All American Call Notice shall be deemed an irrevocable offer to purchase, on the terms set forth in such Sale of All American Call Notice and herein, and the Interpublic Members shall have the obligation to sell, on the terms set forth in such Sale of All American Call Notice and herein, the Interpublic Members' Interests. (c) The closing of the purchase of the Interpublic Members Interests by the All American Members pursuant to this Section 7.2 shall take place (subject to the expiration of any waiting period under the HSR Act) within thirty (30) days after the Sale of All American Call Notice Date, at 11:00 a.m. at the principal offices of the Company, or at such other time or place as the parties may agree. At such closing, the Interpublic 35 36 Members shall sell to the All American Members full right, title and interest in and to their Interests so purchased, free and clear of all liens, security interests or adverse claims of any kind and nature. The All American Members shall deliver to the Interpublic Members, in full payment of the Interpublic Members' Interests, the Sale of All American Call Purchase Price payable by wire transfer at the closing of immediately available funds to an account or accounts designated by the Interpublic Members in writing not less than three (3) business days prior to the closing of such purchase. ARTICLE VIII DISSOLUTION AND TERMINATION OF THE COMPANY SECTION 8.1 Dissolution. The Company shall be dissolved upon the occurrence of the first to occur of any of the following: (i) the expiration of the term of the Company pursuant to Section 2.3; (ii) the bankruptcy or liquidation of any Member, unless the other Members elect to continue the Company within sixty (60) days of such event; (iii) the sale, transfer or other disposition of all or substantially all the assets of the Company; provided that a change of control of the Company shall not constitute a sale, transfer or other disposition of the assets of the Company for such purposes; (iv) the unanimous written consent of the Members to dissolve the Company; or (v) as otherwise required under the Act including, without limitation, in the case of judicial dissolution under Section 702 of the Act. SECTION 8.2 Articles of Dissolution. In accordance with the Act, within ninety (90) days following the dissolution and the commencement of winding up of the Company, the Members will cause to be executed and filed Articles of Dissolution of the Company in such form as is prescribed by the Secretary of State of the State of New York. SECTION 8.3. Winding Up, Liquidation and Distribution of Assets. (a) Upon dissolution, an accounting shall be made by the Members or, at any Member's request, an independent accounting firm mutually acceptable to the Members, of the accounts of the Company and of the Company's assets, liabilities and operations, from the date of the last previous accounting until the date of the dissolution. The Members, a Person designated by the Members by unanimous consent or the Person required by law to wind up the Company's affairs (the Members or such other Person being referred to herein as the "Liquidating Agent") shall immediately proceed to wind up the affairs of the Company. Except as provided in Section 8.3(b)(i), the Members will continue 36 37 to share profits and losses during the period of liquidation in accordance with Article V. In performing its duties, the Liquidating Agent is authorized to sell, distribute, exchange or otherwise dispose of the assets of the Company in any reasonable manner that the Liquidating Agent shall determine to be in the best interests of the Members, subject to applicable law. (b) Following the payment of, or provision for, all debts and liabilities (including liabilities to Members who are also creditors, to the extent otherwise permitted by law, other than liabilities to Members for distributions and the return of capital) of the Company and all expenses of liquidation, and subject to the right of the Liquidating Agent to set up such cash reserves as the Liquidating Agent may deem reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company, the proceeds of the liquidation and any other funds (or other remaining assets) of the Company will be distributed in the following order: (i) If dissolution occurs during the Restricted Period, the Interpublic Members shall receive a priority distribution of any available funds or assets up to the Make Whole Amount, if any. If any assets of the Company are to be distributed in kind, the net fair market value of such assets as of the date of dissolution shall be determined by independent appraisal or by agreement of the Members. Such assets shall be deemed to have been sold as of the date of dissolution for their fair market value. If dissolution occurs during the Restricted Period, net profits and net losses arising as a result of the liquidation of the Company (including any net profits and net losses attributable to the deemed sale of assets pursuant to the immediately preceding sentence) shall be allocated among the Members in accordance with Article V; provided however, that such allocations shall be modified to take account of the priority distribution to the Interpublic Members of a Make Whole Amount so that to the extent possible the Capital Account balances of the Members will reflect the amounts they are entitled to receive on dissolution of the Company (including the payment of a Make Whole Amount to the Interpublic Members). If there are any assets available following the priority distribution to the Interpublic Members, such assets shall be distributed to the Interpublic Members and the All American Members in accordance with their respective positive Capital Account balances. (ii) If dissolution occurs after the termination of the Restricted Period: (A) If any assets of the Company are to be distributed in kind, the net fair market value of such assets as of the date of