UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 333-12995
FOX FAMILY WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4596247
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10960 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
(Address of principal executive offices)
Registrant's Telephone Number, Including Area Code: (310) 235-5100
Former name, address and fiscal year, if changed since last report
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: As of February 1, 2000,
there were 160,000 shares of Class A Common Stock outstanding and 15,840,000
shares of Class B Common Stock outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
FOX FAMILY WORLDWIDE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data)
<CAPTION>
June 30, December 31,
1999 1999
(audited) (unaudited)
---------------- ------------------
<S> <C> <C>
Assets:
Cash and cash equivalents.............................................. $ 46,858 $ 109,022
Restricted cash........................................................ 8,204 8,208
Accounts receivable, net............................................... 145,050 163,808
Amounts receivable from related parties................................ 19,082 64,637
Programming costs, net................................................. 538,219 558,878
Property and equipment, net............................................ 58,096 52,929
Deferred income taxes.................................................. 38,829 38,829
Intangible assets, net................................................. 1,539,852 1,519,591
Other assets, net...................................................... 77,684 61,861
---------------- ------------------
Total assets......................................................... $ 2,471,874 $ 2,577,763
================ ==================
Liabilities and stockholders' (deficit) equity:
Accounts payable....................................................... $ 44,743 $ 53,830
Accrued liabilities ................................................... 190,664 180,357
Deferred revenue....................................................... 59,314 50,818
Accrued participations................................................. 38,860 43,517
Deferred income taxes.................................................. 20,748 94,225
Bank and other debt.................................................... 1,726,315 1,683,371
Amounts payable to related parties..................................... 113,973 41,107
---------------- ------------------
Total liabilities.................................................... 2,194,617 2,147,225
---------------- ------------------
Commitments and contingencies
Series A Mandatorily Redeemable Preferred Stock, $0.001 par value;
500,000 shares authorized; 345,000 shares issued and outstanding
($1,000 per share liquidation value) ................................ 345,000 345,000
---------------- ------------------
Minority interest...................................................... -- 56,552
---------------- ------------------
Stockholders' (deficit) equity:
Preferred Stock, $0.001 par value; 19,500,000 shares authorized;
no shares issued or outstanding................................ -- --
Class A Common Stock, $0.0001 par value; 16,000,000 shares
authorized, 160,000 shares issued and outstanding.............. -- --
Class B Common Stock, $0.0001 par value; 16,000,000 shares
authorized, 15,840,000 shares issued and outstanding........... 16 16
Contributed capital.............................................. 60,731 78,672
Accumulated other comprehensive loss............................. (1,893) (2,214)
Accumulated deficit.............................................. (126,597) (47,488)
---------------- ------------------
Total stockholders' (deficit) equity ................................ (67,743) 28,986
---------------- ------------------
Total liabilities and stockholders' (deficit) equity ................ $ 2,471,874 $ 2,577,763
================ ==================
See accompanying notes.
</TABLE>
Page 2
<PAGE>
<TABLE>
FOX FAMILY WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED
DECEMBER 31, 1998 and 1999
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1998 1999 1998 1999
----------- ----------- ----------- ---------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Revenues....................................... $ 178,725 $ 167,136 $ 361,037 $ 339,338
---------- ----------- ----------- ---------
Costs and expenses:
Production and programming................. 76,464 62,479 173,733 147,766
Selling, general and administrative........ 54,683 56,997 101,399 103,939
Depreciation............................... 2,785 2,671 4,967 5,303
Amortization of intangibles................ 10,220 10,130 20,440 20,261
--------- ---------- ----------- ---------
144,152 132,277 300,539 277,269
--------- ---------- ----------- ---------
Operating income............................... 34,573 34,859 60,498 62,069
Equity in loss of unconsolidated affiliate..... 944 842 2,665 1,407
Other (income) expense, net.................... (174) 14 (282) 35
Interest expense, net.......................... 41,105 43,952 82,835 87,286
Gain on issuance of subsidiary stock:
Staff Accounting Bulletin No. 51 gain....... -- (117,316) -- (117,316)
Gain on issuance of subsidiary stock........ -- (78,623) -- (78,623)
---------- ----------- ----------- ----------
Income (loss) before provision for income
taxes...................................... (7,302) 185,990 (24,720) 169,280
Provision for income taxes..................... 338 74,024 716 74,522
---------- ----------- ------------ ---------
Net income (loss).............................. $ (7,640) $ 111,966 $ (25,436) $ 94,758
========== =========== ============ =========
See accompanying notes.
</TABLE>
Page 3
<PAGE>
<TABLE>
FOX FAMILY WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
DECEMBER 31, 1998 AND 1999
(UNAUDITED)
<CAPTION>
1998 1999
------------- ----------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)....................................... $ (25,436) $ 94,758
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Amortization of programming costs.................. 168,576 126,537
Depreciation....................................... 4,967 5,303
Amortization of intangibles........................ 20,440 20,261
Amortization of debt issuance costs................ 1,630 1,631
Equity in loss of unconsolidated affiliate......... 2,665 1,407
Non-cash interest expense.......................... 32,637 39,304
Gain on issuance of subsidiary stock............... -- (195,939)
Changes in operating assets and liabilities:
Restricted cash................................. -- (4)
Accounts receivable, net........................ (25,406) (18,758)
Amounts receivable from related parties......... (6,406) (25,555)
Other assets.................................... 9,816 10,231
Accounts payable and accrued liabilities........ 47,678 (14,634)
Accrued participations.......................... (10,779) 4,657
Deferred income taxes .......................... 322 73,477
Deferred revenue................................ (14,153) (8,496)
----------- ----------
Net cash provided by operating activities............... 206,551 114,180
----------- ----------
INVESTING ACTIVITIES:
Purchase of property and equipment...................... (7,690) (2,052)
Additions to production and programming costs........... (213,583) (145,280)
Other................................................... (907) 172
----------- ----------
Net cash used in investing activities................... (222,180) (147,160)
----------- ----------
FINANCING ACTIVITIES:
Proceeds from bank borrowings........................... 610 15,000
Paydown on bank borrowings.............................. (10,801) (112,114)
Paydown on NAI Bridge loan.............................. (135) (134)
Proceeds from Fox Subordinated Debt..................... -- 15,000
Dividends on Preferred Stock............................ (15,652) (15,649)
Proceeds on Fox Kids Europe N.V. public offering, net .. -- 152,963
Costs associated with Fox Kids Europe N.V. public
offering not yet paid.............................. -- 12,944
Advances from related parties........................... 5,996 27,134
----------- ----------
Net cash (used in) provided by investing activities..... (19,982) 95,144
----------- ----------
(Decrease) increase in cash and cash equivalents........ (35,611) 62,164
Cash and cash equivalents at beginning of period........ 82,313 46,858
----------- ----------
Cash and cash equivalents at end of period.............. $ 46,702 $ 109,022
=========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of amounts capitalized).............. $ 44,096 $ 43,588
Income taxes....................................... $ 1,158 $ 1,045
Non-cash investing and financing activities:
Shares of subsidiary ordinary stock issued as
settlement of a subscription advance .......... $ -- $ 100,000
Note payable assumed by unconsolidated affiliate... $ -- $ 20,000
Contributed capital by related party in formation
of an unconsolidated affiliate................... $ -- $ 17,941
See accompanying notes.
</TABLE>
Page 4
<PAGE>
FOX FAMILY WORLDWIDE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(UNAUDITED)
Note 1--Preparation of Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial statements of
Fox Family Worldwide, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
in accordance with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Certain prior year amounts have been reclassified to conform to the
current year presentation. Operating results for the six-month period ended
December 31, 1999 are not necessarily indicative of the results that may be
expected for the year ended June 30, 2000.
These interim condensed consolidated financial statements and the notes
thereto should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended June 30, 1999.
The preparation of the condensed consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the condensed
consolidated financial statements and accompanying notes, principally
amortization of programming costs. Actual results could differ from those
estimates. Management periodically reviews and revises its estimates of future
broadcast airings and revenues, as necessary, which may result in revised
amortization of its programming costs. Results of operations may be
significantly affected by the periodic adjustments in such amortization.
Note 2--Issuance of Subsidiary Ordinary Shares
In November 1999, net assets of certain direct and indirect subsidiaries of
the Company were contributed to Fox Kids Europe N.V. ("FKE"), a wholly owned
indirect subsidiary of the Company at the time the assets were contributed. Net
assets contributed mainly represent the Fox Kids cable channels broadcasting in
the European markets and the distribution rights of children's programming in
those markets owned by Saban International N.V., a wholly-owned indirect
subsidiary of the Company. In November 1999, FKE issued 12,519,307 previously
unissued ordinary shares (or 15.2 percent) for gross proceeds of $175,518,000
($14.02 per share) in an initial public offering ("IPO") on the Official Market
for Amsterdam Exchanges. Offering costs for the IPO totaled $22,550,000 and
consisted mainly of underwriter and professional fees plus certain capital
taxes. The Company has accounted for the offering in accordance with Staff
Accounting Bulletin ("SAB") No. 51, "Accounting by the parent in consolidation
for sale of stock by subsidiary." Accordingly, a gain of $117,316,000 was
recorded in the second quarter of fiscal year 2000, less an income tax provision
of $43,994,000. The gain recorded represents the Company's portion of the excess
net offering price per share of FKE's ordinary shares compared to the book
carrying amount per share.
In November 1999, in conjunction with the IPO, a subsidiary of the Company
caused to be transferred 7,507,591 ordinary shares of FKE (or 9.1 percent), to
Fox Broadcasting Company ("FBC") as settlement of a $100,000,000 subscription
advance payable. These shares were issued to the public on behalf of FBC in the
initial public offering for gross proceeds of $105,256,000 ($14.02 per share).
The gross proceeds from these shares, less underwriter fees and capital taxes of
$5,256,000, were retained by FBC. A gain of $78,623,000, less an income tax
provision of $29,483,000, was recorded on this transaction in the second quarter
of fiscal year 2000.
Page 5
<PAGE>
Note 3--Programming Costs
Programming costs, less accumulated amortization, are comprised of the
following:
<TABLE>
<CAPTION>
JUNE 30, 1999
-----------------------------------------
(in thousands)
-----------------------------------------
ACCUMULATED PROGRAMMING
COST AMORTIZATION COSTS, NET
----------- ------------ ------------
<S> <C> <C> <C>
Children's programming............. $ 1,289,026 $1,064,308 $ 224,718
Family programming, movies and
mini-series...................... 562,304 328,291 234,013
Projects in production............. 72,172 -- 72,172
Development........................ 7,316 -- 7,316
----------- ----------- ------------
$ 1,930,818 $ 1,392,599 $ 538,219
=========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-------------------------------------------
(in thousands)
-------------------------------------------
ACCUMULATED PROGRAMMING
COST AMORTIZATION COSTS, NET
----------- ------------ ------------
<S> <C> <C> <C>
Children's programming............. $ 1,386,380 $ 1,129,598 $ 256,782
Family programming, movies and
mini-series...................... 634,813 389,538 245,275
Projects in production............. 51,819 -- 51,819
Development........................ 5,002 -- 5,002
=========== ============ ============
$ 2,078,014 $ 1,519,136 $ 558,878
=========== ============ ============
</TABLE>
Interest amounting to $1,301,000 and $1,532,000 was capitalized to programming
costs for the six months ended December 31, 1999 and 1998, respectively.
Depreciation amounting to $1,916,000 and $1,819,000 was capitalized to
programming costs for the six months ended December 31, 1999 and 1998,
respectively.
Note 4--Comprehensive Income (Loss)
Comprehensive income (loss) for the three months and six months ended
December 31, 1999 and 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1998 1999 1998 1999
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net income (loss) $ (7,640) $ 111,966 $ (25,436) $ 94,758
Foreign currency translation
adjustment 1,013 (454) 596 (321)
============ =========== ============ ============
Comprehensive income (loss) $ (6,627) $ 111,512 $ (24,840) $ 94,437
============ =========== ============ ============
</TABLE>
Accumulated other comprehensive income (loss) at December 31, 1998 consisted of
foreign currency translation adjustments of $(605,000).
Note 5--Business Segment Reporting
The Company's business units have been aggregated into two reportable
operating segments: production & distribution and broadcasting. The other column
includes corporate related items, income and expenses not allocated to the
reportable segments and for the three and six-month periods ended December 31,
1999, the Company's gain on issuance of subsidiary stock. The Company's
reportable operating segments have been determined in accordance with the
Company's internal management structure, which is organized based on operating
activities. The Company evaluates performance based upon several factors, of
which the primary financial measure is segment income (loss) before interest,
income taxes, depreciation and amortization of intangibles.
Summarized financial information concerning the Company's reportable
segments is shown in the following tables (in thousands):
Page 6
<PAGE>
<TABLE>
<CAPTION>
Production
& Distribution Broadcasting Other Total
-------------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
SIX MONTHS ENDED DECEMBER 31, 1999:
Revenues.............................. $ 116,315 $ 222,918 $ 105 $ 339,338
Income before interest, income
taxes, depreciation and
amortization of intangibles......... $ 33,403 $ 55,600 $ 193,127 $ 282,130
SIX MONTHS ENDED DECEMBER 31, 1998:
Revenues.............................. $ 136,323 $ 224,107 $ 607 $ 361,037
Income (loss) before interest,
income taxes, depreciation
and amortization of intangibles..... $ 35,749 $ 53,660 $ (5,887) $ 83,522
QUARTER ENDED DECEMBER 31, 1999:
Revenues.............................. $ 40,805 $ 126,252 $ 79 $ 167,136
Income before interest, income
taxes, depreciation and
amortization of intangibles......... $ 9,662 $ 38,767 $ 194,314 $ 242,743
QUARTER ENDED DECEMBER 31, 1998:
Revenues.............................. $ 52,760 $ 125,949 $ 16 $ 178,725
Income (loss) before interest,
income taxes, depreciation
and amortization of intangibles..... $ 14,525 $ 36,114 $ (3,831) $ 46,808
</TABLE>
The following table reconciles segment income before interest, income taxes,
depreciation and amortization of intangibles to the Company's condensed
consolidated statements of operations (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1998 1999 1998 1999
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Segment income before interest,
income taxes, depreciation and
amortization of intangibles..... $ 46,808 $ 242,743 $ 83,522 $ 282,130
Amortization of intangibles....... (10,220) (10,130) (20,440) (20,261)
Interest expense, net............. (41,105) (43,952) (82,835) (87,286)
Depreciation...................... (2,785) (2,671) (4,967) (5,303)
Provision for income taxes........ (338) (74,024) (716) (74,522)
---------- ----------- ----------- -----------
Net income (loss)................. $ (7,640) $ 111,966 $ (25,436) $ 94,758
========== =========== =========== ===========
</TABLE>
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
This filing contains statements that constitute "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended. The words
"expect", "estimate", "anticipate", "predict", "believe" and similar expressions
and variations thereof are intended to identify forward-looking statements.
These statements appear in a number of places in this filing and include
statements regarding the intent, belief or current expectations of the Company,
its directors or its officers with respect to, among other things: (a) trends
affecting the Company's financial condition or results of operations; (b) the
Company's programming on the Fox Family Channel; (c) the impact of competition;
and (d) certain other operations. The readers of this filing are cautioned that
any such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected in this filing, including, without limitation, those risks
and uncertainties discussed under the headings "Factors That Could Impact Future
Results" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1999 as well as the information set forth below. The
Company does not ordinarily make projections of its future operating results and
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Readers should carefully review the risk factors referred to above and the other
documents the Company files from time to time with the Securities and Exchange
Commission, including the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1999, the quarterly reports on Form 10-Q filed by the
Company, and any current reports on Form 8-K filed by the Company.
RESULTS OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH SIX MONTHS ENDED
DECEMBER 31, 1998
For the six-month period ended December 31, 1999, revenues decreased 6.0%
to $339.3 million as compared to $361.0 million for the same six-month period of
the prior year. The revenue decrease of $21.7 million for the period primarily
results from lower direct-to-video revenues of $25.1 million offset by higher
foreign syndication and merchandising revenues associated with the production
and distribution segment of the Company. The market for direct-to-video features
is highly competitive, primarily due to an oversupply of family-oriented product
in the marketplace and as such, the Company did not release any new titles in
the current year. The Company's broadcast segment revenues decreased $1.2
million due to lower domestic cable and network ad sales revenues, but these
decreases were offset, in part, by higher subscription fee and international ad
sales revenues. Subscriber fee revenues for the Fox Family Channel increased due
to greater household penetration and higher subscriber rates while both ad sales
and subscription fee revenues from the Company's international cable channels
improved as a result of increased penetration in the marketplace and the launch
of additional channels.
The Company is positioning the Fox Family Channel by marketing and
appealing to the adult 18-49 demographic during primetime and evenings and to
children during the day. The Company utilizes original series, specials, and
both produced and licensed movies for its primetime programming while the
daytime children's block consists of library product along with other third
party acquired and original programming. The cable platform covers approximately
95% of U.S. cable and direct broadcast satellite homes and currently reaches
approximately 75 million viewers. The Company has introduced various programming
changes, which have had a positive impact on ratings and have improved important
demographics. The Company continues to pursue its long-term objective of
attracting a broader audience with improved advertiser demographics.
Production and programming costs for the six-month period ended December
31, 1999 decreased 14.9% to $147.8 million as compared to $173.7 million for the
same six-month period of the prior year. Production and programming costs as a
percentage of total revenues decreased to 43.5% for the six-month period ended
December 31, 1999 from 48.1% for the comparable prior year period. The decreases
in production and programming costs are attributable to a number of factors,
primarily the decrease in direct-to-video revenues described above, which have
high amortization rates, and lower amortization expense associated with the
Company's mix of domestic and foreign revenues as compared to the prior year.
Selling, general and administrative expenses increased 2.5% to $103.9
million for the six-month period ended December 31, 1999, from $101.4 million
for the same six months of the prior year. This increase is due to various costs
incurred with the expansion of the international channels and increased
marketing expenses for the Fox Kids Network. Offsetting this increase were lower
marketing expenses for the Fox Family Channel as the result of the reformatting
costs incurred in the prior year.
Page 8
<PAGE>
Depreciation expense for the six-month period ended December 31, 1999
increased $0.3 million or 6.8% as compared to the comparable prior year period.
As a percentage of total revenues, depreciation expense increased to 1.6% in the
current year from 1.4% in the prior year. The increase is due to depreciation on
property and equipment additions.
Amortization of intangible assets for the six-month period ended December
31, 1999 results from the acquisition of International Family Entertainment,
Inc. ("IFE"). These intangible assets are being amortized over 40 years.
The equity in loss of unconsolidated affiliate represents the Company's
portion of the loss generated by TV10, a cable network based in The Netherlands.
This cable network is a joint venture between the Company and a subsidiary of
The News Corporation Limited.
Interest expense increased by $4.5 million for the six-month period ended
December 31, 1999, as compared to the same period in 1998. The increase is
principally due to higher levels of the Company's subordinated debt partially
offset by lower levels of bank facility borrowings.
In November 1999, a subsidiary of the Company, Fox Kids Europe N.V., a
public limited liability company organized in The Netherlands ("FKE"), issued
12,519,307 previously unissued shares (15.2%) for net proceeds of approximately
$153.0 million in an initial public offering of its ordinary shares on the
Official Market of Amsterdam Exchanges. The Company has accounted for the
proceeds of the offering in accordance with Staff Accounting Bulletin ("SAB")
51, "Accounting by the parent in consolidation for sale of stock in subsidiary."
Accordingly, a gain of $117.3 million was recorded during the current period.
The gain recorded represents the Company's portion of the excess net offering
price per share of FKE's ordinary shares compared to the book carrying amount
per share. Additionally, a subsidiary of the Company caused to be transferred
7,507,591 shares of FKE, or 9.1% of its ordinary shares, to Fox Broadcasting
Company ("FBC") as settlement of a $100.0 million subscription advance payable.
These shares were issued to the public on behalf of FBC, as a selling
stockholder, in the initial public offering and the net proceeds from these
shares were retained by FBC. A gain of $78.6 million was recorded on the stock
issuance to FBC during the current period. (See Note 2 in the Notes to Condensed
Consolidated Financial Statements).
The Company's provision for income taxes for the six-month period ended
December 31, 1999 primarily reflects deferred taxes associated with the initial
public offering gains as described above plus foreign withholding taxes.
THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH THREE MONTHS ENDED
DECEMBER 31, 1998
For the three-month period ended December 31, 1999, revenues decreased
6.5% to $167.1 million as compared to $178.7 million for the same three-month
period of the prior year. The revenue decrease of $11.6 million primarily
relates to lower direct-to-video revenues of $7.3 million coupled with lower
foreign syndication revenues associated with the production and distribution
segment of the Company. The Company's broadcast segment posted higher domestic
cable and international subscription revenues and higher international ad sales
revenues as a result of the growth described above. These increases were
partially offset by lower domestic cable and network ad sales revenues.
