1
EXHIBIT 10.1
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ASSET PURCHASE AGREEMENT
BETWEEN AND AMONG
XXXX XXXXXXX PRODUCTIONS, L.P.
AND
THE CHILD'S PLAY COMPANY,
AS SELLERS,
AND
XXXX XXXXXXX PRODUCTIONS, LLC,
THE INTERPUBLIC GROUP OF COMPANIES, INC.,
AS BUYERS,
AND
XXXXXX XXXXXXX, XXXXXXX XXXXXXXXXX AND
XXXXXX XXXXXX, AS EXECUTORS OF THE
ESTATE OF XXXX XXXXXXX
AS GUARANTOR
AND
ALL AMERICAN COMMUNICATIONS, INC.
DATED AS OF OCTOBER 6, 1995
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TABLE OF CONTENTS
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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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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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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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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 "Xxxx Xxxxxxx", "Xxxx Xxxxxxx Company" and
"Xxxx Xxxxxxx 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
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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 Xxxx 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 Xxxx 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
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of
October 6, 1995, between and among XXXX XXXXXXX 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 Xxxx Xxxxxxx 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 Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxxx and Xxxxxx Xxxxxx, as
executors of the Estate of Xxxx Xxxxxxx (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.
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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 Xxxxxxx, 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
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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
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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 Xxx Xxxxxx and other talent, the Sony Agreement, the license
and merchandising agreements with Fremantle International, Inc. and
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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
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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.
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"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 Xxxx Xxxxxxx 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.
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"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.
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"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.
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"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 Xxxx-Xxxxx-Xxxxxx 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.
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"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
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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.
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"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 Xxxx 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
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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
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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).
"Xxxx" 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.
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"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 Xxxx Xxxxxxx
Television Productions, Inc., Celebrity Productions, Inc., Xxxx Xxxxxxx Games,
L.P., Xxxxxxx TV Enterprises, Inc., Xxxxxxx Television Productions, Inc.,
Strong Productions, Inc., Price Productions, Inc., Xxxx Xxxxxxx Telecasts,
Inc., The New Family
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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 Xxxxxx
Trusts, the Estate, FF&E Trust, Xxxx Xxxxxxx Advertising Sales, Producer,
Representative and Xxxx Xxxxxxx 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,
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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
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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 Xxxx
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 Xxxx 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
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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,
Xxxx Xxxxxxx, individually and doing business as "Xxxx Xxxxxxx Productions"
("Xxxxxxx"), 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,
Xxxxxxx, FF&E Trust, and the other parties signatory thereto, as
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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,
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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
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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 "Xxxx Xxxxxxx", "Xxxx Xxxxxxx Company,"
"Xxxx Xxxxxxx 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 Xxxx "Xxxxxxx" or any combination or derivation thereof,
together, in the case of each such Xxxx, with all good will associated
therewith. Sellers have no rights in the names "The Estate of Xxxx Xxxxxxx,"
"Xxxxxxxx Xxxxxxx," "Xxxxxx Xxxxxxx," "Xxxxxxx and Xxxxxxx" and "The Xxxxxxx
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
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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").
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(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
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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
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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
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"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 Xxxx, Scholer, Fierman, Xxxx & Handler, 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 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
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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
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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,
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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
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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
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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
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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
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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.
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(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
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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
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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
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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
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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
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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
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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
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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.
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(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
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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
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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
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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.
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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
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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
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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):
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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 Xxxx
Xxxxxxx 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) Xxxx Xxxxxxx 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.
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(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 Xxxx Xxxxxx, the Estate of Xxxx
Xxxxxxx, Xxxxxxx Xxxxxxx Cutt 1995 Revocable Trust, Royal X. Xxxxxxxx as
Trustee for the Shamos Children's Trust, Xxxxxxxx Xxxxxxx and Xxxxx Xxxx
Xxxxxxx 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 xxxx
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
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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 Xxxx Xxxxxxx 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,
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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
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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
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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
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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
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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),
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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
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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
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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 Xxxx for which a registration has been issued by, or the application
number and date for each Xxxx 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 Xxxx "Xxxxxxx." Each
Xxxx 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 Xxxx
(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
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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 Xxxx. No action or proceeding is pending seeking to limit,
cancel or question the validity of any Xxxx.