dissolution shall be determined by independent appraisal or by agreement of the Members. Such assets shall be deemed to have been sold as of the date of dissolution for their fair market value, 37 38 and the Capital Accounts of the Members shall be adjusted pursuant to the provisions of Article V. (B) The positive balance (if any) of each Member's Capital Account (as determined after taking into account all Capital Account adjustments for the Company's taxable year during which the liquidation occurs) shall be distributed to the Members in cash or, if both Members agree, in kind with the net fair market value of any assets distributed in kind being determined by agreement of the Members. SECTION 8.4 Return of Contribution Nonrecourse to Other Members. Except as provided by law or Section 4.2, each Member will look solely to the assets of the Company for all distributions with respect to the Company and such Member's Capital Contributions thereto and share of profits or losses thereof, and will have no recourse therefore (upon dissolution of the Company or otherwise) against any other Member. ARTICLE IX COMPANY EXPENSES, BOOKS AND RECORDS SECTION 9.1 Fiscal Year and Method of Accounting. The fiscal year of the Company shall begin on January 1 of each year (except for the first fiscal year of the Company which shall begin on the date of this Agreement) and end on the following December 31 of each year, unless otherwise agreed to by the unanimous consent of all Members. The Company's books of account and records shall be maintained in a manner consistent with GAAP applied on a consistent basis and the Company shall elect to use the accrual method of accounting. SECTION 9.2 Audits. (a) The Members shall have the right to audit, at any time and at their sole cost and expense, the books of account and records of the Company. Such audit may be conducted by such Member or its external auditor. If a Member elects to have its external auditor audit the Company's books and records, it shall provide to the other Members a copy of any report or comments prepared by such auditor relating to the Company, its books of account or records. If the Members disagree about matters covered in such reports any Member may require the Company to retain a nationally recognized independent accounting firm mutually agreed upon by the Members to audit the books of account and records of the Company until such time as the Members unanimously determine that it is no longer necessary to retain such outside accounting firm. (b) Interpublic shall have the right, on behalf of the Company, to audit (up to four times in any Fiscal year) the books, records and production budgets of All American Goodson, All American TV, All American Television II, Fremantle and All American Fremantle II. Any such audit shall be at the Company's sole cost and expense. 38 39 (c) Interpublic shall have the right, on behalf of the Company, to audit the books, records and production budgets, with respect to production costs, of any sublicensee of All American Goodson and any other Persons producing, licensing or distributing the Company's programming assets. The All American Members will use their best efforts to cause their sublicensees to agree to allow Interpublic to perform such audits. SECTION 9.3 Right of Inspection. The books and records of the Company shall be available for inspection by the Members at the principal office and place of business of the Company. Additionally, Interpublic shall be given access to the Operator's financial statements and, with respect to production costs, will have the right to examine such financial statements at any reasonable time or times for any purpose. SECTION 9.4 Financial Statements and Reports. Each Member shall receive unaudited reports, quarterly, setting forth with specificity the Company's financial data. Such reports shall be delivered within thirty (30) days of the end of such quarter. The Members shall also receive such other information as may be reasonably requested by a Member or as is otherwise required by law. SECTION 9.5 Tax Matters Partner. The Operator will be the "Tax Matters Partner" (as defined in Section 6231 of the Code) until such time as a new Tax Matters Partner may be designated by the Members. The Tax Matters Partner is authorized and required to represent the Company (at the Company's expense) in connection with all examinations of the Company's affairs by tax authorities, including administrative and judicial proceedings, and to expend Company funds for professional services and costs associated therewith. ARTICLE X LIABILITY AND INDEMNIFICATION SECTION 10.1 Liability to Company and Other Members. (a) Neither the Operator nor any Member, in its capacity as Operator or as a Member, shall be liable to the Company or to any other Member for any losses arising from any act or omission performed or omitted by it in connection with this Agreement, except for any losses determined to be attributable to the Operator's or such Member's gross negligence, bad faith, willful misconduct or breach of this Agreement. Notwithstanding anything herein to the contrary, the provisions of this Section 10.1 shall not be construed so as to relieve (or attempt to relieve) the Operator or any Member of any liability, to the extent (but only to the extent) that such liability may not be waived, modified or limited under applicable law, but shall be construed so as to effectuate the provisions of this Section 10.1 to the fullest extent permitted by law. (b) The Members, as such, shall not be liable under a judgment, decree, or order of a court, or in any other manner, for a debt, obligation, or liability of the Company. 