<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)/1/
____________________
INTERNATIONAL FAMILY ENTERTAINMENT, INC.
----------------------------------------
(Name of Issuer)
CLASS B COMMON STOCK, PAR VALUE $.01 PER SHARE
----------------------------------------------
(Title of Class of Securities)
45950M 10 6
----------------------------------------------
(CUSIP Number)
Arthur M. Siskind, Esq.
c/o News America Publishing Incorporated
1211 Avenue of the Americas
New York, New York 10036
(212) 852-7000
----------------------------------------------
with copies to:
<TABLE>
<S> <C> <C>
Jay Itzkowitz, Esq. C. N. Franklin Reddick, III, Esq. Jeffrey W. Rubin, Esq.
Fox Television Stations, Inc. Troop Meisinger Steuber & Pasich, LLP Squadron, Ellenoff, Plesent & Sheinfeld, LLP
10201 West Pico Blvd. 10940 Wilshire Blvd. 551 Fifth Avenue
Los Angeles, California 90035 Los Angeles, California 90024 New York, New York 10176
(Name, address and telephone number of person
authorized to receive notices and communications)
September 4, 1997
----------------------
(Date of event which Requires
Filing of this Statement)
</TABLE>
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]
Note. Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
(Continued on following pages)
(Page 1 of 15 Pages)
__________________________
/1/The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS/S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
The News Corporation Limited
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF, WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(D) OR 2(E) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
South Australia, Australia
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
Number of ----------------------------------------------
Shares 8 SHARED VOTING POWER
Beneficially 48,707,777
Owned by ----------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting -0-
Person with ----------------------------------------------
10 SHARED DISPOSITIVE POWER
48,707,777
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
48,707,777
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
100%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
-2-
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS/S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
K. Rupert Murdoch
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(D) OR 2(E) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
Number of ----------------------------------------------
Shares 8 SHARED VOTING POWER
Beneficially 48,707,777
Owned by ----------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting -0-
Person with ----------------------------------------------
10 SHARED DISPOSITIVE POWER
48,707,777
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
48,707,777
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
100%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
-3-
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS/S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Twentieth Holdings Corporation
95-4066193
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(D) OR 2(E) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware, U.S.A.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
Number of --------------------------------------------------
Shares 8 SHARED VOTING POWER
Beneficially 48,707,777
Owned by --------------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting -0-
Person with --------------------------------------------------
10 SHARED DISPOSITIVE POWER
48,707,777
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
48,707,777
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
100%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
-4-
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS/S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Fox Television Stations, Inc,
52-1408474
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(D) OR 2(E) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware, U.S.A.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
Number of --------------------------------------------------
Shares 8 SHARED VOTING POWER
Beneficially 48,707,777
Owned by --------------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting -0-
Person with --------------------------------------------------
10 SHARED DISPOSITIVE POWER
48,707,777
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
48,707,777
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
100%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
-5-
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS/S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Haim Saban
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(D) OR 2(E) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
Number of -0-
Shares ---------------------------------------------------
Beneficially 8 SHARED VOTING POWER
Owned by 48,707,777
Each ---------------------------------------------------
Reporting 9 SOLE DISPOSITIVE POWER
Person with -0-
---------------------------------------------------
10 SHARED DISPOSITIVE POWER
48,707,777
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
48,707,777
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
100%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
-6-
<PAGE>
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS/S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Fox Kids Worldwide, Inc.
95-4596247
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF, BK, OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(D) OR 2(E) [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware, U.S.A.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
Number of 48,707,777
Shares ---------------------------------------------------
Beneficially 8 SHARED VOTING POWER
Owned by -0-
Each ---------------------------------------------------
Reporting 9 SOLE DISPOSITIVE POWER
Person with 48,707,777
---------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
48,707,777
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
100%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
-7-
<PAGE>
This statement on Schedule 13D ("Amendment No. 2") amends and
supplements the statement on Schedule 13D, dated June 11, 1997, and Amendment
No. 1 to Schedule 13D, dated August 1, 1997, filed with the Securities and
Exchange Commission (the "Commission") by (i) The News Corporation Limited, a
South Australia, Australia corporation ("News Corporation"), (ii) K. Rupert
Murdoch, a United States citizen, (iii) Twentieth Holdings Corporation, a
Delaware corporation ("Twentieth Holdings"), (iv) Fox Television Stations, Inc.,
a Delaware corporation ("Fox Television"), (v) Haim Saban, a United States
citizen, and (vi) Fox Kids Worldwide, Inc., a Delaware corporation ("FKWW"),
with respect to their ownership of the Class B Common Stock, par value $.01 per
share (the "Class B Common Stock"), of International Family Entertainment, Inc.,
a Delaware corporation ("IFE"). News Corporation, K. Rupert Murdoch, Twentieth
Holdings, Fox Television, Haim Saban and FKWW are referred herein collectively
as the "Reporting Persons." The address of the principal executive offices of
IFE is 2877 Guardian Lane, Virginia Beach, Virginia 23452.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
-------------------------------------------------
Item 3 is hereby amended and supplemented by the addition of the
following information:
On September 4, 1997, Fox Kids Merger Corporation ("Merger Sub"), a
Delaware corporation and wholly owned subsidiary of FKWW, merged with and into
IFE (the "Merger"), pursuant to the terms and conditions of the Agreement and
Plan of Merger by and among FKWW, Merger Sub and IFE, dated as of June 11, 1997
(the "Merger Agreement").
As a result of the Merger, IFE, as the surviving corporation in the
Merger, became a wholly-owned subsidiary of FKWW, and each issued and
outstanding share of Class B Common Stock of IFE outstanding immediately prior
to the Merger was converted into the right to receive $35 in cash.
In lieu of the Senior Loan Agreement, dated as of August 1, 1997, FKWW
established, pursuant to an Amended and Restated Credit Agreement, dated as of
September 4, 1997 (the "Amended and Restated Senior Loan Agreement"), a
$602,000,000 seven-year Secured Reducing Revolving Credit Facility (the "Tranche
A Revolving Credit Facility"), a $298,000,000 seven-year Secured Reducing
Revolving Credit Facility (the "Tranche B Revolving Credit Facility") and a
$350,000,000 nine-year Secured Term Loan Facility (the "Term Loan") with
Citicorp USA, Inc. acting as the administrative agent for a syndicate of
financial
-8-
<PAGE>
institutions providing the facility. The Tranche A Revolving Credit Facility was
fully drawn down in connection with the acquisition of the Common Stock of IFE
pursuant to the Stock Purchase Agreements. The Tranche B Revolving Credit
Facility and the Term Loan were fully drawn down in connection with the Merger
to prepay certain outstanding indebtedness, to pay fees and expenses incurred in
connection with the Merger and related transactions and for working capital.
In lieu of Fox Broadcasting Company ("FBC") or an affiliate thereof
advancing approximately $250,000,000 to $350,000,000 to FKWW in exchange for a
new series of 12.5% preferred stock of FKWW (as previously reported), on July
31, 1997, FBC loaned FKWW $104,573,000, upon the terms and subject to the
conditions set forth in the Subordinated Note Agreement (the "FBC Note
Agreement"), dated as of July 31, 1997 and amended as of September 4, 1997, by
and among FBC, FKWW and Citicorp USA, Inc., as administrative agent under the
Amended and Restated Senior Loan Agreement.
In addition, FKWW entered into a Subordinated Note Agreement, dated as
of August 29,1997, with News America Holdings Incorporated ("NAHI") (the "NAHI
Note Agreement"), upon substantially the same terms and conditions as the FBC
Note Agreement, except that NAHI is the lender under the NAHI Note Agreement and
the principal amount of the NAHI Note is $345,513,864.31.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
------------------------------------
Item 5 is hereby amended and supplemented by the addition of the
following information:
The number of shares of Class B Common Stock beneficially owned as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934 by
the Reporting Persons as of the date hereof is 48,707,777, representing 100% of
the outstanding Class B Common Stock of IFE immediately prior to the effective
time of the Merger.
<TABLE>
<CAPTION>
ITEM 7. EXHIBITS
--------
Exhibit No.
------- ---
<S> <C>
Amended and Restated Credit Agreement 1
First Amendment to FBC Note Agreement 2
NAHI Note Agreement 3
</TABLE>
-9-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: September 12, 1997
THE NEWS CORPORATION LIMITED
BY: /s/ARTHUR M. SISKIND
---------------------------------------
NAME: ARTHUR M. SISKIND
TITLE: DIRECTOR
-10-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: September 12, 1997
/s/K. RUPERT MURDOCH
---------------------------------------
K. RUPERT MURDOCH
-11-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: September 12, 1997
TWENTIETH HOLDINGS CORPORATION
BY: /s/ JAY ITZKOWITZ
---------------------------------------
NAME: JAY ITZKOWITZ
TITLE: SENIOR VICE PRESIDENT
AND SECRETARY
-12-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: September 12, 1997
FOX TELEVISION STATIONS, INC.
BY: /s/ JAY ITZKOWITZ
---------------------------------------
NAME: JAY ITZKOWITZ
TITLE: SENIOR VICE PRESIDENT
AND SECRETARY
-13-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: September 12, 1997
/s/HAIM SABAN
---------------------------------------
HAIM SABAN
-14-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: September 12, 1997
FOX KIDS WORLDWIDE, INC.
BY: /s/HAIM SABAN
---------------------------------------
NAME: HAIM SABAN
TITLE: CHIEF EXECUTIVE OFFICER
-15-
<PAGE>
COPIED AS EXECUTED
TOGETHER WITH EXHIBITS
D-1 THROUGH D-8, E &
AS SEPARATELY EXECUTED
================================================================================
$1,250,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF SEPTEMBER 4, 1997
Among
FOX KIDS WORLDWIDE, INC.,
FCN HOLDING, INC.,
FOX KIDS MERGER CORPORATION
and
SABAN ENTERTAINMENT, INC.,
as Borrowers,
-- ---------
and
THE INITIAL LENDERS NAMED HEREIN,
as Initial Lenders,
-- ------- -------
and
CITICORP USA, INC.,
as Administrative Agent,
-- -------------- -----
and
CITICORP SECURITIES, INC.,
as Arranger
-- --------
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C>
SECTION 1.01. Certain Defined Terms..................................... 3
SECTION 1.02. Computation of Time Periods............................... 50
SECTION 1.03. Accounting Terms.......................................... 50
SECTION 1.04. Currency Equivalents Generally............................ 50
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances.............................................. 51
SECTION 2.02. Making the Advances....................................... 52
SECTION 2.03. Repayment of Advances..................................... 53
SECTION 2.04. Termination or Reduction of the Commitments............... 54
SECTION 2.05. Prepayments............................................... 57
SECTION 2.06. Interest on Advances...................................... 59
SECTION 2.07. Fees...................................................... 60
SECTION 2.08. Conversion of Advances.................................... 61
SECTION 2.09. Increased Costs, Etc...................................... 62
SECTION 2.10. Payments and Computations................................. 65
SECTION 2.11. Taxes..................................................... 67
SECTION 2.12. Sharing of Payments, Etc.................................. 70
SECTION 2.13. Defaulting Lenders........................................ 71
SECTION 2.14. Use of Proceeds........................................... 73
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Initial Revolving Credit B
Borrowing and/or Term Borrowing........................... 73
SECTION 3.02. Conditions Precedent to Each Borrowing.................... 83
SECTION 3.03. Determinations Under Section 3.01......................... 83
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties............................ 84
ARTICLE V
</TABLE>
<PAGE>
ii
COVENANTS OF THE BORROWERS
<TABLE>
<S> <C>
SECTION 5.01. Affirmative Covenants.................................... 95
SECTION 5.02. Negative Covenants....................................... 104
SECTION 5.03. Reporting Requirements................................... 127
SECTION 5.04. Financial Covenants...................................... 133
SECTION 5.05. Covenant of Fox Kids..................................... 136
ARTICLE VI
BORROWERS GUARANTEE
SECTION 6.01. Borrowers Guarantee...................................... 137
SECTION 6.02. Guarantee Absolute....................................... 138
SECTION 6.03. Waivers and Acknowledgments.............................. 139
SECTION 6.04. Subrogation.............................................. 140
SECTION 6.05. Continuing Guarantee; Assignments........................ 141
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default........................................ 141
ARTICLE VIII
THE AGENTS
SECTION 8.01. Authorization and Action................................. 145
SECTION 8.02. Administrative Agent's Reliance, Etc..................... 146
SECTION 8.03. Citicorp USA and Affiliates.............................. 147
SECTION 8.04. Lender Credit Decision................................... 147
SECTION 8.05. Indemnification.......................................... 147
SECTION 8.06. Successor Administrative Agent........................... 148
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc.......................................... 149
SECTION 9.02. Notices, Etc............................................. 150
SECTION 9.03. No Waiver; Remedies...................................... 151
SECTION 9.04. Indemnification.......................................... 151
SECTION 9.05. Costs and Expenses....................................... 154
SECTION 9.06. Right of Setoff.......................................... 156
SECTION 9.07. Binding Effect........................................... 156
SECTION 9.08. Assignments and Participations........................... 156
</TABLE>
<PAGE>
iii
<TABLE>
<S> <C>
SECTION 9.09. Confidentiality.......................................... 160
SECTION 9.10. Execution in Counterparts................................ 160
SECTION 9.11. Governing Law; Jurisdiction, Etc......................... 161
SECTION 9.12. WAIVER OF JURY TRIAL..................................... 161
</TABLE>
EXHIBITS
--------
Exhibit A-1 - Form of Revolving Credit A Note
Exhibit A-2 - Form of Revolving Credit B Note
Exhibit A-3 - Form of Term Note
Exhibit B-1 - Form of Notice of Borrowing
Exhibit B-2 - Form of Notice of Conversion
Exhibit C - Form of Assignment and Acceptance
Exhibit D-1 - Form of Security Agreement
Exhibit D-2 - Form of U.K./Saban U.K. Pledge Agreement
Exhibit D-3 - Form of U.K./FKE Pledge Agreement
Exhibit D-4 - Form of Netherlands Pledge Agreement
Exhibit D-5 - Form of Netherlands Antilles Pledge Agreement
Exhibit D-6 - Form of German Pledge Agreement
Exhibit D-7 - Form of French/Saban SARL Pledge Agreement
Exhibit D-8 - Form of French/Fox Kids SARL Pledge Agreement
Exhibit E - Form of Pledge Agreement
Exhibit F - Form of Guarantee
Exhibit G - Form of Solvency Certificate
Exhibit H-1 - Form of Opinion of Louis A. Isakoff, Esq.
Exhibit H-2 - Form of Tax Opinion of Squadron, Ellenoff, Plesent & Sheinfeld,
LLP
Exhibit H-3 - Form of Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP
Exhibit H-4 - Form of Opinion of Troop Meisinger Steuber & Pasich, LLP
Exhibit H-5 - Form of Opinion of Westaway & Co.
Exhibit H-6 - Form of Opinion of Norton Rose
Exhibit H-7 - Form of Opinion of Trenite Van Doorne
Exhibit H-8 - Form of Opinion of Promes Trenite Van Doorne
Exhibit H-9 - Form of Opinion of Deringer Tessin Herrmann & Sedemund
Exhibit H-10 - Form of Opinion of Klein-Goddard Associes
Exhibit H-11 - Form of Opinion of Finnegan, Henderson, Farabow, Garrett &
Dunner, LLP
Exhibit I-1 - Form of Intercompany Note
Exhibit I-2 - Form of Permitted Affiliate Subordinated Note
<PAGE>
iv
SCHEDULES
---------
Schedule I - Commitments and Lending Offices
Schedule 4.01(b) - Subsidiaries
Schedule 4.01(d) - Governmental Authorizations
Schedule 4.01(m) - Disclosed Information
Schedule 4.01(p) - Intellectual Property Infringements
Schedule 4.01(x) - Plans and Multiemployer Plans
Schedule 4.01(ee) - Tax Returns and Reports
Schedule 4.01(ff) - Open Years
Schedule 4.01(gg) - Extensions of Taxable Periods
Schedule 4.01(jj) - Distributors
Schedule 4.01(kk) - Surviving Indebtedness
Schedule 4.01(ll) - Real Property
Schedule 4.01(mm) - Existing Investments
Schedule 4.01(nn) - Intellectual Property
Schedule 4.01(oo) - Product Laboratories
Schedule 4.01(pp) - Items of Product
Schedule 4.01(qq) - Material Agreements
Schedule 5.02(a) - Existing Liens
Schedule 5.02(j) - Existing Dividends and Payment Restrictions
<PAGE>
EX.1
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of September 4, 1997
among FOX KIDS WORLDWIDE, INC., a Delaware corporation ("FOX KIDS"), FCN
HOLDING, INC., a Delaware corporation ("FCN HOLDING"), FOX KIDS MERGER
CORPORATION, a Delaware corporation ("MERGER CORPORATION"), SABAN ENTERTAINMENT,
INC., a Delaware corporation ("SABAN" and, together with Fox Kids, FCN Holding
and Merger Corporation and, following the consummation of the Merger (as
hereinafter defined), the Surviving Corporation (as hereinafter defined), the
"BORROWERS"), the banks, financial institutions and other institutional lenders
set forth on the signature pages to this Agreement under the caption "The
Initial Lenders" (collectively, the "INITIAL LENDERS"), CITICORP SECURITIES,
INC., a Delaware corporation ("CITICORP SECURITIES"), as the arranger and the
syndication agent (the "ARRANGER") for the Facilities (as hereinafter defined),
and CITICORP USA, INC., a Delaware corporation ("CITICORP USA"), as the
administrative agent and the collateral agent (together with any successor
thereto appointed pursuant to Article VIII, the "ADMINISTRATIVE AGENT") for the
Lenders and the other Secured Parties (each as hereinafter defined).