(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 xxxx,
common law or other similar right of any Person or violates
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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 "Xxxx Xxxxxxx", "Xxxx Xxxxxxx Company", "Xxxx Xxxxxxx
Productions" or any combination or derivation thereof, and no other Person uses
or claims the right to use the Xxxx "Xxxxxxx," 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 Xxxx "Xxxxxxx") 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 "Xxxx
Xxxxxxx", "Xxxx Xxxxxxx Company", "Xxxxxxx" and "Xxxx Xxxxxxx 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.
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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 & Xxxxxxx, 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 & Xxxxxxx L.L.P., (iii) the combined statements of net assets at
December 31, 1994 and 1993 audited by Coopers & Xxxxxxx, L.L.P., and (iv) the
unaudited combined statements of net assets as at June 30, 1995, which has been
reviewed by Coopers & Xxxxxxx 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
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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
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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
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(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 Xxxx, 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)
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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
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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
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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
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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
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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
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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
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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).
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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
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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
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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
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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.
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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
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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.
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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.
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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
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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
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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
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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;
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(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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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, Xxxxxxxx Xxxxxxx 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
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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
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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
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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 "Xxxxxxx," "Xxxx Xxxxxxx," "Xxxx Xxxxxxx
Company" or "Xxxx Xxxxxxx Productions" or any combination or derivation of such
words (in the case of the Xxxx "Xxxxxxx", insofar as Sellers, their respective
predecessors, Related Persons or corporate Affiliates have any rights thereto).
Sellers and their Affiliates shall not use the Marks "Xxxx Xxxxxxx" "Xxxx
Xxxxxxx Company" or "Xxxx Xxxxxxx Productions" or any combination or derivation
thereof in connection with any business or activity (other than the use of the
name "Xxxx Xxxxxxx" in connection with the sale of the art collection of Xxxx
Xxxxxxx or the ongoing administration of the Estate) and Buyers shall have the
exclusive rights to use such words or
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combination of such words (except that Buyers shall not use the Xxxx "Xxxx
Xxxxxxx" 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 Xxxx "Xxxxxxx" 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 Xxxx "Xxxxxxx" 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 xxxx license agreement with the Partnership or, at the direction of the
Partnership, Xxxxxxxx Xxxxxxx pursuant to which the Partnership or, at the
direction of the Partnership, Xxxxxxxx Xxxxxxx shall be granted an exclusive
license, to the extent of the Company's rights therein, to use the Xxxx
"Xxxxxxx" solely in connection with the Lottery Business; provided, however,
that each Seller and its Affiliates shall not use the Xxxx "Xxxxxxx" 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.
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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 xxx 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
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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
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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
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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
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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:
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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
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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 xxxx
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
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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;
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(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 xxxx 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
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(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
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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:
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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
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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
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(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
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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
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"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
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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
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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.
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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
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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
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xxx 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
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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,
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000
(xxx) 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
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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
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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
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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
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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
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(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
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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 Xxxxxxx Xxxx & Xxxxx and Xxxx, Scholer, Fierman, Xxxx & 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
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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
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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
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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.
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(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
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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 Xxxxx Xxxxxxx 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
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this Agreement and the transactions contemplated hereby. The Partnership
represents and warrants that said representative shall initially be Xxxxxx
Xxxxxx.
(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.
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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
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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
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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
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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: Xxxxxx Xxxxxx,
Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxxx, Xxxx Xxxxxxx, Xxxxxxx Xxxxxxxx, Royal X.
Xxxxxxxx, and Xxxxx Xxxxxxx; 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
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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:
Xxxx Xxxxxxx Productions, L.P.