39 40 SECTION 10.2 Indemnification. (a) The Company shall, to the fullest extent permitted by law, indemnify and hold harmless the Operator and each Member (each, an "Indemnified Person" and collectively, the "Indemnified Persons") from and against any loss, liability, damage, cost or expense (including reasonable legal fees and expenses and any amount paid in settlement) ("Loss") resulting from a claim, demand, lawsuit, action or proceeding, including any appellate or bankruptcy proceeding (collectively, "Claims") relating to such Indemnified Person's actions or omissions or such Indemnified Person's status or capacity as a Member or otherwise concerning business or activities undertaken by or on behalf of the Company pursuant to this Agreement unless and to the extent that the acts or omissions are determined to be attributable to the Indemnified Person's gross negligence, bad faith, willful misconduct or breach of this Agreement. With respect to any Claim brought by another Member against the Indemnified Person and containing allegations of gross negligence, bad faith, willful misconduct or breach of this Agreement, including without limitation, a breach of any representation or warranty made pursuant to Article XIV (which shall continue to survive after the execution of the Agreement), by the Indemnified Person, the prevailing party shall be entitled to be reimbursed by the unsuccessful party for any Loss incurred by the prevailing party in connection with such Claim. (b) All rights to indemnification provided herein shall survive the termination of this Agreement and the withdrawal, removal or insolvency of the Operator or any Member; provided that a claim for indemnification hereunder is made by or on behalf of the Person seeking such indemnification prior to the time distribution in liquidation of the assets of the Company is made pursuant to Article VIII. (c) The reimbursement and indemnity obligations of each Member, as such, under this Article X shall be limited to the sum of such Member's Interest and any Capital Contributions required to be made but not then made by such Member hereunder, including contributions made pursuant to Section 4.2, and interest accrued (but not paid) thereon; provided that a Member shall be reimbursed for 100% of any Losses incurred in connection with a breach by a Member of any representation or warranty made pursuant to Article XIII irrespective of the amount of such Loss or Losses. SECTION 10.3 Indemnification of Company. If the Company is made a party to any Claim, or otherwise incurs any Loss as a result of or in connection with the Operator's, any Member's or any Ex-Member's obligations or liabilities unrelated to the business of the Company, the Operator, such Member or such Ex-Member shall reimburse the Company for all Losses incurred. SECTION 10.4 Members Right to Bring Cause of Action. Notwithstanding anything herein to the contrary, any right, claim or cause of action by the Company against the Operator, any Member or any Affiliate of such Member may be brought by the other Member on behalf of the Company. SECTION 10.5 Authorizations. The execution, delivery and filing of the 40 41 Articles of Organization is hereby authorized, approved and ratified and each Member is hereby authorized to execute, deliver and file any amendment to and restatements of the Articles of Organization that are required or permitted by the Act and any and all certificates or documents required by the Act. ARTICLE XI MATTERS RELATING TO THE ASSET PURCHASE AGREEMENT SECTION 11.1 Unanimous Consent of Members Required. Any actions to be taken by the Company pursuant to the terms of the Asset Purchase Agreement, including without limitation, any actions (i) to extend the Earn-Out Payments pursuant to Section 3.8 of the Asset Purchase Agreement, (ii) to approve refunding agreements pursuant to the Estate Guaranty referred to in Section 13.5(a) of the Asset Purchase Agreement, or (iii) to assert claims or defenses to or to commence or defend lawsuits arising under the Asset Purchase Agreement on behalf of the Company, shall require the unanimous written consent of the Members. SECTION 11.2 Assumption of Liabilities. (a) Pursuant to the Assumption and Assignment Agreement, the Company assumes and discharges the Interpublic Members for any and all liabilities and obligations in connection with the Interpublic Members' undivided interest in the Assets other than the obligations of Interpublic (i) to deliver its equity securities to Sellers pursuant to Section 3.3 of the Asset Purchase Agreement, (ii) to deliver cash in lieu of fractional shares of its securities to Sellers pursuant to Section 3.4 of the Asset Purchase Agreement, (iii) relating to the giving of representations and warranties pursuant to Article 6 of the Asset Purchase Agreement and (iv) relating to the covenant to maintain Interpublic Game Shows as a special purpose entity pursuant to Section 7.15 of the Asset Purchase Agreement. (b) If the Interpublic Members incur any Loss as a result of or in connection with it being a purchaser of the Assets (as opposed to being an equity owner of the Company) pursuant to the Asset Purchase Agreement, other than a Loss resulting from Interpublic's breach of the Asset Purchase Agreement or a breach by either Seller under the Asset Purchase Agreement, the Company shall reimburse such Members for 100% of all Losses incurred with respect thereto. Notwithstanding anything in Article V to the contrary, such reimbursement payments shall be distributed to the Interpublic Members prior to distributions of Ordinary Distributions, Special Distributions and Earn-Out Payments. SECTION 11.3 Indemnification. (a) If the Company or any Member incurs any Loss as a result of Interpublic's or All American's breach of the Asset Purchase Agreement, such breaching party shall reimburse the Company or the other non-Affiliated Members, as the case may be, for 100% of all Losses incurred. 