Production and programming costs for the three-month period ended December
31, 1999 decreased 18.3% to $62.5 million as compared to $76.5 million for the
same three-month period of the prior year. Production and programming costs as a
percentage of total revenues decreased to 37.4% for the three-month period ended
December 31, 1999 from 42.8% for the comparable prior year period. The decreases
in production and programming costs are attributable to a number of factors,
primarily the decrease in direct-to-video revenues described above, which have
high amortization rates, and lower amortization expense associated with the
Company's mix of domestic and foreign revenues as compared to the prior year.
Selling, general and administrative expenses increased 4.2% to $57.0
million for the three-month period ended December 31, 1999, from $54.7 million
for the same three months of the prior year. This increase is due to various
costs incurred with the expansion of the international channels and increased
marketing expenses for the Fox Kids Network. Offsetting this increase were lower
marketing expenses for the Fox Family Channel as a result of the reformatting
costs incurred in the prior year.
Page 9
<PAGE>
The equity in loss of unconsolidated affiliate represents the Company's
portion of the loss generated by TV10, a cable network based in The Netherlands.
This cable network is a joint venture between the Company and a subsidiary of
The News Corporation Limited.
Interest expense increased by $2.8 million for the three-month period
ended December 31, 1999, as compared to the same period in 1998. The increase is
principally due to higher levels of the Company's subordinated debt partially
offset by lower levels of bank facility borrowings.
In November 1999, a subsidiary of the Company, FKE, issued 12,519,307
previously unissued shares (15.2%) for net proceeds of approximately $153.0
million in an initial public offering of its ordinary shares on the Official
Market of Amsterdam Exchanges. The Company has accounted for the proceeds of the
offering in accordance with SAB 51. Accordingly, a gain of $117.3 million was
recorded during the current period. The gain recorded represents the Company's
portion of the excess net offering price per share of FKE's ordinary shares
compared to the book carrying amount per share. Additionally, a subsidiary of
the Company caused to be transferred 7,507,591 shares of FKE, or 9.1% of its
ordinary shares, to FBC as settlement of a $100.0 million subscription advance
payable. These shares were issued to the public on behalf of FBC, as a selling
stockholder, in the initial public offering and the net proceeds from these
shares were retained by FBC. A gain of $78.6 million was recorded on the stock
issuance to FBC during the current period. (See Note 2 in the Notes to Condensed
Consolidated Financial Statements).
The Company's provision for income taxes for the three-month period ended
December 31, 1999 primarily reflects deferred taxes associated with the initial
public offering gains as described above plus foreign withholding taxes.
LIQUIDITY AND CAPITAL RESOURCES
As a result of the various financing transactions utilized to fund the IFE
acquisition (the "Acquisition"), which was completed in September 1997, the
Company's principal liquidity requirements arise from interest payments on both
the Company's credit facility ("Credit Facility") and the 9 1/4% Senior Notes
due 2007 and the dividend payments on the Mandatorily Redeemable Preferred
Stock. The Company further anticipates certain seasonal working capital needs
related to the development, production and acquisition of programming, the
financing of accounts receivable and other related operating costs. The Company,
on a regular basis has had, and intends to continue to engage in, exploratory
discussions concerning programming and other acquisition opportunities, and any
such acquisition could result in additional capital requirements. The Company's
principal sources of liquidity include borrowings under the Credit Facility,
cash generated from operations and funding from the Company's stockholders.
In November 1999, FKE, the Company's indirect subsidiary, completed an
initial public offering of its ordinary shares in The Netherlands, as described
above, generating net cash proceeds of approximately $153.0 million of which
$90.0 million was utilized to pay down the Company's credit facility and the
remaining amount was made available for working capital purposes. It is not
currently contemplated that similar transactions will take place in the near
future.
The Credit Facility is comprised of a seven-year amortizing term loan and
a seven-year reducing revolving credit facility. The maximum borrowings allowed
under the facility as of December 31, 1999 are $120 million for the term loan
and $355 million for the revolving credit facility. The Credit Facility is
scheduled to terminate September 29, 2004. Borrowings under the Credit Facility
bear interest, at the Company's option, at a rate per annum equal to either
LIBOR plus a 1.125% interest rate margin or a base rate plus a .25% interest
rate margin. As of December 31, 1999, $50 million was available under the Credit
Facility for additional borrowings, subject to certain restrictions.
Net cash provided by operating activities of the Company for the six
months ended December 31, 1999 was $114.2 million as compared to $206.6 million
for the six months ended December 31, 1998, primarily reflecting lower revenues
discussed above, expansion of the Company's international channel activities and
timing of production and programming payments.
Net cash used in investing activities of the Company during the six months
ended December 31, 1999 and 1998 was $147.2 million and $222.2 million,
respectively. The net cash flow used in investing activities for the six months
ended
Page 10
<PAGE>
December 31, 1999 and 1998 primarily related to additions to production and
programming costs and purchases of property and equipment. The six months ended
December 31, 1998 reflected higher than normal production and programming costs
associated with the completely revamped program schedule of the Fox Family
Channel.
Net cash provided by (used in) financing activities of the Company during
the six months ended December 31, 1999 and 1998 was $95.1 million and $(20.0)
million, respectively. The financing activities for the six months ended
December 31, 1999 relate to proceeds from the initial public offering of the
ordinary shares of FKE, the issuance of additional Fox subordinated debt and
advances from related parties, payments of dividends related to the Company's
Series A Mandatorily Redeemable Preferred Stock and proceeds from and paydown of
bank borrowings, while the financing activities for the six months ended
December 31, 1998 related primarily to dividend payments, paydown of bank
borrowings and advances from related parties.
The Company's total unrestricted cash and cash equivalents balance at
December 31, 1999 was $109.0 million.
The Company believes that the available borrowings under the Credit
Facility, together with cash flows from operations, cash on hand and funding
from the Company's stockholders should be sufficient to fund its operations and
service its debt for the foreseeable future.
USE OF EBITDA
While many in the financial community consider earnings before interest,
income taxes, depreciation and amortization of intangibles ("EBITDA") to be an
important measure of comparative operating performance, it should be considered
in addition to, but not as a substitute for or superior to, operating income,
net income (loss), cash flow and other measures of financial performance
prepared in accordance with generally accepted accounting principles. EBITDA
does not reflect cash available to fund cash requirements, and the items
excluded from EBITDA, such as depreciation and non-film amortization, are
significant components in assessing the Company's financial performance. Other
significant uses of cash flows are required before cash will be available to the
Company, including debt service, taxes and expenditures for production,
distribution and broadcast assets. EBITDA eliminates the uneven effect across
business segments of depreciation and amortization primarily resulting from the
value of intangible assets acquired in business combinations accounted for by
the purchase method of accounting, including the Company's August 1997
acquisition of IFE. The Company's calculation of EBITDA may be different from
the calculation used by other companies and, therefore, comparability may be
limited.
The following table sets forth the Company's revenues and earnings before
interest, income taxes, depreciation and amortization of intangibles for the
three and six-month periods ended December 31, 1998 and 1999. Included in
EBITDA for the three and six-month periods ended December 31, 1999 is the
Company's gain on issuance of subsidiary stock which totalled $195.9 million.
Page 11
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1998 1999 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
- ---------
Production and distribution.......... $52,760 $ 40,805 $136,323 $116,315
Broadcasting......................... 125,949 126,252 224,107 222,918
Other................................ 16 79 607 105
-------- -------- -------- --------
Total Revenues................. 178,725 167,136 361,037 339,338
-------- -------- -------- --------
EBITDA:
- -------
Production and distribution.......... 14,525 9,662 35,749 33,403
Broadcasting......................... 36,114 38,767 53,660 55,600
Other................................ (3,831) 194,314 (5,887) 193,127
-------- -------- -------- --------
Total EBITDA................... 46,808 242,743 83,522 282,130
OTHER EXPENSE:
- --------------
Interest expense..................... 41,105 43,952 82,835 87,286
Depreciation......................... 2,785 2,671 4,967 5,303
Amortization of intangibles.......... 10,220 10,130 20,440 20,261
-------- -------- -------- --------
Income (loss) before provision for
income taxes.......................... (7,302) 185,990 (24,720) 169,280
Provision for income taxes.............. 338 74,024 716 74,522
-------- -------- -------- --------
Net income (loss)....................... $(7,640) $111,966 $(25,436) $ 94,758
======== ======== ======== ========
</TABLE>
IMPACT OF YEAR 2000
The Year 2000 issue is the result of computer programs being written using
two digits instead of four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software or facilities or equipment
containing embedded micro-controllers may recognize a date using "00" as the
year 1900 rather than the year 2000. This could cause a system failure or
miscalculations causing potential disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities.
Through January 2000, the Company has not experienced significant or
material malfunctions in its information technology (IT) systems as the result
of Year 2000. The Company believes it could experience minor malfunctions of its
IT systems and Non-IT business systems not previously detected but that these
minor malfunctions will not have a material impact on the Company's results of
operations or financial condition. As discussed below, the Company's continued
Year 2000 compliance in calendar 2000 is in part dependent on the continued Year
2000 compliance of third parties.
Through January 2000, the Company's key vendors and customers have not
reported any significant Year 2000 compliance problems, and the Company's
financial results have not been negatively impacted by Year 2000 failures of
third parties. However, because the Company's continued Year 2000 compliance in
calendar 2000 is in part dependent on the continued Year 2000 compliance of
third parties, there can be no assurance that the Company's efforts alone have
resolved all Year 2000 issues or that key third parties will not experience Year
2000 compliance failures as calendar year 2000 progresses.
The Company began its Year 2000 project in June 1998. In November 1998, the
Company engaged the services of a consulting firm to review all phases completed
to date, to assist the Company with testing and to help the Company build its
contingency plan.
Page 12
<PAGE>
With the assistance of the consultants, the Company completed its assessment
of the significant software applications and equipment used in the Company's
operations. The Company then substantially completed the modification or
replacement of its software and hardware so that the areas of information
technology and non-information technology would function properly with respect
to dates in the year 2000 and thereafter. The vast majority of this hardware and
software was tested and changes were implemented prior to June 1999. Based upon
its efforts to date, the Company believes that all mission critical hardware and
software has been vendor verified and tested as Year 2000 compliant. The small
percentage of items which remained to be fixed were identified as non-critical
and were completed by December 31, 1999.
Through December 31, 1999, the Company has incurred approximately $750,000
in costs related to its Year 2000 readiness program which has been funded from
its operating cash flow. These costs have not all been incremental, but rather
reflect redeployment of internal resources from other activities. The Company
does not expect the activities of the Year 2000 readiness program to have a
material adverse effect on the ongoing business operations of the Company.
Page 13
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company's primary market risks include fluctuations in interest rates,
variability in interest rate spread relationships (i.e., prime to LIBOR spreads)
and exchange rate variability. The Company manages these market risks by using
derivative financial instruments in accordance with established policies and
procedures. The Company does not use derivative financial instruments for
trading purposes.
When the Company licenses its programming outside the United States, the
majority of transactions are denominated in U.S. dollars. Channel subscription
fees are denominated in local currencies. For those transactions denominated in
foreign currencies, to the extent possible, sales and purchases in specific
currencies are offset against each other. The foreign currencies in which the
Company has the most significant exchange rate exposure are the British pound,
French franc, German mark and Canadian dollar. To manage these exposures, the
Company periodically initiates hedging activities by entering into currency
exchange agreements, consisting primarily of currency forward contracts, to
minimize cost variations which could result from fluctuations in currency
exchange rates. The currency exchange agreements which provide hedge coverage
typically mature within one year of origination, consistent with the underlying
purchase or sales commitment.
The Company maintains a mix of fixed and floating debt to mitigate its
exposure to interest rate fluctuations.
The Company's management believes that fluctuations in interest rates and
currency exchange rates in the near term would not materially affect the
Company's consolidated operating results, financial position or cash flows as
the Company has limited risks related to interest rate and currency exchange
rate fluctuations.
Page 14
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company currently and from time to time is engaged in litigation in
the ordinary course of its business. The Company is not currently a party to any
lawsuit or proceeding which, in the opinion of management, if decided adversely
to the Company, would be likely to have a material adverse effect on the
Company's financial condition and results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
10.1 Amendment and Waiver No. 5 to the Second Amended and
Restated Credit Agreement dated as of October 26, 1999.
10.2 Letter Amendment No. 6 to the Second Amended and Restated
Credit Agreement dated as of October 26, 1999.
10.3 First Amendment to Subscription Agreement dated as of
November 23, 1999, by and among Fox Broadcasting Company and
Fox Kids Europe Holdings, Inc.
27.1 Financial Data Schedule.
(b) REPORTS ON FORM 8-K:
None.
Page 15
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FOX FAMILY WORLDWIDE, INC.
Date: February 11, 2000 /S/ MEL WOODS
---------------------------------
Mel Woods
President, Chief Operating Officer and
Chief Financial Officer
Page 16
<PAGE>
EXHIBIT INDEX
ITEM EXHIBIT PAGE
10.1 Amendment and Waiver No. 5 to the Second Amended and
Restated Credit Agreement dated as of October 26, 1999.
10.2 Letter Amendment No. 6 to the Second Amended and Restated
Credit Agreement dated as of October 26, 1999.
10.3 First Amendment to Subscription Agreement dated as of
November 23, 1999, by and among Fox Broadcasting Company
and Fox Kids Europe Holdings, Inc.
27.1 Financial Data Schedule
Page 17
EXECUTION COPY
AMENDMENT AND WAIVER NO. 5 TO THE LOAN DOCUMENTS
AMENDMENT AND WAIVER dated as of October 26, 1999 to (a) the Second Amended
and Restated Credit Agreement dated as of October 28, 1997 (as amended by Letter
Amendment No. 1 dated as of November 18, 1997, Letter Amendment No. 2 dated as
of April 16, 1998, Amendment and Waiver No. 3 to the Loan Documents dated as of
June 29, 1998 and Amendment and Waiver No. 4 to the Loan Documents dated as of
May 26, 1999, the "CREDIT Agreement") among FCN Holding, Inc., a Delaware
corporation ("FCN HOLDING"), International Family Entertainment, Inc., a
Delaware corporation ("IFE"), Saban Entertainment, Inc., a Delaware corporation
("SABAN"), Fox Family Properties, Inc., a Delaware corporation ("FOX
PROPERTIES"), Fox Family Management, LLC, a Delaware limited liability company
("FOX MANAGEMENT" and, together with FCN Holding, IFE, Saban and Fox Properties,
the "Borrowers"), Fox Kids Holdings, LLC, a Delaware limited liability company
("HOLDINGS"), as Guarantor, the banks, financial institutions and other
institutional lenders (collectively, the "LENDERS") party to the Credit
Agreement, Citicorp USA, Inc., as administrative agent (the "ADMINISTRATIVE
AGENT") for such Lenders and the other Secured Parties referred to therein, and
Salomon Smith Barney Inc. (formerly known as Citicorp Securities, Inc.), Chase
Securities, Inc. and BankBoston, N.A., as Co-Arrangers for the Facilities
referred to therein, (b) the Fox Kids Guarantee dated October 28, 1997 (as
amended by Letter Amendment No. 2 dated as of April 16, 1998, Amendment and
Waiver No. 3 to the Loan Documents dated as of June 29, 1998 and Amendment and
Waiver No. 4 to the Loan Documents dated as of May 26, 1999, the "FOX KIDS
GUARANTEE") made by Fox Kids in favor of the Secured Parties referred to
therein, (c) the Pledge and Assignment Agreement dated as of October 28, 1997
(as amended by Amendment and Waiver No. 3 to the Loan Documents dated as of June
29, 1998 and Amendment and Waiver No. 4 to the Loan Documents dated as of May
26, 1999 and as further amended, supplemented or otherwise modified through the
date hereof, the "PLEDGE AND ASSIGNMENT AGREEMENT") made by Fox Kids, Holdings
and each of the Subsidiaries of Holdings listed on the signature pages thereof,
as pledgors, to and in favor of the Administrative Agent, and (d) the other Loan
Documents referred to in the Credit Agreement. Capitalized terms not otherwise
defined in this Amendment and Waiver shall have the same meanings as specified
therefor in the Credit Agreement.
PRELIMINARY STATEMENTS
(1) The Borrowers have requested that the Lenders agree to amend and
otherwise modify the Credit Agreement and the other Loan Documents in order to
permit:
(a) all of the Equity Interests in Fox Kids Europe Limited, Fox Kids
France SARL, TV 10 Holdings, Saban Merchandising and Licensing GmbH, Saban
Entertainment Italy Srl and Saban Entertainment (UK) Ltd. (collectively,
the "RESTRUCTURED EUROPEAN SUBSIDIARIES"), certain properties, assets and
businesses of Saban International, N.V. and Saban International Paris SARL,
and the Intercompany Note dated June 28, 1999 of IFE owing to FKE Holdings
(the "EXISTING IFE INTERCOMPANY NOTE") to be sold, contributed or otherwise
transferred from Saban and certain of its Subsidiaries to Fox Kids Europe,
N.V., a newly created Dutch company that prior to the consummation of the
FKE Equity Offering (as hereinafter defined) will be a wholly owned
Subsidiary of Saban ("FOX KIDS EUROPE"), so that, upon the consummation of
all such sales, contributions and transfers, Fox Kids Europe (i) will own
substantially all of the existing television, merchandising, home video and
Internet rights, and all amounts receivable under existing distribution or
exploitation agreements due on or after the Restructuring Effective Date
(as hereinafter defined), in and to the children's television series and
specials owned or controlled
<PAGE>
by Saban and certain of its Subsidiaries, subject to third party
participation claims, and the future rights to Internet technologies and
applications relating to children's programming and properties of Saban and
certain of its Subsidiaries, for distribution in the territories set forth
in Part III of Annex A hereto and (ii) will have the right to acquire the
same rights in such territories in all children's programming and
properties produced or acquired by Saban and certain of its Subsidiaries in
the future, all as more fully described in Part I of Annex A hereto
(together with the contributions by FKE Holdings and, in turn, by Fox Kids
SPC2 of the Existing IFE Intercompany Note described in clause (c)(i)
below, collectively, the "EUROPEAN SUBSIDIARIES RESTRUCTURING");
(b) the sale by Fox Kids Europe of a portion of its Voting Interests
to the public (the "FKE EQUITY OFFERING") pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or an
exemption from the registration requirements thereof, and otherwise on the
terms and conditions of the Final Offering Memorandum to be dated November
1999 (the "FINAL OFFERING MEMORANDUM");
(c) (i) the contribution by FKE Holdings to Fox Kids SPC2, Inc., a
California corporation and a newly created, wholly owned subsidiary of FKE
Holdings ("FOX KIDS SPC2"), and, in turn, the contribution by Fox Kids SPC2
to Fox Kids Europe of the Existing IFE Intercompany Note as part of the
European Subsidiaries Restructuring and (ii) upon the consummation of the
FKE Equity Offering, the restatement of the Existing IFE Intercompany Note
on the terms and conditions of the IFE/FKE Senior Notes (as hereinafter
defined); and
(d) the issuance by IFE of a senior unsecured note due May 2020 in
favor of Fox Kids Europe (together with the restated IFE Intercompany Note
referred to in clause (c)(ii) above, the "IFE/FKE SENIOR NOTES") in a
principal amount equal to the loan made by Fox Kids Europe to IFE on the
Offering Effective Date (as hereinafter defined) with the aggregate amount
of cash proceeds received by Fox Kids Europe in the FKE Equity Offering in
excess of $160,000,000.
The European Subsidiaries Restructuring, the FKE Equity Offering, the
contributions by FKE Holdings to Fox Kids SPC2 and, in turn, by Fox Kids SPC2 to
Fox Kids Europe of the Existing IFE Intercompany Note, the subsequent
restatement of the Existing IFE Intercompany Note on the terms and conditions of
the IFE/FKE Senior Notes and, if applicable, the issuance of the additional
IFE/FKE Senior Note are hereinafter collectively referred to as the "AMENDMENT
NO. 5 TRANSACTIONS".
(2) The Lenders have indicated their willingness to agree to amend the
Credit Agreement and the other Loan Documents in order, among other things, to
permit the amendments and modifications thereto described in the foregoing
Preliminary Statements on the terms and subject to the satisfaction of
conditions set forth herein.
SECTION 1. AMENDMENTS TO CERTAIN PROVISIONS OF THE CREDIT AGREEMENT
EFFECTIVE ON THE RESTRUCTURING EFFECTIVE DATE. The Credit Agreement is, upon the
occurrence of the Restructuring Effective Date, hereby amended to read as
follows:
(a) Section 1.01 of the Credit Agreement is hereby amended to add the
following new definitions in their appropriate alphabetical order:
EX-10.1 - 2
<PAGE>
"AMENDMENT AND WAIVER NO. 5" means Amendment and Waiver No. 5 to
the Loan Documents dated as of October 26, 1999.