PRELIMINARY STATEMENTS
(1) The Borrowers are parties to the Credit Agreement dated as of
August 1, 1997 (the "ORIGINAL CREDIT AGREEMENT") with Citicorp USA, as the sole
Initial Lender thereunder (the "ORIGINAL LENDER"), Citicorp Securities, as the
arranger and syndication agent for the Original Facilities (as hereinafter
defined), and Citicorp USA, as the administrative agent for the lenders and the
other secured parties referred to therein.
(2) Merger Corporation was organized by Fox Kids in order to acquire
control of International Family Entertainment, Inc., a Delaware corporation
("IFE").
(3) Fox Kids acquired on the Phase I Closing Date (the "ROBERTSON
ACQUISITION") all of the outstanding shares of Class A Common Stock, par value
$0.01 per share (the "IFE CLASS A COMMON STOCK"), of IFE, in the form of Class B
Common Stock, par value $0.01 per share, of IFE (the "IFE CLASS B COMMON STOCK")
issuable upon conversion thereof, owned on such date by, and the shares of IFE
Class B Common Stock owned on such date by or issuable upon exercise of
outstanding stock options to, M.G. "Pat" Robertson, individually and as trustee
of each of the Robertson Charitable Remainder Unitrust, u/t/a dated January 22,
1990, the Gordon P. Robertson Irrevocable Trust, u/t/a dated December 18, 1996,
the Elizabeth F. Robinson Irrevocable Trust, u/t/a dated December 18, 1996, and
the Ann R. Lablanc Irrevocable Trust, u/t/a dated December 18, 1996; Lisa N.
Robertson and Timothy B. Robertson, as joint tenants; and Timothy B. Robertson,
individually, as trustee of each of the Timothy and Lisa Robertson Children's
Trust, u/t/a dated September 18, 1995, and the Timothy B. Robertson Charitable
Trust, u/t/a dated December 30, 1996, and as custodian to and for each of
Abigail H. Robertson, Laura N. Robertson, Elizabeth C. Robertson, Willis H.
Robertson and Caroline S. Robertson under the Virginia Uniform Transfers to
Minors Act (collectively, the "ROBERTSON SELLERS"), pursuant to that certain
Stock Purchase Agreement dated as of June 11, 1997 ( the "ROBERTSON PURCHASE
AGREEMENT") by and among the Robertson Sellers and Fox Kids. Fox Kids also
acquired on the Phase I Closing Date (the "CBN ACQUISITION") all of the shares
of IFE Class B Common Stock owned on such date by The Christian Broadcasting
Network, Inc., a Virginia corporation ("CBN"), pursuant to that certain Stock
Purchase Agreement dated as of June 11, 1997 (the "CBN PURCHASE AGREEMENT") by
and between CBN and Fox Kids. Fox Kids also acquired on the Phase I Closing
Date (the "REGENT ACQUISITION") all of the shares of IFE Class B Common Stock
owned on such date by Regent University, a Virginia
<PAGE>
2
corporation ("REGENT"), pursuant to that certain Stock Purchase Agreement dated
as of June 11, 1997 (the "REGENT PURCHASE AGREEMENT" and, together with the
Robertson Purchase Agreement and the CBN Purchase Agreement, the "PURCHASE
AGREEMENTS") by and between Regent and Fox Kids.
(4) Liberty IFE, Inc., a Colorado corporation ("LIBERTY IFE"),
contributed on the Phase I Closing Date (the "LIBERTY IFE CONTRIBUTION") to Fox
Kids all of the shares of Class C Non-Voting Common Stock, par value $0.01 per
share, of IFE owned on such date by it, and the 6% Convertible Secured Notes due
2004 of IFE owing on such date to it in an aggregate principal amount of
$23,000,000, in exchange for 345,000 shares of Series A Preferred Stock, par
value $0.001 per share, of Fox Kids (the "SERIES A PREFERRED STOCK") pursuant to
that certain Contribution and Exchange Agreement dated as of June 11, 1997 (as
amended, by the First Amendment to the Contribution and Exchange Agreement dated
as of August 1, 1997, the "CONTRIBUTION AND EXCHANGE AGREEMENT") by and among
Liberty IFE, Liberty Media Corporation, a Delaware corporation ("LIBERTY
MEDIA"), and Fox Kids. The Robertson Acquisition, the CBN Acquisition, the
Regent Acquisition and the Liberty IFE Contribution are hereinafter collectively
referred to as the "ACQUISITIONS".
(5) Concurrently with the Liberty IFE Contribution, FCN Holding and
Saban were restructured and reorganized (the "REORGANIZATION") into Fox Kids
such that Fox Kids owns all of the businesses and operations of FCN Holding,
Saban and their respective Subsidiaries. More specifically, (a) Fox
Broadcasting Company, a Delaware corporation ("FBC"), contributed all of its
member interests in Fox Kids Worldwide, L.L.C., a Delaware limited liability
company ("FOX KIDS LLC"), to Fox Kids in exchange for a portion of the
Indebtedness evidenced by the FBC Subordinated Note (as hereinafter defined)
issued in an aggregate principal amount of $104,573,000, (b) Fox Broadcasting
Sub, Inc., a Delaware corporation ("FBC SUB"), contributed all of the shares of
common stock of FCN Holding owned by it to Fox Kids in exchange for 7,920,000
shares of Class B Common Stock, par value $0.001 per share, of Fox Kids (the
"CLASS B COMMON STOCK"), (c) Allen & Company Incorporated, a New York
corporation ("ALLEN & CO."), contributed all of the shares of common stock of
FCN Holding owned by it to Fox Kids in exchange for 160,000 shares of Class A
Common Stock, par value $0.001 per share, of Fox Kids (the "CLASS A COMMON
STOCK") and (d) Haim Saban and the other existing stockholders of Saban
contributed all of the shares of common stock of Saban owned by them to Fox Kids
in exchange for 7,920,000 shares of Class B Common Stock. Upon consummation of
the Reorganization, each of FCN Holding and Saban became direct wholly owned
Subsidiaries of Fox Kids, and Fox Kids LLC became an indirect wholly owned
Subsidiary of Fox Kids.
(6) Pursuant to the Agreement and Plan of Merger dated as of June 11,
1997 (the "MERGER AGREEMENT") by and among Fox Kids, Merger Corporation and IFE,
Merger Corporation has agreed to consummate a merger (the "MERGER") with and
into IFE, with IFE being the surviving corporation (the "SURVIVING
CORPORATION"). The Robertson Sellers, CBN and Regent (which collectively held
of record prior to the consummation of the Acquisitions a number of shares of
IFE Class A Common Stock and IFE Class B Common Stock representing a majority of
the votes entitled to be cast at a meeting to consider the Merger Agreement and
the Merger) have delivered their written consent (the "CONSENT") approving the
Merger Agreement and the Merger, which consent constitutes the only action
necessary by the stockholders of IFE in order to authorize the Merger Agreement
and the Merger under the Amended and Restated Certificate of Incorporation of
IFE and the Delaware General Corporation Law. Upon consummation of the Merger,
the Surviving Corporation will be a direct wholly owned Subsidiary (as
hereinafter defined) of Fox Kids.
(7) The Original Lender agreed, on the terms and conditions set forth
in the Original Credit Agreement, to lend to the Borrowers from time to time up
to $1,250,000,000 at any time outstanding
<PAGE>
3
in the following manner: (a) concurrently with consummation of the Acquisitions
(and following consummation of the Reorganization) and from time to time
thereafter prior to the Phase II Closing Date (as hereinafter defined), the
Lenders agreed to lend to Fox Kids, FCN Holding and Saban up to $602,000,000 in
order to finance the purchase price for all of the IFE Class B Common Stock
owned by the Robertson Sellers, CBN and Regent, to refinance certain
Indebtedness (as hereinafter defined) of Saban outstanding on the Phase I
Closing Date, to pay certain fees and expenses incurred in connection with the
consummation of the Acquisitions, the Reorganization and the Original Facilities
and for other general corporate purposes not otherwise prohibited under the
terms of the Loan Documents (as defined in the Original Credit Agreement), (b)
immediately upon the consummation of the Merger, the Lenders agreed to lend to
Fox Kids and the Surviving Corporation up to $648,000,000 in order to finance in
part the cash consideration payable to the remaining former holders of the
outstanding shares of IFE Class B Common Stock for their shares in the Merger,
to refinance certain Indebtedness of IFE outstanding on the Phase II Closing
Date and to pay certain fees and expenses incurred in connection with the
consummation of the Transaction (as hereinafter defined) and (c) from time to
time following the Phase II Closing Date, within the limits of the Unused
Revolving Credit Commitments (as hereinafter defined) in effect from time to
time, the Lenders agreed to lend to the Borrowers (other than Fox Kids) up to
$900,000,000 for general corporate purposes not otherwise prohibited under the
terms of the Loan Documents.
(8) The Borrowers have requested that the Lenders amend the terms of
the Original Credit Agreement to, among other things, permit the incurrence by
Fox Kids of additional subordinated Indebtedness from time to time from one or
more of its Affiliates (as hereinafter defined), permit the issuance by Fox Kids
of shares of the Permitted Preferred Stock (as hereinafter defined) from time to
time to one or more of its Affiliates and modify the terms of certain of the
financial covenants set forth in Section 5.04 of the Original Credit Agreement
and, in connection with their agreement to permit such amendments, that the
Lenders affirm their agreement to lend them from time to time up to
$1,250,000,000 at any time outstanding in the manner and for the purposes
described above in Preliminary Statement (7). The Lenders have indicated their
willingness to agree to such amendments and to lend such amounts on the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACQUISITIONS" has the meaning specified in Preliminary Statement (4)
to this Agreement.
"ACQUISITIONS ADVANCES" means each of the outstanding advances made by
the Original Lender under the Original Facilities on the Phase I Closing
Date, all of which shall constitute Revolving Credit A Advances on the date
of this Agreement for all purposes of this Agreement.
<PAGE>
4
"ADJUSTED CONSOLIDATED EBITDA" means, for any period, the sum of (a)
Consolidated EBITDA for such period, (b) the aggregate amount of all
capital contributions made to Fox Kids by one or more of its Affiliates and
(c) the aggregate Net Cash Proceeds received by Fox Kids from the issuance
and sale of any Equity Interests therein to one or more of its Affiliates
to the extent that the issuance and sale of such Equity Interests is
otherwise expressly permitted under Section 5.02(g)(i)(C) or 5.02(g)(i)(E).
"ADJUSTED FUNDED INDEBTEDNESS" means, with respect to Fox Kids and its
Subsidiaries at any date of determination, all Funded Indebtedness of Fox
Kids and its Subsidiaries outstanding on such date, after excluding
therefrom (solely to the extent otherwise included in the determination of
Funded Indebtedness at such date) all of the Indebtedness arising under the
shares of Series A Preferred Stock, the FBC Subordinated Notes and the NAHI
Subordinated Notes outstanding on such date and all intercompany
Indebtedness among Fox Kids and its Subsidiaries outstanding on such date.
"ADMINISTRATIVE AGENT" has the meaning specified in the recital of
parties to this Agreement.
"ADMINISTRATIVE AGENT'S ACCOUNT" means the account of the
Administrative Agent maintained by the Administrative Agent at its office
at 399 Park Avenue, New York, New York 10043, Account No. 36852248,
Reference: Fox Kids Worldwide, Inc., Attention: Bank Loan Syndications,
or such other account maintained by the Administrative Agent and designated
by the Administrative Agent as such in a written notice to the each of the
Borrowers and each of the Lenders.
"ADVANCE" means a Revolving Credit A Advance, a Revolving Credit B
Advance or a Term Advance, as the context may require.
"AFFECTED LENDERS" has the meaning specified in Section 2.09(e).
"AFFILIATE" means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person, or is a director or officer of such Person or,
with respect to any individual, has a relationship with such individual by
blood, marriage or adoption not more remote than first cousin. For
purposes of this definition, the term "control" (including the terms
"controlling", "controlled by" and "under common control with") of a Person
means the possession, direct or indirect, of the power to vote 10% or more
of the Voting Interests in such Person or to direct or cause the direction
of the management and policies of such Person, whether through the
ownership of Voting Interests, by contract or otherwise.
"AGENTS" means, collectively, the Administrative Agent, the Arranger
and each co-agent or sub-agent appointed by the Administrative Agent from
time to time pursuant to Section 8.01(b).
"ALLEN & CO." has the meaning specified in Preliminary Statement (5)
to this Agreement.
"APPLICABLE LENDING OFFICE" means, with respect to each of the
Lenders, such Lender's Base Rate Lending Office in the case of a Base Rate
Advance and such Lender's Eurodollar Lending Office in the case of a
Eurodollar Rate Advance.
"APPLICABLE MARGIN" means (a) at any time during the period from the
date of this Agreement through the earlier of (i) the date on which the
Consolidated financial statements of Fox Kids and its
<PAGE>
5
Subsidiaries for the Fiscal Quarter ending September 30, 1998 are delivered
to the Lenders pursuant to Section 5.03(b) and (ii) November 30, 1998,
1.25% per annum for Base Rate Advances and 2.25% per annum for Eurodollar
Rate Advances outstanding under either of the Revolving Credit Facilities
and 1.75% per annum for Base Rate Advances and 2.75% per annum for
Eurodollar Rate Advances outstanding under the Term Facility and (b) at any
time and from time to time thereafter, a percentage per annum equal to the
applicable percentage set forth below for the Performance Level set forth
below:
<TABLE>
<CAPTION>
============================================================================
REVOLVING
REVOLVING CREDIT TERM
CREDIT FACILITIES TERM FACILITY
FACILITIES EURODOLLAR FACILITY BASE EURODOLLAR
PERFORMANCE LEVEL BASE RATE RATE RATE RATE
ADVANCES ADVANCES ADVANCES ADVANCES
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I 0.000% 0.500% 0.000% 1.000%
----------------------------------------------------------------------------
II 0.000% 0.625% 0.000% 1.000%
----------------------------------------------------------------------------
III 0.000% 0.625% 1.000% 2.000%
----------------------------------------------------------------------------
IV 0.000% 0.750% 1.000% 2.000%
----------------------------------------------------------------------------
V 0.000% 0.875% 1.000% 2.000%
----------------------------------------------------------------------------
VI 0.125% 1.125% 1.000% 2.000%
----------------------------------------------------------------------------
VII 0.250% 1.250% 1.000% 2.000%
----------------------------------------------------------------------------
VIII 0.500% 1.500% 1.000% 2.000%
----------------------------------------------------------------------------
IX 1.250% 2.250% 1.750% 2.750%
============================================================================
</TABLE>
For purposes of clause (b) of the immediately preceding sentence, the
Applicable Margin for each Base Rate Advance shall be determined by
reference to the Performance Level in effect from time to time and the
Applicable Margin for each Eurodollar Rate Advance shall be determined by
reference to the Performance Level in effect on the first day of each
Interest Period for such Advance.
