Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Amendment # 1 to Form S-1 233 1.44M
2: EX-1.1 Purchase Agreement Dated October 22, 1997 42 183K
3: EX-2.1 Share Transfer Agreement Dated April 15, 1996 12 51K
4: EX-2.2 Agreement for the Purchase of Film Assets 9 45K
5: EX-2.3 Agreement and Plan of Merger 40 198K
6: EX-2.4 Stock Purchase Agreement Dated as of June 11, 1997 20 90K
7: EX-2.5 Stock Purchase Agreement Dated as of June 11, 1997 17 80K
8: EX-2.6 Stock Purchase Agreement 17 80K
9: EX-2.7 Amended and Restated Agreement 16 68K
10: EX-3.1 Corrected and Restated Certificate 21 104K
11: EX-3.2 Amended and Restated Bylaws 22 95K
12: EX-4.1 Senior Notes Indenture 167 574K
13: EX-4.2 Senior Discount Notes Indenture 169 585K
14: EX-4.3 Senior Notes Registration Rights Agreement 37 135K
15: EX-4.4 Senior Discount Notes Registration Rights 38 142K
Agreement
16: EX-4.5 Senior Notes Liquidated Damages Agreement 5 28K
17: EX-4.6 Senior Discount Notes Liquidated Damages Agreement 5 28K
18: EX-10.1 Amended & Restated Strategic Stockholders 38 149K
Agreement
25: EX-10.12 Operating Agreement 34 146K
26: EX-10.14 Amendment No. 2 to Operating Agreement 10 45K
27: EX-10.17 Stock Ownership Agreement 11 46K
28: EX-10.18 Amendment No. 1 to Stock Ownership Agreement 5 26K
19: EX-10.2 Employment Assumption Agreement 2 22K
29: EX-10.20 Form of Fox Broadcasting Co. Station Affiliate 11 55K
Agreement
30: EX-10.21 Merchandising Rights Acquisition Agreement 12 55K
31: EX-10.22 Indemnification Agreement 6 30K
32: EX-10.23 Distribution Rights Acquisition Agreement 27 95K
33: EX-10.24 Administration Agreement 2 19K
34: EX-10.25 Registration Agreement 20 74K
35: EX-10.26 Amendment No. 1 to Registration Agreement 4 25K
36: EX-10.27 Contribution and Exchange Agreement 30 144K
37: EX-10.28 Guarantee Dated as of December 22, 1995 9 35K
38: EX-10.29 First Amendment to Lease 6 33K
20: EX-10.3 Employment Assumption Agreement 2 22K
39: EX-10.30 Guaranty of Lease 7 40K
40: EX-10.33 Funding Agreement 10 48K
41: EX-10.34 Guaranty Dated as of June 11, 1997 5 34K
42: EX-10.35 Distribution Agreement Dated August 21, 1992 20 68K
43: EX-10.36 Memorandum of Agreement 10 40K
44: EX-10.38 10960 Wilshire Boulevard Office Lease 93 410K
45: EX-10.39 Production Facility Agreement 14 57K
46: EX-10.40 Letter Agreement Dated as of January 1, 1995 3 26K
47: EX-10.41 Barter Syndication Agreement 2 19K
48: EX-10.42 Letter Agreement Dated as of September 26, 1996 22 84K
49: EX-10.43 First Amendment to the Contribution and Exchange 2 18K
Agreement
50: EX-10.44 Agreement Re Registration Rights 5 23K
51: EX-10.46 Agreement Re Transfer of LLC Interests 3 23K
52: EX-10.48 Subordinated Promissory Note 36 146K
21: EX-10.5 Form of Indemnification Agreement 10 54K
53: EX-10.54 Registration Rights Agreement 18 90K
22: EX-10.6 Employment Agreement 6 38K
23: EX-10.8 Employment Agreement 31 101K
24: EX-10.9 Employment Agreement 25 89K
54: EX-12.1 Ratio of Earnings to Fixed Charges 1 19K
55: EX-21.1 Subsidiaries of the Registrant 3 21K
56: EX-23.2 Consent of Independent Auditors 1 17K
57: EX-23.3 Consent of Independent Auditors 1 15K
58: EX-24.2 Power of Attorney 1 18K
59: EX-25.1 Statement of Eligibility - Bank of New York 10 46K
60: EX-27.1 Article 5 FDS 2 19K
EX-10.1 — Amended & Restated Strategic Stockholders Agreement
Exhibit Table of Contents
EXHIBIT 10.1
AMENDED AND RESTATED
STRATEGIC STOCKHOLDERS AGREEMENT
This Amended and Restated Strategic Stockholders Agreement (the
"Agreement") is made and entered into as of August 1, 1997, by and among Haim
Saban ("Saban"), each of the entities listed on Schedule A hereto (the "SEI
Entities" and, with Saban, the "SEI Stockholders"), Fox Broadcasting Company, a
Delaware corporation ("FBC"), Fox Broadcasting Sub, Inc., a Delaware corporation
("FBC Sub") and Allen & Company Incorporated, a New York corporation ("Allen").
R E C I T A L S
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A. On December 22, 1995, the SEI Stockholders owned, in the
aggregate, 800 shares of the common stock, par value $0.01 per share, of Saban
Entertainment, Inc., a Delaware corporation ("SEI") (the "SEI Common Stock") and
FBC owned 800 shares of the common stock, without par value, of FCN Holding,
Inc., a Delaware corporation ("FCNH") (the "FCNH Common Stock").
B. On December 22, 1995, the closing under that certain LLC
Formation Agreement, dated as of November 1, 1995, among SEI, FBC and FCNH (the
"LLC Formation Agreement") occurred and the original Strategic Stockholders
Agreement (the "Initial Strategic Stockholders Agreement") was executed; the
LLC Formation Agreement provided, among other things, for the formation of FOX
KIDS WORLDWIDE L.L.C., a Delaware limited liability company (the "Management
Company").
C. The SEI Stockholders and FBC desired to maximize the long-term
strategic values of their respective corporations, and determined that it would
be in their respective best interests to achieve this objective by entering into
a strategic alliance for the purpose of sharing with each other their respective
strengths, to the mutual benefit of all of them, all on the terms and conditions
of the Initial Strategic Stockholders Agreement, the LLC Formation Agreement,
and the other agreements referred to herein or therein (collectively, the
"Alliance Agreements").
D. On September 27, 1996, FBC transferred to FBC Sub all of its FCNH
Common Stock and FBC Sub agreed to be bound by all of the terms of the Initial
Strategic Stockholders Agreement, as amended by Amendment No. 1 to Strategic
Stockholders Agreement dated February 26, 1996, Amendment No. 2 to Strategic
Stockholders Agreement dated September 27, 1996 and supplemented by Supplement
to Strategic Stockholders Agreement dated September 27, 1996 (together, the
"Strategic Stockholders Agreement").
E. On September 27, 1996, Allen acquired 16 16/99 shares of FCNH
Common Stock pursuant to the Allen Agreement (defined herein) and agreed to be
bound by certain of the terms of the Strategic Stockholders Agreement.
F. On June 11, 1997, an agreement was executed by and among Fox Kids
Worldwide, Inc., a Delaware corporation ("Fox Kids"), SEI, FBC, FBC Sub, Allen,
and the SEI Stockholders which provided that the SEI Stockholders would
contribute to Fox Kids their SEI Common Stock for an aggregate of 7,920,000
shares of Class B Common Stock of Fox Kids, Allen would contribute its FCNH
Common Stock to Fox Kids for 160,000 shares of Class A Common Stock of Fox Kids,
and FBC Sub would contribute its FCNH Common Stock to Fox Kids for 7,920,000
shares of Class B Common Stock of Fox Kids. On August 1, 1997 this agreement
was amended and restated among the parties (as amended and restated, the
"Reorganization Agreement"). The transactions contemplated by the Reorganization
Agreement are hereinafter referred to as the "Reorganization."
G. On August 1, 1997, the Reorganization was consummated.
Immediately following the Reorganization, (i) all of the equity securities of
SEI and FCNH are held by Fox Kids, and (ii) all of the voting equity securities
of Fox Kids are held by FBC Sub, the SEI Stockholders and Allen.
H. The parties to this Agreement, being the sole holders of voting
equity securities of Fox Kids, have determined that it would be in their
respective best interests to amend and restate the Strategic Stockholders
Agreement to reflect the current organizational and ownership structure of Fox
Kids.
I. All references herein to a "Shareholder" or the "Shareholders"
shall include Allen, the SEI Stockholders and FBC Sub. All references herein to
the (i) SEI Common Stock shall mean the Class B Common Stock of Fox Kids held by
the SEI Stockholders, (ii) Allen Shares shall mean the Class A Common Stock of
Fox Kids held by Allen, and (iii) FCNH Common Stock shall mean the Class B
Common Stock of Fox Kids held by FBC Sub. The shares of Fox Kids now owned by
the SEI Stockholders, Allen and FBC Sub are hereinafter referred to as the
"Shares." Fox Kids and its successors may hereinafter be referred to as "Fox
Kids" or "Successor Entity."
A G R E E M E N T
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NOW, THEREFORE, in consideration of the foregoing facts and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. Defined Terms. The terms defined in Exhibit "A", which is
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incorporated herein by this reference, shall have the same meanings when used
herein.
2. Restrictions on Transfer.
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(a) General Restriction. Except as permitted in this Agreement, none
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of the Shares may be transferred. ANY ATTEMPTED TRANSFER OF SHARES OTHER THAN IN
ACCORDANCE WITH THIS AGREEMENT SHALL BE NULL AND VOID AND OF NO FORCE OR EFFECT.
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(b) No Liens. Except as specifically contemplated hereby and except
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for the Liens created by that certain Credit Agreement dated as of August 1,
1997 among Fox Kids, FCNH, Fox Kids Merger Corporation and SEI, as Borrowers,
and the initial lenders named therein and Citicorp USA, Inc., as Administrative
Agent ("Citicorp USA"), and Citicorp Securities, Inc., as Arranger (the "Credit
Agreement"), no Shares may be voluntarily subjected to a Lien by any party
hereto, and any such Lien shall be NULL AND VOID AND OF NO FORCE OR EFFECT.
(c) Effect of Transfers. Except for transfers covered by Section
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3(a)(i) or 3(a)(ii): (i) any Shares transferred in a transaction permitted
hereunder shall remain subject to all of the terms and provisions hereof as if
they were still owned by the transferor, and, without limiting the foregoing,
(x) all transfers of Shares by the transferee shall be subject to this
Agreement; (y) SEI Common Stock transferred shall remain subject to the Options
granted in Section 7 hereof, and shall be transferred and sold at the same time
as the other shares of SEI Common Stock are transferred and sold pursuant
thereto; and (z) Allen Shares transferred shall remain subject to the option
granted in Section 6(a) of the letter agreement, dated as of September 27, 1996,
but effective as of April 3, 1996 between FCNH and Allen (the "Allen
Agreement"), and shall be transferred and sold at the same time as the other
Allen Shares are transferred and sold pursuant thereto; (ii) the transferee
shall enter into a written agreement for the benefit of the parties hereto,
prepared by Fox Kids and in form and substance reasonably acceptable to Saban
and FBC, to be bound by the provisions of this Agreement relating to the
transferred Shares; and (iii) unless Saban and FBC shall otherwise agree, the
transferor of such Shares shall remain fully liable for all of its obligations
with respect to such Shares hereunder.