"AMENDMENT NO. 5 TRANSACTIONS" means, collectively, (a) the
consummation of the European Subsidiaries Restructuring and the FKE
Equity Offering, (b) the execution and delivery, and the satisfaction
of the conditions precedent to effectiveness, of Amendment and Waiver
No. 5 to the Loan Documents, (c) the contributions by FKE Holdings to
Fox Kids SPC2 and, in turn, by Fox Kids SPC2 to FKE of the
Intercompany Note dated June 28, 1999 of IFE and the subsequent
restatement of such Intercompany Note of IFE on the terms and
conditions of the IFE/FKE Senior Notes, (d) the issuance of the
additional IFE/FKE Senior Note, if applicable, and (e) the payment of
the fees and expenses incurred in connection with the consummation of
the foregoing.
"EUROPEAN SUBSIDIARIES RESTRUCTURING" means the restructuring of
the ownership of the Equity Interests in Fox Kids Europe Limited, Fox
Kids France SARL, TV 10 Holdings, Saban Merchandising and Licensing
GmbH, Saban Entertainment Italy Srl and Saban Entertainment (UK) Ltd.,
certain properties, assets and businesses of SINV and Saban
International Paris SARL and the Intercompany Note dated June 28, 1999
of IFE by and from Saban and certain of its Subsidiaries to FKE so
that, upon the consummation of such restructuring, FKE will own all of
the FKE Intangibles and will have a right of first negotiation to
acquire the same types of rights as comprise the FKE Intangibles in
the same territories as are included in the FKE Intangibles in all
children's programming produced or acquired by SINV in the future,
together with the absolute right to acquire from SINV such rights in
such territories in such future children's programming, all as more
fully described in Part I of Annex A to Amendment and Waiver No. 5.
"EUROPEAN SUBSIDIARIES RESTRUCTURING EFFECTIVE DATE" means the
first date on which all of the conditions precedent to the
effectiveness of the European Subsidiaries Restructuring set forth in
Amendment and Waiver No. 5 were satisfied.
"FKE"means Fox Kids Europe, B.V. and, after the conversion of
such Person from a besloten vennootschap organized under the laws of
The Netherlands to a naamloze vennootschap organized under the laws of
The Netherlands as part of the European Subsidiaries Restructuring,
Fox Kids Europe, N.V., in either case a Subsidiary of Saban.
"FKE EQUITY OFFERING" means the sale of Voting Interests in FKE
made to the public by FKE pursuant to an effective registration
statement under the Securities Act, or an exemption from the
registration requirements thereof, and otherwise on the terms and
conditions described in the Final Offering Memorandum dated (or to be
dated) November 1999, copies of which have been furnished to all of
the Lenders.
"FKE EQUITY OFFERING EFFECTIVE DATE" means the first date on
which all of the conditions precedent to the effectiveness of the FKE
Equity Offering set forth in Amendment and Waiver No. 5 were
satisfied.
EX-10.1 - 3
<PAGE>
"FKE INTANGIBLES" means the existing terrestrial, cable and
satellite television, merchandising, home video and Internet rights,
and all amounts receivable under existing distribution or exploitation
agreements due on or after the European Subsidiaries Restructuring
Effective Date, in and to children's television series and specials
owned or controlled by SINV, subject to third party participation
claims, and the future rights to Internet technologies and
applications relating to children's programming and properties of
SINV, for distribution in the territories set forth in Part III of
Annex A to Amendment and Waiver No. 5.
"FOX KIDS SPC2" means Fox Kids SPC2, Inc., a California
corporation and a direct wholly owned subsidiary of FKE Holdings.
"IFE/FKE SENIOR NOTES" means one or more senior unsecured notes
of IFE due May 2020 comprised of the restated Intercompany Note dated
June 28, 1999 of IFE in an aggregate principal amount of $104,114,000
(of which $4,114,000 represents capitalized interest on such
Intercompany Note to the European Subsidiaries Restructuring Effective
Date) and the principal amount of the loan, if any, made by FKE to IFE
on the FKE Equity Offering Effective Date with the cash proceeds
received by FKE in the FKE Equity Offering in excess of $160,000,000;
PROVIDED, HOWEVER, that (a) such senior unsecured notes of IFE shall
not accrue interest payable in cash at a rate per annum of more than
10.5%, (b) no payment of the principal amounts outstanding under such
senior unsecured notes shall be required to be made prior to October
31, 2005, (c) any prepayment or payment of amounts outstanding from
time to time under such senior unsecured notes shall be expressly
permitted under Section 5.02(p), (d) the Obligations under the IFE/FKE
Senior Notes shall be owing at all times to FKE or one or more of its
wholly owned Subsidiaries or to one or more of the Borrowers and their
wholly owned Subsidiaries and (e) all of the other terms and
conditions of such senior unsecured notes shall be reasonably
satisfactory to the Lenders.
"1999 FBC SUBSCRIPTION AGREEMENT" means the Subscription
Agreement dated as of June 28, 1999 between FKE Holdings and FBC, as
amended by Amendment No. 1 to be dated on or about the European
Subsidiaries Restructuring Effective Date.
"SINV" means Saban International, N.V., a corporation organized
under the laws of the Netherlands Antilles and a wholly owned
Subsidiary of Saban."
(b) The definition of "FOREIGN SUBSIDIARY PLEDGE AGREEMENTS" set forth
in Section 1.01 of the Credit Agreement is hereby restated in its entirety
to read as follows:
"FOREIGN SUBSIDIARY PLEDGE AGREEMENTS" means, collectively, (a)
the Amended and Restated Pledge Agreement of Shares dated the Phase II
Closing Date among Saban, SINV and the Administrative Agent, (b) the
Pledge Agreement dated the Phase II Closing Date between Saban and the
Administrative Agent, (c) the Deed of Pledge of Shares dated the Phase
II Closing Date among Saban, Saban International Paris SARL and the
Administrative Agent, (d) the Pledge Agreement of Shares dated on or
prior to the European Subsidiaries Restructuring Effective Date among
Saban, certain of its Subsidiaries and the Administrative Agent and
(e) each of the other pledge agreements, assignment agreements (or
other similar documents) governed by the laws of a jurisdiction
outside of the United States of America that is delivered pursuant to
Section
EX-10.1 - 4
<PAGE>
5.02(j), in each of the foregoing cases as amended, supplemented or
otherwise modified hereafter from time to time in accordance with the
terms hereof and Section 9.01."
(c) The definition of "RESTRICTED SUBSIDIARY" set forth in Section
1.01 of the Credit Agreement is hereby amended to add the following new
parenthetical at the end of clause (a) thereof:
"(other than the special purpose companies organized in a jurisdiction
of the United States as part of the European Subsidiaries
Restructuring and referred to as "SPC3" and "SPC5" in Annex A to
Amendment and Waiver No. 5, which will be (or will have been)
liquidated on or immediately following the FKE Equity Offering
Effective Date)".
(d) Section 5.01(j) of the Credit Agreement is hereby amended (i) to
delete the word "and" at the end of clause (vi) thereof, (ii) to delete the
punctuation "." at the end of clause (vii) thereof and to substitute
therefor the new language "; and", (iii) to delete the language "(iv), (vi)
or (vii) of Section 5.02(f)" at the end of clause (vii) thereof and to
substitute therefor the new language "(iv), (vi), (vii) or (x) of Section
5.02(f)" and (iv) to add the following new clause (viii) thereto:
"(viii) the making and holding of the loans to IFE as evidenced by the
IFE/FKE Senior Notes and the making and holding of loans by, and
capital contributions from, Saban to Fox Kids Europe Limited and Fox
Kids France SARL in accordance with Section 5.02(e)(v)(D)."
(e) Section 5.01 of the Credit Agreement is hereby further amended to
add to the end of such Section 5.01 the following new subsection (l):
"(l) COVENANT TO REESTABLISH SECURITY INTEREST, ETC. If the FKE
Equity Offering Effective Date shall not have occurred on or prior to
December 15, 1999, each of the Borrowers and the Restricted
Subsidiaries (including, without limitation, the special purpose
companies that are wholly owned Domestic Subsidiaries and are referred
to as "SPC3" and "SPC5" in Annex A to Amendment and Waiver No. 5),
shall, no later than December 15, 1999, (i) cause the Intercompany
Note dated June 28, 1999 of IFE otherwise transferred as part of the
European Subsidiaries Restructuring to be acquired (or reacquired) by
a Borrower other than IFE or a Restricted Subsidiary and pledged and
assigned (or repledged and reassigned) thereby to the Administrative
Agent for the benefit of the Secured Parties as Collateral, (ii)
pledge and assign and repledge and reassign, as applicable, to the
Administrative Agent for the benefit of the Secured Parties all of the
Equity Interests in, and all of the Intercompany Notes issued by, the
Restructured European Subsidiaries (as defined in Amendment and Waiver
No. 5) intended to comprise part of the Collateral, and any other
items of Collateral that were released by the Lenders and the Agents
on the European Subsidiaries Restructuring Effective Date and (iii)
take all actions necessary to comply with the requirements of Section
5.02(j), all as though Sections 1(g)(iv), 4(b)(ii), 4(c) and 4(d) of
Amendment and Waiver No. 5 had not become effective."
(f) Section 5.02(b) of the Credit Agreement is hereby amended (i) to
delete the word "and" at the end of subclause (ii)(A) thereof, (ii) to
delete the language "; and" at the end of
EX-10.1 - 5
<PAGE>
subclause (ii)(B) thereof and to substitute therefor the new language ",
and", (iii) to add the following new subclause (ii)(C):
"(C) Indebtedness evidenced by the Intercompany Note dated June
28, 1999 of IFE owing to FKE (as successor in interest to FKE Holdings
upon the contribution thereto as part of the European Subsidiaries
Restructuring);", and
(iv) to delete the phrase "otherwise expressly permitted under Section
5.02(e)(xii)" in the sixth and seventh lines of subclause (iii)(C) thereof
and to substitute therefor the new phrase "otherwise expressly permitted
under Section 5.02(e)(v)(D) or 5.02(e)(xii)".
(g) Section 5.02(d) of the Credit Agreement is hereby amended (i)
to delete the word "and" at the end of subclause (iii)(B) thereof and
to substitute therefor the new punctuation ",", (ii) to delete the
phrase "any of their respective Subsidiaries" at the end of subclause
(iii)(C) thereof immediately following the language "any of the
Borrowers or " and to substitute therefor the new phrase "any of the
Restricted Subsidiaries", (iii) to add immediately prior to the
PROVISO clause to clause (iii) thereof the following new subclause
(iii)(D) thereto:
"and (D) any of the Unrestricted Subsidiaries may sell, lease,
transfer or otherwise dispose of any of its property or assets
to any of the other Unrestricted Subsidiaries", and
(iv) to renumber the existing clause (xii) thereof as clause (xi) of
Section 5.02(d).
(h) Section 5.02(e) of the Credit Agreement is hereby amended (i) to
delete the word "or" at the end of subclause (v)(B) thereof and to
substitute therefor the new punctuation ",", (ii) to add the following new
subclause (v)(D) thereto:
"and (D) Saban in Fox Kids Europe Limited and Fox Kids France SARL
comprised solely of loans and cash capital contributions made
(directly or indirectly through FKE Holdings) in the ordinary course
of business prior to the European Subsidiaries Restructuring Effective
Date in an aggregate amount not to exceed $36,000,000",
(iii) to delete the phrase "in accordance with clause (vii), (viii), (ix)
or (xii) of Section 5.02(d)" in clause (viii) thereof and to substitute
therefor the phrase "in accordance with clause (vii), (viii), (ix) or (xi)
of Section 5.02(d)", (iv) to delete the word "and" at the end of clause
(xii) thereof, (v) to delete the punctuation "." at the end of clause
(xiii) thereof and to substitute therefor the new language "; and" and (vi)
to add the following new clause (xiv) thereto:
"(xiv) as part of the European Subsidiaries Restructuring,
Investments by Saban and one or more of the Restricted Subsidiaries in
FKE, either directly or indirectly, of all of the Equity Interests in
Fox Kids Europe Limited, Fox Kids France SARL, TV 10 Holdings, Saban
Merchandising and Licensing GmbH, Saban Entertainment Italy Srl and
Saban Entertainment (UK) Ltd., certain properties, assets and
businesses of SINV and Saban International Paris SARL and the
Intercompany Note dated June 28, 1999 of IFE in exchange for at least
51% of the outstanding Equity Interests in FKE (on a fully diluted
basis); PROVIDED that immediately before and after giving PRO FORMA
effect to each such Investment, no Default shall have occurred and be
continuing."
EX-10.1 - 6
<PAGE>
(i) Section 5.02(g) of the Credit Agreement is hereby amended to
restate clause (ii) thereof in its entirety to read as follows:
"(ii) Amend, modify or change in any manner any of the terms or
conditions of any of the Surviving Indebtedness or any of the other
Intercompany Notes, except (A) that the terms and conditions of the
Intercompany Note dated June 28, 1999 of IFE may be amended to reflect
the capitalization of all accrued and unpaid interest thereon to the
European Subsidiaries Restructuring Effective Date and to conform to
the terms of the IFE/FKE Senior Notes upon the restatement thereof on
the FKE Equity Offering Effective Date , (B) as part of the European
Subsidiaries Restructuring, the terms of the Intercompany Notes of Fox
Kids Europe Limited and Fox Kids France SARL that evidence the loans
made by Saban and FKE Holdings in accordance with Section
5.02(e)(v)(D) may be amended to replace (1) the maturity thereof upon
demand with a maturity date that is no earlier than May 31, 2002 and
(2) the payment of interest on demand with scheduled periodic interest
payments to occur no more frequently than semiannually, and (C) as
otherwise expressly permitted under the terms of the Loan Documents
or, solely in the case of the Intercompany Notes, as, either
individually or in the aggregate, could not adversely affect Fox Kids
or any of its Subsidiaries or any of the rights or interests of the
Administrative Agent or the Lenders in any manner;".
(j) Section 5.02(l) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(l) AMENDMENTS TO CONSTITUTIVE DOCUMENTS. Amend, or permit any
of its Subsidiaries to amend, its Constitutive Documents, except that
(i) Holdings or any of its Subsidiaries may amend its certificate or
articles of association (or similar Constitutive Documents) to change
its legal name, (ii) FKE may amend its Articles of Association to
convert FKE from a besloten vennootschap organized under the laws of
The Netherlands to a naamloze vennootschap organized under the laws of
The Netherlands as part of the European Subsidiaries Restructuring and
(iii) Holdings or any of its Subsidiaries may amend its bylaws (or
similar Constitutive Documents) in such a manner as, either
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect; PROVIDED that copies of any such
amendment to the Constitutive Documents of Holdings or any such
Subsidiary shall be delivered to the Administrative Agent at least ten
Business Days prior to the date on which such amendments are intended
to become effective; and PROVIDED FURTHER that Holdings or its
applicable Subsidiary shall have executed and filed such financing
statements, or amendments thereto, and such instruments and notices,
and shall have taken such other actions, as may be necessary or as the
Administrative Agent may reasonably deem desirable and may request in
order to perfect and preserve the pledges, assignments and security
interests granted or purported to be granted under the Pledge and
Assignment Agreement."
(k) Section 5.03(c) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(c) ANNUAL FINANCIALS. As soon as available and in any event
within 120 days after the end of each Fiscal Year, an unaudited
Consolidated balance sheet of Holdings and its Subsidiaries as of the
end of such Fiscal Year and unaudited
EX-10.1 - 7
<PAGE>
Consolidated statements of operations, stockholders' equity and cash
flows of Holdings and its Subsidiaries for such Fiscal Year, setting
forth in comparative form, in the case of each such Consolidated
balance sheet, the corresponding figures as of the last day of the
immediately preceding Fiscal Year from the Consolidated balance sheet
for such Persons for such immediately preceding Fiscal Year and, in
the case of each such Consolidated statement of operations,
stockholders' equity or cash flows, the corresponding figures for the
immediately preceding Fiscal Year, all in reasonable detail, together
with an "AGREED UPON PROCEDURES" report prepared in accordance with
the guidelines of the American Institute of Certified Public
Accountants then in effect from Ernst & Young LLP (or other
independent public accountants of recognized standing reasonably
acceptable to the Required Lenders) for the reconciliation of the
Consolidated financial statements of Holdings and its Subsidiaries for
such Fiscal Year with the audited Consolidated financial statements of
Fox Kids and its Subsidiaries for such Fiscal Year delivered to the
Lenders pursuant to Section 7(i)(ii) of the Fox Kids Guarantee."
(l) Section 5.03(d) of the Credit Agreement is hereby amended (i) to
delete the existing clause (ii) thereof, (ii) to renumber the existing
clauses (iii), (iv), (v) and (vi) thereof as clauses (ii), (iii), (iv) and
(v) of Section 5.03(d), respectively, and (iii) to delete the language "in
the case of any such financial statements delivered to the Lenders pursuant
to Section 5.03(b)," at the beginning of the renumbered clauses (iv) and
(v) of Section 5.03(d).
(m) Section 7.01(c) of the Credit Agreement is hereby amended to
delete the language "5.01(j) or 5.01(k)" in the third line of clause (i)
thereof and to substitute therefor the new language "5.01(j), 5.01(k) or
5.01(l)".
SECTION 2. AMENDMENTS TO CERTAIN PROVISIONS OF THE CREDIT AGREEMENT
EFFECTIVE ON THE OFFERING EFFECTIVE DATE. The Credit Agreement is, upon the
occurrence of the Offering Effective Date, hereby amended to read as follows:
(a) The definition of "CONSOLIDATED CASH INTEREST EXPENSE" set forth
in Section 1.01 of the Credit Agreement is hereby amended (i) to delete the
word "and" in the last line thereof immediately following the phrase "any
deferred payment obligation" and to substitute therefor the punctuation ","
and (ii) to add in the last line thereof after the phrase "not payable in
cash" the following new subclause (D):
"and (D) interest expense paid or payable by IFE in respect of
Indebtedness outstanding under the IFE/FKE Senior Notes".
(b) The definition of "CONSOLIDATED EBITDA" set forth in Section 1.01
of the Credit Agreement is hereby amended to add the following new PROVISO
clause at the end of such definition:
"; PROVIDED, HOWEVER, that in the case of Fox Kids and its
Subsidiaries or Holdings and its Subsidiaries, as the case may be, but
solely with respect to any Measurement Period ending after September
30, 1999, Consolidated EBITDA shall be increased to include, solely to
the extent any such amount is otherwise deducted in the determination
of the Consolidated Net Income of such Person and its Subsidiaries for
such period, (A) any nonrecurring, noncash restructuring charges taken
in accordance with GAAP in connection with the consummation of the
Amendment No. 5 Transactions, (B) the aggregate amount of all
transaction fees and expenses paid to any Person that is not an
EX-10.1 - 8
<PAGE>
Affiliate of Fox Kids or any of its Subsidiaries in connection with
the consummation of the Amendment No. 5 Transactions and (C) any
noncash charges taken in accordance with GAAP for increases in the
value of the options to purchase common stock of Fox Kids, which
options were issued to the Fox Kids Optionholders on or prior to the
FKE Equity Effective Date, that result solely from increases in the
market value of the ordinary shares of FKE".
(c) The definition of "FIXED CHARGE COVERAGE RATIO" set forth in
Section 1.01 of the Credit Agreement is hereby amended to add the following
new parenthetical at the end of subclause (b)(v) thereof after the language
"Fox Kids and its Subsidiaries during such period":
"(other than the mandatory prepayment of outstanding Advances made on
the FKE Equity Offering Effective Date with the proceeds of the
IFE/FKE Senior Notes)".
(d) Section 2.04(b) of the Credit Agreement is hereby amended (i) to
add in the third line of subclause (iv)(B) thereof after the phrase "or
subclause (iii)(A), (iii)(C) or (iii)(G), of Section 5.02(b)" the new
language "and, except to the extent such reduction is expressly required
thereunder, subclause (ii)(C) of Section 5.02(b) hereof" and (ii) to add in
the third line of subclause (iv)(C) thereof after the phrase "pursuant to
subclause (v), (vi) or (vii) of Section 5.02(f) hereof" the new language
"and, except to the extent such reduction is expressly required thereunder,
subclause (ix) of Section 5.02(f) hereof".
(e) Section 4.01(ll) of the Credit Agreement is hereby amended (i) to
delete the word "or" in the second line thereof after the phrase "on the
Effective Date" and to substitute therefor the new punctuation "," and (ii)
to add in the second line thereof after the phrase "the TV 10 Transactions
Effective Date" the new language ", the Foreign Subsidiaries Restructuring
Effective Date or the FKE Equity Offering Effective Date".