0000 Xxxxxxxx Xxxx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Partner
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with copies to:
Xxxxxxx Xxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
and
Xxxxxxx & Xxxxxxx
00000 Xxxxxxxx Xxxx.
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
If to CPC:
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Partner
Fax No. (000) 000-0000
with copies to:
Xxxxxxx Xxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
and
Xxxxxxx & Xxxxxxx
00000 Xxxxxxxx Xxxx.
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
If to the Company:
Xxxx Xxxxxxx Productions, LLC
c/o All American Television, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
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with copies to:
The Interpublic Group of Companies, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
and
Xxxx, Scholer, Fierman, Xxxx & Handler
1999 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Interpublic:
The Interpublic Group of Companies, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
with copies to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
If to AACI:
All American Communications, Inc.
0000 Xxxx Xxxxxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
with copies to:
Xxxx, Scholer, Fierman, Xxxx
& Handler
1999 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000x-0000
Attention: Xxxxx X. Xxxxxx, 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
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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
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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
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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
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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
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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 Xxxx, Scholer,
Fierman, Xxxx & Handler, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Attention:
Managing Attorney), and the Sellers hereby irrevocably appoint Xxxxxxx Xxxx &
Xxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Attention: Xxxxxx X.
Xxxxxxxx, 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.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
XXXX XXXXXXX PRODUCTIONS, LLC
By: All American Communications,
Inc., its Operator
By: /s/ XXXXXX XXXXXXXX
------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Chief Financial Officer
THE INTERPUBLIC GROUP OF COMPANIES,
INC.
By: /s/ XXXXXX X. XXXXX
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President --
Financial Operation
XXXX XXXXXXX PRODUCTIONS, L.P.
By: Xxxx Xxxxxxx Television
Productions, Inc., its
General Partner
By: /s/ XXXXXXX XXXXXXXXXX
------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Secretary
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THE CHILD'S PLAY COMPANY
By: Estate of Xxxx Xxxxxxx,
its Managing Partner
By: /s/ XXXXXXX XXXXXXXXXX
----------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Executor
THE ESTATE OF XXXX XXXXXXX (on
behalf of itself and as a Related
Person)
By: /s/ XXXXXXX XXXXXXXXXX
-------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Co-Executor
ALL AMERICAN COMMUNICATIONS, INC.
By: /s/ XXXXXX XXXXXXXX
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Chief Financial Officer
/s/ XXXXXX XXXXXXX
-----------------------------------
Xxxxxx Xxxxxxx, as Co-Executor of
the Estate of Xxxx Xxxxxxx
/s/ XXXXXXX XXXXXXXXXX
-----------------------------------
Xxxxxxx Xxxxxxxxxx, as Co-Executor
of the Estate of Xxxx Xxxxxxx
/s/ XXXXXX XXXXXX
-----------------------------------
Xxxxxx Xxxxxx, as Co-Executor of
the Estate of Xxxx Xxxxxxx
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The foregoing is hereby acknowledged and agreed to:
PARTNERSHIP RELATED PERSONS
By: /s/ XXXXXXX XXXXXXXXXX
------------------------------
Xxxxxxx Television Productions,
Inc.
REPRESENTATIVE:
By:
------------------------------
TPIR LLC
By: The Estate of Xxxx Xxxxxxx
Its: Managing Member
By: /s/ XXXXXXX XXXXXXXXXX
-------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Secretary and CFO
Treasurer
THE FF&E TRUST
By: /s/ XXXXXX XXXXXXX
------------------------------
Name: Xxxxxx Xxxxxxx
Its: Co-Trustee
THE ESTATE OF XXXX XXXXXXX
By: /s/ XXXXXXX XXXXXXXXXX
------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Its: Co-Executor
CELEBRITY PRODUCTIONS, INC.
By: /s/ ROYAL X. XXXXXXXX
------------------------------
Name: Royal X. Xxxxxxxx
Its: Secretary
XXXX XXXXXXX GAMES, L.P.
By: Xxxxxxx TV Enterprises, Inc.