3. Permitted Transfers. Subject to Section 2(c), Shares may be
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transferred under the circumstances, and strictly upon the terms and conditions
of, any one of the following Sections:
(a) Public Transfers. Any Shareholder may transfer any or all of its
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Shares free and clear of any and all obligations and restrictions imposed on
such Shares under this Agreement:
(i) pursuant to the "Initial Public Offering" (as defined below)
or otherwise in a public offering effected in accordance with the
provisions of the "Registration Agreement" (as defined below); or
(ii) at any time or from time to time following the Initial
Public Offering and subject to all applicable laws, in a transaction
effected on or through the facilities of a national securities exchange or
an automated quotations system.
Any Shares transferred pursuant to this Section 3(a) shall cease to be
"Shares" under, or subject to, this Agreement; and without limiting the
generality of the foregoing, such Shares shall cease to be subject to the
Options granted in Section 7 of this Agreement.
(b) Transfers to Family Members or Trusts. The SEI Stockholders, or
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any of them, may transfer all or any portion of their respective Shares, by
death or inter vivos, to any other SEI Stockholders, to any of Saban's family
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members (including the "spouse" of an "affected SEI Stockholder" (as defined
below)), to any trust established solely for the benefit of one or more of
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Saban's family members, or to any legal entity in which Saban or any such
Persons are the sole beneficial owners; provided, however, that the Shares
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transferred to the executor of an estate, in the case of death, to any such
family member, trust or legal entity shall be subject to the provisions of this
Agreement. In the event of the dissolution of the marital relationship of any
SEI Stockholder, including Saban, or in the event of the execution of a binding
agreement or issuance of an order with respect to marital property of any SEI
Stockholder, including Saban, any and all Shares transferred pursuant thereto to
the spouse (or ex-spouse) (herein, the "spouse") of such SEI Stockholder (the
"affected SEI Stockholder") shall be subject to all of the provisions of this
Agreement, including the provisions of Section 4 and Section 7 hereof; provided,
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that if the spouse desires to transfer any or all of such Shares pursuant to the
provisions of Section 4 hereof, the spouse shall first offer to sell to the
affected SEI Stockholder the Shares proposed to be transferred, and all of the
procedures of Section 4 shall apply thereto (with all references therein to
"Transferor" applying to the spouse, and all references to the "offeree" therein
applying to the affected SEI Stockholder); and the provisions of Section 8 of
this Agreement shall continue to be applicable to such spouse, notwithstanding
such dissolution or order.
(c) Transfer to Affiliates. Any Shareholder may transfer all or any
----------------------
portion of its Shares to a direct or indirect wholly-owned subsidiary of the
Shareholder (or, with respect to a Shareholder which is a natural person, a
corporation or other Person wholly-owned by the Shareholder), or, with respect
to FBC Sub, to a Fox Inc. Subsidiary. A "Fox Inc. Subsidiary" is Twentieth
Holdings Corp. and any Person in which Fox Inc., a Colorado corporation, or
Twentieth Holdings Corp., a Delaware corporation, is the sole beneficial owner
(either directly or indirectly through one or more wholly-owned subsidiaries) of
all of the outstanding voting securities of that Person. If any transferee
subsidiary, including a Fox Inc. Subsidiary, loses its status as such, it shall,
within 30 days of the occurrence of such event, transfer all of its Shares to a
Person which is then wholly-owned by a Shareholder, or a Fox, Inc. Subsidiary,
as the case may be, which transfer shall be effected in compliance with all
other applicable provisions of this Agreement.
(d) Other Permitted Transfers. Any Person may effect a transfer
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authorized by Sections 4, 6 or 7 of this Agreement; any holder of SEI Common
Stock may effect a transfer under and pursuant to the "Stock Ownership
Agreement" (as defined in Section 7(b) below); and any Person may effect a
transfer of the Allen Shares under and pursuant to Section 6(a) of the Allen
Agreement.
(e) Notice of Transfers. Promptly upon consummation of a transfer of
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any Shares, the transferor shall deliver written notice to all parties to this
Agreement pursuant to the notice provisions of Section 11(c). Promptly upon the
determination that an Affiliate of a Person is no longer an Affiliate, such
Person shall deliver written notice to all parties to this Agreement pursuant to
the notice provisions of Section 11(c).
4. Refusal Rights. No Shares may be transferred pursuant to this Section
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4 prior to the first to occur of (i) the Initial Public Offering (subject to the
provisions of the Registration Agreement) or (ii) December 13, 1998.
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(a) Offer. If any Shareholder ("Transferor") desires to transfer any
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Shares pursuant to this Section 4, it shall deliver a written offer to sell for
cash the Shares, and all rights with respect to the Shares (excluding rights
under this Agreement which, pursuant to Section 11(b), are personal to Saban or
FBC Sub), (x) if Transferor is an SEI Stockholder, to FBC Sub, (y) if Transferor
acquired the Shares pursuant to this Section 4 directly or indirectly: (A) from
FBC Sub, to Saban, or (B) from an SEI Stockholder, to FBC Sub, or (C) from
Allen, to both Saban and FBC Sub; (z) if Transferor is FBC Sub, to Saban; and
(aa) if Transferor is Allen, to both FBC Sub and Saban. In case of an offer to
both FBC Sub and Saban, each of FBC Sub and Saban shall be entitled to subscribe
to purchase 50% of the offered Shares, plus any and all of the offered Shares
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not subscribed for by the other of Saban or FBC Sub. The offer shall be
accompanied by a Bona Fide Offer from a non-Affiliate of Transferor, and shall
(i) remain open for at least 30 days; (ii) state the date of termination of the
offer; (iii) state the purchase price for the Shares, which shall be equal to
the purchase price set forth in the Bona Fide Offer; provided, if the Bona Fide
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Offer provides for consideration other than cash, Transferor's offer shall, to
the extent of such consideration, permit the offeree to pay, in lieu thereof,
cash equal to the Fair Market Value of such other consideration, and
Transferor's offer shall state Transferor's best estimate of such Fair Market
Value, which shall be conclusive and binding upon Transferor (but not the
offeree); and (iv) shall designate the time, the date (which shall not be less
than 45 days from the date of the offer by Transferor) and the place (which
shall be in the County of Los Angeles, California) at which the sale of the
offered Shares is to take place.
In case of an offer to both FBC Sub and Saban pursuant to this Section 4(a), the
provisions of Sections 4(b), 4(c) and 4(d) below shall be separately applicable
to each of FBC Sub and Saban, as an offeree, with respect to the Shares offered
to, subscribed for and purchased by, such offeree; and thus, if, for example,
Saban fails to accept, or rejects, Transferor's offer, but FBC Sub accepts
Transferor's offer, Transferor would not have the right pursuant to Section 4(d)
to sell any of the Shares which FBC Sub has so elected to purchase.
(b) Manner of Payment. Payment of the purchase price for the offered
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Shares may, at the election of the offeree, be made by either (i) bank cashiers'
check in immediately available funds made payable to the order of the
Transferor, or (ii) wire transfer of immediately available funds to a designated
bank account of the offeree.
(c) Acceptance and Closing. Transferor's offer may be accepted only
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by delivering to Transferor written notice of acceptance prior to the expiration
of the offer period; provided, that such acceptance may be made subject to the
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final determination of the Fair Market Value of any non-cash consideration, in
which event such acceptance shall so state, and be accompanied by the offeree's
estimate of such Fair Market Value; and if the actual Fair Market Value differs
in any material respect from the offeree's estimate, the offeree may, within
four business days following receipt of the final determination of Fair Market
Value, withdraw its acceptance of the offer. If the offer is accepted and not
withdrawn as aforesaid, the closing of the sale shall take place at the time and
place, and upon the terms, specified in the offer; provided, however, that if
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the offeree disputes the Transferor's estimate of the Fair Market Value of any
non-cash consideration, the closing shall be delayed to five business days
following the date of final determination of such Fair Market Value, and if the
purchase and sale of such Shares requires the obtaining of any
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regulatory approvals or compliance with any other laws, the closing shall be
delayed for such time as is reasonably necessary to obtain such approvals and
comply with such laws; and provided further, however, that if the seeking of
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such regulatory approvals and compliance with other applicable laws delays the
closing by more than 90 days, at any time subsequent to such 90-day period and
prior to the closing, the Transferor may, by written notice to offeree, treat
such delay as a rejection of the offer, and, following delivery of such notice,
the provisions of Section 4(d) shall be applicable; and provided further, if the
Management Company, SEI, FCNH or any of their respective Subsidiaries then owns
or controls a television broadcasting station operating under a license issued
by the Federal Communications Commission ("FCC"), and as a result of the
proposed transfer approval by the FCC is required, then such 90-day period
referred to in the preceding proviso shall be a one-year period. At the closing,
Transferor shall deliver to the offeree documents of transfer in form and
substance reasonably acceptable to the offeree and its counsel, necessary to
vest in the offeree good and marketable title to the Shares so sold, free and
clear of any and all Liens, other than those imposed under or pursuant to this
Agreement, against delivery by the offeree to the Transferor of the purchase
price therefor.
(d) Sale Pursuant to Bona Fide Offer. If the offeree fails to accept,
--------------------------------
or rejects, Transferor's offer, then, subject to the provisions of Section 2(c),
Transferor shall have the right to sell to the Person specified in the Bona Fide
Offer the Shares so offered pursuant to the terms and conditions specified in
the Bona Fide Offer or otherwise on terms and conditions no less favorable to
Transferor than the terms set forth in the Bona Fide Offer; provided, that such
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sale is consummated within ninety days of the date of delivery of Transferor's
offer.
(e) Transferred Shares Subject to Agreement. All Shares transferred
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pursuant to this Section 4 shall continue to be subject to this Agreement.
5. Covenants and Voting Agreements.
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(a) Of FBC Sub. Except as provided in or contemplated by this
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Agreement, without the prior written consent of Saban, which consent may be
withheld by Saban at his sole and absolute discretion, FBC Sub shall not, (i)
sell any FCNH Common Stock or any options, warrants or rights to subscribe for
or acquire, with or without additional consideration, any shares of FCNH Common
Stock; (iii) merge or consolidate with any other Person; (ii) make any other
payments, whether in the form of advances or loans, to FBC or any of its
Affiliates; (iv) sell, lease or dispose of any assets; (v) liquidate, dissolve,
recapitalize or reorganize in any form of transaction; (vi) engage in any
business or other material activity, other than that of holding its interest in
FCNH Common Stock or own any other non-cash equivalent assets; (vii) amend its
Certificate of Incorporation or By-Laws; or (viii) enter into any commitment or
agreement directly or indirectly to effect any of the foregoing.
(b) Of the SEI Stockholders. Except as provided in or contemplated by
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this Agreement or the LLC Formation Agreement, without the prior written consent
of FBC, which consent may be withheld by FBC at its sole and absolute
discretion, the SEI Stockholders shall not: (i) sell any SEI Common Stock, or
any options, warrants or rights to subscribe for or acquire, with or without
additional consideration, any shares of SEI Common Stock other than pursuant to
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agreements existing as of the date hereof; (ii) merge or consolidate with any
other Person; (iii) make any other payments, whether in the form of advances or
loans, to Saban and the SEI Stockholders or any of their Affiliates; (iv) sell,
lease or dispose of any assets other than in the ordinary course of business;
(v) liquidate, dissolve, recapitalize or reorganize in any form of transaction;
(vi) amend its Certificate of Incorporation or By-Laws; or (vii) enter into any
commitment or agreement directly or indirectly to effect any of the foregoing.
(c) Intentionally deleted.