41 42 (b) If the Company receives any indemnification payments pursuant to Section 13.1 of the Asset Purchase Agreement or any funds as a result of a decrease in the purchase price for the Assets, the Company shall distribute such payments to the Members in accordance with their Membership Percentages prior to making Ordinary Distributions, Special Distributions or Earn-Out Payments notwithstanding anything in this Agreement to the contrary. ARTICLE XII LETTER AGREEMENT The Members and certain other parties are entering into a letter agreement simultaneously with entering into this Agreement. ARTICLE XIII REPRESENTATIONS AND WARRANTIES SECTION 13.1. Representations and Warranties of All American. Each of the All American Members hereby represents and warrants to the Interpublic Members as of the date hereof as follows: 13.1.1 Organization. Each of the All American Members is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite corporate power and authority to (i) conduct its business as it is now being conducted and to own or lease its properties and assets, (ii) execute and deliver this Agreement and the Transaction Documents, (iii) perform its obligations under this Agreement and the Transaction Documents and (iv) consummate all of the transactions contemplated by this Agreement and the Transaction Documents. 13.1.2 Authorization; Binding Effect. The execution, delivery and performance by such All American Member of this Agreement and the Transaction Documents, and the consummation of the transactions contemplated hereby and thereby to be performed by it, have been duly authorized by all necessary corporate action on the part of such All American Member. This Agreement and the Transaction Documents have been duly executed and delivered by it and, assuming the due execution and delivery by the other parties hereto and thereto, this Agreement and the Transaction Documents constitute valid and binding obligations of such All American Member, enforceable against it in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors' rights generally and to general principles of equity (whether considered in a proceeding in equity or at law). 13.1.3 No Conflicts. The execution and delivery of this Agreement and the Transaction Documents by such All American Member and the performance by it of the transactions contemplated hereby and thereby, will not (i) violate any Legal Requirement applicable to such All American Member, (ii) conflict with or result in a breach of any of the provisions of the charter or by-laws of such All American Member, (iii) violate or result in a breach or default under or cause the termination, modification or acceleration of any 42 43 term or condition of any Contractual Obligation binding upon such All American Member or any of its assets, or (iv) result in the creation or imposition of any encumbrance or claim of any kind upon any asset of such All American Member. 13.1.4 Consents. No consent, approval, authorization, order of or filing with any Governmental Authority or other Person is required to be made by such All American Member to consummate the transactions contemplated by this Agreement or the Transaction Documents (other than such as have been received or made). 13.1.5 No Finder. No All American Member nor any party acting on behalf of any All American Member has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement. 13.1.6 Investment Intent. Each All American Member is acquiring its Interest for its own account for investment and not with a view to, or for resale in connection with, the distribution or other disposition thereof. 13.1.7 Investment Company Act. No All American Member is required to be registered as an "investment company" under the Investment Company Act of 1940, as amended. 13.1.8 The Company. (a) The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of New York and has all requisite corporate power and authority to conduct its business as it is now being conducted and to own or lease its properties and assets. (b) The Company has no liabilities other than liabilities assumed by the Company pursuant to the Asset Purchase Agreement or immaterial liabilities incurred in connection with the organization of the Company. SECTION 13.2 Representations and Warranties of Interpublic. Each of the Interpublic Members hereby represents and warrants to the All American Members as of the date hereof as follows: 13.2.1 Organization. Each of the Interpublic Members is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite corporate power and authority to (i) conduct its business as it is now being conducted and to own or lease its properties and assets, (ii) execute and deliver this Agreement and the Transaction Documents, (iii) perform its obligations under this Agreement and the Transaction Documents and (iv) consummate all of the transactions contemplated by this Agreement and the Transaction Documents. 13.2.2 Authorization; Binding Effect. The execution, delivery and 43 44 performance by such Interpublic Member of this Agreement and the Transaction Documents, and the consummation of the transactions contemplated hereby and thereby to be performed by such Interpublic Member, have been duly authorized by all necessary action on the part of such Interpublic Member. This Agreement and the Transaction Documents have been duly executed and delivered by such Interpublic Member and, assuming the due execution and delivery by the other parties hereto and thereto, this Agreement and the Transaction Documents constitute valid and binding obligations of such Interpublic Member enforceable against such Interpublic Member in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors' rights generally and to general principles of equity (whether considered in a proceeding in equity or at law). 13.2.3 No Conflicts. The execution and delivery of this Agreement and the Transaction Documents and the performance by such Interpublic Member of the transactions contemplated hereby and thereby will not (i) violate any Legal Requirement applicable to such Interpublic Member or (ii) conflict with or result in a breach of any of the provisions of the charter or by-laws of such Interpublic Member, (iii) violate or result in a breach or default under or cause the termination, modification or acceleration of any term or condition of any Contractual Obligation binding upon such Interpublic Member or any of its assets or (iv) result in the creation or imposition of any encumbrance or claim of any kind upon any asset of such Interpublic Member. 