Its: General Partner
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By: /s/ ROYAL X. XXXXXXXX
----------------------------
Name: Royal X. Xxxxxxxx
Its: Secretary
XXXXXXX TV ENTERPRISES, INC.
By: /s/ ROYAL X. XXXXXXXX
--------------------------------
Name: Royal X. Xxxxxxxx
Its: Secretary
THE NEW FAMILY COMPANY
By: Xxxxxxx Television Productions, Inc.
Its: General Partner
By: /s/ ROYAL X. XXXXXXXX
----------------------------
Name: Royal X. Xxxxxxxx
Its: Secretary
XXXXXXX TELEVISION PRODUCTIONS, INC.
By: /s/ ROYAL X. XXXXXXXX
--------------------------------
Name: Royal X. Xxxxxxxx
Its: Secretary
STRONG PRODUCTIONS, INC.
By: /s/ ROYAL X. XXXXXXXX
--------------------------------
Name: Royal X. Xxxxxxxx
Its: Secretary
PRICE PRODUCTIONS, INC.
By: /s/ ROYAL X. XXXXXXXX
--------------------------------
Name: Royal X. Xxxxxxxx
Its: Secretary
XXXX XXXXXXX TELECASTS, INC.
By: /s/ ROYAL X. XXXXXXXX
--------------------------------
Name: Royal X. Xxxxxxxx
Its: Secretary
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THE TATTLETALE COMPANY
By: The Estate of Xxxx Xxxxxxx
Its: General Partner
By: /s/ XXXXXXX XXXXXXXXXX
-----------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Co-Executor
THE TRIVIA TRAP COMPANY
By: The Estate of Xxxx Xxxxxxx
Its: General Partner
By: /s/ XXXXXXX XXXXXXXXXX
------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Co-Executor
THE B.B. COMPANY
By: Xxxxxxx Television Productions, Inc.
Its: General Partner
By: /s/ ROYAL X. XXXXXXXX
------------------------------
Name: Royal X. Xxxxxxxx
Title: Secretary
THE CONCENTRATION COMPANY
By: Xxxxxxx Television Productions, Inc.
Its: General Partner
By: /s/ ROYAL X. XXXXXXXX
------------------------------
Name: Royal X. Xxxxxxxx
Title: Secretary
THE CARD SHARKS COMPANY
By: Xxxxxxx Television Productions, Inc.
Its: General Partner
By: /s/ ROYAL X. XXXXXXXX
------------------------------
Name: Royal X. Xxxxxxxx
Title: Secretary
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THE MG COMPANY
By: Xxxxxxx Television Productions, Inc.
Its: General Partner
By: /s/ ROYAL X. XXXXXXXX
-------------------------------
Name: Royal X. Xxxxxxxx
Title: Secretary
THE NOW YOU SEE IT COMPANY
By: Xxxxxxx Television Productions, Inc.
Its: General Partner
By: /s/ ROYAL X. XXXXXXXX
-------------------------------
Name: Royal X. Xxxxxxxx
Title: Secretary
THE TTTT COMPANY
By: Xxxxxxx Television Productions, Inc.
Its: General Partner
By: /s/ ROYAL X. XXXXXXXX
-------------------------------
Name: Royal X. Xxxxxxxx
Title: Secretary
XXXX XXXXXXX TELEVISION PRODUCTIONS,
INC. (Formerly MGTV, Inc.)
By: /s/ XXXXXXX XXXXXXXXXX
-----------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Its: Secretary
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THE SUPER PASSWORD COMPANY
By: THE ESTATE OF XXXX XXXXXXX
-----------------------------
Its: Managing Partner
By: /s/ XXXXXX XXXXXXX
-----------------------------
Name: Xxxxxx Xxxxxxx
Its: Co-Executor
XXXXXXX GAMES, INC.
By: /s/ XXXXXX XXXXXXX
-----------------------------
Name: Xxxxxx Xxxxxxx
Its: Secretary
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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
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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").
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(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
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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;
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(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 Xxx Xxxxxx
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
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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.
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