(d) Performance; Irrevocable Proxy. (i) Each of the SEI
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Stockholders, FBC and FBC Sub, and each of their respective transferees,
successors and assigns (other than with respect to transfers of Shares pursuant
to Section 3(a)(i) or Section 3(a)(ii) of this Agreement) shall take any and all
actions within their power as stockholders of the Successor Entity (defined
herein), including the calling of special meetings of the stockholders of the
Successor Entity and the voting of all of the Shares with respect to which he
or it has sole or shared voting power, in order to carry out and perform their
respective obligations under this Agreement; (ii) FBC shall take any and all
actions within its power as a stockholder of FBC Sub, including the calling of
special meetings of the stockholders of FBC Sub, and the voting of the shares of
capital stock of FBC Sub, required to cause FBC Sub to perform all of its
obligations under this Agreement; and (iii) without limiting the generality of
clauses (i) or (ii) above, if and so long as any party hereto (a "breaching
party") fails or refuses to perform its obligations under this Section 5 or
Section 13, following demand to perform such obligations by Saban or FBC
(whichever is not the breaching party, or a party in control of the breaching
party), without limiting any other rights which may then be available at law or
in equity with respect thereto, all of the Shares of the breaching party (and,
if the breaching party is FBC Sub, all of the voting securities of FBC Sub) and
its controlled Affiliates may be voted by the other of Saban or FBC Sub, as the
case may be, to cure such breach or rectify such default; and in furtherance
thereof, Saban hereby appoints FBC Sub, and FBC and FBC Sub each hereby appoints
Saban, as its proxy and attorney-in-fact pursuant to the provisions of Section
212(e) of the Delaware General Corporation Law, with full power and authority
from time to time to vote or act by written consent with respect to the Shares,
but only following demand to the party granting such proxy to vote the Shares as
required hereby, and then only as may be necessary to ensure full compliance
with the provisions of this Section 5 and Section 13. Each proxy granted hereby
is coupled with an interest in the Shares to which it relates, and shall be
irrevocable for the term of this Section 5 and Section 13.
(dd) Irrevocable Proxy. Allen hereby irrevocably and unconditionally
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appoints FBC, with full power of substitution, as its proxy and attorney-in-fact
pursuant to the provisions of Section 212(e) of the Delaware General Corporation
Law, with full power and authority from time to time to attend meetings, vote,
act by written consent, and in all other ways act in Allen's place and stead
with respect to the Allen Shares (and any and all shares or other securities
issued in respect of such shares). The proxy granted hereby is coupled with an
interest in the Allen Shares, which interest includes the rights granted to the
Shareholders pursuant to the provisions of Section 6 of this Agreement, and the
rights granted to FCNH pursuant to the Allen Agreement, and shall be irrevocable
for the term of this Section 5. For purposes of Section 5(d) of this Agreement
only, the Allen Shares shall be deemed to be "Shares" owned and controlled by
FBC; and the irrevocable
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proxy granted to Saban by FBC in Section 5(d) of this Agreement shall include
the grant by FBC to Saban (under the irrevocable proxy created by this Section
5(dd)) of the power to vote or act by written consent with respect to the Allen
Shares, as therein provided with respect to the Shares of FBC.
(e) Term. All provisions of this Section 5 shall terminate and expire
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on the first to occur of (i) the closing of the Initial Public Offering; or (ii)
the closing of the purchase and sale of the SEI Common Stock pursuant to Section
7.
6. Initial Public Offering.
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(a) Election to Effect Initial Public Offering.
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(i) Either Saban or FBC may at any time propose to the other that
the Successor Entity effect a firmly underwritten public offering (the
"Initial Public Offering") of its Class A Common Stock pursuant to a
registration statement filed with the Commission under the Securities Act
and otherwise in accordance with the registration agreement between the
parties dated as of December 22, 1995 (the "Registration Agreement"), a
copy of which is attached hereto as Exhibit "B". Saban and FBC shall
thereafter attempt in good faith to reach agreement as to the terms of the
Initial Public Offering, including the designation of the managing
underwriter(s) (the "Underwriters") thereof, the size of the offering, and
the maximum aggregate offering price of securities to be offered by the
Successor Entity in the offering.
(ii) If Saban and FBC fail to agree on the terms of the offering
within 15 days from the date of the original proposal, the party first
proposing the Initial Public Offering (the "Initiating Holder") shall have
the right to cause the Initial Public Offering to be effected on such terms
as the Initiating Holder and the Underwriters designated by the Initiating
Holder may in good faith mutually agree; and all parties to this Agreement
shall fully cooperate in the Initial Public Offering.
(iii) If the Initial Public Offering is terminated prior to the
sale of any securities, the provisions of this Section 6(a) shall be
applicable until an Initial Public Offering is actually effected. FBC and
each of the SEI Stockholders shall have the right to participate in the
Initial Public Offering, and in other future offerings, pursuant to the
Registration Agreement.
(b) Intentionally deleted.
7. Put Option.
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(a) Option.
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(i) Upon the occurrence of each and every "Triggering Event," as
that term is defined in clause (ii), below, Saban shall have the right and
option (the "Put
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Option") to require FBC to purchase all Shares of the Successor Entity
which, pursuant to Recital I, are deemed to be shares of SEI Common Stock
and which are owned by the SEI Stockholders or any of their transferees
(other than FBC and excluding Shares transferred pursuant to Section
3(a)(i) or 3(a)(ii)); (the Shares subject to the Put Option are referred to
herein as the "SEI Option Shares") for the per share cash purchase price
determined pursuant to Section 7(c), by delivering written notice of his
election to FBC within the time period for that Triggering Event set forth
in clause (ii) below, accompanied by a separate written notice to FBC Sub
or to the person then holding the Stock Ownership Agreement, of his
election to cause a "Call Triggering Event" thereunder.
(ii) The "Triggering Events," and the time periods for delivery
of election notices with respect thereto, shall be as follows:
(x) death of Saban prior to December 22, 2012 -- 12 calendar
months following death; notice of election may be given by the
executor of his estate, or by a majority in interest of the holders of
the affected Shares of SEI Common Stock;
(y) a Change in Control of FBC -- 90 business days after the
first public announcement of such event;
(z) December 22, 2000 -- notice must be given not later than
180 calendar days prior to December 22, 2000; or
(aa) upon delivery of written notice by Saban of exercise of
the Option at any time on or after the December 22, 2002 and on or
prior to December 22, 2012 -- notice may be given at any time during
the period.
The date of the Triggering Event to which the exercise of the Put Option
relates shall be the "Effective Date" of the Put Option. The failure or decision
not to exercise the Put Option upon the occurrence of a Triggering Event shall
not affect Saban's right to exercise the Put Option on any subsequent Triggering
Event.
(b) Rules of Priority of Call Option Over Put Option. The Management
------------------------------------------------
Company and Saban entered into a separate Stock Ownership Agreement (the "Stock
Ownership Agreement") dated December 22, 1995 pursuant to which the SEI
Stockholders granted a call option (the "Call Option") to the Management
Company. Pursuant to an Assignment and Assumption Agreement dated September 27,
1996, the Management Company transferred to FBC Sub the Call Option. For
purposes of determining whether the SEI Option Shares are being sold under the
Call Option or the Put Option, the following rules will apply:
(i) if the holder of the Call Option has duly exercised the Call
Option, unless FBC Sub thereafter breaches or is unable to perform its
obligations with respect thereto, Saban shall not have the right to
exercise the Put Option; and
9
(ii) if Saban exercises the Put Option, and the holder of the
Call Option thereafter duly and timely exercises its Call Option, the
exercise of the Call Option shall take precedence over the Put Option, and
the SEI Option Shares shall be sold under and pursuant to the Call Option.
(c) Calculation of Purchase Price.
-----------------------------
(i) Put Option Price. The per share purchase price for the SEI
----------------
Option Shares under the Put Option shall be an amount equal to: the Fair
Market Value of the Successor Entity, divided by the number of shares of
common stock of the Successor Entity then issued and outstanding (and if
there is more than one class of common stock of the Successor Entity, the
denominator shall be adjusted to include on an equitable basis all then
outstanding shares of all classes of common stock);
(A) minus, the amount (but in any event, no more than 10% of the
-----
amount computed above, whichever is applicable) paid or payable by SEI with
respect to United States federal or state income taxes (including interest
and penalties) for any of its taxable years ending on or prior to May 31,
1995 with respect to undistributed, Saban International, N.V. income,
divided by the number of SEI Option Shares;
(B) plus, in either such case, interest thereon at the "prime" or
----
"reference" rate published by Wells Fargo Bank at San Francisco,
California, from time to time from the Effective Date through and including
the date of closing of the purchase and sale of the SEI Option Shares;
(C) plus, in either such case, an amount equal to $50,000,000,
----
divided by the number of SEI Option Shares.
(d) Put Option Closing. The closing of the purchase and sale of the
------------------
SEI Option Shares pursuant to this Section 7 shall take place at such time and
place as Saban and FBC shall mutually agree upon; provided, that the date of
--------
closing shall be five business days following the later of (i) the date of final
determination of Fair Market Value; and (ii) if the purchase and sale of such
Shares requires the obtaining of any material regulatory approvals or compliance
with any other material laws or regulations, the date upon which all such
approvals shall have been obtained, and such compliance effected; provided
--------
further, however, that if through no fault of the SEI Stockholders FBC is unable
-------
fully to satisfy all conditions of clause (ii) within six calendar months of the
date of final determination of Fair Market Value, then FBC shall on the first
business day following the end of such six-month period pay and deliver to the
holders of the SEI Option Shares an amount equal to the per share purchase price
for such Shares, and the holders of the SEI Option Shares shall enter into such
agreements with respect to the subsequent voting and transfer of such Shares as
FBC shall reasonably request, including the agreement at any time thereafter to
transfer such Shares, without receipt of further consideration, to such Person
or Persons as may be designated by FBC. At the closing, each of the holders of
the SEI Option Shares shall deliver to FBC documents of transfer in form and
substance reasonably acceptable to FBC and its counsel, necessary to vest in FBC
good and
10
marketable title to the SEI Option Shares so sold by the holder thereof, free
and clear of any and all Liens, other than those imposed under or pursuant to
this Agreement, against delivery by FBC to such holder of the purchase price
therefor, payable, at the election of Saban, by either (x) bank cashiers' checks
in immediately available funds payable to the order of the selling holders, or
(y) wire transfer of immediately available funds to an account or accounts
designated by Saban.
8. Special Provisions Concerning Spouses of SEI Stockholders.
---------------------------------------------------------
This Agreement has been executed by Saban and consented to by his
spouse, who may claim a community property interest, or other interest, in some
or all of the Shares or other rights hereunder held by Saban. Such spouse, in
executing her consent in the form of Exhibit "C" hereto, represents that she has
read provisions of this Agreement (including, without limitation, Sections 2 and
11(b) hereof) and that she has carefully reviewed the same with her counsel, and
acknowledges and irrevocably agrees that by such execution she is waiving any
rights which she may have during the continuance of her marriage, or at any time
thereafter, prior to the death or incompetency of Saban, to control SEI, Fox
Kids or the Management Company. In making such waiver, she has carefully
considered the provisions of Section 1100 of the Family Code of the State of
California which grants to her, among other things, equal right to management
and control of certain community assets, and waives all of her rights thereunder
with respect thereto. Further, she specifically consents to and agrees that the
SEI Common Stock, to the extent that it is controlled by Saban, and the consent,
veto and other rights personally granted to him pursuant to this Agreement, the
Management Agreement and the other Alliance Agreements, constitute a "business
or an interest in a business" which is being operated or managed by Saban, so as
to cause Saban to have primary right to the management and control thereof, and
waives her right to prior notice of any sale, lease, exchange, encumbrance or
other disposition of all or substantially all of the personal property used in
the operation of such business. A copy of Section 1100 is attached as an
exhibit to Exhibit "C".
9. Representations and Warranties.
------------------------------
(a) Intentionally deleted.