13.2.4 Consents. No consent, approval, authorization, order of or filing with any Governmental Authority or other Person is required to be made by such Interpublic Member to consummate the transactions contemplated by this Agreement or the Transaction Documents (other than such as have been received or made). 13.2.5 Contracts. There are no Contractual Obligations to which Interpublic or any of its Affiliates is a party or is otherwise bound relating to the Assets. 13.2.6. No Finder. No Interpublic Member nor any party acting on behalf of any Interpublic Member has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement. 13.2.7 Investment Intent. Each Interpublic Member is acquiring its Interest for its own account for investment and not with a view to, or for resale in connection with, the distribution or other disposition thereof. 13.2.8 Investment Company Act. No Interpublic Member is required to be registered as an "investment company" under the Investment Company Act of 1940, as amended. 44 45 ARTICLE XIV ARBITRATION SECTION 14.1 Nature of the Dispute. Any dispute arising out of or relating to whether the Operator may be removed for Cause pursuant to Section 3.6 or to whether the Company's Assets have been infringed upon pursuant to Section 3.10(b) (a "Dispute") shall be settled exclusively and finally by arbitration. It is specifically understood and agreed that any Dispute may be submitted to arbitration irrespective of the magnitude thereof, the amount in controversy or whether such Dispute would otherwise be considered justiciable or ripe for resolution by a court. SECTION 14.2 Rules of Arbitration. The arbitration shall be conducted in accordance with the Rules of Arbitration of the American Arbitration Association as in effect on the date of this Agreement, except to the extent those rules conflict with the provisions of this Article XIV, in which event the provisions of this Article XIV shall control. SECTION 14.3 Arbitration Procedure. The arbitral tribunal shall consist of three (3) arbitrators. The arbitration shall be conducted in New York, New York or such other place as is unanimously agreed by the parties to the arbitration. Each party to the arbitration shall appoint one (1) arbitrator, and the two (2) arbitrators thus appointed shall choose the third (3rd) arbitrator, who will act as the chairman of the arbitral tribunal and if the two (2) arbitrators appointed pursuant to the foregoing sentence are not able to agree on the third (3rd) arbitrator within thirty (30) days from the date the last such arbitrator was appointed, the third (3rd) arbitrator shall be appointed by the American Arbitration Association. SECTION 14.4 Binding Decision and Award. The arbitral tribunal shall deliver a written decision or award and any such decision or award shall be final and binding upon the parties to the arbitration proceeding. The Members hereby waive to the extent permitted by law any rights to appeal or to review of such award by any court or tribunal. The Members agree that the arbitral award may be enforced against the parties to the arbitration proceeding or their assets wherever they may be found and that a judgment upon the arbitral award may be entered in any court having jurisdiction thereof. SECTION 14.5 Miscellaneous. At any oral hearing of evidence in connection with the arbitration, each party thereto or its legal counsel shall have the right to examine its witnesses and to cross-examine the witnesses of an opposing party. No evidence of any witness shall be presented in written form unless the opposing party or parties shall have the opportunity to cross-examine such witness, except as the parties to the dispute otherwise agree in writing or except under extraordinary circumstances where the arbitrators determine that the interests of justice require a different procedure. Without in any way limiting the foregoing and notwithstanding anything herein to the contrary, the Members may, upon the prior written consent of all parties to a Dispute, submit any Dispute to an expert acceptable to all such parties for consideration and advice. Each 45 46 Member agrees, in the event such submission is made, to reasonably consider the advice of such expert in connection with such Dispute. ARTICLE XV MISCELLANEOUS SECTION 15.1 Amendments to Operating Agreement. The terms and provisions of this Agreement may be modified or amended only by the unanimous written consent of the Members. SECTION 15.2 Notices. The Company shall send the Members copies of all notices which it receives within 5 Business Days of the receipt of such notice. All notices to the Company shall be addressed to its principal office and place of business as set forth in Section 2.1. All notices addressed to a Member shall be addressed to such Member at the address set forth in Schedule B hereto or at such other address as the Member may designate by notice to the Company from time to time. Unless otherwise specifically provided in this Agreement, a notice shall be deemed to have been effectively given when properly mailed by registered or certified mail postage prepaid to the proper address or when properly transmitted by telex or other means of telecommunications or when delivered by hand. SECTION 15.3 Articles of Organization. From time to time the Members shall sign and acknowledge all such writings as are required to amend the Articles of Organization or for the carrying out of the terms of this Agreement or, upon dissolution of the Company, to cancel such Articles of Organization. SECTION 15.4 Entire Agreement. This Agreement supersedes all prior agreements and understandings among the Members with respect to the subject matter hereof. SECTION 15.5 Modification. No change or modification of this Agreement shall be of any force unless such change or modification is in writing and has been signed by the Members. SECTION 15.6 Waivers. No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is in writing and signed by the Member against whom such waiver is claimed. No waiver of any breach shall be deemed to be a waiver of any other or subsequent breach. SECTION 15.7 Severability. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 15.8 Further Assurances. Each Member shall execute such deeds, assignments, endorsements, evidences of Transfer and other instruments and documents and shall give such further assurances as shall be necessary to perform its obligations hereunder. 46 47 SECTION 15.9 Confidentiality. By executing this Agreement, each Member expressly agrees, at all times during the term of the Company and thereafter and whether or not at the time a Member, to maintain the confidentiality of, and not to disclose to any Person other than the Company, another Member, Chemical Bank (provided that Chemical Bank enters into a confidentiality agreement acceptable to Interpublic and All American) or a Person designated by the Company, any information relating to the business, financial structure, financial position or financial results, clients or affairs of the Company that shall not be generally known to the public or the securities industry, except as otherwise required by law or by any regulatory or self-regulatory organization having jurisdiction; provided that any Member may disclose any such information it is required by law, rule, regulation, Nasdaq or the New York Stock Exchange, as determined by its outside counsel, to disclose. SECTION 15.10 Publicity. The All American Members and the Interpublic Members will consult with each other and obtain the consent of the other parties (such consent not to be unreasonably withheld) before issuing any press release or otherwise making any public statement with respect to the Company (other than ordinary course press releases to the trade press in which Interpublic is not named) and shall not make any such public statement prior to such consultation, except as required by law or rules and regulations of the New York Stock Exchange or Nasdaq. SECTION 15.11 Governing Law. This Agreement shall be governed by and be construed in accordance with the laws of the State of New York. SECTION 15.12 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. SECTION 15.13 Limitation on Rights of Others. No Person other than a Member shall have any legal or equitable right, remedy or claim under or in respect of this Agreement. SECTION 15.14 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Members and their respective successors and permitted assigns. SECTION 15.15 Securities Laws. All offerings and Transfers of Interests shall be made in compliance with applicable federal and state securities laws. Each Member indemnifies the other Members and the Company for any loss, cost, liability or damage arising from its breach of the foregoing sentence. 47 48 IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Limited Liability Company Operating Agreement as of the day and year first above written. ALL AMERICAN COMMUNICATIONS, INC. By: /s/ THOMAS BRADSHAW ____________________________________ Name: Thomas Bradshaw ALL AMERICAN GOODSON, INC. By: /s/ THOMAS BRADSHAW ____________________________________ Name: Thomas Bradshaw THE INTERPUBLIC GROUP OF COMPANIES INC. By: /s/ THOMAS J. VOLPE ____________________________________ Name: Thomas J. Volpe INFOPLAN INTERNATIONAL, INC. By: /s/ THOMAS J. VOLPE ____________________________________ Name: Thomas J. Volpe 48 49 SCHEDULE A INITIAL CAPITAL CONTRIBUTIONS OF MEMBERS
Initial Initial Capital Membership Name Contribution Percentage - ---- ------------ ---------- The All American Members __________ 50% The Interpublic Members __________ 50%
49 50 SCHEDULE B NAMES AND ADDRESSES OF MEMBERS
Name Address - ---- ------- All American Communications, Inc. 2114 Pico Boulevard Santa Monica, CA 90405 All American Goodson, Inc. 1325 Avenue of the Americas New York, NY 10019 The Interpublic Group of Companies, Inc. 1271 Avenue of the Americas New York, NY 10020 Infoplan International, Inc. 1271 Avenue of the Americas New York, NY 10020
50 51 SCHEDULE C INITIAL MEMBERS OF THE ARBITRATION COMMITTEE The members of the Arbitration Committee shall be appointed by the Board of Directors of All American, provided that one member of the Arbitration Committee shall consist of the nominee of the director appointed by Interpublic to the All American Board of Directors. The members of the Arbitration Committee shall consist initially of Eugene Beard (as the nominee designated by the director appointed by Interpublic to All American's Board of Directors), Anthony Scotti (as the nominee of the All American board designees) and David Mount. Any member of the Arbitration Committee may be removed, with or without cause, by the director who nominated such Arbitration Committee member, provided that any successor to Mr. Mount will be nominated by the Interpublic board designee and the All American board designee. Any vacancies on the Arbitration Committee shall be filled by the director who initially nominated such member of the Arbitration Committee after consultation with the other directors regarding such Arbitration Committee member's replacement. 51 EX-11.1 8 EXHIBIT 11.1 1 EXHIBIT 11.1 ALL AMERICAN COMMUNICATIONS, INC. & SUBSIDIARIES STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SIX MONTHS ENDED JUNE 30, 1995 --------------------------------------------- AS ADJUSTED FOR THE MARK GOODSON ACQUISITION HISTORICAL PRO FORMA AND THE COMPANY ADJUSTMENTS OFFERING ----------- ------------ ------------ Weighted average number of common shares outstanding.... 