"APPLICABLE PERCENTAGE" means, with respect to the Commitment Fee, (a)
at any time during the period from the date of this Agreement through the
earlier of (i) the date on which the Consolidated financial statements of
Fox Kids and its Subsidiaries for the Fiscal Quarter ending September 30,
1998 are delivered to the Lenders pursuant to Section 5.03(b) and (ii)
November 30, 1998, 0.500% per annum and (b) at any time and from time to
time thereafter, a percentage per annum equal to the applicable percentage
set forth below for the Performance Level set forth below:
<PAGE>
6
<TABLE>
<CAPTION>
==========================================
PERFORMANCE LEVEL COMMITMENT FEE
------------------------------------------
<S> <C>
I 0.200%
------------------------------------------
II 0.250%
------------------------------------------
III 0.250%
------------------------------------------
IV 0.250%
------------------------------------------
V 0.250%
------------------------------------------
VI 0.250%
------------------------------------------
VII 0.250%
------------------------------------------
VIII 0.375%
------------------------------------------
IX 0.500%
==========================================
</TABLE>
For purposes of clause (b) of the immediately preceding sentence, the
Applicable Percentage for the Commitment Fee shall be determined by
reference to the Performance Level in effect from time to time.
"APPROPRIATE BORROWER" means (a) with respect to the Revolving Credit
A Facility, Fox Kids, FCN Holding and Saban at any time prior to the Phase
II Closing Date and Fox Kids, FCN Holding, Saban and the Surviving
Corporation at any time on or after the Phase II Closing Date, (b) with
respect to the Revolving Credit B Facility, Fox Kids, FCN Holding, Saban
and the Surviving Corporation and (c) with respect to the Term Facility,
Fox Kids.
"APPROPRIATE BORROWER'S ACCOUNT" means (a) with respect to Fox Kids,
the account of Fox Kids maintained thereby with Imperial Bank at its office
at 9777 Wilshire Boulevard, Beverly Hills, California 90212, ABA#122201444,
Account No. 60-080-321, (b) with respect to FCN Holding, the account of FCN
Holding maintained thereby with Imperial Bank at its office at 9777
Wilshire Boulevard, Beverly Hills, California 90212, ABA#122201444, Account
No. 60-080-720, (c) with respect to Merger Corporation or the Surviving
Corporation, the account of Merger Corporation (and, upon consummation of
the Merger, the Surviving Corporation) maintained thereby with Imperial
Bank at its office at 9777 Wilshire Boulevard, Beverly Hills, California
90212, ABA#122201444, Account No. 60-080-712 and (d) with respect to Saban,
the account of Saban maintained thereby with Imperial Bank at its office at
9777 Wilshire Boulevard, Beverly Hills, California 90212, ABA#122201444,
Account No. 60-082-421, or (e) with respect to any of the Borrowers, such
other account of such Borrower as is agreed from time to time in writing
between such Borrower and the Administrative Agent.
"APPROPRIATE LENDER" means, with respect to any of the Facilities at
any time, a Lender that has a Commitment with respect to such Facility at
such time.
<PAGE>
7
"APPROVED COMPLETION GUARANTEE" means, with respect to any of the
items of Product, a guarantee in support of the completion of such item of
Product issued by any Person that has a claims paying ability rating of at
least "A-" (or the then equivalent rating) from A.M. Best Company or S&P or
an insurance financial strength rating of at least A3 from Moody's or that
is approved in writing by the Lenders (such approval not to be unreasonably
withheld or delayed) in favor of the Borrower or the Subsidiary of any of
the Borrowers that is producing such item of Product, in each case together
with a "cut-through" endorsement issued by the reinsurer of such Person
reasonably acceptable to the Lenders in favor of such Borrower or such
Subsidiary as beneficiary thereunder, naming the Administrative Agent, on
behalf of the Secured Parties, as the direct beneficiary of all proceeds
thereunder, and otherwise in form and substance reasonably satisfactory to
the Lenders.
"ARRANGER" has the meaning specified in the recital of parties to this
Agreement.
"ASSIGNED AGREEMENTS" has the meaning specified in Section 1(d) of the
Security Agreement.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by and between a Lender and an Eligible Assignee, and accepted by the
Administrative Agent and, if required, Fox Kids, in accordance with Section
9.08 and in substantially the form of Exhibit C hereto.
"AVAILABLE CASH FLOW" means, with respect to Fox Kids and its
Subsidiaries for any period, (a) Consolidated EBITDA for such period less
(b) the sum (without duplication) of (i) Consolidated Interest Expense for
such period, (ii) all Consolidated Cash Taxes paid during such period,
(iii) the aggregate amount of all Capital Expenditures made by Fox Kids and
its Subsidiaries during such period, (iv) the aggregate amount of all
Required Principal Payments made by Fox Kids and its Subsidiaries during
such period and (v) the aggregate amount of all Cash Distributions made by
or on behalf of Fox Kids during such period.
"BANK HEDGE AGREEMENT" means any interest rate Hedge Agreement
permitted under Article V that is entered into by and between any of the
Borrowers and any of the Lenders.
"BASE RATE" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the
highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is
no nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1%
per annum plus (ii) the rate obtained by dividing (A) the latest
three-week moving average of secondary market morning offering rates
in the United States of America for three-month certificates of
deposit of major United States money market banks, such three-week
moving average (adjusted on the basis of a year of 360 days) being
determined weekly on each Monday (or, if such day is not a Business
Day, on the next succeeding Business Day) for the three-week period
ending on the previous Friday by Citibank on the basis of such rates
reported by certificate of deposit dealers to and published by the
Federal Reserve Bank of New York or, if such publication shall be
suspended or terminated, on the basis of quotations for such rates
received by Citibank from three New York certificate of deposit
dealers of recognized standing selected by Citibank, by
<PAGE>
8
(B) a percentage equal to 100% minus the average of the daily
percentages specified during such three-week period by the Board of
Governors of the Federal Reserve System (or any successor thereto) for
determining the maximum reserve requirement (including, but not
limited to, any emergency, supplemental or other marginal reserve
requirement) for Citibank with respect to liabilities consisting of or
including (among other liabilities) three-month U.S. dollar
nonpersonal time deposits in the United States plus (iii) the average
during such three-week period of the annual assessment rates estimated
by Citibank for determining the then current annual assessment payable
by Citibank to the Federal Deposit Insurance Corporation (or any
successor thereto) for insuring U.S. dollar deposits of Citibank in
the United States of America; and
(c) 0.50% per annum above the Federal Funds Rate.
"BASE RATE ADVANCE" means an Advance that bears interest as provided
in Section 2.06(a)(i).
"BASE RATE LENDING OFFICE" means, with respect to each of the Lenders,
the office of such Lender specified as its "Base Rate Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender, as the case may be, or such other
office of such Lender as such Lender may from time to time specify to each
of the Appropriate Borrowers and the Administrative Agent for such purpose.
"BLOCKED ACCOUNT LETTERS" has the meaning specified in Section 5(b) of
the Security Agreement.
"BLOCKED ACCOUNTS" has the meaning specified in Section 1(e)(v) of the
Security Agreement.
"BORROWERS" has the meaning specified in the recital of parties to
this Agreement.
"BORROWERS GUARANTEE" has the meaning specified in Section 6.01(a).
"BORROWING" means a Revolving Credit A Borrowing, a Revolving Credit B
Borrowing or a Term Borrowing, as the context may require.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized by law to close in New York, New York, and, if the applicable
Business Day relates to any Eurodollar Rate Advances, on which dealings in
U.S. dollar deposits are carried on in the London interbank market.
"CAPITAL ASSETS" means, with respect to any Person, all equipment,
fixed assets and real property or improvements of such Person, or
replacements or substitutions therefor or additions thereto, that, in
accordance with GAAP, have been or should be reflected as additions to
property, plant or equipment on the balance sheet of such Person or that
have a useful life of more than one year.
"CAPITAL EXPENDITURES" means, with respect to any Person for any
period, (a) all expenditures made directly or indirectly by such Person
during such period for Capital Assets (whether paid in cash or other
consideration or accrued as a liability and including, without limitation,
all expenditures for
<PAGE>
9
maintenance and repairs which are required, in accordance with GAAP, to be
capitalized on the books of such Person) and (b) solely to the extent not
otherwise included in clause (a) of this definition, the aggregate
principal amount of all Indebtedness (including, without limitation,
Obligations in respect of Capitalized Leases) assumed or incurred during
such period in connection with any such expenditures for Capital Assets.
"CAPITALIZED LEASE" means any lease with respect to which the lessee
is required to recognize concurrently the acquisition of property or an
asset and the incurrence of a liability in accordance with GAAP.
"CASH COLLATERAL ACCOUNT LETTERS" has the meaning specified in Section
5(a) of the Security Agreement.
"CASH COLLATERAL ACCOUNTS" has the meaning specified in Preliminary
Statement (5) of the Security Agreement.
"CASH DISTRIBUTIONS" means, with respect to any Person for any period,
all dividends and distributions on any of the outstanding Equity Interests
in such Person, all purchases, redemptions, retirements, defeasances or
other acquisitions of any of the outstanding Equity Interests in such
Person and all returns of capital to the stockholders, partners or members
(or the equivalent persons) of such Person, in each case to the extent paid
in cash by or on behalf of such Person during such period.
"CASH EQUIVALENTS" means any of the following types of Investments, to
the extent owned by Fox Kids or any of its Subsidiaries free and clear of
all Liens (other than Liens created under the Collateral Documents):
(a) readily marketable obligations issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than 360 days
from the date of acquisition thereof; provided that the full faith and
credit of the United States of America is pledged in support thereof;
(b) time deposits with, or insured certificates of deposit or
bankers' acceptances of, any commercial bank that (i) (A) is a Lender
or (B) is organized under the laws of the United States of America,
any state thereof or the District of Columbia or is the principal
banking subsidiary of a bank holding company organized under the laws
of the United States of America, any state thereof or the District of
Columbia and is a member of the Federal Reserve System, (ii) issues
(or the parent of which issues) commercial paper rated as described in
clause (c) of this definition and (iii) has combined capital and
surplus of at least $1,000,000,000, in each case with maturities of
not more than 180 days from the date of acquisition thereof;
(c) commercial paper issued by any Person organized under the
laws of any state of the United States of America and rated at least
"Prime-1" (or the then equivalent grade) by Moody's or at least "A-1"
(or the then equivalent grade) by S&P, in each case with maturities of
not more than 180 days from the date of acquisition thereof; and
<PAGE>
10
(d) Investments, classified in accordance with GAAP as current
assets of Fox Kids or any of its Subsidiaries, in money market
investment programs registered under the Investment Company Act of
1940, as amended, which are administered by financial institutions
that have the highest rating obtainable from either Moody's or S&P,
and the portfolios of which are limited solely to Investments of the
character and quality described in clauses (a), (b) and (c) of this
definition.
"CBN" has the meaning specified in Preliminary Statement (3) to this
Agreement.
"CBN ACQUISITION" has the meaning specified in Preliminary Statement
(3) to this Agreement.
"CBN PURCHASE AGREEMENT" has the meaning specified in Preliminary
Statement (3) to this Agreement.
"CBN PURCHASE AGREEMENT GUARANTY" means the Guaranty dated as of June
11, 1997 made by TNCL in favor of CBN.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the United States
Environmental Protection Agency.
"CHANGE OF CONTROL" means, at any time:
(a) the TNCL Group shall cease to own and control legally and
beneficially, either directly or indirectly, (i) Voting Interests in
Fox Kids representing at least 30% of the combined voting power of all
of the Voting Interests in Fox Kids (on a fully diluted basis) and
(ii) Equity Interests in Fox Kids representing at least 30% of the
issued and outstanding Equity Interests in Fox Kids (on a fully
diluted basis);
(b) any "person" or "group" (each as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) becomes the "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
(A) Voting Interests in Fox Kids (including through securities
convertible into or exchangeable for such Voting Interests)
representing a percentage of the combined voting power of all of the
Voting Interests in Fox Kids (on a fully diluted basis) that is equal
to or greater than the percentage of such combined voting power
legally and beneficially owned, directly or indirectly, by the TNCL
Group (on a fully diluted basis) or (B) Equity Interests in Fox Kids
representing a percentage of the aggregate Equity Interests in Fox
Kids (on a fully diluted basis) outstanding at such time that is equal
to or greater than the aggregate Equity Interests in Fox Kids legally
and beneficially owned directly or indirectly by the TNCL Group (on a
fully diluted basis) at such time; provided, however, that Haim Saban
and/or one or more of his Affiliates may own (1) Voting Interests in
Fox Kids (including through securities convertible into or
exchangeable for such Voting Interests) representing a percentage of
the combined voting power of all of the Voting Interests in Fox Kids
(on a fully diluted basis) that is equal to (but not greater than) the
percentage of such combined voting power legally and beneficially
owned, directly or indirectly, by the TNCL
<PAGE>
11
Group (on a fully diluted basis) and/or (2) Equity Interests in Fox
Kids representing not more than 55% of the aggregate Equity Interests
in Fox Kids (on a fully diluted basis) outstanding at such time;
(c) (i) the TNCL Group shall cease to have the ability, directly
or indirectly, to elect at least one-half of the members of the board
of directors of Fox Kids or (ii) any "person" or "group" (each as used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than the
TNCL Group otherwise acquires the ability, directly or indirectly, to
elect a majority of the board of directors of Fox Kids;
(d) any Person or two or more Persons acting in concert shall
have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation thereof, will result
in its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence on the management or policies of
Fox Kids, other than the TNCL Group;
(e) with respect to any pledge or other security agreement
covering all or any portion of the Equity Interests that are owned
beneficially and of record by any of the Equity Investors or their
nominees, any secured party or pledgee thereunder shall become the
holder of record of any such shares (except in the case of a
registration of the pledge of such Equity Interests to such secured
party or pledgee solely in its capacity as a pledgee) or shall receive
dividends or other cash or cash equivalent distributions (including,
without limitation, stock repurchases) in respect thereof, or shall
proceed to exercise voting or other consensual rights in respect
thereof (whether by proxy, voting or other similar arrangement or
otherwise), or shall otherwise commence to realize upon such shares;
or
(f) Fox Kids shall cease, directly or indirectly, to own and
control legally and beneficially all of the Equity Interests in each
of the other Borrowers.
"CITIBANK" means Citibank, N.A., a national banking association and an
affiliate of Citicorp Securities and Citicorp USA.
"CITICORP SECURITIES" has the meaning specified in the recital of
parties to this Agreement.
"CITICORP USA" has the meaning specified in the recital of parties to
this Agreement.
"CLASS A COMMON STOCK" has the meaning specified in Preliminary
Statement (5) to this Agreement.
"CLASS B COMMON STOCK" has the meaning specified in Preliminary
Statement (5) to this Agreement.
"COLLATERAL" means all of the "Collateral" referred to in the
Collateral Documents and all of the other property and assets that are or
are intended under the terms of the Collateral Documents to be subject to
Liens in favor of the Administrative Agent for the benefit of the Secured
Parties.
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12
"COLLATERAL DOCUMENTS" means, collectively, the Security Agreement,
the Foreign Subsidiary Pledge Agreements, the Pledge Agreements, the IP
Collateral Assignments--Short Form, the Cash Collateral Account Letters,
the Blocked Account Letters, the Product Laboratory Access Letters and each
of the other agreements that creates or purports to create a Lien in favor
of the Administrative Agent for the benefit of the Secured Parties.
"COMMITMENT" means a Revolving Credit A Commitment, a Revolving Credit
B Commitment or a Term Commitment, as the context may require.
"COMMITMENT FEE" has the meaning specified in Section 2.07(a).
"CONFIDENTIAL INFORMATION" means information that is furnished to the
Administrative Agent or any of the Lenders by or on behalf of any of the
Borrowers that either is conspicuously marked as confidential or that a
reasonable person would believe is confidential or proprietary in nature,
but does not include any such information that (a) is or becomes generally
available to the public (other than as a result of a breach by the
Administrative Agent or such Lender of its confidentiality obligations
under this Agreement) or (b) is or becomes available to the Administrative
Agent or such Lender from a source other than any of the Borrowers that is
not, to the best of the Administrative Agent's or such Lender's knowledge,
acting in violation of a confidentiality agreement with any such Borrower
or otherwise legally prohibited from disclosing such information.
"CONSENT" has the meaning specified in Preliminary Statement (6) to
this Agreement.