(f) Section 5.02(b) of the Credit Agreement is hereby amended (i) to
restate subclause (ii)(C) thereof in its entirety to read as follows:
"(C) Indebtedness evidenced by the IFE/FKE Senior Notes, and the
restatement on the FKE Equity Offering Effective Date of the
Intercompany Note dated June 28, 1999 of IFE owing to FKE (as
successor in interest to FKE Holdings) on the terms and conditions of
the IFE/FKE Senior Notes; PROVIDED that all of the Net Cash Proceeds
received from the issuance of the IFE/FKE Senior Notes shall be (or
shall have been) applied on the date of receipt thereof to reduce the
Commitments in accordance with, and to the extent required under,
Section 2.04(b)(iv) and to prepay the Advances outstanding at such
time in accordance with, and to the extent required under, Section
2.05(b); and PROVIDED FURTHER that the payee of such Indebtedness
shall be at all times FKE or one or more of its wholly owned
Subsidiaries or one or more of the Borrowers and their wholly owned
Subsidiaries;", and
(ii) to delete the language "any of subclauses (iii)(B)" in the second and
third lines of subclause (iii)(N) thereof and to substitute therefor the
new language "any of subclauses (ii)(C), (iii)(B)".
(g) Section 5.02(d) of the Credit Agreement is hereby amended (i) to
add the following new PROVISO clause at the end of clause (iv) thereof:
EX-10.1 - 9
<PAGE>
" PROVIDED, HOWEVER, that notwithstanding the foregoing provisions of
this clause (iv), the Borrowers and the applicable Unrestricted
Subsidiaries may wind up, liquidate or otherwise dissolve the special
purpose companies organized in a jurisdiction of the United States as
part of the European Subsidiaries Restructuring and referred to as
"SPC3" and "SPC5" in Annex A to Amendment and Waiver No. 5 within ten
Business Days of the FKE Equity Offering Effective Date so long as all
of the property and assets thereof are distributed to, and all of
their liabilities and other Obligations are assumed by, their
respective shareholders upon their winding-up, liquidation or
dissolution, as the case may be;",
(ii) to delete the word " and" at the end of clause (x) thereof, (iii) to
delete the punctuation "." at the end of clause (xi) thereof and to
substitute therefor the new language "; and" and (iv) to add the following
new clause (xii) thereto:
"(xii) at any time prior to the consummation of the FKE Equity
Offering, FKE Holdings may sell and otherwise transfer to FBC all of
the Equity Interests in FKE received thereby upon the organization of
FKE in satisfaction of its Obligations under the 1999 FBC Subscription
Agreement; PROVIDED that the Fair Market Value of all such Equity
Interests in FKE so issued to FBC shall not exceed the purchase price
paid therefor under the 1999 FBC Subscription Agreement."
(h) Section 5.02(f) of the Credit Agreement is hereby amended (i) to
delete the language ", (vii) or (viii) of this Section 5.02(f)" in the
tenth and eleventh lines thereof and to substitute therefor the new
language ", (vii), (viii) or (ix) of this Section 5.02(f)", (ii) to delete
the word "and" at the end of subclause (ii)(C) thereof after the language
"Section 8(c)(iv) of the Fox Kids Guarantee" and to substitute therefor the
new punctuation ",", (iii) to add at the end of clause (ii) thereof the
following new subclause (ii)(E):
"and (E) to pay additional compensation to one or more of its senior
executives during the calendar year ending December 31, 1999 in
connection with the FKE Equity Offering in an aggregate amount not to
exceed $6,500,000",
(iv) to delete the word "and" at the end of clause (vii) thereof, (v) to
delete the punctuation "." at the end of clause (viii) thereof and to
substitute therefor the new punctuation ";" and (vi) to add the following
new clauses (ix) and (x) thereto:
"(ix) FKE may issue and sell its ordinary shares in the FKE
Equity Offering; provided that upon consummation of the FKE Equity
Offering, the Borrowers and the Restricted Subsidiaries shall continue
to own and control legally and beneficially Voting Interests in FKE
representing at least 51% of the combined voting power of all of the
Voting Interests in FKE (on a fully diluted basis) and Equity
Interests in FKE representing at least 51% of the issued and
outstanding Equity Interests in FKE (on a fully diluted basis); and
PROVIDED FURTHER that FKE receives not less than $140,000,000 in gross
proceeds in cash from such issuance and sale and applies such proceeds
on the date of receipt thereof in the following manner:
(A) FIRST, at least $100,000,000 of the Net Cash Proceeds so
received by FKE shall be paid to SINV in full satisfaction of the
Intercompany Note of FKE owing to SINV (which Intercompany Note
was issued in partial
EX-10.1 - 10
<PAGE>
consideration for the transfer of the FKE Intangibles, and
assumed by FKE, in the European Subsidiaries Restructuring) and,
immediately thereafter, paid to Saban in satisfaction of
co-production costs funded by Saban in the ordinary course of
business and, immediately thereafter, applied by Saban as
follows:
(1) not more than $25,000,000 of such payment so
received by Saban may be retained thereby for use in the
business and operations of the Borrowers and their
Subsidiaries in the ordinary course; and
(2) the remaining proceeds of such payment so received
by Saban shall be applied to reduce the Commitments in
accordance with, and to the extent required under, Section
2.04(b)(iv) and to prepay the Advances outstanding at such
time in accordance with, and to the extent required under,
Section 2.05(b);
(B) SECOND, not more than $60,000,000 of the Net Cash
Proceeds so received by FKE may be retained thereby for use in
the businesses and operations of FKE and its Subsidiaries in the
ordinary course; and
(C) THIRD, all remaining Net Cash Proceeds so received by
FKE shall be advanced (either directly or through the repayment
of amounts outstanding under existing Intercompany Notes among
IFE and its Affiliates) to IFE on the terms and conditions of the
IFE/FKE Senior Notes and immediately applied by IFE in accordance
with the terms of Section 5.02(b)(ii)(C); and
(x) FKE may issue and sell its ordinary shares, or options or
other rights to acquire its ordinary shares, to one or more employees
of FKE and its Subsidiaries pursuant to a stock option plan duly
adopted by the board of directors of FKE so long as (A) the aggregate
number of ordinary shares of FKE so issued and sold (or subject to all
options and other rights so issued and sold) shall not exceed 10% of
the outstanding ordinary shares of FKE on the date of the related
issuance and sale (on a fully diluted basis), (B) the purchase price
for any ordinary shares of FKE so issued and sold, or the exercise
price for any options or other rights so issued and sold, shall not be
less than the Fair Market Value of the date of such issuance and sale,
and such purchase price shall be paid in cash or with a loan or
advance from one of the Borrowers or their Subsidiaries otherwise
permitted under Section 5.02(e)(vi) and (C) immediately after giving
effect to each such issuance and sale, the Borrowers and the
Restricted Subsidiaries shall continue to own and control legally and
beneficially Voting Interests in FKE representing at least 51% of the
combined voting power of all of the Voting Interests in FKE (on a
fully diluted basis) and Equity Interests in FKE representing at least
51% of the issued and outstanding Equity Interests in FKE (on a fully
diluted basis)."
(i) Section 5.02(g) of the Credit Agreement is hereby amended (i) to
delete the word "and" at the end of subclause (i)(E) thereof, (ii) to
delete the punctuation ";" at the end of subclause (i)(F) thereof and to
substitute therefor the new language ", and" and (iii) to add the following
new subclause (i)(G) thereto:
"(G) the prepayment of amounts outstanding from time to time
under the IFE/FKE Senior Notes in accordance with Section 5.02(p);".
EX-10.1 - 11
<PAGE>
(j) Section 5.02 of the Credit Agreement is hereby further amended to
add at the end of such Section 5.02 the following new subsection (p):
"(p) PAYMENTS UNDER THE IFE/FKE SENIOR NOTES. Pay, prepay,
redeem, purchase, defease or otherwise satisfy in cash all or any
portion of the IFE/FKE Senior Notes (whether principal, interest, fees
or other amounts) unless immediately before and after giving PRO forma
effect to such payment, prepayment, redemption, purchase, defeasance
or other satisfaction, no Default shall have occurred and be
continuing."
SECTION 3. AMENDMENTS TO CERTAIN PROVISIONS OF THE FOX KIDS GUARANTEE
EFFECTIVE ON THE RESTRUCTURING EFFECTIVE DATE. The Fox Kids Guarantee is, upon
the occurrence of the Restructuring Effective Date, hereby amended to read as
follows:
(a) Section 6(aa) of the Fox Kids Guarantee is hereby amended (i) to
delete the word "or" in the second line thereof after the phrase "on the
Effective Date" and to substitute therefor the new punctuation "," and (ii)
to add to the second line thereof after the phrase "on the TV 10
Transactions Effective Date" the new phrase ", the European Subsidiaries
Restructuring Effective Date or the FKE Equity Offering Effective Date".
(b) Section 7(g) of the Fox Kids Guarantee is hereby amended (i) to
delete the word "and" at the end of clause (vi) thereof, (ii) to delete the
punctuation "." at the end of clause (vii) thereof and to substitute
therefor the new language "; and" and (iii) to add the following new clause
(viii) thereto:
"(viii) the making and holding of the loans to IFE as evidenced
by the IFE/FKE Senior Notes and the making and holding of loans by,
and capital contributions from, Saban to Fox Kids Europe Limited and
Fox Kids France SARL in accordance with Section 5.02(e)(v)(D) of the
Credit Agreement."
(c) Section 8(d) of the Fox Kids Guarantee is hereby amended to add at
the end of clause (iii) thereof the following new language:
"except, solely in the case of the FBC Subordinated Notes Documents,
the NAHI Subordinated Notes Documents or the Permitted Affiliate
Subordinated Notes, as, either individually or in the aggregate, could
not adversely affect Fox Kids or any of its Subsidiaries or any of the
rights or interests of the Administrative Agent or the Lenders in any
manner."
SECTION 4. WAIVERS OF AND CONSENTS UNDER CERTAIN PROVISIONS OF THE LOAN
DOCUMENTS. (a) Any and all Defaults and Events of Default under Section
7.01(c)(i) of the Credit Agreement that have occurred and are continuing as a
result of the failure of Holdings and the Borrowers to deliver the financial
statements required to be delivered thereby under Sections 5.03(b) or 5.03(c) of
the Credit Agreement for any Fiscal Quarter or Fiscal Year occurring prior to
the date of this Amendment and Waiver are hereby waived by the Lenders.
(b) Each of the Lenders and the Agents hereby agree, on and as of the
Restructuring Effective Date, but solely in connection with the
consummation of the Amendment No. 5 Transactions, to waive:
EX-10.1 - 12
<PAGE>
(i) the requirements of the second PROVISO to the definition of
"FAIR MARKET Value" set forth in Section 1.01 of the Credit Agreement
that a Responsible Officer certify to the Lenders the Fair Market
Value of the Equity Interests in any Unrestricted Subsidiary, or the
other property, assets or businesses of Saban or any of its
Subsidiaries, being sold, contributed or otherwise transferred as part
of the European Subsidiaries Restructuring and the Fair Market Value
of the Equity Interests in Fox Kids Europe being issued to FBC in
satisfaction of the Obligations of Fox Kids Europe under the 1999 FBC
Subscription Agreement, or obtain an independent determination thereof
from a qualified appraiser (although all of the other requirements of
such definition of "FAIR MARKET VALUE" shall remain in full force and
effect with respect to each such transaction); and
(ii) the requirements of Section 5.02(j) of the Credit Agreement
and Section 1(a)(ii) of the Pledge and Assignment Agreement (and the
similar provisions of certain of the Foreign Subsidiary Pledge
Agreements) that the Borrowers and the Restricted Subsidiaries pledge
to the Administrative Agent, on behalf of the Secured Parties, up to
66% of the Voting Interests and all of the other Equity Interests in
the Unrestricted Subsidiaries being organized thereby as part of the
European Subsidiaries Restructuring unless either (A) such Voting
Interests or other Equity Interests will continue to be owned or
otherwise held directly by one or more of the Borrowers and the
Restricted Subsidiaries upon consummation of the European Subsidiaries
Restructuring or (B) the European Subsidiaries Restructuring is not
consummated on or prior to December 15, 1999.
(c) Each of the Lenders and the Agents hereby consent, on and as of
the Restructuring Effective Date, to release all liens and security
interests of the Secured Parties in (i) the Equity Interests in the
Restructured European Subsidiaries comprising part of the Collateral and
(ii) Intercompany Notes owing to each of the Restructured European
Subsidiaries comprising part of the Collateral, in each case in accordance
with the terms of Section 23(a) of the Pledge and Assignment Agreement (and
any similar provisions of any of the other Collateral Documents).
(d) Each of the Lenders and the Agents hereby consent, on and as of
the Restructuring Effective Date, to release and discharge each of the
Restructured European Subsidiaries from its guarantee of the Guaranteed
Obligations (as defined in the Subsidiaries Guarantee) and all of its other
Obligations under and in respect of the Loan Documents to which such
Restructured European Subsidiary is a party.
SECTION 5. CONDITIONS OF EFFECTIVENESS TO THIS AMENDMENT AND WAIVER. (a)
Sections 1, 3 and 4 of this Amendment and Waiver shall become effective as of
the first date (the "RESTRUCTURING EFFECTIVE DATE") on which each of the
following conditions precedent shall have been satisfied:
(i) The Administrative Agent shall have received (i) counterparts of
this Amendment and Waiver executed by the Borrowers, Fox Kids, Holdings and
the Required Lenders or, as to any of the Lenders, advice satisfactory to
the Administrative Agent that such Lender has executed this Amendment and
Waiver and (ii) the Consent attached hereto executed by each of the Loan
Parties (other than Holdings, Fox Kids and the Borrowers).
EX-10.1 - 13
<PAGE>
(ii) The Required Lenders shall be reasonably satisfied with any and
all additions and other modifications to the European Subsidiaries
Restructuring from the structure described in Part I of Annex A hereto. All
of the Lenders shall have received copies, certified by a Responsible
Officer of Fox Kids or the Borrowers, of the 1999 FBC Subscription
Agreement (as defined in Section 1) and all of the other material
agreements, instruments and other documents evidencing or otherwise setting
forth the terms and conditions of the European Subsidiaries Restructuring
(collectively, the "RESTRUCTURING TRANSACTION DOCUMENTS") at least three
Business Days prior to the Restructuring Effective Date, and shall be
satisfied with any and all additions and other changes to the terms and
conditions thereof from those disclosed to the Lenders prior to the date of
this Amendment and Waiver.
(iii) All of the Governmental Authorizations, and all of the consents,
approvals and authorizations of, notices and filings to or with, and other
actions by, any other Person necessary in connection with any aspect of the
European Subsidiaries Restructuring or any of the other transactions
contemplated thereby shall have been obtained (without the imposition of
any conditions that are not reasonably acceptable to the Required Lenders)
and shall remain in full force and effect; all applicable waiting periods
shall have expired without any action being taken by any competent
authority; and no Requirement of Law shall be applicable in the reasonable
judgment of the Required Lenders that restrains, prevents or imposes
materially adverse conditions upon any aspect of the European Subsidiaries
Restructuring or any of the other transactions contemplated thereby. Each
aspect of the European Subsidiaries Restructuring shall have been
consummated or shall be consummated on or prior to the Restructuring
Effective Date in compliance with all applicable Requirements of Law.
(iv) The Administrative Agent shall have received on or before the
Restructuring Effective Date the following, each dated such date (unless
otherwise specified), in form and substance to which (unless otherwise
specified) the Lenders shall not have reasonably objected and (unless
otherwise specified) in sufficient copies for each of the Lenders:
(A) A certificate of a Responsible Officer of Fox Kids or the
Borrowers, in form and substance reasonably satisfactory to the
Administrative Agent, certifying that immediately before and after
giving PRO FORMA effect to each aspect of the European Subsidiaries
Restructuring and the other transactions contemplated thereby that are
to have been consummated at or prior to such time, no Default shall
have occurred and be continuing and, immediately after giving effect
to each aspect of the European Subsidiaries Restructuring and such
other transactions contemplated thereby, Fox Kids and its Subsidiaries
shall be in PRO FORMA compliance with all of the covenants set forth
in Section 5.04, such compliance to have been determined on the basis
of the Consolidated financial statements of Fox Kids and its
Subsidiaries or Holdings and its Subsidiaries, as applicable, most
recently delivered to the Lenders pursuant to Section 7(i)(i) or
7(i)(ii) of the Fox Kids Guarantee or Section 5.03(b) or 5.03(c) of
the Credit Agreement, respectively, as though the European
Subsidiaries Restructuring and such other transactions had been
consummated on the first day of the fiscal period covered thereby.
(B) Certified copies of (1) the resolutions of the board of
directors of each Loan Party that is or is to be a party to any aspect
of the European Subsidiaries Restructuring or the transactions
contemplated thereby that are to have been consummated at or prior to
such time approving the Restructuring Transaction Documents to which
it is or is to be a party and the consummation of each aspect of the
EX-10.1 - 14
<PAGE>
European Subsidiaries Restructuring and the other transactions
contemplated by any of the foregoing involving or affecting such Loan
Party, and (2) all documents evidencing necessary Governmental
Authorizations, or other necessary consents, approvals,
authorizations, notices, filings or actions, with respect to any of
the Restructuring Transaction Documents to which it is or is to be a
party or the consummation of any aspect of the European Subsidiaries
Restructuring, or any of the other transactions contemplated by any of
the foregoing, involving or affecting such Loan Party (other than the
Constitutive Documents of any Unrestricted Subsidiary that is or will
become a direct or indirect wholly owned Subsidiary of Fox Kids
Europe).
(C) A copy of the appraisal by Houlihan Lokey Howard & Zukin of
the Fair Market Value of the FKE Intangibles.
(D) A copy of the certificate or articles of incorporation (or
similar Constitutive Document) of each of the wholly owned Domestic
Subsidiaries created as part of the European Subsidiaries
Restructuring other than the two special purpose companies organized
in a jurisdiction of the United States as part of the European
Subsidiaries Restructuring and referred to as "SPC3" and "SPC5" in
Annex A hereto (collectively, the "NEW RESTRICTED SUBSIDIARIES"), and
each amendment thereto, certified (as of a date reasonably near the
Restructuring Effective Date) as being a true and complete copy
thereof by the Secretary of State (or the equivalent Governmental
Authority) of the jurisdiction of incorporation of such New Restricted
Subsidiary.
(E) A copy of a certificate of the Secretary of State (or the
equivalent Governmental Authority) of the jurisdiction of
incorporation of each New Restricted Subsidiary, dated reasonably near
the Restructuring Effective Date, listing the certificate or articles
of incorporation (or similar Constitutive Document) of such New
Restricted Subsidiary and each amendment thereto on file in the office
thereof and certifying that (1) such amendments are the only
amendments to the certificate or articles of incorporation (or similar
Constitutive Document) of such New Restricted Subsidiary on file in
its office, (2) such New Restricted Subsidiary has paid all franchise
taxes (or the equivalent thereof) to the date of such certificate and
(3) such New Restricted Subsidiary is duly organized and is in good
standing under the laws of the jurisdiction of its incorporation.
(F) Certificates representing the Pledged Interests comprising
all of the outstanding Equity Interests in the New Restricted
Subsidiaries and, to the extent owned or otherwise held by the
Borrowers and the Restricted Subsidiaries, Fox Kids Europe, in each
case accompanied by undated stock powers or other appropriate powers
duly executed in blank, and instruments evidencing the Pledged
Indebtedness, if any, comprising all of the Indebtedness of any of the
New Restricted Subsidiaries owing to any of the other Loan Parties,
duly endorsed in blank, together with:
(1) proper amendments to existing financing statements (Form
UCC-3 or a comparable form) under the Uniform Commercial Code of
all jurisdictions that may be necessary or that the
Administrative Agent may reasonably deem desirable in order to
perfect and protect the liens and security interests created or
purported to be created under the Pledge and Assignment
EX-10.1 - 15
<PAGE>
Agreement, covering such Pledged Interests and Pledged
Indebtedness, in each case completed in a manner satisfactory to
the Administrative Agent; and
(2) evidence that all of the other actions (including,
without limitation, the completion of all of the other recordings
and filing of or with respect to the Pledge and Assignment
Agreement) that may be necessary or that the Administrative Agent
may reasonably deem desirable in order to perfect and protect the
liens and security interests created under the Pledge and
Assignment Agreement have been taken or will be taken in
accordance with the terms of the Loan Documents.
(G) One or more guarantee supplements, in substantially the form
of Exhibit A to the Subsidiaries Guarantee, duly executed by each of
the New Restricted Subsidiaries.