7,976 4,000(1) 11,976 Assumed exercise of dilutive options and warrants under the treasury stock method based on average market price................................................. 105(2) 105 ------- ------ ------- Weighted average number of common shares and common share equivalents -- primary (B)...................... 7,976 4,105 12,081 Additional shares from assumed exercise of dilutive options and warrants under the treasury stock method based on ending market price.......................... 162(2) 162 Weighted average assumed conversion of 6 1/2% Convertible Subordinated Notes due 2003............... 5,217 5,217 ------- ------ ------- Weighted average number of common shares and common share equivalents -- fully diluted (D)................ 13,193 4,267 17,460 ======= ====== ======= Computation of net income (loss) for per share purposes: Net income (loss) (A)................................... $(1,571) $2,003 $ 432 Add: After tax reduction of interest expense for assumed conversion of 6 1/2% Convertible Subordinated Notes due 2003........................................... 1,254 1,254 ------- ------ ------- Net income (loss) for fully diluted per share computation (C)....................................... $ (317) $2,003 $ 1,686 ======= ====== ======= Net earnings (loss) per share -- Primary (A)/(B)........ $ (0.20) $ 0.04 ======= ======= Net earnings (loss) per share -- Fully diluted (C)/(D)............................................... $ (0.02)(*) $ 0.10(*) ======= =======
- --------------- (*) Calculation is antidilutive (1) Reflects the issuance of Class B Common Stock in connection with the offering. (2) Reflects the inclusion of dilutive common stock equivalents. EX-11.2 9 EXHIBIT 11.2 1 EXHIBIT 11.2 ALL AMERICAN COMMUNICATIONS, INC. & SUBSIDIARIES STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31, 1994 -------------------------------------------------- AS ADJUSTED SEVEN MONTH FOR THE YEAR ENDED PERIOD ENDED AS ADJUSTED MARK GOODSON DECEMBER 31, JULY 31, 1994 FOR THE ACQUISITION 1994 HISTORICAL PRO FORMA FREMANTLE PRO FORMA AND THE AS REPORTED(1) FREMANTLE ADJUSTMENTS ACQUISITION ADJUSTMENTS OFFERING --------------- ------------- ------------ ------------ ------------- ------------- (IN THOUSANDS -- EXCEPT PER SHARE AMOUNTS) Weighted average number of common shares outstanding............ 6,135 1,841(2) 7,976 4,000(5) 11,976 Assumed exercise of dilutive options and warrants under the treasury stock method based on average market price.......... 66 (66) (3) -- 66(4) 66 -------- ------- ------- -------- ------ ------- Weighted average number of common shares and common share equivalents -- primary (B)................... 6,201 -- 1,775 7,976 4,066 12,042 Additional shares from assumed exercise of dilutive options and warrants under the treasury stock method based on ending market price................. -- 66(4) 66 (66)(3) -- Weighted average assumed conversion of 6 1/2% Convertible Subordinated Notes due 2003.................. 5,217 5,217 5,217 -------- ------- ------- -------- ------ ------- Weighted average number of common shares and common share equivalents -- fully diluted (D)........... 11,418 -- 1,841 13,259 4,000 17,259 ======== ======= ======= ======== ====== ======= Computation of net income (loss) for per share purposes: Net income (loss) (A)... $ 455 $ 476 $ (2,033) $ (1,102) $ 4,406 $ 3,304 Add: After tax reduction of interest expense for assumed conversion of 6 1/2% Convertible Subordinated Notes due 2003........... 2,508 2,508 2,508 -------- ------- ------- -------- ------ ------- Net income (loss) for fully diluted per share computation (C)................... $ 2,963 $ 476 $ (2,033) $ 1,406 $ 4,406 $ 5,812 ======== ======= ======= ======== ====== ======= Net earnings (loss) per share -- Primary (A)/(B)............... $ 0.07 $ (0.14) $ 0.27 ======== ======== ======= Net earnings (loss) per share -- Fully diluted (C)/(D)............... $ 0.26(*) $ 0.11(*) $ 0.34(*) ======== ======== =======
- --------------- (*) Calculation is antidilutive (1) The historical results for the year ended December 31, 1994 include the five months of operations of Fremantle from August 1994, the date of the Fremantle Acquisition. (2) Reflects the weighted average number of shares issued in connection with the Fremantle Acquisition. (3) Reflects the elimination of anti-dilutive common stock equivalents. (4) Reflects the inclusion of dilutive common stock equivalents. (5) Reflects the issuance of Class B Common Stock in connection with the offering. EX-11.3 10 EXHIBIT 11.3 1 EXHIBIT 11.3 ALL AMERICAN COMMUNICATIONS, INC. & SUBSIDIARIES STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SIX MONTHS ENDED JUNE 30, 1994 ----------------------------------------------------------------------------------- AS FURTHER ADJUSTED FOR THE AS ADJUSTED MARK GOODSON HISTORICAL FOR THE ACQUISITION ------------------- PRO FORMA FREMANTLE PRO FORMA AND THE COMPANY FREMANTLE ADJUSTMENTS ACQUISITION ADJUSTMENTS OFFERING ------- --------- ----------- ----------- ------------ ------------- (IN THOUSANDS -- EXCEPT PER SHARE AMOUNTS) Weighted average number of common shares outstanding................................ 4,826 3,150(1) 7,976 4,000(2) 11,976 Assumed exercise of dilutive options and warrants under the treasury stock method based on average market price............. -- -- -- ------- ------- ------- ------- ------ ------- Weighted average number of common shares and common share equivalents -- primary(B).... 4,826 -- 3,150 7,976 4,000 11,976 Additional shares from assumed exercise of dilutive options and warrants under the treasury stock method based on ending market price.............................. -- -- 197(3) 197 Weighted average assumed conversion of 6 1/2% Convertible Subordinated Notes due 2003...................................... 5,217 5,217 5,217 ------- ------- ------- ------- ------ ------- Weighted average number of common shares and common share equivalents -- fully diluted(D)................................ 