(b) No party makes any representation or warranty to the other except
as set forth in this Agreement. Without limiting the generality of the
foregoing, except as and to the extent provided in Sections 10(h) and 10(i)
hereof, no party hereto makes any representation or warranty to any other party
hereto with respect to any financial projection, forecast or other forward-
looking information with respect to its assets, business or operations.
10. Survival of Representations and Warranties; Indemnification.
-----------------------------------------------------------
(a) Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained in the Initial Strategic Stockholders Agreement, any
amendment thereto and this Agreement shall survive the execution and delivery
of this Agreement and any investigation at any time made; and, with respect to
those matters subject to Section 10(c)(ii), below, shall terminate and expire on
the expiration of the "Indemnification Period" defined in Section 10(c)(ii), and
shall be of no further force or effect thereafter, except with respect to any
claim written notice of which
11
shall have been delivered to the party making the representation or warranty
subject to Section 10(c)(ii) on or prior to the termination of the
Indemnification Period, but only, if such claim shall not thereto-fore have been
settled, if litigation with respect to which shall have been commenced on or
prior to six months following the termination of the Indemnification Period.
(b) Indemnification. FBC and FBC Sub, with respect to representations
---------------
and warranties made by either or both of them in Section 9 of the Strategic
Stockholders Agreement with respect to themselves, and the SEI Stockholders,
with respect to representations or warranties made by any of them in Section 9
of the Strategic Stockholders Agreement with respect to themselves or the other
SEI Stockholders (each group the "indemnifying party"), jointly and severally
agree to indemnify, defend, and hold the other (such group, the "indemnified
party") harmless against and in respect of:
(i) if and to the extent that any of the representations and
warranties of the indemnifying parties set forth in Section 9(a) of the
Initial Stockholders Agreement are incorrect, the damages sustained by the
indemnified paries as a result thereof, which damages shall be fixed at 50%
of the positive difference, if any, between (A) the Fair Market Value as of
the LLC FA Date of SEI and its Subsidiaries (if the indemnified parties are
FBC and FBC Sub) or of FCNH and FCN (if the indemnified parties are the SEI
Stockholders) had the representations and warranties been true, correct and
complete in all respects (and thus taking into consideration misstatements,
errors and omissions which would have had the effect of increasing such
price, as well as those having the effect of depressing such price), and
(B) the actual Fair Market Value as of the LLC FA Date of SEI and its
Subsidiaries, or of FCNH and FCN, as applicable.
(ii) if and to the extent that any representations and
warranties of the indemnifying parties in the Initial Stockholders
Agreement, any amendment thereto or this Agreement (other than in Section
9(a) of the Initial Stockholders Agreement) are incorrect, any loss or
damage incurred by the indemnified parties by reason thereof;
(iii) any and all loss, cost, liability, or damage incurred by
the indemnified party or the Management Company, the Successor Entity or
operating companies managed by either of them as the result of any claim,
demand, action, suit or proceeding by any third party alleged to be based
upon any mortgage, indenture, loan or credit agreement or any other
agreement or instrument, which, if the allegations in such claim, demand,
action, suit or proceeding were to be proved, would result in a breach of
the representations and warranties of the indemnifying party set forth in
Section 9(b)(iii)(A)(y) of the Initial Strategic Stockholders Agreement;
(iv) any and all loss, cost, liability, damage or deficiency
arising out of or in connection with any breach of any covenant or
agreement made or to be performed by the indemnifying parties under the
terms of this Agreement; and
(v) all claims, demands, actions, suits, proceedings, judgments,
costs, reasonable attorneys' fees and expenses, or liens, charges, or
encumbrances upon the assets
12
of any of the indemnified parties relating to or incurred by the
indemnified parties incident to the foregoing.
If a claim is made under Section 10(b)(i), Fair Market Value shall be determined
using only a "discounted cash flow" analysis, with the discount rate fixed at
10%.
(c) Limitations.
-----------
(i) The parties' rights to indemnification under this Section 10 shall
be available only if a party entitled to indemnification pursuant to this
Section 10 delivers written notice to the party or parties required to provide
indemnification, setting forth in detail the factual basis for indemnification
and the amount thereof, or a good faith estimate thereof, sought to be
indemnified (the "Indemnification Notice"). The indemnified party or parties
shall use its or their best efforts to provide in its or their Indemnification
Notice sufficient detail to enable the indemnifying party or parties to evaluate
the claim. Except with respect to Indemnification Claims covered by Section
10(d) (which relates to third party claims), within 30 days (the "Objection
Period") of the date such Indemnification Notice is given, the indemnifying
party shall respond to the Indemnification Notice. The indemnifying party shall
be entitled to cure any default which is capable of cure during the Objection
Period, and the amount of the claim for indemnification contained in the
Indemnification Notice shall be reduced by the amount of the damages mitigated
by cure[; and, to the extent that any default relates to a matter covered by
Section 10(i) hereof, payments made or to be made thereunder shall be deemed to
be payments made to cure such defaults, in whole or in part]. If the
indemnifying party or parties agree in writing during the Objection Period to
accept any of the claims included in the Indemnification Notice, such party
shall promptly pay the amounts so agreed upon. In all other cases, the
indemnified party or parties and the indemnifying party or parties shall use
their respective good faith reasonable efforts to resolve the dispute within 60
days of the date such Indemnification Notice is given (the "Settlement Period").
If the dispute is not resolved within the Settlement Period, the parties shall
be free to commence litigation to enforce their rights to indemnification under
this Section 10; provided, however, that if such litigation has not been
-------- -------
commenced on or prior to six months following the date such Indemnification
Notice is given, all rights of the indemnified party or parties to
indemnification with respect to the matters set forth in that Indemnification
Notice shall be deemed to have been irrevocably waived and released by the
indemnified party or parties, and shall terminate and expire.
(ii) Notwithstanding any provision of this Section 10 to the contrary,
the parties' rights to indemnification for breaches of the representations and
warranties contained in Section 9(a) of the Initial Strategic Stockholders
Agreement shall be available only if the party entitled to such indemnification
delivers and Indemnification Notice with respect to such claim prior to the date
which is 24 months from the date of the Initial Strategic Stockholders Agreement
(the "Indemnification Period"). The rights of the Parties to this Agreement to
indemnification under this Section 10 relating to any other representation or
warranty shall survive the closing under the Initial Strategic Stockholders
Agreement and the execution and delivery of this Agreement, and shall not be
subject to the foregoing Indemnification Period.
13
(d) Defense. If any of the indemnified parties is made or threatened
-------
to be made a defendant in or party to any action or proceeding, judicial or
administrative, instituted by any third party for the liability under which or
the costs or expenses of which any of the indemnified parties is entitled to be
indemnified pursuant to Section 10 (any such third party action or proceeding
being referred to as an "Indemnification Claim"), the indemnified party or
parties shall give prompt notice thereof to the indemnifying party; provided
--------
that the failure to give such notice shall not affect the indemnified party or
parties' ability to seek indemnification hereunder unless such failure has
materially and adversely affected the indemnifying party or parties' ability to
prosecute successfully an Indemnification Claim. Each indemnified party shall
permit the indemnifying party, at its own expense, to assume the defense of any
such claim or any litigation to which this Section 10(d) may be applicable, by
counsel reasonably satisfactory to the indemnified party or parties; provided,
--------
that the indemnified party or parties shall be entitled at any time, at its or
their own cost and expense (which expense shall not be recoverable from the
indemnifying party unless the indemnifying party is not adequately representing
or, because of a conflict of interest, may not adequately represent, the
indemnified party or parties' interests), to participate in such claim, action
or proceeding and to be represented by attorneys of its or their own choosing.
If the indemnified party or parties elects to participate in such defense, such
party or parties will cooperate with the indemnifying party in the conduct of
such defense. The indemnified party or parties may not concede, settle or
compromise any Indemnification Claim without the consent of the indemnifying
party. The indemnifying party, in the defense of any such claim or litigation,
shall not, except with the approval of each indemnified party, consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party or parties of a full and complete release from all liability
in respect to such claim or litigation. If the Indemnification Claim arises
under Section 10(b)(iii), the indemnifying party shall defend the third party
claim in the name of the indemnifying party and pay any amounts to be
indemnified under such section directly to the claiming party.
(e) Indemnification is Sole and Exclusive Remedy. Except as provided
--------------------------------------------
in Section 11(l) of this Agreement, the rights of the parties to indemnification
under this Section 10 shall constitute the sole and exclusive remedies of the
parties for all breaches of representations and warranties of the parties hereto
or for the nonfulfillment or other breach by any of them of any of their
respective covenants and agreements contained herein, and each party hereby
waives any other rights or remedies which it may have against any of the others,
or arising out of any action or failure to act by any of them. If any such
breach or nonfulfillment of any representation, warranty or covenant hereunder
constitutes a breach or nonfulfillment of any representation, warranty or
covenant under any other of the Alliance Agreements, the damaged party or
parties shall have the right to seek relief under each of such agreements; but
in no event shall the amounts paid or recovered by such party and its Affiliates
result in a duplication of damages.
(f) Limitation on Claims. Except with respect to (i) third party
--------------------
Indemnification Claims subject to the terms and provisions of Section 10(d) of
this Agreement, (ii) claims based upon the failure of any party fully to comply
with all of its obligations under Sections 2 through 8 of this Agreement, no
party shall have the right to deliver an Indemnification Notice pursuant to this
Section 10 unless (i) the amount of each of such party's separate claims
included therein is in excess of $500,000 (each, a "Permitted Claim") and the
aggregate amount of all such party's Permitted
14
Claims included in that Indemnification Notice exceeds $2,000,000, or (ii) the
aggregate amount of all such party's claims included in such Indemnification
Notice (whether Permitted Claims or not) exceeds $3,000,000.
(g) Discharge of Indemnification Obligation. Notwithstanding the
---------------------------------------
provisions of this Section 10 to the contrary, with respect to any damages
relating to a breach of the representations and warranties set forth in Section
9(a) of the Initial Strategic Stockholders Agreement, the indemnifying party or
parties may, at its or their election, either pay the damages with respect
thereto directly to the indemnified parties, or, alternatively, contribute such
additional property reasonably acceptable to FBC and Saban, or cash, or a
combination thereof, to the Successor Entity to increase the Fair Market Value
thereof, defined under Section 10(b)(i), to that value which it should have had,
had the complained or representations and warranties been, true, correct and
complete.
(h) Intentionally deleted.
(i) FBC Cash Receipts Payments. FBC agrees, on the terms and subject
--------------------------
to the conditions of this Section 10(i), to loan to FCN amounts provided for in
Section 10(i)(A) below and indemnify the Management Company for amounts set
forth in Section 10(i)(B) below:
(A) Promptly following the end of June 1996, FBC shall cause FCN
to prepare, or cause to be prepared, and deliver to the Management Company
and Saban a statement of FCN's programming "Net Profits," as determined
pursuant to Exhibit "C" to the Station Affiliate Agreements, through June
30, 1996 (the "FCN Net Profits Statement"), which report shall include the
(i) the actual amounts paid by FCN to FCN's Station Affiliates as their
share of FCN's programming Net Profits for fiscal 1996; (ii) any advances
(the "Advances") made by FCN to the FCN Station Affiliates in excess of the
actual amount of FCN cash available for payment to the FCN Station
Affiliates with respect to their share of FCN's programming Net Profits for
fiscal 1996; and (iii) the actual amount of FCN cash available for payment
at June 30, 1996. If the Advances were paid pursuant to the mutual
agreement of FCNH and Saban, then FBC shall loan FCN an amount equal to the
aggregate of such Advances, which such loan shall (x) be evidenced by a
promissory note containing terms and conditions customary in commercial
transactions, (y) bear interest at the rate historically charged FCN for
advances by FBC, and (z) shall be repaid on the same terms and at the same
times as the Advances are recouped by FCN from the Station Affiliates.