(H) One or more pledge agreement supplements, in substantially
the form of Exhibit B to the Pledge and Assignment Agreement
(collectively, the "PLEDGE AGREEMENT SUPPLEMENTS"), duly executed by
each of the New Restricted Subsidiaries, together with:
(1) certificates representing the Pledged Interests referred
to therein, if any, accompanied by undated stock powers or other
appropriate powers, duly executed in blank;
(2) instruments evidencing the Pledged Indebtedness referred
to therein, if any, duly endorsed in blank;
(3) proper financing statements (Form UCC-1 or a comparable
form) under the Uniform Commercial Code of all jurisdictions that
may be necessary or that the Administrative Agent may reasonably
deem desirable in order to perfect and protect the liens and
security interests created or purported to be created under the
Pledge Agreement Supplements and the Pledge and Assignment
Agreement, covering the Collateral of the New Restricted
Subsidiaries described therein, in each case completed in a
manner satisfactory to the Administrative Agent and duly executed
by the applicable New Restricted Subsidiary; and
(4) evidence that all of the other actions (including,
without limitation, the completion of all of the other recordings
and filings of or with respect to the Pledge Agreement
Supplements and the Pledge and Assignment Agreement) that may be
necessary or that the Administrative Agent may reasonably deem
desirable in order to perfect and protect the liens and security
interests created under the Pledge Agreement Supplements and the
Pledge and Assignment Agreement have been taken or will be taken
in accordance with the terms of the Loan Documents.
(I) A certificate of each of the New Restricted Subsidiaries,
signed on behalf of such New Restricted Subsidiary by a Responsible
Officer thereof,
dated the Restructuring Effective Date (the statements made in which
certificate shall be true on and as of the Restructuring Effective
Date), certifying as to:
EX-10.1 - 16
<PAGE>
(1) the absence of any amendments to the certificate or
articles of incorporation (or similar Constitutive Document) of
such New Restricted Subsidiary since the date of the Secretary of
State's (or equivalent Governmental Authority's) certificate
delivered pursuant to clause (E) of this Section 5(a)(iv) or any
steps taken by the board of directors or the shareholders (or the
persons performing similar functions) of such New Restricted
Subsidiary to effect or authorize any further amendment,
supplement or other modification thereto;
(2) the accuracy and completeness of the bylaws (or the
equivalent Constitutive Documents, if any) of such New Restricted
Subsidiary as in effect on the date on which the resolutions of
the board of directors (or the persons performing similar
functions) of such New Restricted Subsidiary referred to in
clause (B) of this Section 5(a)(iv) were adopted and on the
Restructuring Effective Date (a copy of which shall be attached
to such certificate);
(3) the due organization and good standing of such New
Restricted Subsidiary as a Person organized under the laws of the
jurisdiction of its organization, and the absence of any
proceeding (either pending or contemplated) for the dissolution,
liquidation or other termination of the existence of such New
Restricted Subsidiary;
(4) the legal and beneficial ownership by such New
Restricted Subsidiary of all of the Collateral in which such New
Restricted Subsidiary has purported to have granted a lien and
security interest to the Administrative Agent, on behalf of the
Secured Parties, under the Collateral Documents, free and clear
of all Liens, except for the liens and security interests created
under the Loan Documents;
(5) the accuracy in all material respects of the
representations and warranties made by such New Restricted
Subsidiary in the Loan Documents to which it is or is to be a
party as though made on and as of the Restructuring Effective
Date, before and after giving effect to this Amendment and Waiver
and the European Subsidiaries Restructuring; and
(6) the absence of any event occurring and continuing, or
resulting from this Amendment and Waiver or any aspect of the
European Subsidiaries Restructuring, that would constitute a
Default other than the Defaults and Events of Default expressly
waived under Section 4.
(J) A certificate of the Secretary or an Assistant Secretary of
each of the New Restricted Subsidiaries certifying the names and true
signatures of the officers of such New Restricted Subsidiary
authorized to sign each of the Loan Documents to which it is or is to
be a party and the other agreements, instruments and documents to be
delivered hereunder and thereunder.
EX-10.1 - 17
<PAGE>
(K) A Deed of Pledge of Shares, in substantially the form of the
Deed of Pledge of Shares dated the Phase II Closing Date, dated the
Restructuring Effective Date (the "DUTCH FKE PLEDGE") among Saban and
its applicable Subsidiaries (including Fox Kids Europe) and the
Administrative Agent, duly executed by Saban, Fox Kids Europe and each
such Subsidiary, together with evidence that all of the actions
(including, without limitation, the completion of all of the
recordings and filings of or with respect to the Dutch FKE Pledge)
that may be necessary or that the Administrative Agent may reasonably
deem desirable in order to perfect and protect the liens and security
interests created under the Dutch FKE Pledge have been taken or will
be taken in accordance with the terms of the Loan Documents.
(L) A favorable opinion of Troop, Steuber, Pasich, Reddick &
Tobey, LLP, special counsel for the Loan Parties, in form and
substance satisfactory to the Lenders.
(M) A favorable opinion of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, New York counsel for the Loan Parties, in form and
substance satisfactory to the Lenders.
(N) A favorable opinion of Stibbe Simont Monahan Duhot, Dutch
counsel for the Loan Parties, in form and substance satisfactory to
the Lenders.
(v) The representations and warranties set forth in each of the Loan
Documents shall be correct in all material respects on and as of the date
first above written and the Restructuring Effective Date, before and after
giving effect to this Amendment and Waiver and the European Subsidiaries
Restructuring and the transactions contemplated thereby, as though made on
and as of such date (except (A) for any such representation and warranty
that, by its terms, refers to a specific date other than the Restructuring
Effective Date, in which case as of such specific date and (B) that the
Consolidated financial statements of each of the Borrowers and its
Subsidiaries and Fox Kids and its Subsidiaries referred to in Sections
4.01(f), 4.01(g), 4.01(h) and 4.01(i) of the Credit Agreement,
respectively, shall be deemed to refer to the Consolidated financial
statements of each such Borrower and its Subsidiaries and Fox Kids and its
Subsidiaries most recently delivered to the Administrative Agent and the
Lenders pursuant to Sections 5.03(b) and 5.03(c) of the Credit Agreement
and Sections 7(i)(i) and 7(i)(ii) of the Fox Kids Guarantee, respectively,
on or prior to the Restructuring Effective Date and (C) that the forecasted
Consolidated financial statements of Fox Kids and its Subsidiaries referred
to in Section 4.01(j) of the Credit Agreement shall be deemed to refer to
the forecasted Consolidated financial statements of Fox Kids and its
Subsidiaries most recently delivered to the Administrative Agent and the
Lenders prior to the Restructuring Effective Date).
(vi) No event shall have occurred and be continuing, or shall result
from the effectiveness of this Amendment and Waiver or the European
Subsidiaries Restructuring, that constitutes a Default other than the
Defaults and Events of Default expressly waived under Section 4.
(vii) The Restructuring Effective Date shall have occurred on or prior
to December 15, 1999.
EX-10.1 - 18
<PAGE>
(b) Section 2 of this Amendment and Waiver shall become effective as
of the first date (the "OFFERING EFFECTIVE DATE") on which each of the
following conditions precedent shall have been satisfied:
(i) The Restructuring Effective Date shall have occurred. The
Offering Effective Date shall have occurred on or prior to December
15, 1999.
(ii) The Required Lenders shall be reasonably satisfied with any
and all additions and other modifications (A) to the FKE Equity
Offering from the structure described in Part I of Annex A hereto and
(B) the terms and conditions of the IFE/FKE Senior Notes from the
terms and conditions thereof disclosed to the Lenders prior to the
Restructuring Effective Date. All of the Lenders shall have received
copies, certified by a Responsible Officer of Fox Kids or the
Borrowers, of the Final Offering Memorandum, the form of the IFE/FKE
Senior Notes and all of the other material agreements, instruments and
other documents evidencing or otherwise setting forth the terms and
conditions of the Amendment No. 5 Transactions at least three Business
Days prior to the Offering Effective Date, and shall be satisfied with
any and all additions and other changes to the terms and conditions
thereof from those disclosed to the Lenders prior to the date of this
Amendment and Waiver.
(iii) All of the Governmental Authorizations, and all of the
consents, approvals and authorizations of, notices and filings to or
with, and other actions by, any other Person necessary in connection
with any aspect of the Amendment No. 5 Transactions or any of the
other transactions contemplated thereby shall have been obtained
(without the imposition of any conditions that are not reasonably
acceptable to the Required Lenders) and shall remain in full force and
effect; all applicable waiting periods shall have expired without any
action being taken by any competent authority; and no Requirement of
Law shall be applicable in the reasonable judgment of the Required
Lenders that restrains, prevents or imposes materially adverse
conditions upon any aspect of the Amendment No. 5 Transactions or any
of the other transactions contemplated thereby. Each aspect of the
Amendment No. 5 Transactions shall have been consummated or shall be
consummated on or prior to the Offering Effective Date in compliance
with all applicable Requirements of Law.
(iv) The Administrative Agent shall have received on or before
the Offering Effective Date a certificate of a Responsible Officer of
Fox Kids or the Borrowers, dated the Offering Effective Date and
otherwise in form and substance reasonably satisfactory to the
Administrative Agent, certifying that immediately before and after
giving PRO FORMA effect to each aspect of the Amendment No. 5
Transactions and the other transactions contemplated thereby, no
Default shall have occurred and be continuing and (A) immediately
after giving effect to each aspect of the Amendment No. 5 Transactions
and the other transactions contemplated thereby, Fox Kids and its
Subsidiaries shall be in PRO FORMA compliance with all of the
covenants set forth in Section 5.04, such compliance to have been
determined on the basis of the Consolidated financial statements of
Fox Kids and its Subsidiaries or Holdings and its Subsidiaries, as
applicable, most recently delivered to the Lenders pursuant to Section
7(i)(i) or 7(i)(ii) of the Fox Kids Guarantee or Section 5.03(b) or
5.03(c) of the Credit Agreement, respectively, as though the Amendment
No. 5 Transactions and such other transactions had been consummated on
the first day of the fiscal period covered thereby.
EX-10.1 - 19
<PAGE>
(v) The representations and warranties set forth in each of the
Loan Documents shall be correct in all material respects on and as of
the date first above written and the Offering Effective Date, before
and after giving effect to this Amendment and Waiver and the Amendment
No. 5 Transactions, as though made on and as of such date (except (A)
for any such representation and warranty that, by its terms, refers to
a specific date other than the Offering Effective Date, in which case
as of such specific date and (B) that the Consolidated financial
statements of each of the Borrowers and its Subsidiaries and Fox Kids
and its Subsidiaries referred to in Sections 4.01(f), 4.01(g), 4.01(h)
and 4.01(i) of the Credit Agreement, respectively, shall be deemed to
refer to the Consolidated financial statements of each such Borrower
and its Subsidiaries and Fox Kids and its Subsidiaries most recently
delivered to the Administrative Agent and the Lenders pursuant to
Sections 5.03(b) and 5.03(c) of the Credit Agreement and Sections
7(i)(i) and 7(i)(ii) of the Fox Kids Guarantee, respectively, on or
prior to the Offering Effective Date and (C) that the forecasted
Consolidated financial statements of Fox Kids and its Subsidiaries
referred to in Section 4.01(j) of the Credit Agreement shall be deemed
to refer to the forecasted Consolidated financial statements of Fox
Kids and its Subsidiaries most recently delivered to the
Administrative Agent and the Lenders prior to the Offering Effective
Date).
(vi) No event shall have occurred and be continuing, or shall
result from the effectiveness of this Amendment and Waiver or the
Amendment No. 5 Transactions, that constitutes a Default.
(vii) The Borrowers shall have paid to the Administrative Agent,
for the account of each of the Lenders that has executed and delivered
a counterpart of this Amendment and Waiver to the Administrative Agent
on or prior to the date of this Amendment and Waiver (or advised the
Administrative Agent in a manner satisfactory to it that such Lender
has executed this Amendment and Waiver on or prior to the date of this
Amendment and Waiver), an amendment fee of 0.05% on the aggregate
Commitments of such Lender.
(viii) All of the accrued fees and expenses of the Administrative
Agent and the Lenders (including the accrued fees and expenses of
counsel for the Administrative Agent) shall have been paid in full.
The effectiveness of each of Sections 1, 3 and 4 (in accordance with subsection
(a) of this Section 5) and Section 2 (in accordance with subsection (b) of this
Section 5) of this Amendment and Waiver is further conditioned upon the accuracy
of all of the factual matters described herein. This Amendment and Waiver is
subject to the provisions of Section 9.01 of the Credit Agreement.
SECTION 6. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a) On and after
each of the Restructuring Effective Date and the Offering Effective Date, as
applicable, (i) each reference in the Credit Agreement to "THIS AGREEMENT",
"HEREUNDER", "HEREOF" or words of like import referring to the Credit Agreement,
and each reference in the Notes and each of the other Loan Documents to "THE
CREDIT AGREEMENT", "THEREUNDER", "THEREOF " or words of like import referring to
the Credit Agreement, shall mean and be a reference to the Credit Agreement, as
amended and otherwise modified by this Amendment and Waiver, as applicable; (ii)
each reference in the Fox Kids Guarantee to "THIS GUARANTEE", "HEREUNDER",
"HEREOF " or words of like import referring to the Fox Kids Guarantee, and
EX-10.1 - 20
<PAGE>
each reference in each of the other Loan Documents to "THE FOX KIDS GUARANTEE",
"THEREUNDER", "THEREOF " or words of like import referring to the Fox Kids
Guarantee, shall mean and be a reference to the Fox Kids Guarantee, as amended
and otherwise modified by this Amendment and Waiver, as applicable; (iii) each
reference in the Pledge and Assignment Agreement to "THIS AGREEMENT,"
"HEREUNDER" "HEREOF", or words of like import referring to such Pledge and
Assignment Agreement and each reference in each of the other Loan Documents to
"THE PLEDGE AND ASSIGNMENT AGREEMENT," "THEREUNDER", "THEREOF" or words of like
import referring to the Pledge and Assignment Agreement, shall mean and be a
reference to the Pledge and Assignment Agreement, as amended and otherwise
modified by this Amendment and Waiver, as applicable; (iv) each reference in the
Subsidiaries Guarantee to "THIS Guarantee", "HEREUNDER", "HEREOF" or words of
like import referring to the Subsidiaries Guarantee, and each reference in the
Notes and each of the other Loan Documents to "THE SUBSIDIARIES GUARANTEE",
"THEREUNDER", "THEREOF " or words of like import referring to the Subsidiaries
Guarantee, shall mean and be a reference to the Subsidiaries Guarantee, as
amended and otherwise modified by this Amendment and Waiver, as applicable; and
(v) each reference in each Collateral Document to "THIS AGREEMENT", "HEREUNDER",
"HEREOF" or words of like import referring to such Collateral Document, and each
reference in the Notes and each of the other Loan Documents to "THE COLLATERAL
DOCUMENTS", "THEREUNDER", "THEREOF " or words of like import referring to such
Collateral Document, shall mean and be a reference to such Collateral Document,
as amended and otherwise modified by this Amendment and Waiver, as applicable.
(b) The Credit Agreement, the Notes and each of the other Loan Documents,
as amended, supplemented and otherwise modified by the amendments, supplements,
waivers and affirmations specifically provided above in Sections 1 through 4,
are and shall continue to be in full force and effect and are hereby in all
respects ratified and confirmed. Without limiting the generality of the
foregoing, each of the Collateral Documents and all of the Collateral described
therein do and shall continue to secure the payment of all Obligations of the
Loan Parties under the Loan Documents, in each case as amended and otherwise
modified in accordance with this Amendment and Waiver.
(c) The execution, delivery and effectiveness of this Amendment and Waiver
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any of the Secured Parties or the Administrative Agent
under any of the Loan Documents, or constitute a waiver of any provision of any
of the Loan Documents.
SECTION 7. COSTS AND EXPENSES. Each of the Borrowers hereby severally
agrees to pay, upon demand, all of the reasonably and properly documented costs
and expenses of the Administrative Agent (including, without limitation, the
reasonable fees and expenses of counsel for the Administrative Agent) in
connection with the preparation, execution, delivery, administration,
modification and amendment of this Amendment and Waiver and all of the
instruments, agreements and other documents delivered or to be delivered in
connection herewith, all in accordance with the terms of Section 9.05 of the
Credit Agreement.
SECTION 8. EXECUTION IN COUNTERPARTS. This Amendment and Waiver may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment and Waiver by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment and Waiver.
EX-10.1 - 21
<PAGE>
SECTION 9. GOVERNING LAW. This Amendment and Waiver shall be governed by,
and construed in accordance with, the laws of the State of New York, excluding
(to the fullest extent a New York court would permit) any rule of law that would
cause application of the laws of any jurisdiction other than the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be executed by their respective officers, thereunto duly authorized,
as of the date first written above.
THE LOAN PARTIES
FCN HOLDING, INC.
By /S/ MEL WOODS
--------------------------
Name: Mel Woods
Title: President
INTERNATIONAL FAMILY
ENTERTAINMENT, INC.
By /S/ MEL WOODS
--------------------------
Name: Mel Woods
Title: President
SABAN ENTERTAINMENT, INC.
By /S/ STAN GOLDEN
--------------------------
Name: Stan Golden
Title: President
FOX FAMILY MANAGEMENT, LLC
By Haim Saban, as its Manager
/S/ HAIM SABAN
-------------------------
EX-10.1 - 22
<PAGE>
FOX FAMILY PROPERTIES, INC.
By /S/ MEL WOODS
--------------------------
Name: Mel Woods
Title: President
FOX FAMILY WORLDWIDE, INC.
By /S/ MEL WOODS
--------------------------
Name: Mel Woods
Title: President
FOX KIDS HOLDINGS, LLC
By Fox Family Worldwide, Inc.
as its Managing Member
By /S/ MEL WOODS
--------------------------
Name: Mel Woods
Title: Authorized Signatory
EX-10.1 - 23
<PAGE>
THE AGENTS AND THE LENDERS
CITICORP USA, INC., as Agent and as
Lender
By /S/ ELIZABETH H. MINNELLA
----------------------------
Name: Elizabeth H. Minnella
Title: Vice President
SALOMON SMITH BARNEY INC., as Agent
By /S/ WILLIAM L. HARTMANN
------------------------------
Name: William L. Hartmann
Title: Attorney-In-Fact
EX-10.1 - 24
<PAGE>
BANKBOSTON, N.A., as Agent and as
Lender
By /S/ ROBERT F. MILORDI
------------------------------
Name:
Title:
EX-10.1 - 25
<PAGE>
THE CHASE MANHATTAN BANK, as
Lender
By /S/ JOAN FITZGIBBON
------------------------------
Name: Joan M. Fitzgibbon
Title: Managing Director
CHASE SECURITIES, INC., as Agent
By /S/ JOHN P.HALTMAIER
------------------------------
Name: John P. Haltmaier
Title: Vice President
EX-10.1 - 26
<PAGE>
BANK OF AMERICA, N.A., as Lender
By /S/ SEAN W. CASSIDY
------------------------------
Name: Sean W. Cassidy
Title: Vice President
EX-10.1 - 27
<PAGE>
THE BANK OF NOVA SCOTIA, as Lender
By /S/ IAN A. HODGART
------------------------------
Name: Ian A. Hodgart
Title: Authorized Signatory
EX-10.1 - 28
<PAGE>
FLEET BANK, N.A., as Lender
By /S/ TANYA CROSSLEY
------------------------------
Name: Tanya M. Crossley
Title: Vice President
EX-10.1 - 29
<PAGE>
THE INDUSTRIAL BANK OF JAPAN
LIMITED, LOS ANGELES AGENCY, as
Lender
By /S/ CARL-ERIC BENZINGER
------------------------------
Name: Carl-Eric Benzinger
Title: SVP & SDGM
EX-10.1 - 30
<PAGE>
TORONTO-DOMINION (TEXAS), INC., as
Lender
By /S/ MARK A. BAIRD
------------------------------
Name: Mark A. Baird
Title: Vice President
EX-10.1 - 31
<PAGE>
SOCIETE GENERALE, NEW YORK
BRANCH, as Co-Agent and as Lender
By /S/ ELAINE KHALIL
------------------------------
Name: Elaine Khalil
Title: Vice President
EX-10.1 - 32
<PAGE>
THE BANK OF NEW YORK, as Lender
By /S/ STEPHEN M. NETTLER
------------------------------
Name: Stephen M. Nettler
Title: Assistant Vice President
EX-10.1 - 33
<PAGE>
BANQUE NATIONALE DE PARIS, as
Lender
By /S/ NUALA MARLEY
------------------------------
Name: Nuala Marley
Title: Vice President
By /S/ BRIAN M. FOSTER
------------------------------
Name: Brian M. Foster
Title: Vice President
EX-10.1 - 34
<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES
AGENCY, as Lender
By
------------------------------
Name:
Title:
EX-10.1 - 35
<PAGE>
THE SUMITOMO BANK, LIMITED, as
Lender
By
------------------------------
Name:
Title:
EX-10.1 - 36
<PAGE>
CRESTAR BANK, as Lender
By /S/ THOMAS C. KING
------------------------------
Name: Tom King
Title: Assistant Vice President
EX-10.1 - 37
<PAGE>
THE DAI-ICHI KANGYO BANK, LIMITED,
as Lender
By /S/ THOMAS CHA
------------------------------
Name: Thomas Cha
Title: Account Officer
EX-10.1 - 38
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Lender
By /S/ WILLIAM IMGRASSIN
------------------------------
Name: William Imgrassin
Title: V.P.