10,043 -- 3,150 13,193 4,197 17,390 ======= ======= ======= ======= ====== ======= Computation of net income (loss) for per share purposes: Net income (loss)(A)........................ $(3,757) $ 1,246 $(1,152) $(3,663) $3,143 $ (520) Add: After tax reduction of interest expense for assumed conversion of 6 1/2% Convertible Subordinated Notes due 2003................................... 1,254 1,254 1,254 ------- ------- ------- ------- ------ ------- Net income (loss) for fully diluted per share computation(C)...................... $(2,503) $ 1,246 $(1,152) $(2,409) $3,143 $ 734 ======= ======= ======= ======= ====== ======= Net earnings (loss) per share -- Primary (A)/(B)................................... $ (0.78) $ (0.46) $ (0.04) ======= ======= ======= Net earnings (loss) per share -- Fully diluted(C)/(D)............................ $ (0.25)(*) $ (0.18)(*) $ 0.04(*) ======= ======= =======
- --------------- (*) Calculation is antidilutive (1) Reflects the weighted average number of shares issued in connection with the Fremantle Acquisition. (2) Reflects the issuance of Class B Common Stock in connection with the offering. (3) Reflects the inclusion of dilutive common stock equivalents. EX-99 11 PRESS RELEASE 1 EXHIBIT 99 NEWS ANNOUNCEMENT [JC LOGO] JAFFONI & COLLINS INCORPORATED CONTACT: Joseph N. Jaffoni David C. Collins Jaffoni & Collins Incorporated All American Communications The Interpublic Group of Companies, Inc. Thomas Bradshaw William S. Keating Eugene P. Beard Chief Financial Officer Associate General Counsel Chief Financial Officer 310/450-3193 212/399-8078 212/399-8053 FOR IMMEDIATE RELEASE ALL AMERICAN COMMUNICATIONS AND INTERPUBLIC GROUP TO PURCHASE MARK GOODSON PRODUCTIONS - Extends All American's Strong Presence in Television Game Show Production and Distribution - Santa Monica, CA, & New York, NY, (October 12, 1995) - All American Communications, Inc. (NASDAQ: AACI) and The Interpublic Group of Companies, Inc. (NYSE: IPG) announced today that they have formed a 50/50-owned, limited liability company which has agreed to purchase substantially all of the assets and assume certain liabilities of Mark Goodson Productions L.P. for $50 million and contingent earn-out payments on domestic earnings. Mark Goodson Productions is a leading producer and licensor of television game shows in the U.S. and abroad. The purchase closed into escrow with All American providing a $25 million letter of credit through its bank facility led by Chemical Bank and Interpublic agreeing to issue shares of its common stock with a fair market value of $25 million. The transaction will close on the expiration of certain contingencies including Hart-Scott-Rodino filings. The final closing is expected in approximately thirty days. (more) 215 PARK AVENUE SOUTH - NEW YORK, NY 10003 - TEL 212.505.3015 - FAX 212.505.8195 2 All American and Interpublic To Acquire Mark Goodson Productions, 10/12/95 Page 2 All American Communications, through its All American Fremantle International subsidiary, is currently the largest producer of Goodson game shows internationally. Mark Goodson Productions has the largest portfolio of game shows in the world with over forty game show formats including The Price is Right, now on the CBS network, Card Sharks, Family Feud, Match Game, Password, Rate Your Mate, To Tell The Truth, Winner Take All and What's My Line. Goodson game shows are currently broadcast in more than eighteen countries throughout North America, Europe, the Middle East and Asia. The management of All American Television, a subsidiary of All American Communications, will oversee day-to-day operations of Mark Goodson Productions. Interpublic Group Owns 23 percent of All American Communications on a fully diluted basis. The current production team, led by Bob Barker, will continue to produce The Price is Right which is in its 24th season on the CBS network. The acquisition does not include the lottery-based television production business which will be retained by the sellers. Philip H. Geier, Jr., Chairman of the Board and Chief Executive Officer of the Interpublic Group, said, "Our association with All American has achieved all of our business and financial expectations and the current acquisition of Mark Goodson Productions can only result in more benefits to all our shareholders." Anthony J. Scotti, Chairman and Chief Executive Officer of All American, stated, "The Goodson acquisition is an important element in our strategic plan to produce and distribute programming for every country in the world. With the addition of Mark Goodson Productions, we will significantly expand our game show production and distribution capabilities in additional international territories. Our international subsidiary, All American Fremantle International, currently produces and distributes 93 game shows in 27 countries and the Goodson formats are produced and broadcast in the local language in more than 18 of these countries. Goodson expands our portfolio of game show formats and increases the territories in which we can exploit these assets." 3 All American and Interpublic To Acquire Mark Goodson Productions, 10/12/95 Page 3 All American Communications, Inc. is a diversified worldwide entertainment company with operations in television and recorded music production and distribution. All American Communications produces and distributes more than 100 shows a year in 27 countries. In addition to game shows and talk shows, All American produces and distributes the successful, worldwide Baywatch franchise: the weekly Baywatch series, the new Baywatch Nights and the Baywatch strip. The Interpublic Group of Companies is comprised of McCann-Erickson Worldwide, Lintas Worldwide, The Lowe Group, Western International Media and other related companies. The shares of The Interpublic Group of Companies, Inc. are listed on The New York Stock Exchange. -----END PRIVACY-ENHANCED MESSAGE-----