"CONSOLIDATED" refers to the consolidation of accounts in accordance
with GAAP.
"CONSOLIDATED CASH TAXES" means, for any period, (a) the aggregate
amount of all payments in respect of income taxes made in cash by Fox Kids
and its Subsidiaries to any applicable Governmental Authority during such
period less (b) the aggregate amount of all cash refunds in respect of
income taxes received by Fox Kids and its Subsidiaries from any applicable
Governmental Authority during such period, after giving effect, to the
extent available, to the application of net operating losses available to
Fox Kids or any such Subsidiary.
"CONSOLIDATED EBITDA" means, for any period, (a) the Consolidated Net
Income of Fox Kids and its Subsidiaries for such period plus (b) the sum of
each of the following expenses that have been deducted from the
determination of the Consolidated Net Income of Fox Kids and its
Subsidiaries for such period: (i) Consolidated Interest Expense for such
period, (ii) all income tax expense (whether federal, state, local, foreign
or otherwise) of Fox Kids and its Subsidiaries for such period, (iii) all
depreciation expense of Fox Kids and its Subsidiaries for such period, (iv)
all amortization expense of Fox Kids and its Subsidiaries (other than any
such amortization expense attributable to programming costs, Participations
and Residuals) for such period and (v) all extraordinary losses deducted in
the determination of the Consolidated Net Income of Fox Kids and its
Subsidiaries for such period less all extraordinary gains added in the
determination of the Consolidated Net Income of Fox Kids and its
Subsidiaries for such period, in each case determined on a Consolidated
basis and in accordance with GAAP for such period.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the sum of (a)
all interest expense (whether paid or accrued) paid or payable on all
Indebtedness of Fox Kids and its Subsidiaries for such
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13
period, determined on a Consolidated basis and in accordance with GAAP for
such period (other than any interest expense attributable to accrued
interest on the FBC Subordinated Notes or the NAHI Subordinated Notes that
is not paid in cash during such period) and (b) the aggregate amount of all
Cash Distributions made by or on behalf of Fox Kids during such period,
including, without limitation, (i) in the case of each of the Borrowers,
(A) interest expense paid or payable during such period in respect of
Indebtedness resulting from Advances and (B) all fees paid pursuant to
Section 2.07(a), (ii) the interest component of all Obligations in respect
of Capitalized Leases, (iii) all capitalized interest on the Programming
Liabilities of the Subsidiaries of Fox Kids, (iv) commissions, discounts
and other fees and charges payable in connection with letters of credit and
(v) the net payment, if any, payable in connection with Hedge Agreements
less the net credit, if any, received in connection with Hedge Agreements.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the net income (or net loss) of such Person and its Subsidiaries
for such period, determined on a Consolidated basis and in accordance with
GAAP for such period.
"CONSOLIDATED NET WORTH" means, at any date of determination, the sum
of (a) the capital stock and additional paid-in capital of Fox Kids and its
Subsidiaries plus (b) retained earnings (or less accumulated deficits) of
Fox Kids and its Subsidiaries, determined on a Consolidated basis and in
accordance with GAAP for such period.
"CONSTITUTIVE DOCUMENTS" means, with respect to any Person, the
certificate of incorporation or registration (including, if applicable,
certificate of change of name), articles of incorporation or association,
memorandum of association, charter, bylaws, partnership agreement, trust
agreement, joint venture agreement, limited liability company operating or
members agreement, joint venture agreement or one or more similar
agreements, instruments or documents constituting the organization or
formation of such Person.
"CONSULTING AGREEMENT" means the Letter Employment Agreement dated
June 11, 1997 between Fox Kids and M.G. "Pat" Robertson, as such agreement
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof, but to the extent permitted under the
terms of the Loan Documents.
"CONSULTING AGREEMENT GUARANTY" means the Guaranty dated as of June
11, 1997 made by TNCL in favor of M.G. "Pat" Robertson, as such guaranty
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"CONTINGENT OBLIGATION" means, with respect to any Person, any
obligation of such Person to guarantee or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, (a) the
direct or indirect guaranty, endorsement (other than for collection or
deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of a
primary obligor, (b) the obligation to make take-or-pay or similar
payments, if required, regardless of nonperformance by any other party or
parties to an agreement or (c) any obligation of such Person, whether or
not contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation
or (B) to
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14
maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor,
(iii) to purchase property, assets, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation
or (iv) otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made (or, if less, the maximum amount of such
primary obligation for which such Person may be liable pursuant to the
terms of the instrument evidencing such Contingent Obligation) or, if not
stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder),
as determined by such Person in good faith.
"CONTRIBUTION AND EXCHANGE AGREEMENT" has the meaning specified in
Preliminary Statement (4) to this Agreement.
"CONVERSION", "CONVERT" and "CONVERTED" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section
2.06 or 2.08.
"COPYRIGHT DOCUMENTATION" means, with respect to any of the items of
Product, all of the applications, registrations, documents and confirmatory
searches and reports that are necessary or that the Administrative Agent
may reasonably deem desirable in order to establish a clear and
unencumbered chain of title to such item of Product in favor of the
Borrower or the Restricted Subsidiary that is purported to own or have an
interest in such item of Product.
"COPYRIGHTS" has the meaning specified in Section 1(h) of the Security
Agreement.
"CURRENT ASSETS" means, with respect to any Person, all assets of such
Person that, in accordance with GAAP, would be classified as current assets
on the balance sheet of a company conducting a business the same as or
similar to that of such Person, after deducting appropriate and adequate
reserves therefrom in accordance with GAAP.
"CURRENT LIABILITIES" means, with respect to any Person, (a) all
Indebtedness of such Person that by its terms is payable on demand or
matures within one year after the date of determination (excluding any
Indebtedness renewable or extendible, at the option of such Person, to a
date more than one year from such date or arising under a revolving credit
or similar agreement that obligates the lender or lenders to extend credit
during a period of more than one year from such date), (b) all amounts of
Funded Indebtedness of such Person required to be paid or prepaid within
one year after such date and (c) all other items (including, without
limitation, taxes accrued as estimated and trade payables otherwise
excluded from Indebtedness under clause (b) of the definition thereof)
that, in accordance with GAAP, would be classified on the balance sheet of
such Person as current liabilities of such Person.
"DECLINING LENDER" has the meaning specified in Section 2.04(c)(i).
"DEFAULT" means any Event of Default or any event or condition that
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
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15
"DEFAULTED ADVANCE" means, with respect to any of the Lenders at any
time, the portion of any Advance required to be made by such Lender to any
of the Borrowers pursuant to Section 2.01 at or prior to such time that has
not been made by such Lender or by the Administrative Agent for the account
of such Lender pursuant to Section 2.02(d) as of such time. If a portion of
a Defaulted Advance shall be deemed made pursuant to Section 2.13(a), the
remaining portion of such Defaulted Advance shall be considered a Defaulted
Advance originally required to be made pursuant to Section 2.01 on the same
date as the Defaulted Advance so deemed made in part.
"DEFAULTED AMOUNT" means, with respect to any of the Lenders at any
time, any amount required to be paid by such Lender to the Administrative
Agent or any of the other Lenders under this Agreement or any of the other
Loan Documents at or prior to such time that has not been so paid as of
such time, including, without limitation, any amount required to be paid by
such Lender to (a) the Administrative Agent pursuant to Section 2.02(d) to
reimburse the Administrative Agent for the amount of any Advance made by
the Administrative Agent for the account of such Lender, (b) any of the
other Lenders pursuant to Section 2.12 to purchase any participation in
Advances owing to such other Lender and (c) the Administrative Agent
pursuant to Section 8.05 to reimburse the Administrative Agent for such
Lender's ratable share of any amount required to be paid by the Lenders to
the Administrative Agent as provided therein. If a portion of a Defaulted
Amount shall be deemed paid pursuant to Section 2.13(b), the remaining
portion of such Defaulted Amount shall be considered a Defaulted Amount
originally required to be paid under this Agreement or any of the other
applicable Loan Documents on the same date as the Defaulted Amount so
deemed paid in part.
"DEFAULTING LENDER" means, at any time, any of the Lenders that, at
such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall
take any action or be the subject of any action or proceeding of a type
described in Section 7.01(f).
"DOMESTIC SUBSIDIARY" means, at any time, any of the direct or
indirect Subsidiaries of Fox Kids (other than any of the other Borrowers)
that is incorporated or organized under the laws of any state of the United
States of America or the District of Columbia.
"ECF PERCENTAGE" means (a) at any date of determination on which the
Performance Level is Performance Level I, Performance Level II, Performance
Level III or Performance Level IV, 0%, (b) at any date of determination on
which the Performance Level is Performance Level V or Performance Level VI,
50% and (c) at any date of determination on which the Performance Level is
Performance Level VII, Performance Level VIII or Performance Level IX, 75%.
"ELIGIBLE ASSIGNEE" means:
(a) a Lender;
(b) an Affiliate of a Lender;
(c) a commercial bank organized under the laws of the United
States of America or any state thereof and having total assets in
excess of $5,000,000,000;
(d) a commercial bank organized under the laws of any country
other than the United States of America that is a member of the OECD
or a political subdivision of any such
<PAGE>
16
country and having total assets in excess of $5,000,000,000, so long
as such bank is acting through a branch or agency located in the
United States of America;
(e) the central bank of any country that is a member of the
OECD;
(f) any finance company, insurance company or other financial
institution or fund (whether a corporation, partnership, trust or
other entity) that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business
and has total assets in excess of $300,000,000; or
(g) any other Person approved by the Administrative Agent and
Fox Kids (in each case such approval not to be unreasonably withheld
or delayed);
provided, however, that, notwithstanding any of the foregoing provisions of
this definition, neither any of the Loan Parties nor any Affiliate of any
of the Loan Parties shall qualify as an Eligible Assignee.
"ENVIRONMENTAL ACTION" means any action, suit, demand, demand letter,
claim, notice of noncompliance or violation, notice of liability or
potential liability, investigation, proceeding, consent order or consent
agreement, abatement order or other order or directive (conditional or
otherwise) relating in any way to any Environmental Law, any Environmental
Permit or any Hazardous Materials or arising from alleged injury or threat
to health, safety, natural resources or the environment, including, without
limitation, (a) by any Governmental Authority for enforcement, cleanup,
removal, response, remedial or other actions or damages and (b) by any
applicable Governmental Authority or other third party for damages,
contribution, indemnification, cost recovery, compensation or injunctive
relief.
"ENVIRONMENTAL LAW" means any Requirement of Law, or any judicial or
agency interpretation, policy, guideline or other requirement of any
Governmental Authority, relating to (a) the generation, use, handling,
transportation, treatment, storage, disposal, release or discharge of
Hazardous Materials, (b) pollution or the protection of the environment,
health, safety or natural resources or (c) occupational safety and health,
industrial hygiene, land use or the protection of human, plant or animal
health or welfare, including CERCLA, the Hazardous Materials Transportation
Act (49 U.S.C. (S) 1801 et seq.), the Resource Conservation and Recovery
Act (42 U.S.C. (S) 6901 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42 U.S.C. (S) 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. (S) 136 et
seq.), the Occupational Safety and Health Act (29 U.S.C. (S) 651 et seq.),
the Oil Pollution Act (33 U.S.C. (S) 2701 et seq.) and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. (S) 11001 et seq.), in
each case as amended from time to time, and including the regulations
promulgated and the rulings issued from time to time thereunder.
"ENVIRONMENTAL PERMIT" means any permit, approval, license,
identification number or other authorization required under any
Environmental Law.
"EQUITY INTERESTS" means, with respect to any Person, all of the
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or other
ownership or profit
<PAGE>
17
interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase
or acquisition from such Person of such shares (or such other interests),
and all of the other ownership or profit interests in such Person
(including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares,
warrants, options, rights or other interests are authorized or otherwise
existing on any date of determination.
"EQUITY INVESTORS" means Haim Saban, Celia Enterprises L.P., a
California limited partnership, Merlot Investments, a California general
partnership, Silverlight Enterprises, L.P., a California limited
partnership, Quartz Enterprises L.P., a California limited partnership, FBC
and FBC Sub and each other Person that directly owns or holds any of the
Equity Interests in Fox Kids (other than any of the Excluded Fox Kids
Equity Interests) at any time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and the rulings
issued from time to time thereunder.
"ERISA AFFILIATE" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of any of the Borrowers, or under
common control with any of the Borrowers, within the meaning of Section 414
of the Internal Revenue Code.
"ERISA EVENT" means:
(a) (i) the occurrence of a reportable event, within the meaning
of Section 4043(c) of ERISA, with respect to any Plan unless the 30-
day notice requirement with respect to such event has been waived by
the PBGC or (ii) the requirements of paragraph (1) of Section 4043(b)
of ERISA are met with respect to a contributing sponsor, as defined in
Section 4001(a)(13) of ERISA, of a Plan, and an event described in
paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
could reasonably be expected to occur with respect to such Plan within
the following 30 days;
(b) the application for a minimum funding waiver with respect to
a Plan;
(c) the provision by the administrator of any Plan of a notice
of intent to terminate such Plan pursuant to Section 4041(a)(2) of
ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA);
(d) the cessation of operations at a facility of any of the
Borrowers or any of the ERISA Affiliates under the circumstances
described in Section 4062(e) of ERISA;
(e) the withdrawal or partial withdrawal by any of the Borrowers
or any of the ERISA Affiliates from a Plan or a Multiemployer Plan;
(f) the conditions for the imposition of a Lien under Section
302(f) of ERISA shall have been met with respect to any Plan;
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18
(g) the adoption of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA;
or
(h) the institution by the PBGC of proceedings to terminate a
Plan pursuant to Section 4042 of ERISA, or the occurrence of any event
or condition described in Section 4042 of ERISA, that constitutes
grounds for the termination of, or the appointment of a trustee to
administer, a Plan.
"EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to each of the
Lenders, the office of such Lender specified as its "Eurodollar Lending
Office" opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became a Lender, as the case may be (or, if
no such office is specified, its Base Rate Lending Office), or such other
office of such Lender as such Lender may from time to time specify to each
of the Appropriate Borrowers and the Administrative Agent for such purpose.
"EURODOLLAR RATE" means, for any Interest Period for all of the
Eurodollar Rate Advances comprising part of the same Borrowing, an interest
rate per annum equal to the rate per annum obtained by dividing (a) the
average (rounded upward to the nearest whole multiple of 1/16 of 1% per
annum, if such average is not such a multiple) of the rate per annum at
which deposits in U.S. dollars are offered by the principal office of each
of the Reference Banks in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period in an amount substantially equal to such
Reference Bank's Eurodollar Rate Advance (or, in the case of Citibank,
Citicorp USA's Eurodollar Rate Advance) comprising part of such Borrowing
to be outstanding during such Interest Period (or, if any Reference Bank
(or, in the case of Citibank, Citicorp USA) shall not have such a
Eurodollar Rate Advance, $1,000,000) and for a period equal to such
Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage for such Interest Period. The Eurodollar Rate for any
Interest Period for each of the Eurodollar Rate Advances comprising part of
the same Borrowing shall be determined by the Administrative Agent on the
basis of applicable rates furnished to and received by the Administrative
Agent from the Reference Banks two Business Days before the first day of
such Interest Period, subject, however, to the provisions of Section
2.06(c).
"EURODOLLAR RATE ADVANCE" means an Advance that bears interest as
provided in Section 2.06(a)(ii).
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for any Interest Period
for all of the Eurodollar Rate Advances comprising part of the same
Borrowing, the reserve percentage applicable two Business Days before the
first day of such Interest Period under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any
successor thereto) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve
System in New York, New York with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to any
other category of liabilities that includes deposits by
<PAGE>
19
reference to which the interest rate on Eurodollar Rate Advances is
determined) having a term equal to such Interest Period.
"EVENTS OF DEFAULT" has the meaning specified in Section 7.01.