EX-10.1 - 39
<PAGE>
GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender
By /S/ ROBERT M. KADLICK
------------------------------
Name: Robert M. Kadlick
Title: Duly Authorized Signatory
EX-10.1 - 40
<PAGE>
FIRST HAWAIIAN BANK, as Lender
By
------------------------------
Name:
Title:
EX-10.1 - 41
<PAGE>
ISRAEL DISCOUNT BANK LIMITED, LOS
ANGELES AGENCY., as Lender
By /S/ HIEU T. NGUYEN
------------------------------
Name: Hieu T. Nguyen
Title: Vice President
EX-10.1 - 42
<PAGE>
CONSENT
Reference is made to (a) Amendment and Waiver No. 5 dated as of October 26,
1999 (the "AMENDMENT AND WAIVER"; capitalized terms not otherwise defined herein
being used herein as defined in the Amendment and Waiver and in the Credit
Agreement referred to therein), (b) the Second Amended and Restated Credit
Agreement dated as of October 28, 1997 (as amended by Letter Amendment No. 1
dated as of November 18, 1997, Letter Amendment No. 2 dated as of April 16,
1998, Amendment and Waiver No. 3 to the Loan Documents dated as of June 29,
1998, Amendment and Waiver No. 4 dated as of May 26, 1999, the Amendment and
Waiver, the "CREDIT AGREEMENT") among FCN Holding, Inc., International Family
Entertainment, Inc., Saban Entertainment, Inc., Fox Family Properties, Inc. and
Fox Family Management, LLC (collectively, the "BORROWERS"), Fox Kids Holdings,
LLC, a Delaware limited liability company ("HOLDINGS"), as Guarantor, the banks,
financial institutions and other institutional lenders (collectively, the
"LENDERS") party to the Credit Agreement, Citicorp USA, Inc., as administrative
agent (the "ADMINISTRATIVE AGENT") for such Lenders and the other Secured
Parties referred to therein, and Salomon Smith Barney Inc. (formerly known as
Citicorp Securities, Inc.), Chase Securities, Inc. and BankBoston, N.A., as
Co-Arrangers for the Facilities referred to therein, and (c) the other Loan
Documents referred to therein.
Each of the undersigned, in its capacity as (a) a Guarantor under the
Second Amended and Restated Subsidiaries Guarantee dated October 28, 1997 (the
"SUBSIDIARIES GUARANTEE") in favor of the Secured Parties referred to therein
and a Pledgor under the Pledge and Assignment Agreement and/or (b) a Pledgor
under the Pledge and Assignment Agreement and/or under one or more of the
following Agreements, (i) the Amended and Restated Memorandum of Deposit of
Shares of Equity Interests dated October 28, 1997 (the "U.K./SABAN U.K. PLEDGE
AGREEMENT") between Saban and the Administrative Agent, (ii) the Amended and
Restated Memorandum of Deposit of Shares of Equity Interests dated October 28,
1997 (the "U.K./FKE PLEDGE AGREEMENT"), among FKE Holdings, Fox Kids Network
Europe Holdings, Inc. and the Administrative Agent, (iii) the Deeds of Pledge
dated September 4, 1997 and June 24, 1998 (collectively, the "NETHERLANDS PLEDGE
AGREEMENT"), among FKE Holdings, T.V. 10 and the Administrative Agent, (iv) the
Amended and Restated Pledge Agreement of Shares dated September 4, 1997 (the
"NETHERLANDS ANTILLES PLEDGE AGREEMENT"), among Saban, SINV and the
Administrative Agent, (v) the Pledge Agreement dated September 4, 1997 (the
"GERMAN PLEDGE AGREEMENT") among Saban and the Administrative Agent, (vi) the
Deed of Pledge of Shares dated September 4, 1997 (the "FRENCH/FOX KIDS PLEDGE
AGREEMENT"), among FKE Holdings, Fox Kids Network, Fox Kids France SARL and the
Administrative Agent and (vii) the Deed of Pledge of Shares dated September 4,
1997 (together with the U.K./Saban U.K. Pledge Agreement, the U.K./FKE Pledge
Agreement, the Netherlands Pledge Agreement, the Netherlands Antilles Pledge
Agreement, the German Pledge Agreement and the French/Fox Kids Pledge Agreement,
the "FOREIGN SUBSIDIARY PLEDGE AGREEMENTS"), among Saban, Saban International
Paris SARL and the Administrative Agent, hereby consents to the execution,
delivery and performance of the Amendment and Waiver and agrees that:
EX-10.1 - 43
<PAGE>
(A) each of the Subsidiaries Guarantee, the Pledge and Assignment
Agreement, the Foreign Subsidiary Pledge Agreements and the other
Collateral Documents to which it is a party is, and shall continue to be,
in full force and effect and is hereby in all respects ratified and
confirmed on each of the Restructuring Effective Date and the Offering
Effective Date, except that, on and after each of the Restructuring
Effective Date and the Offering Effective Date, as applicable, (1) each
reference to "THE CREDIT AGREEMENT", "THEREUNDER", "THEREOF", "THEREIN" or
words of like import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement, as amended and otherwise modified by the
Amendment and Waiver, (2) each reference to "THE FOX KIDS GUARANTEE",
EX-10.1 - 44
<PAGE>
"THEREUNDER", "THEREOF", "THEREIN" or words of like import referring to the
Fox Kids Guarantee shall mean and be a reference to the Fox Kids Guarantee,
as amended and otherwise modified by the Amendment and Waiver, (3) each
reference to the "THE PLEDGE AND ASSIGNMENT AGREEMENT", "THEREUNDER",
"THEREOF", "THEREIN" or words of like import referring to the Pledge and
Assignment Agreement shall mean and be a reference to the Pledge and
Assignment Agreement, as amended and otherwise modified by the Amendment
and Waiver, (4) each reference to "THE SUBSIDIARIES GUARANTEE",
"THEREUNDER", "THEREOF", "THEREIN" or words of like import referring to the
Subsidiaries Guarantee shall mean and be a reference to the Subsidiaries
Guarantee, as amended and otherwise modified by the Amendment and Waiver,
and (5) each reference to the "THE COLLATERAL DOCUMENTS", "THEREUNDER",
"THEREOF", "THEREIN" or words of like import referring to any Collateral
Document shall mean and be a reference to such Collateral Document, as
amended and otherwise modified by the Amendment and Waiver; and
(B) as of each of the Restructuring Effective Date and the Offering
Effective Date, as applicable, the Pledge and Assignment Agreement and the
Foreign Subsidiary Pledge Agreements to which it is a party and all of the
Collateral of such Person described therein do, and shall continue to,
secure the payment of all of the Secured Obligations.
This Consent shall be governed by, and construed in accordance with, the
laws of the State of New York, excluding (to the fullest extent a New York court
would permit) any rule of law that would cause application of the laws of any
jurisdiction other than the State of New York.
Delivery of an executed counterpart of a signature page of this Consent by
telecopier shall be effective as the delivery of a manually executed counterpart
of this Consent.
ANGEL GROVE PRODUCTIONS, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
BUGBOY PRODUCTIONS, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
CYBERPROD, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
EX-10.1 - 45
<PAGE>
FOX KIDS EUROPE HOLDINGS, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
ERIK PRODUCTIONS
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
FOX KIDS (LATIN AMERICA), INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
FOX KIDS WORLDWIDE, L.L.C.
By Fox Kids Holdings, LLC,
as Managing Member
By Fox Family Worldwide, Inc.,
as Managing Member
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
EX-10.1 - 46
<PAGE>
IAN PRODUCTIONS, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
INTERPROD, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
KIDS ROCK, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
LAUREL WAY PRODUCTIONS, INC.
By /S/ STAN GOLDMAN
-------------------------------
Name: Stan Golden
Title: President
MMPR PRODUCTIONS, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
POCKET PRODUCTIONS, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
EX-10.1 - 47
<PAGE>
SABAN DOMESTIC SERVICES, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
SABAN FOODS, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
SABAN INTERNATIONAL SERVICES, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
SABAN MERCHANDISING, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
SABAN/SCHERICK PRODUCTIONS, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
SANDSCAPE, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
EX-10.1 - 48
<PAGE>
TEEN DREAM PRODUCTIONS, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
MELVILLE PRODUCTIONS, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
FCNH SUB, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
FOX CHILDREN'S PRODUCTIONS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
FOX CHILDREN'S NETWORK, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
STORYMAKERS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
EX-10.1 - 49
<PAGE>
FOX KID'S MUSIC, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
FOX CHILDREN'S MUSIC, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
FAMILY CHANNEL PICTURES, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
FAMILY DEVELOPMENT CORP.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
FAMILY GAME SHOWS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
GAME TV, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
EX-10.1 - 50
<PAGE>
GILMORE ACQUISITION CORP.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
HOME PRODUCTIONS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
IFE CHINA, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
IFE DIRECT MARKETING, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
IFE JAKE ACQUISITION CORP.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
IFE LATIN AMERICA, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
EX-10.1 - 51
<PAGE>
LYNNHAVEN ACQUISITION CORP.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
MOBILINK PARTNERS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
MTM ACQUISITION COMPANY, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
MTM ENTERPRISES, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
MTM ENTERTAINMENT, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
MTM HOLDING COMPANY, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
EX-10.1 - 52
<PAGE>
PRETENDER PRODUCTIONS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
UNITED STATES FAMILY
ENTERTAINMENT, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
RED CHECK, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
PLAZA PICTURES, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
PAPER GARDENS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
WEBSTER PARK, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
EX-10.1 - 53
<PAGE>
APRIL PARK, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
FAMILY SATELLITE BROADCASTING
SERVICES, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
F.F.P. WEST, L.L.C.
By Mel Woods, as its Manager
/S/ MEL WOODS
------------------------------
FIRST PAPER, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
FOX FAMILY MUSIC, L.L.C.
By Mel Woods, as its Manager
/S/ MEL WOODS
------------------------------
FOX FAMILY MUSIC, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
EX-10.1 - 54
<PAGE>
FOX FAMILY POST PRODUCTION, INC.
By /S/ STAN GOLDEN
-------------------------------
Name: Stan Golden
Title: President
FOX FAMILY POST PRODUCTION, L.L.C.
By Mel Woods, as its Manager
/S/ MEL WOODS
-------------------------------
FOX FAMILY RECORDING ARTISTS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
HOPSCOTCH PRODUCTIONS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
MONUMENT PRODUCTIONS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
KID GUMBO PRODUCTIONS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
EX-10.1 - 55
<PAGE>
FOX KIDS TOURING, L.L.C.
ByMel Woods, as its Manager
/S/ MEL WOODS
-------------------------------
FOXKIDS.COM, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
FOX LATIN PRODUCTIONS, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
CABLE HEALTH TV, INC.
By /S/ MEL WOODS
-------------------------------
Name: Mel Woods
Title: President
FOX KIDS EUROPE LIMITED
By /S/ YNON KREIZ
-------------------------------
Name: Ynon Kreiz
Title: Authorized Signatory
FOX KIDS SPC1, INC.
By /S/ JACQUELINE GOLD GRENFELD
-------------------------------
Name: Jacqueline Gold Grenfeld
Title: Secretary
EX-10.1 - 56
<PAGE>
FOX KIDS SPC2, INC.
By /S/ JACQUELINE GOLD GRENFELD
-------------------------------
Name: Jacqueline Gold Grenfeld
Title: Secretary
EX-10.1 - 56
EXECUTION COPY
LETTER AMENDMENT NO. 6
Dated as of October 26, 1999
To the banks, financial institutions and other institutional lenders
(collectively, the "LENDERS") parties to the Credit Agreement referred to
below, to Citicorp USA, Inc., as administrative agent (the "ADMINISTRATIVE
AGENT") for such Lenders and the other Secured Parties referred to therein,
and to Salomon Smith Barney (formerly known as Citicorp Securities, Inc.),
Chase Securities, Inc. and BankBoston, N.A. as Co-Arrangers for the
Facilities referred to therein.
Ladies and Gentlemen:
We refer to (a) the Second Amended and Restated Credit Agreement dated as
of October 28, 1997 (as amended by Letter Amendment No. 1 dated as of November
18, 1997, Letter Amendment No. 2 dated as of April 16, 1998, Amendment and
Waiver No. 3 to the Loan Documents dated as of June 29, 1998 and Amendment and
Waiver No. 4 to the Loan Documents dated as of May 26, 1999, the "CREDIT
AGREEMENT") among FCN Holding, Inc., a Delaware corporation ("FCN HOLDING"),
International Family Entertainment, Inc., a Delaware corporation ("IFE"), Saban
Entertainment, Inc., a Delaware corporation ("SABAN"), Fox Family Properties,
Inc., a Delaware corporation ("FOX PROPERTIES"), Fox Family Management, LLC, a
Delaware limited liability company ("FOX MANAGEMENT" and, together with FCN
Holding, IFE, Saban and Fox Properties, the "BORROWERS"), Fox Kids Holdings,
LLC, a Delaware limited liability company ("HOLDINGS"), as Guarantor and you and
(b) Amendment and Waiver No. 5 dated as of October 26, 1999 to the Loan
Documents (the "AMENDMENT NO. 5"). Capitalized terms not otherwise defined in
this Letter Amendment have the same meanings as specified in the Credit
Agreement and Amendment No. 5.
In connection with the European Subsidiaries Restructuring and the FKE
Equity Offering, we hereby request that the Lenders agree to further amend the
Credit Agreement in order to permit (a) the Borrowers and the Restricted
Subsidiaries to own less than 51% of the issued and outstanding Equity Interests
in Fox Kids Europe so long as the Borrowers and the Restricted Subsidiaries own
and continue to own at least 38% of the issued and outstanding Equity Interests
in Fox Kids Europe and (b) Fox Kids SPC1, Inc., a Subsidiary of Saban created as
part of the European Subsidiaries Restructuring that is (or will be on the
Restructuring Effective Date) a Restricted Subsidiary, to sell its Voting
Interests in FKE in the FKE Equity Offering to the extent required by the
exercise of the over-allotment option therefor so long as the Net Cash Proceeds
received therefrom are applied to reduce the Commitments and to prepay the
Advances outstanding at such time in accordance with, and to the extent required
under Sections 2.04 and 2.05, respectively, of the Credit Agreement.
The Lenders have indicated their willingness to agree to amend the Credit
Agreement to permit the additional modifications described above on the terms
and conditions set forth below. Accordingly, it is hereby agreed that the Credit
Agreement is, effective upon the occurrence of the Restructuring Effective Date
and subject to the satisfaction of the conditions set forth below, amended as
follows:
<PAGE>
(a) Section 1.01 of the Credit Agreement is amended to add immediately
following the definition of "Solvent" the following new definition:
"SPC1" means Fox Kids SPC1, Inc., a Delaware corporation and a
wholly owned Subsidiary of Saban."
(b) The definition of "CHANGE OF CONTROL" set forth in Section 1.01 of
the Credit Agreement is amended (i) to delete the word "or" at the end of
clause (f) thereof, (ii) to delete the punctuation "." at the end of clause
(g) thereof and to substitute therefor the language "; or" and (iii) to add
to the end of such definition the following new clause (h):
"(h) Holdings and its Subsidiaries shall cease directly or
indirectly to own and control legally and beneficially at least 51% of
the issued and outstanding Equity Interests in FKE."
(c) Section 5.02(b) of the Credit Agreement is amended to add the
following new proviso clause at the end of subclause (iii)(C) thereof:
"and, PROVIDED FURTHER, that all proceeds of such intercompany
Indebtedness owing to SPC1 as a result of advances made by SPC1 to IFE
pursuant to Section 5.02(f)(ix)(C) shall be (or shall have been)
applied on the date of receipt thereof to reduce the Commitments in
accordance with, and to the extent required under, Section 2.04(b)(iv)
and to prepay the Advances outstanding at such time in accordance
with, and to the extent required under, Section 2.05(b)".
(d) Section 5.02(e) of the Credit Agreement is amended to replace the
figure "51%" with the figure "38%" in each place in which such figure
occurs in subclause (xiv) thereof.
(e) Section 5.02(f) of the Credit Agreement is amended (i) to replace
the figure "51%" with the figure "38%" in each place in which such figure
occurs in subclause (ix) thereof, (ii) to add immediately following the
language "FKE may issue and sell its ordinary shares in the FKE Equity
Offering" in the first line of subclause (ix) thereof the new language ",
and, if the underwriters of the FKE Equity Offering exercise the
over-allotment option in the FKE Equity Offering, SPC1 may sell, to the
extent required by such exercise of the over-allotment option, its Voting
Interests in FKE", (iii) to insert the new subclause reference "(i)"
immediately following the language "THIRD, all remaining Net Cash Proceeds
so received by" in subclause (ix)(C) thereof, (iv) to insert immediately
following the language "the terms of Section 5.02(b)(ii)(C)" the following
new language:
"and (ii) SPC1 shall be advanced to IFE on the terms and conditions of
an Intercompany Note and immediately applied by IFE in accordance with
the terms of Section 5.02(b)(iii)(C)", and
(v) to replace the figure "51%" with the figure "38%" in each place in
which such figure occurs in subclause (x)(C) thereof.
EX-10.2 - 2
<PAGE>
(f) Annex A to Amendment No. 5 is, effective as of the date of this
Letter Amendment and subject to the satisfaction of the conditions set
forth below, amended and restated in its entirety to read as set forth in
Schedule I hereto.
This Letter Amendment shall become effective as of the first date on which
each of the following conditions precedent shall have been satisfied:
(a) The Administrative Agent shall have received counterparts of this
Letter Amendment executed by the Required Lenders or, as to any of the
Lenders, advice satisfactory to the Administrative Agent that such Lender
has executed this Letter Amendment, and the consent attached hereto
executed by each Loan Party (other than the Borrowers and Holdings).
(b) The Restructuring Effective Date shall have occurred.
(c) The Administrative Agent shall have received one or more
agreements, dated on or prior to the Restructuring Effective Date and in
form and substance reasonably satisfactory to the Required Lenders, duly
executed by each of the Subsidiaries (other than the Restricted
Subsidiaries) that owns or holds (or on the Restructuring Effective Date
will own or hold) Equity Interests in Fox Kids Europe, under which such
Subsidiary agrees that, if requested by the Administrative Agent, on behalf
of the Secured Parties, in connection with the exercise of their rights and
remedies under the Collateral Documents, it will sell or otherwise transfer
its Equity Interests in Fox Kids Europe to the purchaser (or purchasers),
and on the same terms and conditions as, the Equity Interests in Fox Kids
Europe comprising part of the Collateral are being sold, transferred or
otherwise disposed of at such time.
(d) The representations and warranties set forth in each of the Loan
Documents shall be correct in all material respects on and as of the date
first above written and the effective date hereof, before and after giving
effect to this Letter Amendment, as though made on and as of such date
(except that the Consolidated financial statements of each of the Borrowers
and its Subsidiaries and Fox Kids and its Subsidiaries referred to in
Sections 4.01(f), 4.01(g), 4.01(h) and 4.01(i) of the Credit Agreement,
respectively, shall be deemed to refer to the Consolidated financial
statements of each such Borrower and its Subsidiaries and Fox Kids and its
Subsidiaries most recently delivered to the Administrative Agent and the
Lenders pursuant to Sections 5.03(b) and 5.03(c) of the Credit Agreement
and Sections 7(i)(i) and 7(i)(ii) of the Fox Kids Guarantee, respectively,
on or prior to the effective date hereof and (C) that the forecasted
Consolidated financial statements of Fox Kids and its Subsidiaries referred
to in Section 4.01(j) of the Credit Agreement shall be deemed to refer to
the forecasted Consolidated financial statements of Fox Kids and its
Subsidiaries most recently delivered to the Administrative Agent and the
Lenders prior to the effective date hereof).
(e) No event shall have occurred and be continuing, or shall result
from the effectiveness of this Letter Amendment, that constitutes a
Default.
The Borrowers further agree to pay to the Administrative Agent, for the
account of each of the Lenders that has executed and delivered a counterpart of
this Letter Amendment to the Administrative Agent on or prior to November 5,
1999 (or advised the Administrative Agent in a manner satisfactory to it that
such Lender has executed this Letter Amendment on or prior to such date), an
amendment fee of 0.05% on the aggregate Commitments of such Lender, such
amendment fee to be payable on the earlier of the Offering Effective Date and
December 15, 1999.