(B) If the aggregate amount of cash received by the Management
Company pursuant to or with respect to the Asset Assignment Agreement
during the period from the date of this Agreement through June 30, 1996
plus the amounts paid to FBC Sub by way of dividend pursuant to the terms
of Section 5.9.2 of the Operating Agreement (the "Actual Cash Payments")
are less than $35,755,000, FBC shall, within 30 days following receipt of
the FCN Net Profits Statement, contribute to the Management Company,
without offset, an amount equal to the difference between $35,755,000 and
the Actual Cash Payments.
15
(C) Any payments made by FBC pursuant to Section 10(i)(B) above
shall be treated, as between FBC, FCNH and FCN, as payments subject to
Section 19.11 of the Asset Assignment Agreement. This Section 10(i) is
intended for the benefit of, and is enforceable by, the Management Company,
SEI and Saban.
11. Miscellaneous Provisions.
------------------------
(a) In this Agreement, headings are for convenience only and shall not
affect interpretation, and except to the extent that the context otherwise
requires: (i) references to any legislation or to any provision of any
legislation include any modification or re-enactment of, or any legislative
provision substituted for, and all statutory instruments issued under, such
legislation or such provision; (ii words denoting the singular include the
plural and vice versa; (ii words denoting individuals include corporations and
other Persons and vice versa; (iv words denoting any gender include all genders;
(v) references to any document, agreement or other instrument (including this
Agreement) include references to such document, agreement or other instrument as
amended, novated, supplemented or replaced from time to time; (vi references to
clauses, sub-clauses, sections, sub-sections, Schedules and Exhibits are to
clauses, sub-clauses, sections, sub-sections, Schedules and Exhibits of this
Agreement; (vi "or" is not exclusive; (vi "$", and all other references to
dollar amounts, are in U. S. currency; (ix references to any party to this
Agreement or any other document, agreement or other instrument includes its
successors or permitted assigns; and (x) "writing" and cognate expressions
include all means of reproducing words in a tangible and permanently visible
form.
(b) Rights Personal to FBC and Saban. Each and every right and
--------------------------------
obligation which refers to "Saban" or "FBC" is personal to Saban or FBC, as the
case may be, and shall not attach to, or be deemed to relate to or concern the
Shares held by Saban or FBC; and thus, without the prior written consent of both
Saban and FBC, none of such rights or obligations may be assigned, delegated or
transferred to any other Person; provided, however, that in the event of the
-------- -------
incompetency or death of Saban, all rights granted to Saban hereunder shall be
exercisable by his conservator, executor or administrator, or by a single Person
from time to time designated by SEI Stockholders then holding a majority of the
then outstanding Shares of SEI Common Stock held by all SEI Stockholders.
(c) Notices. All notices, demands or other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given (i) if delivered
in person, upon delivery thereof, or (ii) if mailed, certified first class mail,
postage pre-paid, with return receipt requested, on the fifth day after the
mailing, or (iii) if sent by telex or facsimile transmission, with a copy mailed
on the same day in the manner provided in (ii) above, when transmitted and
receipt is confirmed by telephone or telex or facsimile response, or (iv) if
otherwise actually delivered, when delivered:
16
(i) if to FBC or FBC Sub:
Fox Broadcasting Company, Inc.
P.O. Box 900
10201 West Pico Boulevard
Los Angeles, CA 90035
Attention: Jay Itzkowitz, Esq.
Fax: (310) 369-1391
With a copy to:
Squadron, Ellenoff, Plesent &
Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Attention: Jeffrey Rubin, Esq.
Fax: (212) 697-6686
(ii) if to FCNH:
FCN Holding, Inc.
Fox Inc.
10201 West Pico Boulevard
Los Angeles, CA 90035
SVP Legal Affairs
Fox Television Group
Attention: Jay Itzkowitz, Esq.
Fax: (310) 369-2572
With a copy to:
Squadron, Ellenoff, Plesent &
Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Attention: Jeffrey Rubin, Esq.
Fax: (212) 697-6686
(iii) If to SEI, Saban or any of the Other SEI Stockholders:
Haim Saban
Saban Entertainment, Inc.
10960 Wilshire Boulevard
Los Angeles, CA 90024
Fax: (310) 235-5108
17
With a copy to:
Matthew G. Krane, Esq.
1451 North Kings Road
Los Angeles, CA 90069
Fax: (213) 654-6353
and with a copy to:
Troop Meisinger Steuber & Pasich, LLP
10940 Wilshire Boulevard, Suite 800
Los Angeles, California 90024
Attention: Richard E. Troop, Esq.
Fax: (310) 443-8503
(iv) If to Allen:
Allen & Company Incorporated
711 Fifth Avenue
New York, New York 10022
Attention: Stanley S. Shuman,
Executive Vice President
Fax: (212) 832-8023
or at such other address or addresses as may have been furnished by such Person
in like manner to the other parties.
(d) Severability. Should any Section or any part of a Section within
------------
this Agreement be rendered void, invalid or unenforceable by any court of law
for any reason, such invalidity or unenforceability shall not void or render
invalid or unenforceable any other Section or part of a Section in this
Agreement.
(e) Governing Law. THE TERMS OF THIS AGREEMENT SHALL BE GOVERNED BY
-------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE WITHIN, AND TO BE PERFORMED WITHIN, SUCH STATE, EXCLUDING CHOICE
OF LAW PRINCIPLES OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS
OF A JURISDICTION OTHER THAN SUCH STATE.
(f) No Adverse Construction. The rule that a contract is to be
-----------------------
construed against the party drafting the contract is hereby waived, and shall
have no applicability in construing this Agreement or the terms of this
Agreement.
(g) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same
18
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
(h) Costs and Attorneys' Fees. In the event that any action, suit, or
-------------------------
other proceeding is instituted concerning or arising out of this Agreement, the
prevailing party shall recover all of such party's costs, and attorneys' fees
incurred in each and every such action, suit, or other proceeding, including any
and all appeals or petitions therefrom. As used herein, "attorneys' fees" shall
mean the full and actual costs of any legal services actually rendered in
connection with the matters involved, calculated on the basis of the usual fee
charged by the attorneys performing such services, and shall not be limited to
"reasonable attorneys' fees" as defined by any statute or rule of court.
(i) Successors and Assigns. Except as otherwise provided in this
----------------------
Agreement, all rights, covenants and agreements of the parties contained in this
Agreement shall be binding upon and inure to the benefit of their respective
successors and permitted assigns. Except as otherwise specifically set forth
herein, nothing in this Agreement, expressed or implied, is intended to confer
on any Person other than the parties to this Agreement or their respective
successors and assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
(j) Amendments and Waivers. Neither this Agreement nor any term
----------------------
hereof may be changed, waived, discharged or terminated orally or in writing,
except that any term of this Agreement may be amended and the observance of any
such term may be waived (either generally or in a particular instance and either
retroactively or prospectively) by (and only by) a written document executed by
Saban and FBC; and any such amendment or waiver executed by both Saban and FBC
shall be binding upon all of the parties to this Agreement, including each and
every Person (including Allen) who has agreed to be bound by provisions of this
Agreement relating to the Shares which it holds; provided, however, that no such
-------- -------
amendment or waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent therein. No delay or omission to exercise
any right, power or remedy accruing to any party hereto shall impair any such
right, power or remedy of such party nor be construed to be a waiver of any such
right, power or remedy nor constitute any course of dealing or performance
hereunder.
(k) Entire Agreement. This Agreement, the attached Exhibits and
----------------
Schedules and the Alliance Agreements, and the agreements referred to herein and
therein, together contain the entire understanding of the parties, and there are
no further or other agreements or understandings, written or oral, in effect
between the parties relating to the subject matter hereof unless expressly
referred to herein. No party to this Agreement makes any representation or
warranty except as expressly set forth herein.
(l) Specific Performance and Other Remedies. The parties hereto
---------------------------------------
acknowledge and agree that the Shares (including the SEI Common Stock, the FCNH
Common Stock and the Successor Entity Equity Securities) are unique, and that
the parties will have no adequate remedy at law should any party hereto breach
the provisions of Sections 2 through 8 hereof. In the event of the refusal or
failure of any party hereto to fully comply with any of those provisions, the
other parties, and each of them, shall have the right, in addition to any other
rights and remedies which it
19
or they may have hereunder, to specific performance, and other appropriate
injunctive relief with respect thereto. In no event shall any party to any such
proceeding urge or raise as a defense in any such action that an adequate remedy
at law exists.
(m) Agreement to Perform Required Acts. Each party hereto agrees to
----------------------------------
perform any further acts and to execute and deliver any further documents that
may be reasonably necessary to carry out the provisions hereof, that may be
required to secure performance of any party's duties hereunder or that may be
required to assure the legal and binding effect of the provisions hereof.
(n) Consent to Jurisdiction; Forum Selection. Any actions, suits or
----------------------------------------
proceedings instituted in connection with this Agreement or the performance by
the parties of their obligations hereunder shall be instituted and maintained
exclusively in the Superior Court for the State of California, County of Los
Angeles or in the United States District Court for the Central District of
California. By execution and delivery hereof, each party hereto hereby
consents, for itself and in respect of its property, to the jurisdiction of the
aforesaid courts solely for the purpose of adjudicating its rights or
obligations under, or any disputes involving, this Agreement or any document
related hereto. Each party hereto hereby irrevocably waives, to the extent
permitted by applicable law, any objection, including, without limitation, any
objection that the other corporate party or parties lack the capacity to sue or
defend based upon its or their lack of a certificate of qualification to conduct
intrastate business in California, and any objection to the laying of venue or
based on the grounds of forum non conveniens, which it may now or hereafter have
----- --- ----------
to the bringing of any action or proceeding in such jurisdiction in respect of
this Agreement or any document related
hereto.
(o) Legends. Each of the SEI Stockholders, SEI, FBC, FCNH and Allen
-------
hereby agree that each certificate or other writing evidencing any of the Shares
or any securities of FCN, and each certificate or other writing issued in
exchange or upon the transfer of any Shares or any securities of FCN shall be
stamped or otherwise imprinted with a legend, either on the face of such
certificate, or on the reverse of such certificate, with reference thereto
appearing on the face of such certificate, in substantially the following form:
[DESCRIBE THE SHARES] REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
MATERIAL RESTRICTIONS ON TRANSFER, RIGHTS OF FIRST REFUSAL, OPTIONS TO
PURCHASE AND IRREVOCABLE PROXIES, AMONG OTHER RESTRICTIONS, UNDER THAT
CERTAIN AMENDED AND RESTATED STRATEGIC STOCKHOLDERS AGREEMENT DATED AS OF
AUGUST 1, 1997, BY AND AMONG THE ISSUER, THE RECORD HOLDER OF THE
SECURITIES SUBJECT TO THIS CERTIFICATE AND CERTAIN OTHER PERSONS. A COPY
OF THE AMENDED AND RESTATED STRATEGIC STOCKHOLDERS AGREEMENT SHALL BE
FURNISHED WITHOUT CHARGE BY THE ISSUER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE TO THE HOLDER HEREOF UPON SUCH HOLDER'S WRITTEN REQUEST.
20
Each of SEI and FCNH covenants and agrees that it shall refuse to recognize
any transfer of any Shares effected otherwise than in strict compliance with the
provisions of this Agreement.