"EXCESS CASH FLOW" means, for any period (without duplication):
(a) Consolidated pre-tax income (or pre-tax loss) of Fox Kids
and its Subsidiaries for such period, less
(b) Consolidated income tax expense of Fox Kids and its
Subsidiaries for such period, plus
(c) an amount equal to the aggregate amount of all noncash
charges deducted in determining the Consolidated Net Income of Fox
Kids and its Subsidiaries for such period, plus
(d) an amount (whether positive or negative) equal to the change
in Consolidated Current Liabilities of Fox Kids and its Subsidiaries
during such period, less
(e) an amount equal to the aggregate amount of all noncash
credits included in determining the Consolidated Net Income of Fox
Kids and its Subsidiaries for such period, less
(f) an amount (whether positive or negative) equal to the change
in Consolidated Current Assets (excluding cash and Cash Equivalents)
of Fox Kids and its Subsidiaries during such period, less
(g) to the extent not otherwise excluded from the calculation of
Excess Cash Flow for such period, an amount equal to the net gain, if
any, attributable to the sale, lease, transfer or other disposition of
property and assets of Fox Kids and its Subsidiaries and included in
determining the Consolidated Net Income of Fox Kids and its
Subsidiaries for such period, less
(h) to the extent not otherwise excluded from the calculation of
Excess Cash Flow for such period, an amount equal to all programming
costs of the Subsidiaries of Fox Kids paid in cash during such period,
less
(i) an amount equal to the aggregate amount of all Capital
Expenditures made in cash by Fox Kids and its Subsidiaries during such
period, less
(j) an amount equal to the aggregate amount of all Required
Principal Payments made by Fox Kids and its Subsidiaries during such
period, less
(k) an amount equal to the aggregate amount of all Cash
Distributions paid by Fox Kids during such period.
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20
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder.
"EXCHANGE AGREEMENT" means the Exchange Agreement dated as of August
1, 1997 among NPAL, Liberty Media and Liberty IFE, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof, but to the extent permitted under the terms of the
Loan Documents.
"EXCLUDED FOX KIDS EQUITY INTERESTS" means, collectively, (a) the
shares of Series A Preferred Stock, (b) the shares of Class A Common Stock
owned by Allen & Co. on the Phase I Closing Date and (c) the stock options
owned or otherwise held by the Fox Kids Optionholders on the Phase I
Closing Date, and the shares of Class A Common Stock issuable from time to
time upon the exercise of such stock options, all of which shares of Class
A Common Stock and such stock options do not and will not at any time
represent more than 5% of the outstanding Equity Interests in Fox Kids (on
a fully diluted basis) or more than 5% of the combined voting power of all
of the Voting Interests in Fox Kids (on a fully diluted basis); provided
that the shares of Series A Preferred Stock, the shares of Class A Common
Stock and the stock options of Fox Kids otherwise comprising part of the
Excluded Fox Kids Equity Interests shall cease to be included therein at
such time, if ever, as such shares are acquired by any of the Loan Parties
or any of their respective Subsidiaries.
"EXTRAORDINARY RECEIPT" means any cash received by or paid to or for
the account of any Person other than in the ordinary course of business,
including, without limitation, tax refunds, pension plan reversions,
proceeds of insurance (other than proceeds of business interruption
insurance to the extent such proceeds constitute compensation for lost
earnings), condemnation awards (and payments in lieu thereof), indemnity
payments and payments in respect of judgments or settlements of litigation
or proceedings; provided, however, that Extraordinary Receipts shall not
include cash receipts received from proceeds of insurance, condemnation
awards (or payments in lieu thereof), indemnity payments or payments in
respect of judgments or settlements of litigation or proceedings to the
extent that such proceeds, awards or payments (a) are in respect of loss or
damage to any Capital Asset or reimbursements of liabilities previously
paid by such Person or promptly paid thereafter to any third party that is
not an Affiliate of such Person and (b) are applied (or are in respect of
expenditures that were previously incurred) to replace or repair such
Capital Asset or to reimburse such amounts previously paid or to be paid
promptly to any such third party, in each case in accordance with the terms
of the Loan Documents and so long as such application is commenced within
90 days after the receipt of such proceeds, awards or payments.
"FACILITY" means the Revolving Credit A Facility, the Revolving Credit
B Facility or the Term Facility, as the context may require.
"FAIR MARKET VALUE" means, with respect to any property or assets
(including, without limitation, any of the Equity Interests) of any Person
on any date of determination, the value of the consideration obtainable in
a sale of such property or asset in the open market on such date assuming
an arm's-length sale that has been arranged without duress or compulsion
between a willing seller and a willing and knowledgeable purchaser in a
commercially reasonable manner over a reasonable period of time under all
conditions necessary or desirable for a fair sale (taking into account the
nature and characteristics of such property or asset); provided that the
Fair Market Value of any of the property or assets of any of the Loan
Parties or any of their respective Subsidiaries shall be determined in good
<PAGE>
21
faith by the board of directors (or persons performing similar functions)
of such Loan Party or such Subsidiary, as the case may be, and certified by
a Responsible Officer of such Loan Party or such Subsidiary in a
certificate delivered to the Administrative Agent, on behalf of the
Lenders; and provided, however, that any determination of the Fair Market
Value of any such property (whether real or personal) or asset that is
customarily appraised shall be based upon an appraisal by an independent
qualified appraiser when such property or asset is determined in good faith
by the board of directors (or persons performing similar functions) of such
Loan Party or such Subsidiary to have a Fair Market Value in excess of
$10,000,000.
"FBC" has the meaning specified in Preliminary Statement (5) to this
Agreement.
"FBC SUB" has the meaning specified in Preliminary Statement (5) to
this Agreement.
"FBC SUBORDINATED NOTES" means the subordinated note of Fox Kids due
September 30, 2007 in an aggregate principal amount of $104,573,000 issued
pursuant to the FBC Subordinated Notes Documents, and any note or notes
issued in replacement or substitution therefor.
"FBC SUBORDINATED NOTES DOCUMENTS" means the Subordinated Note
Agreement dated as of July 31, 1997 (as amended by the First Amendment to
Subordinated Note Agreement dated as of September 4, 1997) by and among
FBC, Fox Kids and the Administrative Agent, on behalf of the Secured
Parties, the FBC Subordinated Notes and all other instruments, agreements
or other documents pursuant to which the FBC Subordinated Notes are issued
or otherwise setting forth the terms of the FBC Subordinated Notes, in each
case as such agreement, instrument or other document may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, but to the extent permitted under the terms of the Loan
Documents.
"FCC" means the Federal Communications Commission of the United States
of America or any successor thereto.
"FCN HOLDING" has the meaning specified in the recital of parties to
this Agreement.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York
or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for such day for such transactions received
by the Administrative Agent from three federal funds brokers of recognized
standing selected by it.
"FISCAL QUARTER" means, with respect to Fox Kids or any of its
Subsidiaries, the period commencing July 1 in any Fiscal Year and ending on
the next succeeding September 30, the period commencing October 1 in any
Fiscal Year and ending on the next succeeding December 31, the period
commencing January 1 in any Fiscal Year and ending on the next succeeding
March 31, or the period commencing April 1 in any Fiscal Year and ending on
the next succeeding June 30, as the context may require, or, if any such
Subsidiary was not in existence on the first day of any such period, the
period commencing on the date on which such Subsidiary is incorporated,
organized, formed or otherwise created and ending on the last day of such
period.
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22
"FISCAL YEAR" means, with respect to Fox Kids or any of its
Subsidiaries, the period commencing on July 1 in any calendar year and
ending on the next succeeding June 30 or, if any such Subsidiary was not in
existence on July 1 in any calendar year, the period commencing on the date
on which such Subsidiary is incorporated, organized, formed or otherwise
created and ending on the next succeeding June 30.
"FIXED CHARGE COVERAGE RATIO" means, with respect to Fox Kids and its
Subsidiaries for any Measurement Period, the ratio of (a) Adjusted
Consolidated EBITDA for such period to (b) the sum (without duplication) of
(i) Consolidated Interest Expense for such period, (ii) the amount by which
(A) the aggregate amount of all programming costs of the Subsidiaries of
Fox Kids paid in cash during such period exceeds (B) the aggregate
Programming Amortization during such period, (iii) the aggregate amount of
all Capital Expenditures made by Fox Kids and its Subsidiaries during such
period, (iv) the aggregate amount of all Required Principal Payments made
by Fox Kids and its Subsidiaries during such period and (v) the aggregate
amount of all Cash Distributions made by or on behalf of Fox Kids during
such period.
"FKE HOLDINGS" means Fox Kids Europe Holdings, Inc., a California
corporation and a direct wholly owned Subsidiary of Saban.
"FLEXTECH COMMON STOCK" means the 5,792,008 shares of convertible
redeemable nonvoting common stock of Flextech plc, an English public
limited company, owned by the Surviving Corporation on the Phase II Closing
Date, and the shares of voting common stock of Flextech plc issued upon the
conversion, in whole or in part, thereof.
"FOREIGN CORPORATION" means any Foreign Subsidiary that constitutes a
"controlled foreign corporation" under Section 957 of the Internal Revenue
Code.
"FOREIGN SUBSIDIARY" means, at any time, any of the direct or indirect
Subsidiaries of Fox Kids that is not a Borrower or a Domestic Subsidiary at
such time.
"FOREIGN SUBSIDIARY PLEDGE AGREEMENTS" has the meaning specified in
Section 3.01(i)(x)(G).
"FOX KIDS" has the meaning specified in the recital of parties to this
Agreement.
"FOX KIDS LLC" has the meaning specified in Preliminary Statement (5)
to this Agreement.
"FOX KIDS LLC TRANSFER AGREEMENT" means the Agreement Re Transfer of
LLC Interests dated as of July 31, 1997 by and among Fox Kids, Fox Kids LLC
and FBC.
"FOX KIDS NETWORK" means Fox Kids Network-Europe, Inc., a California
corporation and a direct wholly owned Subsidiary of Saban.
"FOX KIDS OPTIONHOLDERS" means, collectively, Stan Golden, Shuki Levi,
Margaret Loesch and Mel Woods and any permitted transferees thereof.
"FRENCH/FOX KIDS SARL PLEDGE AGREEMENT" has the meaning specified in
Section 3.01(i)(x)(F).
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23
"FRENCH/SABAN SARL PLEDGE AGREEMENT" has the meaning specified in
Section 3.01(i)(x)(G).
"FUNDED INDEBTEDNESS" means, with respect to any Person (without
duplication), Indebtedness in respect of the Advances in the case of the
Borrowers, and all other Indebtedness of such Person that by its terms
matures more than one year after any date of determination or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year after such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
after such date; provided, however, that the term "Funded Indebtedness"
shall not include any Contingent Obligations of such Person (if and to the
extent such Contingent Obligations would otherwise be included in such
term on any date of determination) that are incurred solely to support
Indebtedness of one or more Subsidiaries of such Person to the extent such
Contingent Obligations are otherwise expressly permitted to be incurred
under Section 5.02(b).
"FUNDING AGREEMENT" means the Funding Agreement dated as of June 11,
1997 by and among TNCL, NPAL and Fox Kids, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof, but to the extent permitted under the terms of the
Loan Documents.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States of America and applied on a consistent
basis, subject, however, to the terms of Section 1.03.
"GERMAN PLEDGE AGREEMENT" has the meaning specified in Section
3.01(i)(x)(E).
"GOVERNMENTAL AUTHORITY" means any nation or government, any state,
province, city, municipal entity or other political subdivision thereof,
and any governmental, executive, legislative, judicial, administrative or
regulatory agency, department, authority, instrumentality, commission,
board or similar body, whether federal, state, provincial, territorial,
local or foreign.
"GOVERNMENTAL AUTHORIZATION" means any authorization, approval,
consent, franchise, license, covenant, order, ruling, permit,
certification, exemption, notice, declaration or similar right, undertaking
or other action of, to or by, or any filing, qualification or registration
with, any Governmental Authorization.
"GUARANTEE" has the meaning specified in Section 3.01(i)(xii).
"GUARANTEE SUPPLEMENT" has the meaning specified in Section 8(b) of
the Guarantee.
"GUARANTEED OBLIGATIONS" has the meaning specified in Section 6.01(a).
"HAZARDOUS MATERIALS" means: (a) any chemical, material or substance
at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely
hazardous waste", "acutely hazardous waste", "radioactive waste",
"biohazardous waste", "pollutant", "toxic pollutant", "contaminant",
"restricted hazardous waste", "infectious waste", "toxic substances", or
any other term or expression intended to define, list or classify
substances by reason of properties harmful to health, safety or the indoor
or outdoor
<PAGE>
24
environment (including, without limitation, harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity,
reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of similar
import under any applicable Environmental Laws); (b) any oil, petroleum,
petroleum fraction or petroleum derived substance; (c) any drilling fluids,
produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal
resources; (d) any flammable substances or explosives; (e) any radioactive
materials; (f) any asbestos-containing materials; (g) any urea formaldehyde
foam insulation; (h) any electrical equipment which contains any oil or
dielectric fluid containing polychlorinated biphenyls; (i) any pesticides;
(j) any radon gas; and (k) any other chemical, material or substance
designated, classified or regulated as hazardous or toxic or as a pollutant
or contaminant under any Environmental Law or which could pose a hazard to
health, safety or the environment.
"HEDGE AGREEMENTS" means, collectively, interest rate swap, cap or
collar agreements, interest rate future or option contracts, commodity
future or option contracts, currency swap agreements, currency future or
option contracts and other similar agreements.
"HEDGE BANK" means any Person that is a Lender, in its capacity as a
party to a Bank Hedge Agreement.
"IFE" has the meaning specified in Preliminary Statement (2) to this
Agreement.
"IFE CLASS A COMMON STOCK" has the meaning specified in Preliminary
Statement (3) to this Agreement.
"IFE CLASS B COMMON STOCK" has the meaning specified in Preliminary
Statement (3) to this Agreement.
"INDEBTEDNESS" means, with respect to any Person (without
duplication):
(a) all indebtedness of such Person for borrowed money;
(b) all Obligations of such Person for the deferred purchase
price of property and assets or services (other than trade payables or
other accounts payable incurred in the ordinary course of such
Person's business and not past due for more than 90 days after the
date on which each such trade payable or account payable was created);
(c) all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, or upon which interest
payments are customarily made;
(d) all Obligations of such Person created or arising under any
conditional sale or other title retention agreement with respect to
property or assets acquired by such Person (even though the rights and
remedies of the seller or the lender under such agreement in the event
of default are limited to repossession or sale of such property or
assets);
(e) all Obligations of such Person as lessee under Capitalized
Leases;
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25
(f) all Obligations, contingent or otherwise, of such Person
under acceptance, letter of credit or similar facilities (other than
letters of credit given in support of trade payables incurred in the
ordinary course of such Person's business and with an expiration date
of not more than 90 days after the date on which such letter of credit
was issued);
(g) all Obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any Equity
Interests in such Person or in any other Person valued, in the case of
any Redeemable Preferred Interests, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends
(but excluding (i) any such Obligation arising solely as a result of
the declaration of a dividend (or similar distribution) on any such
Equity Interest of such Person and (ii) in the case of Fox Kids, any
such Obligation in respect of the shares of Permitted Preferred Stock
issued from time to time thereby);
(h) all Obligations of such Person in respect of Hedge
Agreements, take-or-pay agreements or other similar arrangements;
(i) all Obligations of such Person under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-
balance sheet financing if the transaction giving rise to such
Obligation is considered indebtedness for borrowed money for tax
purposes but is classified as an operating lease in accordance with
GAAP;
(j) all Contingent Obligations; and
(k) all Indebtedness referred to in clauses (a) through (j)
above of another Person secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property or assets (including, without
limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of
such Indebtedness, valued, in the case of any such Indebtedness as to
which recourse for the payment thereof is expressly limited to the
property or assets on which such Lien is granted, at the lesser of (i)
the stated or determinable amount of the Indebtedness that is so
secured or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) and (ii) the Fair Market Value of such
property or assets.
The Indebtedness of any Person shall include (i) all Obligations of the
types described in clauses (a) through (k) above of any partnership in
which such Person is a general partner and (ii) all Obligations of the
types described in clauses (a) through (k) above of such Person to the
extent such Person remains legally liable in respect thereof,
notwithstanding that any such Obligation is deemed to be extinguished under
GAAP at any date of determination.
"INDEMNIFIABLE MATTERS" has the meaning specified in Section 9.04(a).
"INDEMNIFIED PARTY" has the meaning specified in Section 9.04(a).
"INFORMATION MEMORANDUM" means the information memorandum dated July
1997 used by the Arranger in connection with the syndication of the
Commitments.
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26
"INITIAL LENDERS" has the meaning specified in the recital of parties
to this Agreement.
"INITIAL PLEDGED INDEBTEDNESS" has the meaning specified in Section
1(c)(iii) of the Security Agreement or Section 1(c) of the Pledge
Agreements, as the context may require.