EX-10.2 - 3
<PAGE>
This Letter Amendment is subject to the provisions of Section 9.01 of the
Credit Agreement.
On and after the effectiveness of this Letter Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Credit Agreement, and each reference in the Notes and
each of the other Loan Documents to "the Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement, as amended by this Letter Amendment.
The Credit Agreement, the Notes and each of the other Loan Documents, as
specifically amended by this Letter Amendment, are and shall continue to be in
full force and effect and are hereby in all respects ratified and confirmed.
Without limiting the generality of the foregoing, the Collateral Documents and
all of the Collateral described therein do and shall continue to secure the
payment of all Obligations of the Loan Parties under the Loan Documents, in each
case as amended by this Letter Amendment. The execution, delivery and
effectiveness of this Letter Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power or remedy of any Lender or any
Agent under any of the Loan Documents, nor constitute a waiver of any provision
of any of the Loan Documents.
If you agree to the terms and provisions hereof, please evidence such
agreement by executing and returning at least one counterpart of this Letter
Amendment to the attention of Benjamin Cheng, Shearman & Sterling, 599 Lexington
Avenue, New York, NY 10022-6069, facsimile no. (212) 848-7179.
This Letter Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Letter Amendment by telecopier shall be effective as
delivery of a manually executed counterpart of this Letter Amendment.
EX-10.2 - 4
<PAGE>
This Letter Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York excluding (to the fullest extent a New
York court would permit) any rule of law that would cause application of the
laws of any jurisdiction other than the State of New York.
Very truly yours,
FCN HOLDING, INC., as Borrower
By /S/ MEL WOODS
-----------------------------------
Name:
Title:
INTERNATIONAL FAMILY
ENTERTAINMENT, INC., as Borrower
By /S/ MEL WOODS
-----------------------------------
Name:
Title:
SABAN ENTERTAINMENT, INC., as Borrower
By /S/ JACQUELINE GOLD GRUNFELD
-----------------------------------
Name: Jacqueline Gold Grunfeld
Title: Secretary
FOX FAMILY MANAGEMENT, LLC
By /S/ HAIM SABAN
-----------------------------------
Haim Saban, as its Manager
FOX FAMILY PROPERTIES, INC.
By /S/ MEL WOODS
-----------------------------------
Name:
Title:
EX-10.2 - 5
<PAGE>
FOX FAMILY WORLDWIDE, INC.
By /S/ MEL WOODS
------------------------
Name:
Title:
FOX KIDS HOLDINGS, LLC
By Fox Family Worldwide, Inc.
as its Managing Member
By /S/ MEL WOODS
------------------------
Name:
Title:
EX-10.2 - 6
<PAGE>
Agreed by each of the following Lenders as of the date first above written:
THE AGENTS AND THE LENDERS
CITICORP USA, INC., as Agent and as Lender
By /S/ ELIZABETH H. MINNELLA
--------------------------------
Name: Elizabeth H. Minnella
Title: Vice-President
SALOMON SMITH BARNEY INC., as Agent
By /S/ WILLIAM L. HARTMANN
--------------------------------
Name: William L. Hartmann
Title: Attorney-in-Fact
BANKBOSTON, N.A., as Agent and as Lender
By /S/ ROBERT F. MILORDI
--------------------------------
Name: Robert F. Milordi
Title: Managing Director
THE CHASE MANHATTAN BANK, as Lender
By /S/ JOAN M. FITZGIBBON
--------------------------------
Name: Joan M. Fitzgibbon
Title: Managing Director
CHASE SECURITIES, INC., as Agent
By /S/ JOHN P. HALTMEIER
--------------------------------
Name: John P. Haltmeier
Title: Vice President
EX-10.2 - 7
<PAGE>
BANK OF AMERICA, N.A., as Lender
By /S/ SEAN W. CASSIDY
--------------------------------
Name: Sean W. Cassidy
Title: Vice President
THE BANK OF NOVA SCOTIA, as Lender
By /S/ IAN A. HODGART
---------------------------------
Name: Ian A. Hodgart
Title: Authorized Signatory
FLEET BANK, N.A., as Lender
By /S/ TANYA CROSSLEY
---------------------------------
Name: Tanya Crossley
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN
LIMITED, LOS ANGELES AGENCY, as Lender
By /S/ CARL-ERIC BENZINGER
---------------------------------
Name: Carl-Eric Benzinger
Title: Senior Vice President
TORONTO-DOMINION (TEXAS), INC., as Lender
By /S/ CAROL BRANDT
----------------------------------
Name: Carol Brandt
Title: Vice President
SOCIETE GENERALE, NEW YORK BRANCH,
as Co-Agent and as Lender
By /S/ ELAINE KHALIL
-----------------------------------
Name: Elaine Khalil
Title: Vice President
EX-10.2 - 8
<PAGE>
THE BANK OF NEW YORK, as Lender
By /S/ STEPHEN M. NETTLER
-----------------------------------
Name: Stephen M. Nettler
Title: AVP
BANQUE NATIONALE DE PARIS, as Lender
By /S/ NUALA MARLEY
-----------------------------------
Name: Nuala Marley
Title: Vice President
By /S/ BONNIE G. EISENSTAT
-----------------------------------
Name: Bonnie G. Eisenstat
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY, as Lender
By /S/ BEATRICE E. KOSSODO
-----------------------------------
Name: Beatrice E. Kossodo
Title: Senior Vice President
THE SUMITOMO BANK, LIMITED, as Lender
By
-----------------------------------
Name:
Title:
CRESTAR BANK, as Lender
By /S/ THOMAS C. KING
------------------------------------
Name: Thomas C. King
Title: Assistant Vice President
EX-10.2 - 9
<PAGE>
THE DAI-ICHI KANGYO BANK, LIMITED,
as Lender
By /S/ THOMAS CHA
-----------------------------------
Name: Thomas Cha
Title: Account Officer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Lender
By /S/ WILLIAM IMGRASSIN
-----------------------------------
Name: William Imgrassin
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
By /S/ ROBERT M. KADLICK
-----------------------------------
Name: Robert M. Kadlick
Title: Duly Authorized Signatory
FIRST HAWAIIAN BANK, as Lender
By
-----------------------------------
Name:
Title:
ISRAEL DISCOUNT BANK LIMITED,
LOS ANGELES AGENCY., as Lender
By /S/ HIEU T. NGUYEN
------------------------------------
Name: Hieu T. Nguyen
Title: Vice President
EX-10.2 - 10
<PAGE>
CONSENT
Reference is made to (a) Letter Amendment No. 6 dated as of October 26,
1999 (the "LETTER AMENDMENT"; capitalized terms not otherwise defined herein
being used herein as defined in the Letter Amendment and in the Credit Agreement
referred to therein), (b) the Second Amended and Restated Credit Agreement dated
as of October 28, 1997 (as amended by Letter Amendment No. 1 dated as of
November 18, 1997, Letter Amendment No. 2 dated as of April 16, 1998, Amendment
and Waiver No. 3 to the Loan Documents dated as of June 29, 1998, Amendment and
Waiver No. 4 dated as of May 26, 1999, the "CREDIT AGREEMENT") among FCN
Holding, Inc., International Family Entertainment, Inc., Saban Entertainment,
Inc., Fox Family Properties, Inc. and Fox Family Management, LLC (collectively,
the "BORROWERS"), Fox Kids Holdings, LLC, a Delaware limited liability company
("HOLDINGS"), as Guarantor, the banks, financial institutions and other
institutional lenders (collectively, the "LENDERS") party to the Credit
Agreement, Citicorp USA, Inc., as administrative agent (the "ADMINISTRATIVE
AGENT") for such Lenders and the other Secured Parties referred to therein, and
Salomon Smith Barney Inc. (formerly known as Citicorp Securities, Inc.), Chase
Securities, Inc. and BankBoston, N.A., as Co-Arrangers for the Facilities
referred to therein, and (c) the other Loan Documents referred to therein.
Each of the undersigned, in its capacity as (a) a Guarantor under the
Second Amended and Restated Subsidiaries Guarantee dated October 28, 1997 (the
"SUBSIDIARIES GUARANTEE") in favor of the Secured Parties referred to therein
and a Pledgor under the Pledge and Assignment Agreement and/or (b) a Pledgor
under the Pledge and Assignment Agreement and/or under one or more of the
following Agreements, (i) the Amended and Restated Memorandum of Deposit of
Shares of Equity Interests dated October 28, 1997 (the "U.K./SABAN U.K. PLEDGE
AGREEMENT") between Saban and the Administrative Agent, (ii) the Amended and
Restated Memorandum of Deposit of Shares of Equity Interests dated October 28,
1997 (the "U.K./FKE PLEDGE AGREEMENT"), among FKE Holdings, Fox Kids Network
Europe Holdings, Inc. and the Administrative Agent, (iii) the Deeds of Pledge
dated September 4, 1997 and June 24, 1998 (collectively, the "NETHERLANDS PLEDGE
AGREEMENT"), among FKE Holdings, T.V. 10 and the Administrative Agent, (iv) the
Amended and Restated Pledge Agreement of Shares dated September 4, 1997 (the
"NETHERLANDS ANTILLES PLEDGE AGREEMENT"), among Saban, SINV and the
Administrative Agent, (v) the Pledge Agreement dated September 4, 1997 (the
"GERMAN PLEDGE AGREEMENT") among Saban and the Administrative Agent, (vi) the
Deed of Pledge of Shares dated September 4, 1997 (the "FRENCH/FOX KIDS PLEDGE
AGREEMENT"), among FKE Holdings, Fox Kids Network, Fox Kids France SARL and the
Administrative Agent and (vii) the Deed of Pledge of Shares dated September 4,
1997 (together with the U.K./Saban U.K. Pledge Agreement, the U.K./FKE Pledge
Agreement, the Netherlands Pledge Agreement, the Netherlands Antilles Pledge
Agreement, the German Pledge Agreement and the French/Fox Kids Pledge Agreement,
the "FOREIGN SUBSIDIARY PLEDGE AGREEMENTS"), among Saban, Saban International
Paris SARL and the Administrative Agent, hereby consents to the execution,
delivery and performance of the Letter Amendment and agrees that:
(A) each of the Subsidiaries Guarantee, the Pledge and Assignment
Agreement, the Foreign Subsidiary Pledge Agreements and the other
Collateral Documents to which it is a party is, and shall continue to be,
in full force and effect and is hereby in all respects ratified and
confirmed on the effective of the Letter Amendment, except that, on and
after such effective date each reference to "THE CREDIT AGREEMENT",
"THEREUNDER", "THEREOF", "THEREIN" or words of like import referring to the
Credit Agreement shall mean and be a reference to the Credit Agreement, as
amended and otherwise modified by the Letter Amendment; and
EX-10.2 - 11
<PAGE>
(B) as of the effective date of the Letter Amendment, the Pledge and
Assignment Agreement and the Foreign Subsidiary Pledge Agreements to which
it is a party and all of the Collateral of such Person described therein
do, and shall continue to, secure the payment of all of the Secured
Obligations.
This Consent shall be governed by, and construed in accordance with, the
laws of the State of New York, excluding (to the fullest extent a New York court
would permit) any rule of law that would cause application of the laws of any
jurisdiction other than the State of New York.
Delivery of an executed counterpart of a signature page of this Consent by
telecopier shall be effective as the delivery of a manually executed counterpart
of this Consent.
ANGEL GROVE PRODUCTIONS, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
BUGBOY PRODUCTIONS, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
CYBERPROD, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
FOX KIDS EUROPE HOLDINGS, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
ERIK PRODUCTIONS
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
EX-10.2 - 12
<PAGE>
FOX KIDS (LATIN AMERICA), INC.
By /S/ MEL WOODS
---------------------------
Name: Mel Woods
Title:
FOX KIDS WORLDWIDE, L.L.C.
By Fox Kids Holdings, LLC,
as Managing Member
By Fox Family Worldwide, Inc.,
as Managing Member
By /S/ MEL WOODS
---------------------------
Name: Mel Woods
Title:
IAN PRODUCTIONS, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
INTERPROD, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
EX-10.2 - 13
<PAGE>
KIDS ROCK, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
LAUREL WAY PRODUCTIONS, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
MMPR PRODUCTIONS, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
POCKET PRODUCTIONS, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
SABAN DOMESTIC SERVICES, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
SABAN FOODS, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
EX-10.2 - 14
<PAGE>
SABAN INTERNATIONAL SERVICES, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
SABAN MERCHANDISING, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
SABAN/SCHERICK PRODUCTIONS, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
SANDSCAPE, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
TEEN DREAM PRODUCTIONS, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
MELVILLE PRODUCTIONS, INC.
By /S/ TONY HOWE
---------------------------
Name: Tony Howe
Title: Vice President
EX-10.2 - 15
<PAGE>
FCNH SUB, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
FOX CHILDREN'S PRODUCTIONS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
FOX CHILDREN'S NETWORK, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
STORYMAKERS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
FOX KID'S MUSIC, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
FOX CHILDREN'S MUSIC, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
EX-10.2 - 16
<PAGE>
FAMILY CHANNEL PICTURES, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
FAMILY DEVELOPMENT CORP.
By /S/ MEL WOODS
----------------------------
Name:
Title:
FAMILY GAME SHOWS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
GAME TV, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
GILMORE ACQUISITION CORP.
By /S/ MEL WOODS
----------------------------
Name:
Title:
HOME PRODUCTIONS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
EX-10.2 - 17
<PAGE>
IFE CHINA, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
IFE DIRECT MARKETING, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
IFE JAKE ACQUISITION CORP.
By /S/ MEL WOODS
----------------------------
Name:
Title:
IFE LATIN AMERICA, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
LYNNHAVEN ACQUISITION CORP.
By /S/ MEL WOODS
----------------------------
Name:
Title:
MOBILINK PARTNERS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
EX-10.2 - 18
<PAGE>
MTM ACQUISITION COMPANY, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
MTM ENTERPRISES, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
MTM ENTERTAINMENT, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
MTM HOLDING COMPANY, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
PRETENDER PRODUCTIONS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
UNITED STATES FAMILY
ENTERTAINMENT, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
EX-10.2 - 19
<PAGE>
RED CHECK, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
PLAZA PICTURES, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
PAPER GARDENS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
WEBSTER PARK, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
APRIL PARK, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
FAMILY SATELLITE BROADCASTING
SERVICES, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
EX-10.2 - 20
<PAGE>
F.F.P. WEST, L.L.C.
By Mel Woods, as its Manager
/S/ MEL WOODS
-------------------------
FIRST PAPER, INC.
By /S/ MEL WOODS
----------------------------
Name: Mel Woods
Title: President
FOX FAMILY MUSIC, L.L.C.
By Mel Woods, as its Manager
/S/ MEL WOODS
--------------------------
FOX FAMILY MUSIC, INC.
By /S/ TONY HOWE
-----------------------------
Name: Tony Howe
Title: Vice President
FOX FAMILY POST PRODUCTION, INC.
By /S/ TONY HOWE
-----------------------------
Name: Tony Howe
Title: Vice President
FOX FAMILY POST PRODUCTION, L.L.C.
By Mel Woods, as its Manager
/S/ MEL WOODS
--------------------------
EX-10.2 - 21
<PAGE>
FOX FAMILY RECORDING ARTISTS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
HOPSCOTCH PRODUCTIONS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
MONUMENT PRODUCTIONS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
KID GUMBO PRODUCTIONS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
EX-10.2 - 22
<PAGE>
FOX KIDS TOURING, L.L.C.
By Mel Woods, as its Manager
/S/ MEL WOODS
---------------------------
FOXKIDS.COM, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
EX-10.2 - 23
<PAGE>
FOX LATIN PRODUCTIONS, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
CABLE HEALTH TV, INC.
By /S/ MEL WOODS
----------------------------
Name:
Title:
FOX KIDS EUROPE LIMITED
By
Name:
Title:
FOX KIDS SPC1, INC.
By /S/ TONY HOWE
-----------------------------
Name: Tony Howe
Title: Vice President
FOX KIDS SPC2, INC.
By /S/ TONY HOWE
-----------------------------
Name: Tony Howe
Title: Vice President
EX-10.2 - 24
FIRST AMENDMENT TO SUBSCRIPTION AGREEMENT
This First Amendment to Subscription Agreement (the "AMENDMENT"), dated
as of November __, 1999, is entered into by and among Fox Broadcasting Company,
a Delaware corporation (the "PURCHASER"), Fox Kids Europe Holdings, Inc., a
California corporation (the "COMPANY"), and Fox Kids Europe, B.V., a BESLOTEN
VENNOOTSCHAP, on the following terms and conditions:
R E C I T A L S
WHEREAS, the Purchaser and the Company are parties to that certain
Subscription Agreement (the "Agreement"; capitalized terms used herein without
definition have the meanings given those terms in the Agreement) dated as of
June 28, 1999, pursuant to the terms of which the Purchaser agreed to purchase,
and the Company agreed to issue and sell, the Shares, and pursuant to the terms
of which the Purchaser is entitled to participate in any IPO or Private Sale as
a selling shareholder;
WHEREAS, the Company desires to enter into a series of transactions
(the "Fox Kids Europe Transactions"), pursuant to the terms of which the Company
will, concurrently herewith, directly or indirectly, contribute all of its
assets to Fox Kids Europe B.V. (which intends immediately thereafter to convert
from a BESLOTEN VENNOOTSCHAP to a NAAMLOZE VENNOOTSCHAP, whereupon its name will
be Fox Kids Europe N.V.) ("FKE"), in exchange for a majority of the ordinary
shares of Fox Kids Europe B.V.;
WHEREAS, FKE intends to sell a number of its ordinary shares in the
United States to qualified institutional buyers in reliance on Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act") and outside the
United States in reliance on Regulation S under the Securities Act (the
"Offering") immediately after the consummation of the Fox Kids Europe
Transactions;
WHEREAS, the Company desires to deliver to the Purchaser ordinary
shares of FKE in substitution for the Shares, and to cause FKE to cooperate with
the Purchaser to enable the Purchaser to participate in the Offering of the
ordinary shares of FKE as a selling shareholder, all in satisfaction of the
Company's obligations under the Agreement to deliver the Shares to the Purchaser
and to allow the Purchaser to participate in any IPO as a selling shareholder;
WHEREAS, the Purchaser is willing, on the terms set forth in this
Amendment, to accept delivery of ordinary shares of FKE in substitution for the
Shares, and to participate in the Offering of the ordinary shares of FKE as a
selling shareholder, all in satisfaction of its rights under the Agreement to
purchase the Shares and to participate in any IPO as a selling shareholder;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration given to each party hereto, the receipt, value and
sufficiency of which are hereby acknowledged, the parties agree as follows.
<PAGE>
AMENDMENT. The Agreement is hereby amended as follows:
1.1. The introductory sentence of the Agreement is amended to read as
follows:
This Subscription Agreement (the "Agreement"), dated as of
June 28, 1999, is entered into by and among Fox Broadcasting
Company, a Delaware corporation (the "Purchaser"), Fox Kids
Europe Holdings, Inc., a California corporation (the
"Company"), and Fox Kids Europe B.V. on the following terms
and conditions:
The recitals are amended to read in full as follows:
"WHEREAS, the Company has entered into a series of
transactions (the "Fox Kids Europe Transactions"), pursuant
to the terms of which the Company has, concurrently with the
execution and delivery of the First Amendment, directly or
indirectly, contributed all of its assets (other than the
equity interests in Fox Kids SPC1, Inc., a Delaware
corporation ("SPC1"), and the equity interests in Fox Kids
SPC2, Inc., a California corporation ("SPC2") to Fox Kids
Europe B.V., in exchange for a majority of the ordinary
shares (the "COMMON STOCK") of Fox Kids Europe B.V.;
"WHEREAS, Fox Kids Europe B.V., which immediately after
the issuance of its Common Stock intends to convert from a
BESLOTEN VENNOOTSCHAP to a NAAMLOZE VENNOOTSCHAP, whereupon
its name will be Fox Kids Europe N.V.) ("FKE"), intends to
make an offering (the "IPO") of shares of the Common Stock
immediately after the consummation of the Fox Kids Europe
Transactions;
"WHEREAS, on the terms and subject to the conditions
set forth in this Agreement, the Purchaser desires to
purchase, and the Company desires to sell to the Purchaser,
shares (`Shares') of the Common Stock;
"WHEREAS, on the terms and subject to the conditions
set forth in this Agreement, the Purchaser desires to
participate in the IPO or any private sale to an
unaffiliated third-party purchaser of shares of the Common
Stock to be issued in connection with such sale (a "PRIVATE
Sale"), as applicable, and, subject to the conditions set
forth herein, thereafter to participate in any subsequent
public offerings (each a "SUBSEQUENT PUBLIC OFFERING") and
any subsequent private sales (each a "SUBSEQUENT PRIVATE
SALE"), and the Company is willing to cause FKE to cooperate
in the Purchaser's participating in the IPO or any Private
Sale and, subject to the conditions set forth herein, any
Subsequent Public Offerings and any Subsequent Private
Sales, as an inducement to the Purchaser to enter into the
First Amendment;".