(p) Financial Statements. Until the date upon which Allen ceases to
--------------------
own at least 50% of the Allen Shares, SEI and FCNH shall each from time to time
deliver, on a confidential basis, to Allen, within a reasonable time after their
availability:
(x) with respect to each of the first three fiscal quarters
of each fiscal year ending on or subsequent to the date of this
Agreement, an unaudited consolidated balance sheet of Fox Kids as of
the end of such period, and the related consolidated statements of
operations and cash flows of Fox Kids for each such period and for the
period from the beginning of the current fiscal year to the end of
such quarterly period, setting forth in each case, to the extent
applicable, comparisons to the corresponding period of the previous
fiscal year; and
(y) with respect to each fiscal year ending after the date
of this Agreement, a consolidated balance sheet of Fox Kids as at the
end of such year and consolidated statements of operations and cash
flows of Fox Kids for such year, setting forth in each case
comparisons, to the extent applicable, to the previous fiscal year,
and, if and to the extent audited, accompanied by the opinion thereon
of the auditors for Fox Kids.
(q) Government Filings. In the event that the percentage of the
------------------
outstanding shares of Common Stock of Successor Entity held by FBC Sub shall be
equal to or more than 50%, then each party hereto shall prepare and make all
filings of the notifications required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended and the rules promulgated
thereunder (the "HSR Act"), including responding promptly to any additional
inquiry, question or second request from either the Federal Trade Commission or
the Department of Justice to the notifications required pursuant to the HSR Act.
In connection therewith, each party thereto shall use its best efforts to
respond diligently and promptly to such requests for additional information made
under the HSR Act by either the Federal Trade Commission or the Department of
Justice, and shall furnish to any other party all such information in its
possession as may be necessary to assist the other party in responding, and
shall deliver copies of any such filings to the other parties thereto.
12. Agreement of Allen. Allen agrees to be bound by all of the provisions
------------------
of Sections 1 through 6 and Section 11, of the Agreement, including, without
limitation, any provision included therein applicable to the Allen Shares, or
Allen as a "Shareholder" or "party" to the Agreement. The provisions of
Sections 7, Section 8 and Section 9 of the Agreement are not for the benefit of,
or enforceable by, Allen. Allen further agrees to indemnify, defend and hold
all of the other parties to the Agreement, and each of them, harmless against
and in respect of any and all loss, cost, liability, damage or deficiency
arising out of or in connection with any breach by Allen of any covenant or
agreement made or to be performed by Allen under the terms of the Agreement, and
all claims, demands, actions, suits, proceedings, judgments, costs, attorneys'
fees and expenses, or liens, charges or encumbrances upon the assets of any of
the indemnified parties relating to or incurred by the indemnified parties
incident to the foregoing.
21
13. Additional Voting and Other Agreements with respect to the Successor
--------------------------------------------------------------------
Entity.
------
(a) Election of Directors of the Successor Entity.
---------------------------------------------
(i) Number of Authorized Directors. The SEI Stockholders, FBC and FBC
------------------------------
Sub shall use their respective best efforts to cause the number of authorized
members ("Directors") of the Board of Directors of the Successor Entity (and
each of its operating Subsidiaries) to be fixed at six. Of the authorized number
of Directors of the Successor Entity and each of its operating Subsidiaries, one
half shall be nominated by FBC (the "FBC Nominees") and one half shall be
nominated by Saban (the "Saban Nominees"); provided, however, that if Saban
-------- -------
transfers, after the date hereof, in the aggregate, a number of Shares held by
him which equal or exceed 1/3 of all of the Shares which are held by all SEI
Stockholders at the date hereof to any other person, then Saban shall only have
the right to so nominate one-third of the authorized number of directors and FBC
shall have the right to designate the remaining 2/3 of the authorized number of
directors.. Further, if at any time after the date hereof, the Successor Entity
becomes subject to any statute, rule or regulation of any national securities
exchange or quotation system or any governmental entity which requires that the
Board of Directors of the Successor Entity include one or more "independent
directors," Fox and Saban each agree to include among their respective slates of
nominees an equal number of such independent directors which is necessary to
satisfy such rule which satisfy such requirements. The current Directors of the
Successor Entity are (x) the Saban Nominees - Haim Saban, Mel Woods and Shuki
Levy and (y) the FBC Nominees - K. Rupert Murdoch, Chase Carey and Margaret
Loesch.
(ii) Nominees for Directors. Within 90 days subsequent to the end of
----------------------
each fiscal year of the Successor Entity and each of its operating Subsidiaries
(but in any event, prior to the date of the annual meeting of stockhoders of the
Successor Entity or the applicable operating Subsidiary, as the case may be,
with respect to such fiscal year (the "Subject Meeting")), Saban shall furnish
to FBC his list of the Saban Nominees for election as Directors at the Subject
Meeting, and (y) FBC shall furnish to Saban its list of the FBC Nominees for
election as Directors at the Subject Meeting. If either or both of Saban and FBC
fail to furnish the other with its list of such nominees, the persons then
serving on the Board of Directors of the Successor Entity (or the applicable
operating Subsidiary, as applicable) as that person's nominees shall be that
person's nominees for the Subject Meeting. Saban and FBC shall advise the
Secretary of the Successor Entity (or the applicable operating Subsidiary, as
applicable) of the identity of the nominees so selected, and Saban and FBC
shall use their respective best efforts to cause the slate of nominees selected
by the Board of Directors of the Successor Entity (or the applicable operating
Subsidiary, as applicable) to consist of the Saban Nominees and the FBC Nominees
selected as hereinabove provided;
(iii) Election of Directors. At each Subject Meeting, (v) FBC, FBC Sub
---------------------
and each of their respective transferees, successors and assigns (other than
with respect to transfers of Shares pursuant to Section 3(a)(i) or Section
3(a)(ii) of this Agreement) shall vote all of the Shares which are deemed to
constitute FCNH Common Stock hereunder, (x) Saban, each of the SEI Entities, and
each of their respective transferees, successors and assigns (other than with
respect to transfers of Shares pursuant to Section 3(a)(i) or Section 3(a)(ii)
of this Agreement) shall vote all of the Shares which are deemed to be SEI
Common Stock hereunder, (y) each of FBC, FBC Sub, Saban, each of the SEI
Entities and each of their respective transferees, successors and assign shall
vote any and all
22
other Shares of the voting securities of the Successor Entity with respect to
which he or it has sole or shared voting power, in favor of the FBC Nominees and
the Saban Nominees, and (z) in the case of a Subject Meeting for election of any
operating Subsidiary of the Successor Entity, the Successor Entity (itself or
through one or more direct or indirect subsidiaries) shall vote any and all
voting securities of such operating Subsidiary in favor of the FBC Nominees and
the Saban Nominees.
(iv) Special Circumstances. If any Saban Nominee or FBC Nominee shall
---------------------
for any reason be unwilling or unable to serve as a Director of the Successor
Entity, the person designating such Nominee shall have the right at any time
prior to the opening of the polls with respect to the election of Directors at
the Subject Meeting to designate a replacement Nominee, and all parties shall
cast their respective votes for such replacement Nominee, in lieu of the
originally designated Nominee. If Saban desires at any time or from time to
time to remove any Saban Nominee, or FBC desires at any time or from time to
time to remove any FBC Nominee, Saban and FBC shall cooperate with each other,
and shall take any and all actions as reasonably may be required, to cause the
removal of such Director. If any Saban Nominee or FBC Nominee shall cease to
serve as a Director for any reason, Saban and FBC shall cooperate with each
other, and shall take any and all actions as reasonably may be required, to
cause the vacancy resulting therefrom to be filled, respectively, by a designee
of Saban or FBC. If any Directors are to be elected at a meeting other than an
annual meeting, or by means of written consents, all of the provisions of this
Section 13(a) shall apply to such meeting or action, mutatis mutandis. Further,
------- --------
notwithstanding anything to the contrary contained herein, the provisions of
Section 13(a) shall not apply to any operating Subsidiary which is incorporated
or organized in any jurisdiction outside the United States; provided, however,
-------- -------
Saban and FBC agree to cooperate to cause the Boards of Directors of any
operating Subsidiary incorporated or organized outside the United States to have
equal numbers of representatives of Saban and FBC to the extent possible without
violating the applicable laws of such jurisdiction.
(b) Other Shareholder Actions. With respect to each matter other than the
-------------------------
election or removal of Directors submitted to a vote of the stockholders of the
Successor Entity, or the holders of any class or classes of its outstanding
voting securities, whether at a meeting of stockholders or by written consent,
FBC, FBC Sub, Saban, each of the SEI Entities, and each of their respective
transferees, successors and assigns (other than with respect to transfers of
Shares pursuant to Section 3(a)(i) or Section 3(a)(ii) of this Agreement) shall
vote all of the Shares which are deemed to be FCNH Common Stock or SEI Common
Stock hereunder, as applicable, and any and all other Shares of the voting
securities of the Successor Entity with respect to which he or it has sole or
shared voting power, as follows: (i) if Saban and FBC are able to reach
agreement as to the manner in which the Shares are to be voted, in accordance
with that agreement; and (ii) in all other cases, each shall abstain from voting
or taking any other action with respect to such matter.
(c) Negative Covenants.
------------------
Without the prior written consent of both FBC and Saban, neither (i)
FBC, or any direct or indirect Affiliate of FBC (including, without limitation,
The News Corporation Limited and its Affiliates), nor (ii) any of the SEI
Stockholders, or any direct or indirect Affiliate of any of the SEI Stockholders
(excluding, however, with respect to (i) or (ii) above, the Successor Entity and
any Person directly or indirectly controlled by the Successor Entity) shall:
23
(i) purchase, acquire or offer or agree to purchase or acquire any
Successor Entity Equity Securities or other voting securities of the Successor
Entity;
(ii) solicit, or encourage any persons to solicit, proxies or become a
"participant" or otherwise engage in any "solicitation" (as those terms are
defined in Regulation 14A under the Exchange Act), without regard to whether the
Successor Entity is subject to Regulation 14A, or otherwise seek to advise or
influence any person, entity or group to vote in opposition to a recommendation
of not less than two-thirds of the authorized number of Directors of the
Successor Entity with respect to any matter submitted to the stockholders
(except the election of Directors) of the Successor Entity;
(iii) initiate, propose or otherwise solicit stockholders for the
approval of one or more stockholder proposals (as described in Rule 14a-8 under
the Exchange Act) with respect to the Successor Entity;
(iv) directly or indirectly participate in or encourage the formation
of, or in any manner provide assistance to, any "group" (as defined in Section
13(d)(3) of the Exchange Act) seeking to acquire or effect control of the
Successor Entity, or for the purpose of acquiring, holding or disposing of
voting securities of the Successor Entity;
(v) deposit any voting securities in a voting trust, or subject any
voting securities to a voting agreement, understanding or similar agreement;
(vi) otherwise act, alone or in concert with others, to assist or
encourage any other person, entity or group in seeking to control the
management, Board of Directors or policies of the Successor Entity or to propose
or effect any form of business combination with the Successor Entity or any
restructuring, recapitalization, liquidation, dissolution or other similar
transaction with respect to the Successor Entity; or
(vii) enter into any agreement or understanding with any person to
do or effect any of the foregoing.
(d) Termination of Section 13. If at any time (i) the SEI Stockholders,
-------------------------
together with all other Persons to whom the SEI Stockholders, or any of them,
have transferred Shares pursuant to Section 3(b) or 3(c) of this Agreement,
beneficially own, in the aggregate less than 2,640,000 shares of the Class B
Common Stock, par value $0.001 per share (the "Class B Common Stock"), of the
Successor Entity; or (ii) FBC, or FBC Sub, together with all other Persons to
whom FBC or FBC Sub have transferred Shares pursuant to Section 3(b) or 3(c) of
this Agreement, beneficially own, in the aggregate, less than 2,640,000 shares
of the Class B Common Stock; then FBC (in case of (i), above) or Saban (in case
of (ii), above), as the case may be, shall have the right and power, by delivery
of written notice to the transferring party, to terminate the provisions of this
Section 13. As used in this Section 13, a Person shall have "beneficial
ownership" of shares only if he or it has the power to vote or direct the voting
of, and the power to dispose or direct the disposition of, the Shares, which
power or powers are shared with no Person other than an Affiliate of such Person
or Persons to whom such Person could transfer the Shares under Section 3(b) or
3(c) of this Agreement. The number of shares
24
referred to above shall be subject to ratable and equitable adjustment with
respect to any stock splits, stock dividends, reverse stock splits,
recapitalizations and other events affecting all of the holders of the Successor
Entity's Class B Common Stock. The termination of the provisions of this Section
13 shall not affect the continuing validity of the other provisions of the
Agreement.