"INITIAL PLEDGED INTERESTS" has the meaning specified in Section
1(c)(i) of the Security Agreement or Section 1(a) of the Pledge Agreements,
as the context may require.
"INTERCOMPANY NOTES" means the promissory notes, in each case in
substantially the form of Exhibit I-1 hereto, evidencing the intercompany
Indebtedness outstanding from time to time pursuant to Section
5.02(b)(iv)(B).
"INTEREST COVERAGE RATIO" means, with respect to Fox Kids and its
Subsidiaries for any Measurement Period, the ratio of (a) Adjusted
Consolidated EBITDA for such period to (b) Consolidated Interest Expense
for such period.
"INTEREST PERIOD" means, for each of the Eurodollar Rate Advances
comprising part of the same Borrowing, the period commencing on the date of
such Eurodollar Rate Advance or the date of the Conversion of any Base Rate
Advance into such Eurodollar Rate Advance, as the case may be, and ending
on the last day of the period selected by the Borrower requesting such
Borrowing or Conversion pursuant to the provisions below and, thereafter,
each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period selected
by such Borrower pursuant to the provisions set forth below. The duration
of each such Interest Period shall be one, two, three or six months and,
subject to clause (c) of this definition, nine months as the Borrower
requesting such Borrowing or Conversion may, upon notice received by the
Administrative Agent not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the first day of such Interest Period, select;
provided, however, that:
(a) such Borrower may not select any Interest Period with
respect to any Eurodollar Rate Advance comprising part of a Term
Borrowing that ends after any principal repayment installment date for
the Term Facility or any Eurodollar Rate Advance comprising part of a
Revolving Credit Borrowing that ends after any mandatory commitment
reduction date for the related Revolving Credit Facility unless, after
giving effect to such selection, the aggregate principal amount of all
Base Rate Advances and of all Eurodollar Rate Advances having Interest
Periods that end on or prior to such principal repayment installment
date or such mandatory commitment reduction date, as the case may be,
shall be at least equal to the aggregate principal amount of Advances
under the Term Facility or the applicable Revolving Credit Facility,
respectively, due and payable on or prior to such date;
(b) Interest Periods commencing on the same date for Eurodollar
Rate Advances comprising part of the same Borrowing shall be of the
same duration;
(c) the Borrower requesting such Borrowing or Conversion shall
not be entitled to select an Interest Period having a duration of nine
months unless, by 2:00 P.M. (New York City time) on the third Business
Day prior to the first day of such Interest Period, each of the
Appropriate Lenders notifies the Administrative Agent that such
Appropriate Lender will be providing funding for such Borrowing with
such Interest Period (the failure of any
<PAGE>
27
Appropriate Lender to so respond by such time being deemed for all
purposes of this Agreement as an objection by such Appropriate Lender
to the requested duration of such Interest Period); provided that if
any of the Appropriate Lenders objects (or is deemed to have objected)
to the requested duration of such Interest Period, the duration of the
Interest Period for such Borrowing shall be one, two, three or six
months, as specified by such Borrower in the applicable Notice of
Borrowing or Notice of Conversion as the desired alternative to an
Interest Period of nine months therefor;
(d) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would cause
the last day of such Interest Period to occur in the next succeeding
calendar month, the last day of such Interest Period shall occur on
the immediately preceding Business Day; and
(e) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
"INVENTORY" has the meaning specified in Section 1(b) of the Security
Agreement.
"INVESTMENT" means, with respect to any Person, any loan or advance to
such Person, any purchase or other acquisition of Equity Interests in, or
other obligations or other securities of, such Person, any capital
contribution to such Person or any other investment in such Person,
including, without limitation, any arrangement pursuant to which the
investor incurs Indebtedness of the types referred to in clause (j) or (k)
of the definition of "Indebtedness" set forth in this Section 1.01 in
respect of such Person.
"INVESTMENT GRADE PERFORMANCE TEST" means, at any date of
determination, either (a) the non-credit enhanced long term senior
unsecured public debt of Fox Kids shall have a Public Debt Rating in effect
on such date of at least BBB- by S&P and Baa3 by Moody's or (b) the
Performance Level in effect on such date shall not be greater than
Performance Level III; provided, however, that, with respect to clause (a)
of this definition at any such date:
(i) if, as of such date, only one of S&P and Moody's shall have
a Public Debt Rating in effect, the satisfaction of the Investment
Grade Performance Test shall be determined by reference to the
available rating on such date; and
(ii) if, as of such date, both S&P and Moody's shall have a
Public Debt Rating in effect, the satisfaction of the Investment Grade
Performance Test shall be determined by reference to the higher of
such Public Debt Ratings unless the Public Debt Rating of S&P or
Moody's in effect on such date shall differ from the corresponding
Public Debt Rating of Moody's or S&P, respectively, in effect on such
date by at least two levels, in which case the
<PAGE>
28
satisfaction of the Investment Grade Performance Test shall be
determined by reference to the rating of such statistical rating
organization that has the lower of such Public Debt Ratings in effect
on such date and shall be deemed to be the rating of such statistical
rating organization that is one level above such lower Public Debt
Rating.
"IP COLLATERAL ASSIGNMENTS--SHORT FORM" means, collectively, the
Collateral Assignment of Security Interest in Copyrights--Short Form, the
Collateral Assignment of Security Interests in Trademarks--Short Form and
the Collateral Assignments in Patents--Short Form, in each case as referred
to in Section 15(a)(i) of the Security Agreement.
"LENDER INDEMNIFIED COSTS" has the meaning specified in Section 8.05.
"LENDERS" means, collectively, the Initial Lenders and each Person
that becomes a Lender pursuant to Section 9.08.
"LEVERAGE RATIO" means, with respect to Fox Kids and its Subsidiaries
at any date of determination, the ratio of (a) Adjusted Funded Indebtedness
of Fox Kids and its Subsidiaries at such date to (b) Consolidated EBITDA
for the most recently completed Measurement Period prior to such date.
"LIBERTY IFE" has the meaning specified in Preliminary Statement (4)
to this Agreement.
"LIBERTY IFE CONTRIBUTION" has the meaning specified in Preliminary
Statement (4) to this Agreement.
"LIBERTY MEDIA" has the meaning specified in Preliminary Statement (4)
to this Agreement.
"LIEN" means, with respect to any Person, (a) any mortgage, lien
(statutory or other), pledge, hypothecation, security interest, charge or
other preference or encumbrance of any kind (including, without limitation,
any agreement to give any of the foregoing), (b) any sale of accounts
receivable or chattel paper, or any assignment, deposit arrangement or
lease intended as, or having the effect of, security, (c) any easement,
right of way or other encumbrance on title to real property or (d) any
other interest or title of any vendor, lessor, lender or other secured
party to or of such Person under any conditional sale or other title
retention agreement or any Capitalized Lease or upon or with respect to any
property or asset of such Person (including, in the case of Equity
Interests, voting trust agreements and other similar arrangements).
"LOAN DOCUMENTS" means, collectively, (a) for all purposes of this
Agreement (other than Article VI) and the Notes and any amendment,
supplement or other modification hereof or thereof and for all other
purposes other than for purposes of Article VI, the Guarantee, the
Collateral Documents, the Intercompany Notes and the TNCL Group
Subordinated Notes, (i) this Agreement, (ii) the Notes, (iii) the
Guarantee, (iv) the Collateral Documents and (v) each of the other
agreements evidencing any of the Obligations of any of the Loan Parties
secured by the Collateral Documents and (b) for all purposes of Article VI,
the Guarantee, the Collateral Documents, the Intercompany Notes and the
TNCL Group Subordinated Notes, (i) this Agreement, (ii) the Notes, (iii)
the Guarantee, (iv) the Collateral Documents, (v) the Bank Hedge Agreements
and (vi) each of the other agreements evidencing any of the Obligations of
any of the Loan Parties secured by the Collateral Documents,
<PAGE>
29
in each case as amended, supplemented or otherwise modified hereafter from
time to time in accordance with the terms thereof and Section 9.01.
"LOAN PARTIES" means, collectively, each of the Equity Investors, each
of the Borrowers, each of the wholly owned Domestic Subsidiaries on the
date of this Agreement and, after giving effect to the consummation of the
Merger, each of the other Subsidiaries of Fox Kids that is required to
execute and deliver (or that otherwise executes and delivers) a mortgage,
pledge agreement, assignment, floating and fixed debenture or other
security agreement (or other similar document) after the date of this
Agreement pursuant to Section 5.01(q) or a Guarantee Supplement, a Security
Agreement Supplement, one or more IP Collateral Assignments--Short Form or
any other mortgage, security agreement, floating or fixed debenture or
pledge agreement (or other similar document) after the date of this
Agreement pursuant to Section 5.02(k) and each Person that is required to
execute and deliver a Pledge Agreement Supplement after the date of this
Agreement pursuant to Section 5(e)(i)(A) of the Pledge Agreement.
"LOCKBOXES" has the meaning specified in Section 1(e)(v) of the
Security Agreement.
"MANDATORY COMMITMENT REDUCTION AMOUNT" has the meaning specified in
Section 2.04(c)(i).
"MANDATORY COMMITMENT REDUCTION DATE" has the meaning specified in
Section 2.04(c)(i).
"MANDATORY DECLINED AMOUNT" has the meaning specified in Section
2.04(c)(i).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of Fox Kids, IFE and their respective Subsidiaries,
taken as a whole, (b) the rights and remedies of the Administrative Agent
or any of the Lenders under any of the Loan Documents or any of the
Transaction Documents (unless the material adverse effect on any such
rights and remedies, either individually or in the aggregate, would apply
solely to an immaterial portion of the Collateral and could not reasonably
be expected to impair the repayment of the Advances and the payment of all
other amounts owing under or in respect of the Loan Documents in a timely
manner) or (c) the ability of any of the Loan Parties to perform any of
their respective Obligations under any of the Loan Documents or any of the
Transaction Documents to which it is or is to be a party (unless the
material adverse effect on any such ability, either individually or in the
aggregate, would apply solely to the immaterial nonpayment Obligations of
any of the Subsidiaries of Fox Kids (other than any of the other
Borrowers)).
"MATERIAL AGREEMENTS" means, with respect to any Person, each of the
agreements, instruments, contracts or other documents (other than
employment agreements) to which such Person is a party (a) involving
aggregate consideration payable (or reasonably expected to be payable) from
time to time either to such Person individually or to such Person and one
or more of its Subsidiaries of at least $5,000,000, (b) involving aggregate
Obligations payable (or reasonably expected to be payable) from time to
time either by such Person individually or by such Person and one or more
of its Subsidiaries of at least $5,000,000 or (c) that could reasonably be
expected to be material to the business, condition (financial or
otherwise), operations, performance, properties or prospects of such Person
and its Subsidiaries, taken as a whole.
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30
"MEASUREMENT PERIOD" means, at any date of determination, the most
recently completed four consecutive Fiscal Quarters on or immediately prior
to such date or, if less than four consecutive Fiscal Quarters have been
completed since the Phase II Closing Date, the Fiscal Quarters that have
been completed since the Phase II Closing Date; provided, however, that any
calculation of Consolidated EBITDA and Consolidated Interest Expense (other
than the calculation of Consolidated Interest Expense under subclause
(b)(i) of the definition of "Consolidated EBITDA" set forth in this Section
1.01) for the first Measurement Period ending after September 30, 1997
shall be multiplied by four, any calculation of Consolidated EBITDA and
Consolidated Interest Expense (other than the calculation of Consolidated
Interest Expense under subclause (b)(i) of the definition of "Consolidated
EBITDA" set forth in this Section 1.01) for the second Measurement Period
ending after September 30, 1997 shall be multiplied by two and any
calculation of Consolidated EBITDA and Consolidated Interest Expense (other
than the calculation of Consolidated Interest Expense under subclause
(b)(i) of the definition of "Consolidated EBITDA" set forth in this Section
1.01) for the third Measurement Period ending after September 30, 1997
shall be multiplied by 1.33.
"MERGER" has the meaning specified in Preliminary Statement (6) to
this Agreement.
"MERGER AGREEMENT" has the meaning specified in Preliminary Statement
(6) to this Agreement.
"MERGER AGREEMENT GUARANTY" means the Guaranty dated as of June 11,
1997 made by TNCL in favor of IFE, as such guaranty may be amended,
supplemented or otherwise modified from time to time on or prior to the
Phase II Closing Date in accordance with the terms thereof, but to the
extent permitted under the terms of the Loan Documents.
"MERGER CORPORATION" has the meaning specified in the recital of
parties to this Agreement.
"MOODY'S" means Moody's Investors Service, Inc.
"MTM ENTERTAINMENT" means MTM Entertainment, Inc., a Delaware
corporation and an indirect Subsidiary of the Surviving Corporation.
"MULTIEMPLOYER PLAN" means a multiemployer plan (as defined in Section
4001(a)(3) of ERISA) to which any of the Borrowers or any of the ERISA
Affiliates (a) is making or accruing an obligation to make contributions or
(b) has within any of the preceding five plan years made or accrued an
obligation to make contributions and with respect to which any of the
Borrowers or any of the ERISA Affiliates could reasonably be expected to
have liability.
"MULTIPLE EMPLOYER PLAN" means a single employer plan (as defined in
Section 4001(a)(15) of ERISA) that (a) is maintained for employees of any
of the Borrowers or any of the ERISA Affiliates and at least one Person
other than the Borrowers and the ERISA Affiliates or (b) was so maintained
and in respect of which any of the Borrowers or any of the ERISA Affiliates
could reasonably be expected to have liability under Section 4064 or 4069
of ERISA in the event such plan has been or were to be terminated.
"MURDOCH FAMILY" means one or more of (a) K. Rupert Murdoch, his wife,
parents, children or more remote issue, or brothers or sisters or children
or more remote issue of a brother or sister,
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31
(b) any Person directly or indirectly controlled by one or more of the
Persons referred to in clause (a) of this definition or (c) a trust in
which the majority of the trustees are Persons referred to in clause (a) or
(b) of this definition or can be removed or replaced by one or more of the
Persons referred to in clause (a) or (b) of this definition.
"NAHI" means News America Holdings Incorporated, a Delaware
corporation and a wholly owned Subsidiary of TNCL.
"NAHI SUBORDINATED NOTES" means the subordinated note of Fox Kids due
no earlier than September 30, 2007 and issued in an aggregate principal
amount not to exceed $345,513,865 pursuant to the NAHI Subordinated Notes
Documents, which subordinated note shall be in the same form as the FBC
Subordinated Notes, and any note or notes issued in replacement or
substitution therefor.
"NAHI SUBORDINATED NOTES DOCUMENTS" means the Subordinated Note
Agreement dated August 29, 1997 by and among NAHI, Fox Kids and the
Administrative Agent, on behalf of the Secured Parties, the NAHI
Subordinated Notes and all other instruments, agreements or other documents
pursuant to which the NAHI Subordinated Notes are issued or otherwise
setting forth the terms of the NAHI Subordinated Notes, in each case which
agreement, instrument or other document shall be in the same form as the
applicable FBC Subordinated Notes Document and as may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, but to the extent permitted under the terms of the Loan
Documents.
"NCP PERCENTAGE" means (a) at any date of determination on which the
Investment Grade Performance Test is satisfied, 0% with respect to any
sale, lease, transfer or other disposition of any property or asset, 50%
with respect to the incurrence or issuance of any Indebtedness, 0% with
respect to the sale or issuance of any Equity Interests in any Person by
such Person and 0% with respect to any Extraordinary Receipt received by or
paid to or for the account of any Person and (b) at any date of
determination on which the Investment Grade Performance Test is not
satisfied, 100% with respect to any sale, lease, transfer or other
disposition of any property or asset, the incurrence or issuance of any
Indebtedness, the sale or issuance of any Equity Interests in any Person by
such Person and any Extraordinary Receipt received by or paid to or for the
account of any Person.