EX-10.3 - 2
<PAGE>
1.2. The definition of "Class B Stock" is deleted and Sections 1.5
through 1.8 are renumbered as Sections 1.4 through 1.7, respectively.
1.3. The following definition is added as Section 1.8:
"1.8 'FIRST AMENDMENT' means that certain First Amendment to Subscription
Agreement between the Purchaser and the Company dated as of November __, 1999."
1.4. The definition of "HSR Act" is deleted and Sections 1.11 through
1.14 are renumbered as Sections 1.10 through 1.13, respectively.
1.5. The following definition is added as Section 1.14:
"1.14 'OFFERING CIRCULAR' means that certain Fox Kids Europe N.V.
Preliminary Offering Circular dated November 3, 1999 for Ordinary Shares of FKE
and, when issued, the final Offering Circular for Ordinary Shares of FKE."
1.6. Section 2 is amended to read in full as follows:
"2. PURCHASE AND SALE OF THE SHARES OF COMMON STOCK. The
Company hereby agrees to sell and the Purchaser hereby agrees to
purchase the Shares on the terms and subject to the conditions
set forth in this Agreement. At each Closing (as defined herein),
beneficial ownership of the Shares purchased at such Closing will
automatically transfer to the Purchaser, and the Company will
deliver the Shares purchased at such Closing at the Purchaser's
direction against prior payment by the Purchaser of the Purchase
Price (as defined herein) for such Closing (in connection with
which the parties acknowledge that payment by the Purchaser of
the Total Purchase Price shall constitute payment of the Purchase
Price for each of the Closings). The parties hereto acknowledge
that the Purchaser has paid the Total Purchase Price concurrently
with the execution of this Agreement by wire transfer to such
account of the Company as the Company has theretofore designated
by notice to the Purchaser."
1.7. The last grammatical sentence of Section 3 is deleted.
1.8. The last grammatical sentence of Section 4.1 is amended to read
in full as follows:
"The Company has all necessary corporate power and authority to
enter into, execute and deliver this Agreement and to consummate
the transactions contemplated hereby."
1.9. Section 4.2 is deleted, and Sections 4.3 through 4.7 are
renumbered as Sections 4.2 through 4.6, respectively.
EX-10.3 - 3
<PAGE>
1.10. Section 4.5 (as renumbered above) is amended to read in full as
follows:
"4.5. NO CONFLICTS. The execution, delivery and performance
by the Company of this Agreement and the delivery of the Shares
hereunder will not conflict with or violate the Articles of
Incorporation or Bylaws of the Company, the Senior Notes
Indentures or the Credit Agreement or violate any other material
agreement to which the Company is a party, including, without
limitation, any voting agreement, stockholders agreement or
voting trust, or otherwise contravene, conflict with or result in
a violation of, any federal, state, local, municipal, foreign,
international, multi-national or other administrative order,
constitution, law, ordinance, regulation or statute, or give any
individual, corporation, partnership, governmental authority or
regulatory body or any other person the right to prevent the
consummation of the sale of the Shares contemplated hereby."
1.11. 1.10 A new Section 4.7 is inserted at the end of Section 4,
which Section 4.7 shall read as follows:
"4.7. TITLE TO SHARES. The Company has, and immediately
prior to delivery on each Closing Date the Company will have,
good and valid title to the Shares to be sold hereunder on such
Closing Date, free and clear of all liens, encumbrances, equities
or claims (other than the security interest in favor of the
Administrative Agent referred to in the definition of Credit
Agreement hereunder); and, upon delivery of such Shares, and
assuming that the Purchaser has made payment therefor on or prior
to such Closing Date in accordance with this Agreement, good and
valid title to such Shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the Purchaser.
1.12. 1.10 A new Section 4A is inserted after the end of Section 4,
which Section 4A shall read as follows:
"4A. REPRESENTATIONS AND WARRANTIES OF FKE. FKE represents
and warrants that the following representations and warranties
are true and correct in all material respects as of the date of
the First Amendment, and covenants that each such representation
and warranty shall be true and correct in all material respects
on and as of each Closing Date, with the same force and effect as
though made on and as of such Closing Date, except for changes
permitted or contemplated by this Agreement.
"4A.1. ORGANIZATION AND STANDING. FKE has been duly
incorporated and is validly existing as a corporation under the
laws of The Netherlands, with all power and authority to own its
EX-10.3 - 4
<PAGE>
properties and conduct its business as described in the Offering
Circular, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any
such jurisdiction; and each subsidiary of FKE has been duly
incorporated and is validly existing as a corporation in good
standing (to the extent that such concept exists in the relevant
jurisdiction) under the laws of its jurisdiction of
incorporation.
"4A.2. CAPITALIZATION. FKE has an authorized capitalization
as set forth in the Offering Circular, and all of the issued
shares of capital stock of FKE have been duly and validly
authorized and issued, are fully paid and conform to the
description of the capital stock contained in the Offering
Circular; and all of the issued shares of capital stock of each
subsidiary of FKE have been duly and validly authorized and
issued, are fully paid and non-assessable (to the extent that
such concept exists in the relevant jurisdiction) and (except for
directors' qualifying shares and except as set forth in the
Offering Circular) are owned directly or indirectly by FKE, free
and clear of all liens, encumbrances, equities or claims; the
holders of outstanding shares of capital stock of FKE are not
entitled to preemptive or other rights to acquire the Shares
which have not been complied with; there are no outstanding
securities convertible into or exchangeable for, or warrants,
rights or options to subscribe for from FKE, or obligations of
FKE to issue, the ordinary shares or any other class of capital
stock of FKE (except as set forth in the Offering Circular); and
there are no restrictions on subsequent transfers of the Shares
under the laws of The Netherlands and of the United States except
as described in the Offering Circular.
"4A.3. EXECUTION, DELIVERY, AND PERFORMANCE. The execution,
delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized
by all necessary corporate action of FKE, and FKE has taken all
other actions required by law and its Articles of Association in
order to consummate the transactions contemplated by this
Agreement. This Agreement constitutes the valid and binding
obligations of FKE, and is enforceable in accordance with its
terms, except as enforceability may be subject to or limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights
generally.
"4A.4. ARTICLES OF ASSOCIATION. FKE has furnished to the
Purchaser a copy of the Articles of Association of FKE, which are
in full force and effect.
EX-10.3 - 5
<PAGE>
"4A.5. AUTHORIZATION AND ISSUANCE OF ORDINARY SHARES. The
Shares to be delivered to the Purchaser hereunder have been duly
and validly authorized and issued by FKE and are fully paid and
conform to the description of the ordinary shares contained in
the Offering Circular.
"4A.6. NO CONFLICTS. The execution, delivery and performance
by FKE of this Agreement will not conflict with or violate the
Articles of Association of FKE, the Senior Notes Indentures or
the Credit Agreement or violate any other material agreement to
which FKE is a party, including, without limitation, any voting
agreement, stockholders agreement or voting trust, or otherwise
contravene, conflict with or result in a violation of, any
federal, state, local, municipal, foreign, international,
multi-national or other administrative order, constitution, law,
ordinance, regulation or statute, or give any individual,
corporation, partnership, governmental authority or regulatory
body or any other person the right to prevent the consummation of
the delivery of the Shares contemplated hereby.
1.13. In Section 5.5, the word "Fox" is deleted and the words "the
Purchaser" are inserted in its place.
1.14. Section 6.1 is amended to read in full as follows:
"6.1 CONSUMMATION OF FOX KIDS EUROPE TRANSACTIONS. The Fox
Kids Europe Transactions shall have been consummated, and
immediately following the Fox Kids Europe Transactions FKE shall
own, directly or indirectly, all of the assets owned by the
Company immediately prior to the consummation of the Fox Kids
Europe Transactions (other than the equity interests in SPC1 and
the equity interests in SPC2), and FKEH shall own all of the
Shares being sold hereunder free and clear of all liens,
encumbrances, equities or claims (other than the security
interest in favor of the Administrative Agent referred to in the
definition of Credit Agreement hereunder).
1.15. Section 6.2 is amended by inserting after the words "All
representations and warranties of the Company" the following words: "and FKE".
1.16. Section 6.5 is deleted and Sections 6.6 and 6.7 are renumbered
as Sections 6.5 and 6.6, respectively.
1.17. Section 7 is amended by striking from the portion thereof that
precedes Section 7.1 the words "issue and sell" and substituting the word
"deliver".
1.18. Section 9.1 is amended to read in full as follows:
EX-10.3 - 6
<PAGE>
"9.1. CONDUCT OF BUSINESS. The Company hereby covenants and
agrees as follows: Subject to the terms and conditions of this
Agreement, the Company agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable to consummate
and make effective the transactions provided for by this
Agreement. Each of the Company and FKE hereby agrees, while this
Agreement is in effect, and except as contemplated hereby, not to
intentionally and knowingly take any action with the intention
and knowledge that such action would make any of its
representations or warranties contained herein untrue or
incorrect in any material respect or have the effect of
preventing or disabling it from performing its obligations under
this Agreement. Without limiting the generality of the foregoing,
and except as contemplated by this Agreement, prior to the Final
Closing Date, neither the Company nor FKE will, without the prior
written consent of the Purchaser:
"(a) Propose or adopt any amendments to the Articles of
Association of FKE (except that FKE shall, prior to the
first Closing, make that certain Deed of Conversion and
Amendment to the Articles of Association for Fox Kids Europe
N.V, pursuant to which FKE will convert from a BESLOTEN
VENNOOTSCHAP to a NAAMLOZE VENNOOTSCHAP, whereupon its name
will be Fox Kids Europe N.V.);
"(b) Issue, sell or repurchase, or authorize or propose the
issuance, sale or repurchase of any shares of capital stock
of FKE, or securities convertible into such shares, or any
rights, warrants or options to acquire such shares or other
convertible securities, other than the initial issuance of
shares by FKE to the Company and the other incorporators of
FKE; or
"(c) Sell, lease, dispose of, convey or transfer or agree to
sell, lease, dispose of, convey or transfer substantially
all of the assets of the Company, except for sales in the
ordinary course of business, and except for the Fox Kids
Europe Transactions, which shall have occurred prior to any
Closing."
1.19. A new Section 9.4 is inserted after the end of Section 9.3,
which Section 9.4 shall read as follows:
"9.4. TAX. The Company will pay when due and payable any and
all stamp, issue, transfer or similar taxes which may be payable
in respect of the issuance of the Shares, any transfer of the
Shares, and the delivery of the Shares to Purchaser.
EX-10.3 - 7
<PAGE>
1.20. Section 10 is amended to read in full as follows:
"10. TAG ALONG RIGHTS.
"10.1. TAG ALONG RIGHTS. If FKE enters into an agreement (or
series of related agreements) to transfer or sell to one or more
persons who, directly or indirectly, own less than 10 percent of
the outstanding Common Stock of FKE (a `THIRD PARTY') any number
of shares of Common Stock of FKE (such transfer or sale, a `TAG
ALONG SALE'), then the Purchaser shall have the obligation to
participate in such Tag Along Sale. The Purchaser will be
entitled to sell all of its shares of Common Stock of FKE before
FKE is entitled to sell any shares.
"10.2. SALE NOTICE. FKE shall provide the Purchaser with
written notice (the `TAG ALONG SALE NOTICE') not more than 60 nor
less than 10 days prior to the proposed date of the Tag Along
Sale (the `TAG ALONG SALE DATE'). Each Tag Along Sale Notice
shall set forth: (i) the name and address of each Third Party;
(ii) the number of shares of Common Stock proposed to be
transferred or sold; (iii) the proposed amount and form of
consideration to be paid for such shares of Common Stock and the
terms and conditions of payment offered by the proposed
transferee or purchaser, provided that if the form of
consideration proposed is other than cash, FKE may not require
the Purchaser's participation in the sale without the Purchaser's
consent; (iv) confirmation that the proposed purchaser or
transferee has been informed of the "Tag Along Rights" provided
for herein and has agreed to purchase the shares of the Purchaser
before purchasing any shares from FKE; and (v) the Tag Along Sale
Date."
1.21. Section 11 is amended to read in full as follows:
"11. REGISTRATION RIGHTS.
"11.1. RIGHT TO PIGGYBACK. Whenever FKE proposes to register
any of its Common Stock under the Securities Act (other than a
registration on Form S-4 or Form S-8 or any successor or similar
forms), and the registration form to be used may be used for the
registration of the shares of Common Stock (a "Piggyback
Registration"), whether or not for sale for its own account, FKE
will give prompt written notice to the Purchaser of its intention
to effect such registration and will include in such registration
all shares of the Common Stock of FKE held by the Purchaser, to
the extent such number of shares is not greater than the number
to be registered.
EX-10.3 - 8
<PAGE>
"11.2. PRIORITY. If in a Piggyback Registration, the
managing underwriters advise FKE in writing that in their opinion
the number of shares of Common Stock requested to be included in
such registration exceeds the number which can be sold in such
offering within a price range reasonably acceptable to FKE, FKE
will include in such registration (i) first, the Common Stock of
FKE that the Purchaser will sell and (ii) second, the Common
Stock of FKE that FKE proposes to sell.
"11.3. "REGISTRATION EXPENSES". FKE shall pay all
Registration Expenses relating to any registration of shares of
Common Stock hereunder. "Registration Expenses" shall include all
fees and expenses incident to FKE's performance of or compliance
with this Agreement, including without limitation: (i) Securities
and Exchange Commission, stock exchange or National Association
of Securities Dealers, Inc. registration and filing fees and all
listing fees with respect to the inclusion of the securities on a
stock exchange, (ii) fees and expenses of compliance with state
securities or "blue sky" laws, including without limitation,
reasonable fees and expenses of blue sky counsel, (iii) printing
expenses, (iv) messenger and delivery expenses, (v) fees and
disbursements of counsel for FKE, (vi) reasonable fees and
expenses of one counsel for the Purchaser, (vii) fees and
disbursements of all independent public accountants and (viii)
any other fees and disbursements of underwriters, if any,
customarily paid by issuers or sellers of securities."
"11.4. INDEMNIFICATION. In the event any of the Purchaser's
Common Stock is included in a registration statement under this
Agreement:
"(a) To the extent permitted by law, FKE will indemnify
and hold harmless the Purchaser and each of its officers,
directors, employees and agents against any losses, claims,
damages or liabilities to which the Purchaser or its
officers, directors, employees or agents may become subject
under the Securities Act, the Securities Exchange Act of
1934 or other federal or state law or the applicable law of
any other jurisdiction including any foreign jurisdiction,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or
alleged untrue statement of a material fact contained in
such registration statement, including any preliminary
prospectus or final prospectus contained therein or any
amendments or
EX-10.3 - 9
<PAGE>
supplements thereto or (ii) the omission or alleged omission
to state therein a material fact required to be stated
therein, or necessary to make the statements therein not
misleading, and FKE will reimburse the Purchaser for any
legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that
the indemnity agreement contained in this Section shall not
apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected
without the consent of FKE, which consent shall not be
unreasonably withheld, nor shall FKE be liable in any such
case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity
with information furnished in writing for use in connection
with such registration by, or on behalf of, the Purchaser.
"(b) To the extent permitted by law, the Purchaser will
indemnify and hold harmless FKE, each of its officers,
directors, agents or employees, and each Person, if any, who
controls FKE within the meaning of the Securities Act,
against any losses, claims, damages or liabilities to which
FKE or any such director, agent, employee, officer or
controlling Person, may become subject, under the Securities
Act, the Exchange Act or other federal or state law, insofar
as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any
Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in
conformity with information furnished in writing by, or on
behalf of, the Purchaser for use in connection with such
registration; and the Purchaser will reimburse any legal or
other expenses reasonably incurred by FKE or any such agent,
employee, director, officer or controlling Person, in
connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that
the indemnity agreement contained in this Section shall not
apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected
without the
EX-10.3 - 10
<PAGE>
consent of the Purchaser, which consent shall not be
unreasonably withheld.
"(c) Promptly after receipt by an indemnified party
under this Section of notice of the commencement of any
action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section, deliver
to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the
right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if, in the reasonable
opinion of counsel for the indemnified party, representation
of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party
and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable period of time of the
commencement of any such action shall relieve such
indemnifying party of any liability to the indemnified party
under this Section to the extent prejudicial to its ability
to defend such action, but the omission so to deliver
written notice to the indemnifying party will not relieve it
of any liability that it may have to any indemnified party
otherwise than under this Section.
"(d) If the indemnification provided for in this
Section is held by a court of competent jurisdiction to be
unavailable to an indemnified party or insufficient to hold
it harmless with respect to any loss, liability, claim,
damage or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability,
claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the
EX-10.3 - 11
<PAGE>
indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party
and of the indemnified party shall be determined by
reference to, among other things whether the untrue or
alleged untrue statements of a material fact or the omission
to state a material fact relates to information supplied by
the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or
omission."
"11.5. APPLICABILITY TO IPO. The provisions of Section 11.4
shall apply to the IPO to the same extent that such provisions
relate to a registered offering in the United States."
1.22. Each reference in the Agreement to the Agreement shall mean the
Agreement as amended by the First Amendment, except if a contrary intent is
expressly set forth.
1.23. Section 13.2 is amended by striking the characters "(a)" and by
adding, immediately after the words "Fax: 310.728.2209," the following:
"IF TO FKE:
Fox Kids Europe, N.V.
Sumatralaan 45, 1217 GP
Hilversum, The Netherlands
Attention: Chief Executive Officer
Fax: __________________
WITH A COPY TO:
Fox Kids Europe Limited
338 Euston Road
London NW1 3AZ.
Attention: General Counsel
Fax: +44 171 554 9086
2. MISCELLANEOUS. Each of Sections 13.1, 13.3, 13.4, 13.5, 13.6, 13.8,
13.9, 13.10, 13.11 and 13.14 of the Agreement is hereby incorporated herein, but
with each reference therein to the Agreement stricken and a reference to this
Amendment inserted in its place.
EX-10.3 - 12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
FKE
FOX KIDS EUROPE B.V.
By /S/ YNON KREIZ
-----------------------------------
Its:
-----------------------------------
COMPANY
FOX KIDS EUROPE HOLDINGS, INC.
By /S/ KATE TRINDER
-----------------------------------
Its:
-----------------------------------
PURCHASER
FOX BROADCASTING COMPANY
By /S/ JAY ITKOWITZ
-----------------------------------
Its:
-----------------------------------
EX-10.3 - 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EX-27.1
FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FOX FAMILY
WORLDWIDE, INC.'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS (AMOUNTS IN THOUSANDS)
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-2000
<PERIOD-START> JUL-01-1998 JUL-01-1999
<PERIOD-END> DEC-31-1998 DEC-31-1999
<CASH> 54,702 <F1> 117,230 <F1>
<SECURITIES> 0 0
<RECEIVABLES> 224,309 230,938
<ALLOWANCES> (2,401) (2,493)
<INVENTORY> 500,430 558,878
<CURRENT-ASSETS> 0 <F2> 0 <F2>
<PP&E> 88,478 93,538
<DEPRECIATION> (26,769) (40,609)
<TOTAL-ASSETS> 2,526,907 2,577,763
<CURRENT-LIABILITIES> 0 <F2> 0 <F2>
<BONDS> 897,165 941,204
345,000 345,000
0 0
<COMMON> 16 16
<OTHER-SE> (10,112) 28,970
<TOTAL-LIABILITY-AND-EQUITY> 2,526,907 2,577,763
<SALES> 361,037 339,338
<TOTAL-REVENUES> 361,037 339,338
<CGS> (173,733) (147,766)
<TOTAL-COSTS> (300,539) (277,269)
<OTHER-EXPENSES> (2,383) 194,497
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (82,835) (87,286)
<INCOME-PRETAX> (24,720) 169,280
<INCOME-TAX> (716) (74,522)
<INCOME-CONTINUING> (25,436) 94,758
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (25,436) 94,758
<EPS-BASIC> 0 <F3> 0 <F3>
<EPS-DILUTED> 0 <F3> 0 <F3>
<FN>
<F1> INCLUDES RESTRICTED CASH OF $8,000 AS OF DECEMBER 31, 1998 AND $8,208
AS OF DECEMBER 31, 1999.
<F2> THE COMPANY HAS ELECTED TO PRESENT AN UNCLASSIFIED BALANCE SHEET
<F3> EPS IS NOT APPLICABLE AS THE COMPANY HAS NO PUBLICLY TRADED EQUITY
Note: Certain prior year (December 31, 1998) amounts have been reclassified
to conform to the current year presentation.
</FN>
</TABLE>