(e) Transfer of Shares. Unless Saban and FBC shall otherwise agree, all
------------------
Shares transferred pursuant to Section 3(b), 3(c) or 4 of the Agreement shall
continue to be subject to this Section 13.
14. Capital Contribution. If Fox Kids is unable to meet its obligations
--------------------
(i) to pay any dividend under the terms of the Series A Preferred Stock of Fox
Kids or to redeem any of the Series A Preferred Stock, (ii) under its lease of
10960 Wilshire Boulevard, Los Angeles, California 90024, or any obligation
guaranteed by News Corp. or its Affiliates, (iii) under the Funding Agreement
dated as of June 11, 1997 by and among Fox Kids, News Corp. and NPAL, and either
News Corp. or NPAL (the "News Parties") provides such funds to Fox Kids (the
"Advance"), then the Advance shall be treated as follows:
1. Loan.
----
(a) the entire amount of such Advance shall be treated as a loan to
the Successor Entity and shall be added to the principal amount then outstanding
under that certain Subordinated Note Agreement by and among the Successor, FBC
and Citicorp USA as Administrative Agent, dated July 31, 1997 (or a comparable
note agreement with News America Holdings Incorporated as lender) (the "Loan
Agreement") and shall be governed by the terms and conditions thereof;
(b) to the extent that the aggregate outstanding principal balance of
all such Advances exceeds $50 million at any given time (such excess hereinafter
referred to as the "Excess Advance"), the following provisions shall apply:
(i) If any portion of the Excess Advance is outstanding and not
repaid by the Successor Entity for more than 18 consecutive months (12
consecutive months after the third anniversary of this Agreement), all or any
portion of such Excess Advance may be converted at the option of FBC Sub into
shares of the Class B Common Stock of the Successor Entity. Such option shall
be exercised by delivery of written notice (the "Conversion Notice") to the
Company, Saban and Allen, and shall be effective 30 days after the delivery of
the Conversion Notice to the Successor Entity (the "Exercise Period") unless
such Excess Advance is repaid prior to the expiration of such Exercise Period.
The number of shares of Class B Common Stock issuable upon such conversion shall
equal that number (rounded to the nearest whole share) which results from
dividing the amount of the Excess Advance to be converted by the Fair Market
Value per share (the "Conversion Price") as of the date of such written notice;
(ii) If FBC Sub elects to convert any portion of the Excess Advance
pursuant to the provisions of this section, Saban shall have the right and
option to purchase from FBC Sub up to 50% of the number of shares of Class B
Common Stock of the Successor Entity issued to FBC Sub pursuant to such
conversion for an exercise price equal to the Conversion Price.
25
Such option shall be exercisable during the Exercise Period by delivery of
written notice to FBC Sub specifying the number of shares which Saban desires to
purchase accompanied by the total aggregate purchase price therefor;
(iii) If FBC Sub elects to convert any portion of the Excess Advance
pursuant to the provisions of this section, Allen shall have the right and
option to purchase from the Successor Entity a number of shares of Class A Stock
of the Successor Entity equal to 1% of the number of shares of Class B Common
Stock of the Successor Entity issued to FBC Sub pursuant to such conversion for
an exercise price equal to the Conversion Price. Such option shall be
exercisable during the Exercise Period by delivery of written notice to the
Successor Entity specifying the number of shares which Allen desires to purchase
accompanied by the total aggregate purchase price therefor.
2. Preferred Stock. If in the sole discretion of Citicorp USA,
---------------
treating the Advance as a Loan is unacceptable to Citicorp USA, the Advance
shall be treated as follows:
(a) to the extent that there are any authorized but unissued shares of
the Successor Entity's Series B Preferred Stock available for issue,
the Advance shall be applied to the issuance of new shares of Series B
Preferred Stock of the Successor Entity at an issue price of $100,000
per share;
(b) to the extent that there are no authorized but unissued shares of
the Successor Entity's Series B Preferred Stock available for issue,
the Advance shall be applied to the issuance of new shares of Series C
Convertible Preferred Stock of the Successor Entity at an issue price
of $100,000 per share;
(i) the Series B Preferred Stock of the Successor Entity shall have
the following rights, preferences and privileges: (A) the Series B
Preferred Stock shall have an authorized number of shares equal to 500
shares ($50,000,000 original issue amount) (B) the Series B Preferred
Stock shall have a liquidation value equal to its original issue price
plus all cumulated but unpaid dividends accrued thereon, (C) the
Series B Preferred Stock shall be non-voting except as required by
law, (D) the Series B Preferred Stock shall be entitled to dividends
at an annual rate of 11.7% of the liquidation value of the Series B
Preferred Stock, which dividends shall be declared and cumulate
quarterly but not be paid until the 10th anniversary of the date of
this Agreement (unpaid dividends to be added to the liquidation value
of the Series B Preferred Stock), (E) the Series B Preferred Stock
shall be redeemable for its liquidation value (x) at any time at the
election of the Successor Entity (any such shares redeemed shall be
added to treasury and be available for future issue), and (y) on the
10th anniversary of this Agreement, at the election of the holders
thereof, (F) the Series B Preferred Stock shall rank as to payment of
dividends and on liquidation junior to the Series A Preferred Stock of
the Successor Entity, pari passu with the Series C Convertible
Preferred Stock of the Successor Entity, and senior to all classes of
common stock of the Successor Entity, (G) the Series B Preferred Stock
shall
26
contain no covenants or events of default, and (H) the Series B
Preferred Stock shall have no rights to be converted into any other
equity security of the Successor Entity;
(ii) the Series C Convertible Preferred Stock of the Successor Entity
shall have the following rights, preferences and privileges: (A) the
Series C Convertible Preferred Stock shall have an authorized number
of shares equal to 5,000 shares ($500,000,000 original issue amount)
(B) the Series C Convertible Preferred Stock shall have a liquidation
value equal to its original issue price plus all cumulated but unpaid
dividends accrued thereon, (C) the Series C Convertible Preferred
Stock shall be non-voting except as required by law, (D) the Series C
Convertible Preferred Stock shall be entitled to dividends at an
annual rate of 11.7% of the liquidation value of the Series C
Convertible Preferred Stock, which dividends shall be declared and
cumulate quarterly but not be paid until the 10th anniversary of the
date of this Agreement (unpaid dividends to be added to the
liquidation value of the Series C Convertible Preferred Stock), (E)
the Series C Convertible Preferred Stock shall be redeemable for its
liquidation value (any such shares redeemed shall be added to treasury
and be available for future issue), (x) at any time at the election of
the Successor Entity, and (y) on the 10th anniversary of this
Agreement, at the election of the holders thereof, (F) the Series C
Convertible Stock shall rank as to payment of dividends and on
liquidation junior to the Series A Preferred Stock of the Successor
Entity, pari passu with the Series B Preferred Stock of the Successor
Entity, and senior to all classes of common stock of the Successor
Entity, (G) the Series B Preferred Stock shall contain no covenants or
events of default, and (H) the Series C Convertible Preferred Stock
shall be convertible, at the election of the holder thereof at any
time after its original issue date as follows: (aa) if at the time
notice of conversion is given to the Successor Entity, there are any
authorized but unissued shares of Series B Preferred Stock available
for issue, such shares of Series C Convertible Preferred Stock to be
converted shall be converted into that number of shares of Series B
Preferred Stock determined by dividing the aggregate liquidation value
of the shares to be converted by $100,000, (bb) if at the time notice
of conversion is given to the Successor Entity, there are no
authorized but unissued shares of Series B Preferred Stock available
for issue, such shares of Series C Convertible Preferred Stock to be
converted shall be converted into that number of shares of Class B
Common Stock determined by dividing the aggregate liquidation value of
the shares to be converted by the Fair Market Value per share of the
common stock at the time of such conversion (the "Conversion Price"),
(cc) conversion of the Series C Convertible Preferred Stock into
Series B Preferred Stock or Class B Common Stock (as applicable) shall
be effective as of the 30th day following written notice of exercise
of conversion is delivered (the "Exercise Period") by the holder of
the shares to be converted is delivered to the Successor Entity (with
a copy to Saban and Allen), and (dd) the Successor Entity shall have
the right (but not the obligation) to redeem the Series C Convertible
Stock at any time following receipt of the notice of conversion up and
through the calendar day immediately preceding the effective date of
conversion;
27
(iii) If a holder of Series C Preferred Stock elects to convert any
portion of the Series C Convertible Preferred Stock into Class B
Common Stock pursuant to the provisions of this section, Saban shall
have the right and option to purchase from such holder up to 50% of
the number of shares of Class B Common Stock of the Successor Entity
issued to such holder pursuant to such conversion for an exercise
price equal to the Conversion Price. Such option shall be exercisable
during the Exercise Period by delivery of written notice to the holder
Sub specifying the number of shares which Saban desires to purchase
accompanied by the total aggregate purchase price therefor;
(iv) If a holder of Series C Preferred Stock elects to convert any
portion of the Series C Convertible Preferred Stock into Class B
Common Stock pursuant to the provisions of this section, Allen shall
have the right and option to purchase from the Successor Entity a
number of shares of Class A Common Stock of the Successor Entity equal
to 1% of the number of shares of Class B Common Stock of the Successor
Entity issued to the holder of Series C Convertible Preferred Stock
pursuant to such conversion for an exercise price equal to the
Conversion Price. Such option shall be exercisable during the Exercise
Period by delivery of written notice to the Successor Entity
specifying the number of shares which Allen desires to purchase
accompanied by the total aggregate purchase price therefor.
As soon as practicable following the execution of this Agreement, FBC Sub, FBC,
Saban and Allen agree to prepare, negotiate and file with the Secretary State of
the Delaware (x) an amendment to the Successor Entity's Certificate of
Incorporation deleting the provisions relating to the Series B Preferred Stock
and Series C Preferred Stock currently provided therein, and (y) a Certificate
of Designation providing for the rights, preferences and privileges of the
Series B Preferred Stock and the Series C Convertible Preferred Stock summarized
above.
Notwithstanding the foregoing, News Corp. shall have no obligation to contribute
any amounts to, or on behalf of, the Successor Entity and the Successor Entity
shall have no obligation to accept any amounts from News Corp. to the extent the
Successor Entity is able to obtain third party financing on terms reasonably
acceptable to it which would not cause it to breach any of its material
agreements or to violate any applicable law.
28
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
/s/ Haim Saban
----------------------------
HAIM SABAN
QUARTZ ENTERPRISES, L.P.
By: /s/ Haim Saban
-------------------------------
-------------------------------
MERLOT INVESTMENTS
By: /s/ Haim Saban
-------------------------------
-------------------------------
SILVERLIGHT ENTERPRISES, L.P.
By: /s/ Haim Saban
-------------------------------
-------------------------------
CELIA ENTERPRISES, L.P.
By: /s/ Haim Saban
-------------------------------
-------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
FOX BROADCASTING COMPANY
By: /s/ Jay Itzkowitz
-------------------------------
Its: Senior Vice President
FOX BROADCASTING SUB, INC.