"NET CASH PROCEEDS" means, with respect to any sale, lease, transfer
or other disposition of any property or asset, or the incurrence or
issuance of any Indebtedness, or the sale or issuance of any Equity
Interests in any Person, or any Extraordinary Receipt received by or paid
to or for the account of any Person, as the case may be, the aggregate
amount of cash received from time to time (whether as initial consideration
or through payment or disposition of deferred consideration) by or on
behalf of such Person for its own account in connection with any such
transaction, after deducting therefrom only:
(a) reasonable and customary brokerage commissions, underwriting
fees and discounts, legal fees, finder's fees, filing and registration
fees with the Securities and Exchange Commission (or any similar
Governmental Authority or any national or international securities
exchange) and other similar fees and commissions;
(b) the amount of taxes payable in connection with or as a
result of such transaction;
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32
(c) in the case of any sale, lease, transfer or other
disposition of any property or asset, the outstanding principal amount
of, the premium or penalty, if any, on, and any accrued and unpaid
interest on, any Indebtedness (other than the Advances) that is
secured by a Lien on the property and assets subject to such sale,
lease, transfer or other disposition and is required to be repaid
under the terms thereof as a result of such sale, lease, transfer or
other disposition; and
(d) in the case of any sale, lease, transfer or other
disposition of any property or asset, the amount required to be
reserved, in accordance with GAAP as in effect on the date on which
the Net Cash Proceeds from such sale, lease, transfer or other
disposition are determined, and so reserved, against liabilities under
indemnification obligations, liabilities related to environmental
matters or other similar contingent liabilities associated with the
property and assets subject to such sale, lease, transfer or other
disposition that are required to be so provided for under the terms of
the documentation for such sale, lease, transfer or other disposition;
in each case to the extent, but only to the extent, that the amounts so
deducted are properly attributable to such transaction or to the property
or asset that is the subject thereof and (i) in the case of clauses (a) and
(c) of this definition, are actually paid at the time of receipt of such
cash to a Person that is not an Affiliate of such Person or any of the Loan
Parties or of any Affiliate of any of the Loan Parties and (ii) in the case
of clauses (b) and (d) of this definition, are actually paid at the time of
receipt of such cash to a Person that is not an Affiliate of such Person or
any of the Loan Parties or any Affiliate of any of the Loan Parties or, so
long as such Person is not otherwise indemnified therefor, are reserved for
in accordance with GAAP at the time of receipt of such cash based upon such
Person's reasonable estimate of such taxes or contingent liabilities, as
the case may be; provided, however, that if, at the time such taxes or such
contingent liabilities are actually paid or otherwise satisfied, the amount
of the reserve therefor exceeds the amount paid or otherwise satisfied,
then the Borrowers shall reduce the Commitments in accordance with the
terms of Section 2.04(b)(v), and shall prepay the outstanding Advances in
accordance with the terms of Section 2.05(b), in an amount equal to the
amount of such excess reserve.
"NETHERLANDS ANTILLES PLEDGE AGREEMENT" has the meaning specified in
Section 3.01(i)(x)(D).
"NETHERLANDS PLEDGE AGREEMENT" has the meaning specified in Section
3.01(i)(x)(C).
"NEW SUBSIDIARY" has the meaning specified in Section 5.02(k).
"NOTE" means a Revolving Credit A Note, a Revolving Credit B Note or a
Term Note, as the context may require.
"NOTICE OF BORROWING" has the meaning specified in Section 2.02(a).
"NOTICE OF CONVERSION" has the meaning specified in Section 2.08(a).
"NPAL" means News Publishing Australia Limited, a Delaware
corporation.
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33
"NPAL CHARTER AMENDMENT" means the Certificate of Amendment of the
Certificate of Incorporation of NPAL, which, among other things, authorizes
NPAL to issue up to 500,000 shares of NPAL Preferred Stock, par value
$0.001 per share, and describes the designations, voting powers,
preferences and relative, participating, optional and other special rights
of such NPAL Preferred Stock and the qualifications, limitations and
restrictions thereof.
"NPL" means the National Priorities List under CERCLA.
"OBLIGATION" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any
proceeding of the type referred to in Section 7.01(f). Without limiting
the generality of the immediately preceding sentence, the Obligations of
the Loan Parties under or in respect of the Loan Documents include (a) the
obligation to pay principal, interest, commissions, charges, expenses,
fees, attorneys' fees and disbursements, indemnities and other amounts
payable by any of the Loan Parties under or in respect of any of the Loan
Documents and (b) the obligation of any of the Loan Parties to reimburse
any amount in respect of any of the items described above in clause (a) of
this definition that the Administrative Agent or any of the Lenders, in its
sole discretion, may elect to pay or advance on behalf of such Loan Party.
"OECD" means the Organization for Economic Cooperation and
Development.
"OPEN YEAR" means, with respect to any Person, any year for which
United States federal income tax returns have been filed by or on behalf of
such Person and for which the expiration of the applicable statute of
limitations for assessment, reassessment or collection has not occurred
(whether by reason of extension or otherwise).
"ORIGINAL CREDIT AGREEMENT" has the meaning specified in Preliminary
Statement (1) to this Agreement.
"ORIGINAL FACILITIES" has the meaning ascribed to the term
"Facilities" in the Original Credit Agreement.
"ORIGINAL LENDER" has the meaning specified in Preliminary Statement
(1) to this Agreement.
"OTHER TAXES" has the meaning specified in Section 2.11(b).
"PARTICIPATIONS" means all amounts (other than Residuals) payable to
any Person other than any of the Loan Parties or any of their respective
Affiliates in connection with the development, acquisition, production,
exhibition, syndication, exploitation or distribution of any item of
Product, the payment of which is contingent upon and payable only to the
extent of the receipt by the obligor of revenues from the exhibition,
syndication or exploitation of such item of Product.
"PATENTS" has the meaning specified in Section 1(j) of the Security
Agreement.
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34
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PERFORMANCE LEVEL" means Performance Level I, Performance Level II,
Performance Level III, Performance Level IV, Performance Level V,
Performance Level VI, Performance Level VII, Performance Level VIII or
Performance Level IX, as the context may require. For purposes of
determining the Performance Level at any date of determination:
(a) not more than one decrease in the Performance Level (thereby
resulting in a decrease in the Applicable Margin and the Applicable
Percentage) shall occur in any three-month period; and
(b) no change in the Performance Level shall be effective until
five Business Days after the date on which the Administrative Agent
receives Consolidated financial statements of Fox Kids and its
Subsidiaries pursuant to (and satisfying all of the requirements of)
Section 5.03(b) or 5.03(c) reflecting such change and the related
certificate pursuant to Section 5.03(d); provided, however, that, if
the Borrowers have not submitted to the Administrative Agent all of
the information required under this clause (b) within five Business
Days after the date on which such information is otherwise required
under Section 5.03(b) or 5.03(c) and Section 5.03(d), as the case may
be, the Performance Level shall be deemed to be at Performance Level
IX for so long as such information has not been submitted.
"PERFORMANCE LEVEL I" means, at any date of determination, that Fox
Kids and its Subsidiaries shall have maintained a Leverage Ratio of less
than 3.00:1 for the most recently completed Measurement Period prior to
such date.
"PERFORMANCE LEVEL II" means, at any date of determination, that (a)
the Performance Level does not meet the requirements of Performance Level I
and (b) Fox Kids and its Subsidiaries shall have maintained a Leverage
Ratio of less than 3.50:1 for the most recently completed Measurement
Period prior to such date.
"PERFORMANCE LEVEL III" means, at any date of determination, that (a)
the Performance Level does not meet the requirements of Performance Level I
or Performance Level II and (b) Fox Kids and its Subsidiaries shall have
maintained a Leverage Ratio of less than 4.00:1 for the most recently
completed Measurement Period prior to such date.
"PERFORMANCE LEVEL IV" means, at any date of determination, that (a)
the Performance Level does not meet the requirements of Performance Level
I, Performance Level II or Performance Level III and (b) Fox Kids and its
Subsidiaries shall have maintained a Leverage Ratio of less than 4.50:1 for
the most recently completed Measurement Period prior to such date.
"PERFORMANCE LEVEL V" means, at any date of determination, that (a)
the Performance Level does not meet the requirements of Performance Level
I, Performance Level II, Performance Level III or Performance Level IV and
(b) Fox Kids and its Subsidiaries shall have maintained a Leverage Ratio of
less than 5.00:1 for the most recently completed Measurement Period prior
to such date.
"PERFORMANCE LEVEL VI" means, at any date of determination, that (a)
the Performance Level does not meet the requirements of Performance Level
I, Performance Level II, Performance Level
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35
III, Performance Level IV or Performance Level V and (b) Fox Kids and its
Subsidiaries shall have maintained a Leverage Ratio of less than 5.50:1 for
the most recently completed Measurement Period prior to such date.
"PERFORMANCE LEVEL VII" means, at any date of determination, that (a)
the Performance Level does not meet the requirements of Performance Level
I, Performance Level II, Performance Level III, Performance Level IV,
Performance Level V or Performance Level VI and (b) Fox Kids and its
Subsidiaries shall have maintained a Leverage Ratio of less than 6.00:1 for
the most recently completed Measurement Period prior to such date.
"PERFORMANCE LEVEL VIII" means, at any date of determination, that (a)
the Performance Level does not meet the requirements of Performance Level
I, Performance Level II, Performance Level III, Performance Level IV,
Performance Level V, Performance Level VI or Performance Level VII and (b)
Fox Kids and its Subsidiaries shall have maintained a Leverage Ratio of
less than 7.00:1 for the most recently completed Measurement Period prior
to such date.
"PERFORMANCE LEVEL IX" means, at any date of determination, that the
Performance Level does not meet the requirements of Performance Level I,
Performance Level II, Performance Level III, Performance Level IV,
Performance Level V, Performance Level VI, Performance Level VII or
Performance Level VIII.
"PERMITTED AFFILIATE INVESTMENT" means (a) any capital contribution to
Fox Kids made by any of its Affiliates or (b) the Net Cash Proceeds
received by Fox Kids from the issuance and sale of shares of the Permitted
Preferred Stock or one or more Permitted Affiliate Subordinated Notes;
provided that on the date on which any such Permitted Affiliate Investment
is made, Fox Kids shall deliver to the Administrative Agent, on behalf of
the Lenders, a certificate of a Responsible Officer of Fox Kids, certifying
that such capital contribution or the Net Cash Proceeds received by Fox
Kids from such issuance and sale are intended to constitute, and to be used
as, a Permitted Affiliate Investment in accordance with the terms of
Section 5.02(f)(ix).
"PERMITTED AFFILIATE SUBORDINATED NOTES" means one or more notes, in
each case in the form of Exhibit I-2 hereto, issued from time to time by
Fox Kids to any of the existing Equity Investors or any of the other
members of the TNCL Group and having a maturity date that is not earlier
than (and no scheduled or mandatory redemption or repurchase date prior to)
the tenth anniversary of the date of issuance of any such note; provided
that on the date on which each of the Permitted Affiliate Subordinated
Notes is issued, Fox Kids shall deliver to the Administrative Agent, on
behalf of the Lenders, a certificate of a Responsible Officer of Fox Kids,
certifying in reasonable detail the intended use by Fox Kids and/or any of
its Subsidiaries of the proceeds of such issuance.
"PERMITTED ENCUMBRANCES" means easements, rights of way, zoning
restrictions and other encumbrances and minor survey exceptions, minor
title irregularities and other similar minor restrictions on title to, or
the use of, real property that do not, either individually or in the
aggregate, materially and adversely affect the use of such real property
for its intended purposes or the conduct of the business of the Borrowers
and their respective Subsidiaries in the ordinary course and that were not
incurred in connection with and do not secure Indebtedness or other
extensions of credit.
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36
"PERMITTED FILM FINANCING" means, with respect to any of the Special
Purpose Vehicles, financing received by such Special Purpose Vehicle
(whether through the issuance or incurrence of Indebtedness or the issuance
and sale of Equity Interests) from any other Person that is not an
Affiliate thereof or of any of the Loan Parties, the proceeds of which will
be used solely for the acquisition, production, exhibition, syndication,
exploitation or distribution of television films or other programming and
as to which none of the Loan Parties has incurred or will incur any
Indebtedness or other Obligations other than the obligation to pay for any
item of Product of such Special Purpose Vehicle (or any or all of the
rights in such item of Product) that is the subject of such Permitted Film
Financing and is (or which rights are) acquired by any such Loan Party in
the ordinary course of business upon the completion and delivery thereto of
such item of Product.
"PERMITTED LIENS" means the following types of Liens (excluding any
such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA or any such Lien relating to or imposed in
connection with any Environmental Action), in each case as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced:
(a) Liens for taxes, assessments and governmental charges or
levies to the extent not otherwise required to be paid under Section
5.01(b);
(b) Liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's, storage and repairmen's Liens and other similar
Liens arising in the ordinary course of business and securing
obligations (other than Indebtedness for borrowed money) (i) that are
not overdue for a period of more than 60 days or (ii) the amount,
applicability or validity of which are being contested in good faith
and by appropriate proceedings diligently conducted and with respect
to which Fox Kids or any of its Subsidiaries, as the case may be, has
established reserves in accordance with GAAP;
(c) pledges or deposits to secure obligations incurred in the
ordinary course of business under workers' compensation laws,
unemployment insurance or other similar social security legislation
(other than in respect of employee benefit plans subject to ERISA) or
to secure public or statutory obligations;
(d) Liens securing the performance of, or payment in respect of,
bids, tenders, government contracts (other than for the repayment of
borrowed money), surety and appeal bonds and other obligations of a
similar nature incurred in the ordinary course of business;
(e) any interest or title of a lessor or sublessor and any
restriction or encumbrance to which the interest or title of such
lessor or sublessor may be subject that is incurred in the ordinary
course of business and, either individually or when aggregated with
all other Permitted Liens in effect on any date of determination,
could not be reasonably expected to have a Material Adverse Effect;
(f) Liens in favor of customs and revenue authorities arising as
a matter of law or pursuant to a bond to secure payment of customs
duties in connection with the importation of goods;
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37
(g) customary rights of setoff upon deposits of cash in favor of
banks or other depository institutions in which such cash is
maintained in the ordinary course of business;
(h) Liens arising out of judgments or awards that do not
constitute an Event of Default under Section 7.01(g) or 7.01(h) and in
respect of which Fox Kids or any of its Subsidiaries subject thereto
shall be prosecuting an appeal or proceedings for review in good faith
and, pending such appeal or proceedings, shall have secured within ten
days after the entry thereof a subsisting stay of execution and shall
be maintaining reserves, in accordance with GAAP, with respect to any
such judgment or award; and
(i) Permitted Encumbrances.
"PERMITTED PREFERRED STOCK" means Preferred Interests in Fox Kids
issued from time to time to one or more of its Affiliates that have (a) no
dividends required to be paid in cash, and no scheduled or mandatory
redemption or repurchase dates, in whole or in part, prior to the payment
in full in cash of all of the Obligations of the Loan Parties under or in
respect of the Loan Documents and any extension, refinancing or replacement
thereof, and the termination of all commitments to extend credit under any
of the foregoing, (b) no voting rights and (c) no other conditions,
covenants or events of default; provided that on the date on which each of
the shares of Permitted Preferred Stock is issued, Fox Kids shall deliver
to the Administrative Agent, on behalf of the Lenders, a certificate of a
Responsible Officer of Fox Kids, certifying in reasonable detail the
intended use by Fox Kids and/or any of its Subsidiaries of the proceeds of
such issuance.
"PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company, unlimited liability company,
joint stock company, trust, unincorporated association, joint venture or
other entity, or a government or any political subdivision or agency
thereof.
"PHASE I CLOSING DATE" means August 1, 1997, the date on which the
initial borrowing under the Original Credit Agreement occurred following
the satisfaction or waiver of all of the conditions precedent to such
borrowing set forth in Sections 3.01 and 3.03 of the Original Credit
Agreement.
"PHASE II CLOSING DATE" means the date on which the initial Revolving
Credit B Borrowing and/or the initial Term Borrowing occur following
satisfaction of all of the conditions precedent set forth in Sections 3.01
and 3.02.
"PLAN" means a Single Employer Plan and/or a Multiple Employer Plan,
as the context may require.
"PLEDGE AGREEMENT SUPPLEMENT" has the meaning specified in Section
12(b) of the Pledge Agreement signed by the Equity Investors (other than
Haim Saban) on the Phase II Closing Date.
"PLEDGE AGREEMENTS" has the meaning specified in Section 3.01(i)(xi).
"PREFERRED INTERESTS" means, with respect to any Person, Equity
Interests issued by such Person that are entitled to a preference or
priority over any other Equity Interests issued by such Person upon any
distribution of such Person's property and assets, whether by dividend or
upon liquidation.