By: /s/ Jay Itzkowitz
-------------------------------
Its:
ALLEN & COMPANY INCORPORATED
By: /s/ William F. Leimkuhler
-------------------------------
Its: Vice President & General Counsel
THE FOLLOWING PERSONS HAVE SIGNED THIS AGREEMENT TO ACKNOWLEDGE THAT THEY ARE NO
LONGER PARTIES HERETO
FCN Holding, Inc.
By: /s/ Jay Itkowitz
-------------------------------
Its: Senior Vice President
SABAN ENTERTAINMENT, INC.
By: /s/ Haim Saban
-------------------------------
Haim Saban
Its: Chief Executive Officer
EXHIBITS AND SCHEDULES
Exhibits
--------
Exhibit "A" - Defined Terms
Exhibit "B" - Registration Agreement
Exhibit "C" - Spousal Consent
SCHEDULE "A"
[Download Table]
SEI STOCKHOLDERS NUMBER OF SHARES
---------------- ----------------
HAIM SABAN 3,737,844
QUARTZ ENTERPRISES, L.P. 760,320
MERLOT INVESTMENTS 645,381
SILVERLIGHT ENTERPRISES, L.P. 2,759,724
CELIA ENTERPRISES, L.P. 16,731
EXHIBIT "A"
Definitions. As used in the Agreement to which this Exhibit is
-----------
attached (the "Agreement"), the following terms shall have the following
meanings:
"Affiliate" means, when used with reference to a specified Person, any
Person that directly or indirectly through one or more intermediaries controls
or is controlled by, or is under common control with, the specified Person.
"Bona Fide Offer" shall mean an offer from a person which is not an
Affiliate, or otherwise related to, the offeree, and which person has the means
to make or obtain financing for the offer, and which offer clearly identifies,
and is binding upon, the offeror, and which contains all relevant terms and
conditions of an offer to purchase any Shares, including (i) the length and
expiration of the offer, (ii) the purchase price, (iii) the manner of
acceptance, (iv) the manner and mode of payment, and (v) the time, place and
date of the proposed closing.
"Change in Control" of FBC shall mean any event or series of events,
regardless of how structured, as the result of which (i) FBC ceases to be an
Affiliate of Fox Inc. or The News Corporation Limited, or (ii) the primary
business of FBC ceases to be controlled by Fox Inc. or The News Corporation
Limited.
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Control" (including as used in the terms "controlling," "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities by contract or
otherwise.
"Fair Market Value" shall mean the value determined pursuant hereto
consistent with the provisions of the Agreement, and, with respect to Section 7
of the Agreement, shall be determined on the basis of the businesses,
properties, historical financial performance and financial condition,
projections and prospects for the further growth of the entity or entities whose
Fair Market Value is being determined. The parties will, in each case, use
reasonable efforts to reach agreement on Fair Market Value. In the event of a
disagreement between the parties regarding the Fair Market Value, (i) each of
Saban and FBC shall retain a reputable investment bank to determine such value,
and within 30 days thereafter, shall deliver to the other the written report of
its investment bank as to such value; (ii) if the higher valuation is less than
10% above the lower valuation, the average shall be the Fair Market Value; (iii)
if the valuations exceed such 10% difference, Saban and FBC shall instruct their
investment banks to forthwith select a third reputable investment bank, and (x)
if the third investment bank's valuation is between the valuations of the other
banks, the third investment bank's valuation shall be the Fair Market Value, or
(y) if the third investment bank's valuation is outside the range of the other
banks, the other banks will continue to select new third investment banks, until
a third bank so selected provides a valuation which is between the first two
valuations, and such valuation shall be the Fair Market Value. In connection
with such valuations, the parties shall cause the entity or entities being
valued to, on a confidential basis, deliver or provide
access to each investment bank of all information reasonably requested by the
investment bank in order to determine Fair Market Value. The cost of the
appraisal (x) shall be shared equally by the parties if Fair Market Value is
determined without reference to a third investment bank, and (y) otherwise,
shall be borne by the party whose investment bank's valuation is furthest from
the Fair Market Value.
"Family Member" shall any descendant of the grandfather of Saban or
his spouse.
"FCN" means Fox Children's Network, Inc., a Delaware corporation.
"FCNH" means FCN Holding, Inc., a Delaware corporation.
"FCNH Sub" means FCNH Sub, Inc., a Delaware corporation.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect to such asset.
For purposes of the Agreement, any Person shall be deemed to own, subject to a
Lien, any asset which it has acquired or holds, subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Material Adverse Effect" shall mean any event, act or failure to act
which would have a material adverse effect upon the business, properties or
financial condition of the entity with respect to which such term is used and
all of its Affiliates and Subsidiaries, considered as a whole.
"Person" includes an individual, partnership, trust, corporation,
joint venture, limited liability company, association, government bureau or
agency or other entity of whatsoever kind or nature.
"Securities Act" means the Securities Act of 1933.
"Shares" shall include, without limitation, any securities issued with
respect to such Shares upon the Reorganization, any security issued by the
issuer of such Shares by way of dividend or split or similar transaction, or by
the issuer or successor issuer in connection with any recapitalization, merger,
consolidation or other reorganization.
"Station Affiliate" and "Station Affiliate Agreements" shall have the
meanings ascribed to such terms in the Asset Assignment Agreement.
"Subsidiary" of a Person means (i) any corporation of which equity
securities possessing a majority of the ordinary voting power in electing the
board of directors are, at the time as of which such determination is being
made, owned by such Person either directly or through one or more Subsidiaries,
and (ii) any Person (other than a corporation) in which such Person, or any
Subsidiary or Subsidiaries, directly or indirectly, has more than a 50%
ownership interest. With respect to FBC, FCNH, FCN and their respective
subsidiaries, the term "Subsidiary" shall include Twentieth Holding Corporation
and its subsidiaries.
2
The "transfer" of any Share shall include, without limitation, any
direct or indirect sale, transfer (with or without consideration, or whether by
operation of law or otherwise), assignment, pledge, hypothecation, encumbrance,
or other disposition of the Share, or the making, issuance, grant or sale,
directly or indirectly, of any option, warrants, convertible security or other
right or agreement which affords any Person the right to purchase or otherwise
acquire the Share.
"Voting Power" means the power to vote, directly or indirectly, for
the election of directors or exercise other rights of holders of voting common
shares to vote on, approve or consent to matters as a shareholder under the
General Corporation Law of the State of Delaware, as the same may from time to
time be amended.
3
EXHIBIT "C"
SPOUSAL ACKNOWLEDGMENT AND CONSENT
The undersigned, Cheryl Saban, acknowledges and agrees that:
(i) she has read the Amended and Restated Strategic Stockholders
Agreement, dated as of August 1, 1997 (the "Agreement"), to which this Spousal
Acknowledgment and Consent (this "Consent") is attached, the parties to which
include her husband, and including, without limitation, Sections 2, 3, 8 and
11(b) thereof;
(ii) she consents to the execution and performance of the Agreement by
her husband, and specifically consents and agrees that all provisions of the
Agreement, and the other "Alliance Agreements" (as therein defined) which relate
to the SEI Common Stock also relate to any shares of the SEI Common Stock in
which she has or may have or may hereafter acquire a community property or other
interest; and she agrees to be subject to, and abide by the terms of, such
provisions (including, without limitation, the terms and conditions set forth in
Section 2 and 3 thereof) as if she had been a party to the Agreement and such
other Alliance Agreements;
(iii) she hereby waives any rights she may have during the continuance
of her marriage, or at any time thereafter, prior to the death or incompetency
of her spouse, to control and/or manage Saban Entertainment, Inc. ("SEI"), Fox
Kids Worldwide, Inc. ("Fox Kids") or the "Management Company," as that term is
defined in the Agreement;
(iv) she has carefully considered the provisions of Section 1100 of
the California Family Code attached hereto, which Section grants to her, among
other things, equal rights to management and control of certain community
assets, and understands that by executing this Consent she has waived any rights
she may have thereunder with respect to SEI, Fox Kids or the Management Company;
and she specifically consents to and agrees that the SEI Common Stock, to the
extent that it is controlled by her spouse, and the consent, approval and other
rights personally granted to him pursuant to the Agreement, the Management
Agreement and other Alliance Agreements, constitute a "business or an interest
in a business" which is being operated or managed by her spouse, so as to cause
her spouse to have primary right to the management and control thereof, and she
waives her right to prior notice of any sale, lease, exchange, encumbrance or
other disposition of any or all of the personal property used in the operation
of such business.
(v) she was advised to seek independent counsel to review and advise
her with respect to the negotiation and execution of this Consent. She hereby
acknowledges that, of her own free will, she declined to do so.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Consent
as of the 1st day of August, 1997.
/s/ Cheryl Saban
----------------------
Cheryl Saban
2
(S) 1100. Community personal property; management and control;
restrictions on disposition
(a) Except as provided in subdivisions (b), (c), and (d) and Sections 761
and 1103, either spouse has the management and control of the community personal
property, whether acquired prior to or on or after January 1, 1975, with like
absolute power of disposition, other than testamentary, as the spouse has of the
separate estate of the spouse.
(b) A spouse may not make a gift of community personal property, or dispose
of community personal property for less than fair and reasonable value, without
the written consent of the other spouse. This subdivision does not apply to
gifts mutually given by both spouses to third parties and to gifts given by one
spouse to the other spouse.
(c) A spouse may not sell, convey or encumber community personal property
used as the family dwelling, or the furniture, furnishings, or fittings of the
home, or the clothing or wearing apparel of the other spouse or minor children
which is community personal property, without the written consent of the other
spouse.
(d) Except as provided in subdivisions (b) and (c), and in Section 1102, a
spouse who is operating or managing a business or an interest in a business that
is all or substantially all community personal property has the primary
management and control of the business or interest. Primary management and
control means that the managing spouse may act alone in all transactions but
shall give prior written notice to the other spouse of any sale, lease,
exchange, encumbrance, or other disposition of all or substantially all of the
personal property used in the operation of the business (including personal
property used for agricultural purposes), whether or not title to that property
is held in the name of only one spouse. Written notice is not, however,
required when prohibited by the law otherwise applicable to the transaction.
Remedies for the failure by a managing spouse to give prior written notice
as required by this subdivision are only as specified in Section 1101. A
Failure to give prior written notice shall not adversely affect the validity of
a transaction nor of any interest transferred.
(e) Each spouse shall act with respect to the other spouse in the
management and control of the community assets and liabilities in accordance
with the general rules governing fiduciary relationships which control the
actions of persons having relationships of personal confidence as specified in
Section 721, until such time as the assets and liabilities have been divided by
the parties or by a court. This duty includes the obligation to make full
disclosure to the other spouse of all material facts and information regarding
the existence, characterization, and valuation of all assets in which the
community has or may have an interest and debts for which the community is or
may be liable, and to provide equal access to all information, records, and
books that pertain to the value and character of those assets and debts, upon
request.
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘S-1/A’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 12/22/12 | | 9 |
| | 12/22/02 | | 9 |
| | 12/22/00 | | 9 |
| | 12/13/98 | | 4 |
| Filed on: | | 1/26/98 |
| | 8/1/97 | | 1 | | 36 |
| | 7/31/97 | | 25 |
| | 6/11/97 | | 2 | | 25 |
| | 9/27/96 | | 1 | | 9 | | | S-1 |
| | 6/30/96 | | 15 |
| | 4/3/96 | | 3 |
| | 2/26/96 | | 1 |
| | 12/22/95 | | 1 | | 9 |
| | 11/1/95 | | 1 |
| | 5/31/95 | | 10 |
| List all Filings |
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