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38
"PREPRINT MATERIALS" means, with respect to any item of Product, the
original motion picture negative for such item of Product, the optical
soundtrack negative for such item of Product, the magnetic soundtrack
(consisting of separate mixed dialogue and separate mixed music and effects
tracks) for such item of Product and/or such other materials as are
necessary to duplicate such Product (including interpositives, negatives,
duplicate negatives, internegatives, color reversals, intermediates,
lavenders, fine grain master prints and matrices, and all other forms of
preprint materials that may be necessary or useful to produce prints or
other copies or additional preprint materials), whether now known or
hereafter devised.
"PRIMARY OBLIGATION" has the meaning specified in the definition of
"Contingent Obligation" set forth in this Section 1.01.
"PRIMARY OBLIGOR" has the meaning specified in the definition of
"Contingent Obligations" set forth in this Section 1.01.
"PRO RATA SHARE" of any amount means, with respect to any of the
Lenders at any time, the product of (a) a fraction the numerator of which
is the amount of such Lender's Commitment under the applicable Facility or
Facilities at such time and the denominator of which is the aggregate
amount of such Facility or Facilities at such time and (b) such amount.
"PRODUCT" means any feature or nonfeature motion picture, television
program, series, miniseries, pilot, movie-of-the-week, special, animated
cartoon, interactive game, short or other type of recorded audiovisual
production (whether now existing or hereafter created, devised, developed
or acquired) (including, without limitation, the film and television
libraries of the Borrowers and their respective Subsidiaries), whether made
for or distributed in any market, including, without limitation,
theatrical, nontheatrical, television, home video or exhibition in any
other market or medium, whether now existing or hereafter created, devised
or developed and whether produced, recorded, distributed, performed or
exhibited on or by photographic film, videotape, wire, disc, cartridge,
cassette or any other means, methods or devices now existing or hereafter
created, devised or developed and further including, without limitation,
all exposed and developed negative film, soundtracks, positive prints,
cutouts and trims connected with any such Product, whether or not in
completed form or in a state of completion, and all related goods and
physical properties, including, without limitation, exposed film, developed
film, positives, negatives, prints, answer prints, special effects,
Preprint Materials, soundtracks, recordings, audio and video tape and discs
of all types and gauges, cutouts, trims and any and all other physical
properties of every kind and nature relating to any such Product in
whatever state of completion, and all duplicates, drafts, versions,
variations and copies of each thereof, all rights to produce, release,
sell, distribute, lease, perform, market, license, promote, merchandise,
exhibit, broadcast, reproduce, record, publicize or otherwise exploit the
foregoing and all Special Assets and any and all rights therein, in any
manner and in any media whatsoever throughout any territory, including,
without limitation, free, pay, toll, cable, sustaining, subscription,
sponsored and direct satellite broadcast, in theatres, nontheatrically, on
cassettes, cartridges and discs and by any and all other scientific,
mechanical or electronic means, methods, processes or devices now known or
hereafter conceived, devised or created.
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39
"PRODUCT LABORATORY" means any film laboratory or video duplication
facility in which any Preprint Materials, physical elements or properties
of or pertaining to any item of Product owned or controlled by any of the
Borrowers or any of the Restricted Subsidiaries are located.
"PRODUCT LABORATORY ACCESS LETTER" means a letter agreement, in
substantially the form of Exhibit B to the Security Agreement or otherwise
in form and substance reasonably satisfactory to the Administrative Agent,
among a Product Laboratory, the applicable Borrower or the Restricted
Subsidiary and the Administrative Agent, which letter agreement, among
other things, grants the Administrative Agent, upon the occurrence and
during the continuance of a Default under Section 7.01(a) or 7.01(f) or an
Event of Default, the right of access to such item of Product and
subordinates any Lien of such Product Laboratory on the Preprint Materials,
physical elements or properties of or pertaining to any item of Product
maintained or to be maintained thereby to the lien and security interest of
the Administrative Agent, on behalf of the Secured Parties, therein
pursuant to the terms of the Collateral Documents.
"PROGRAMMING AMORTIZATION" means, for any period, that portion of all
of the Programming Rights of the Subsidiaries of Fox Kids that are expensed
on the Consolidated statement of operations of Fox Kids and it Subsidiaries
for such period.
"PROGRAMMING LIABILITIES" means all outstanding Indebtedness of the
type described in clause (b) of the definition of "Indebtedness" set forth
in this Section 1.01 that is incurred by any of the Borrowers or any of
their respective Subsidiaries in the ordinary course of business to
acquire, produce, exhibit, syndicate, exploit, license or distribute
television films or other programming.
"PROGRAMMING RIGHTS" means the rights to distribute, exhibit,
syndicate and exploit television films and other programming acquired by
any of the Subsidiaries of Fox Kids under license agreements and other
similar arrangements for use on the cable networks of the Surviving
Corporation or any of the other Subsidiaries of Fox Kids and for
distribution and relicensing to other Persons, which rights shall include
the costs of programming (including films-in-progress) and allocated
overhead (which shall be capitalized as incurred).
"PUBLIC DEBT RATING" means, at any date of determination, the
statistical rating that has been most recently announced by either S&P or
Moody's for any class of non-credit enhanced long term senior unsecured
public debt issued by Fox Kids. For purposes of the foregoing:
(a) if any rating established by S&P or Moody's shall be
changed, such change shall be effective as of the first date on which
such change is announced publicly by the statistical rating
organization making such change; and
(b) if either S&P or Moody's shall change the basis on which
ratings are established by it, each reference to the Public Debt
Rating announced by S&P or Moody's shall refer to the then equivalent
rating by S&P or Moody's, as the case may be.
"PURCHASE AGREEMENTS" has the meaning specified in Preliminary
Statement (3) to this Agreement.
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"RECEIPT DATE" has the meaning specified in Section 2.04(c)(i).
"RECEIVABLES" has the meaning specified in Section 1(f) of the
Security Agreement.
"REDEEMABLE" means, with respect to any Equity Interest, any
Indebtedness or any other right or Obligation, any such Equity Interest,
Indebtedness, right or Obligation that (a) the issuer has undertaken to
redeem at a fixed or determinable date or dates, whether by operation of a
sinking fund or otherwise, or upon the occurrence of a condition not solely
within the control of the issuer or (b) is redeemable at the option of the
holder.
"REFERENCE BANKS" means (a) during the period from the date of this
Agreement until such time as the Administrative Agent and Fox Kids shall
have agreed upon at least two additional commercial banks that are Lenders
at such time to act as "Reference Banks" hereunder, Citibank and (b) at any
time and from time to time after the Administrative Agent and Fox Kids
shall have agreed upon at least two additional commercial banks that are
Lenders at such time to act as "Reference Banks" hereunder, Citibank and
such additional commercial banks or, in the event that any of such
commercial banks ceases to be a Lender at any time, any other commercial
bank designated by Fox Kids and approved by the Required Lenders as
constituting a "Reference Bank" hereunder.
"REGENT" has the meaning specified in Preliminary Statement (3) to
this Agreement.
"REGENT ACQUISITION" has the meaning specified in Preliminary
Statement (3) to this Agreement.
"REGENT PURCHASE AGREEMENT" has the meaning specified in Preliminary
Statement (3) to this Agreement.
"REGENT PURCHASE AGREEMENT GUARANTY" means the Guaranty dated as of
June 11, 1997 made by TNCL in favor of Regent.
"REGISTER" has the meaning specified in Section 9.08(d).
"REORGANIZATION" has the meaning specified in Preliminary Statement
(5) to this Agreement.
"REORGANIZATION AGREEMENT" means the Amended and Restated Agreement
dated as of August 1, 1997 by and among Fox Kids, Saban, FBC Sub, Allen &
Co., Haim Saban and certain stockholders of Saban prior to the
Reorganization.
"REQUIRED LENDERS" means, at any time, Lenders owed or holding not
less than a majority in interest of the sum of (a) the aggregate principal
amount of all Advances outstanding at such time, (b) the aggregate unused
Commitments under the Term Facility at such time and (c) the aggregate
Unused Revolving Credit Commitments at such time; provided, however, that
if any of the Lenders shall be a Defaulting Lender at such time, there
shall be excluded from the determination of Required Lenders at such time
(i) the aggregate principal amount of all Advances owing to such Defaulting
Lender and outstanding at such time, (ii) the unused portion of the Term
Commitment of such Defaulting Lender at such time and (iii) the aggregate
Unused Revolving Credit Commitments of such Defaulting Lender at such time;
and provided further, however, that if, at any time, there shall be
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41
more than three Lenders and Citicorp USA and/or one or more of its
affiliates shall otherwise comprise the Required Lenders, then,
notwithstanding the foregoing provisions of this definition, the Required
Lenders shall at such time be comprised of at least two Lenders other than
Citicorp USA and/or one or more of its affiliates.
"REQUIRED PRINCIPAL PAYMENTS" means, with respect to any Person for
any period, the sum of all regularly scheduled principal payments or
redemptions and all required prepayments, repurchases, redemptions or
similar acquisitions for value of outstanding Funded Indebtedness made
during such period, but excluding any such payments to the extent
refinanced through the incurrence of additional Indebtedness otherwise
expressly permitted under Section 5.02(b)(iv)(D).
"REQUIREMENTS OF LAW" means, with respect to any Person, all laws,
constitutions, statutes, treaties, ordinances, rules and regulations, all
orders, writs, decrees, injunctions, judgments, determinations or awards of
an arbitrator, a court or any other Governmental Authority, and all
Governmental Authorizations, binding upon or applicable to such Person or
to any of its properties, assets or businesses.
"RESIDUALS" means all amounts payable by any of the Borrowers (other
than Fox Kids) or any of their respective Subsidiaries pursuant to guild
agreements or collective bargaining agreements in connection with the
exhibition, syndication, exploitation or distribution of any item of
Product.
"RESPONSIBLE OFFICER" means, with respect to Fox Kids or any of its
Subsidiaries, the chief executive officer, the president, the chief
financial officer, the principal accounting officer or the treasurer (or
the equivalent of any of the foregoing) or any other officer, partner or
member (or person performing similar functions) of Fox Kids or any such
Subsidiary responsible for overseeing the administration of, or reviewing
compliance with, all or any portion of this Agreement or any of the other
Loan Documents.
"RESTRICTED SUBSIDIARY" means any of the wholly owned Domestic
Subsidiaries or any of the other Subsidiaries of Fox Kids (other than any
of the other Borrowers) that, at the option of Fox Kids, (a) executes and
delivers (i) a Guarantee Supplement and a Security Agreement Supplement
and/or one or more IP Collateral Assignments or (ii) one or more other
mortgages, security agreements, floating or fixed debentures or pledge
agreements (or other similar documents), in each case in form and substance
reasonably satisfactory to the Lenders, in favor of the Administrative
Agent, on behalf of the Secured Parties, securing the Obligations of the
appropriate Loan Parties under and in respect of the Loan Documents and (b)
delivers such other agreements, opinions, certificates and other documents
as the Administrative Agent, or the Required Lenders through the
Administrative Agent, shall reasonably request; provided, however, that
none of the Special Purpose Vehicles shall constitute a Restricted
Subsidiary.
"REVOLVING CREDIT A ADVANCES" has the meaning specified in Section
2.01(a).
"REVOLVING CREDIT A BORROWING" means a borrowing consisting of
simultaneous Revolving Credit A Advances of the same Type made by the
Revolving Credit A Lenders.
"REVOLVING CREDIT A COMMITMENT" means, with respect to any of the
Revolving Credit A Lenders at any time, the amount set forth opposite such
Revolving Credit A Lender's name on
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42
Schedule I hereto under the caption "Revolving Credit A Commitment" or, if
such Revolving Credit A Lender has entered into one or more Assignments and
Acceptances, the amount set forth for such Revolving Credit A Lender in the
Register maintained by the Administrative Agent pursuant to Section 9.08(d)
as such Revolving Credit A Lender's "Revolving Credit A Commitment", as
such amount may be reduced at or prior to such time pursuant to Section
2.04.
"REVOLVING CREDIT A FACILITY" means, at any time, the aggregate
Revolving Credit A Commitments of all of the Revolving Credit A Lenders at
such time.
"REVOLVING CREDIT A LENDER" means, at any time, any of the Lenders
that has a Revolving Credit A Commitment at such time.
"REVOLVING CREDIT A NOTE" means a promissory note of an Appropriate
Borrower payable to the order of any of the Revolving Credit A Lenders, in
substantially the form of Exhibit A-1 hereto, evidencing the aggregate
indebtedness of such Appropriate Borrower to such Revolving Credit A Lender
resulting from the Revolving Credit A Advances made by such Revolving
Credit A Lender.
"REVOLVING CREDIT ADVANCE" means a Revolving Credit A Advance or a
Revolving Credit B Advance, as the context may require.
"REVOLVING CREDIT B ADVANCE" has the meaning specified in Section
2.01(b).
"REVOLVING CREDIT B BORROWING" means a borrowing consisting of
simultaneous Revolving Credit B Advances of the same Type made by the
Revolving Credit B Lenders.
"REVOLVING CREDIT B COMMITMENT" means, with respect to any of the
Revolving Credit B Lenders at any time, the amount set forth opposite such
Revolving Credit B Lender's name on Schedule I hereto under the caption
"Revolving Credit B Commitment" or, if such Revolving Credit B Lender has
entered into one or more Assignments and Acceptances, the amount set forth
for such Revolving Credit B Lender in the Register maintained by the
Administrative Agent pursuant to Section 9.08(d) as such Revolving Credit B
Lender's "Revolving Credit B Commitment", as such amount may be reduced at
or prior to such time pursuant to Section 2.04.
"REVOLVING CREDIT B FACILITY" means, at any time, the aggregate
Revolving Credit B Commitments of all of the Revolving Credit B Lenders at
such time.
"REVOLVING CREDIT B LENDER" means, at any time, any of the Lenders
that has a Revolving Credit B Commitment at such time.
"REVOLVING CREDIT B NOTE" means a promissory note of an Appropriate
Borrower payable to the order of any of the Revolving Credit B Lenders, in
substantially the form of Exhibit A-2 hereto, evidencing the aggregate
indebtedness of such Appropriate Borrower to such Revolving Credit B Lender
resulting from the Revolving Credit B Advances made by such Revolving
Credit B Lender.
"REVOLVING CREDIT BORROWING" means a Revolving Credit A Borrowing or a
Revolving Credit B Borrowing, as the context may require.
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43
"REVOLVING CREDIT FACILITIES" means the Revolving Credit A Facility or
the Revolving Credit B Facility, as the context may require.
"RIGHTS IN PRODUCT" means (a) any right, whether arising under written
contracts or otherwise, to sell, produce, distribute, subdistribute,
exhibit, syndicate, lease, sublease, license, sublicense or otherwise
exploit any item of Product, including rights under so-called "pick up"
arrangements and other contracts and agreements relating to the acquisition
of any item of Product or any interest therein in any market, including the
theatrical, nontheatrical, stage, television (including broadcast, cable
and pay television) and home markets, whether by film, videotape, cassette
cartridge, disc or by any other means, method, process or device now known
or hereafter developed, (b) any right to sell trailer and advertising
accessories relating to any item of Product, (c) any sequel, series,
serial, reissue or re-make rights relating to any item of Product, and (d)
any rights to exploit any element or component of any item of Product or
any ancillary rights relating to any item of Product, including
merchandising and character rights, stage rights, sound track recording
rights and music publishing rights relating to any music embodied in or
written for any item of Product, including the right to grant licenses to
print, perform or mechanically reproduce such music.
"ROBERTSON ACQUISITION" has the meaning specified in Preliminary
Statement (3) to this Agreement.
"ROBERTSON PURCHASE AGREEMENT" has the meaning specified in
Preliminary Statement (3) to this Agreement.
"ROBERTSON PURCHASE AGREEMENT GUARANTY" means the Guaranty dated as of
June 11, 1997 made by TNCL in favor of the Robertson Sellers.
"ROBERTSON SELLERS" has the meaning specified in Preliminary Statement
(3) to this Agreement.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"SABAN" has the meaning specified in the recital of parties to this
Agreement.
"SECURED OBLIGATIONS" has the meaning specified in Section 2 of the
Security Agreement or Section 2 of the Pledge Agreements, as the context
may require.
"SECURED PARTIES" means, collectively, the Agents, the Lenders, the
Hedge Banks and the other Persons, if any, the Obligations owing to which
are or are purported to be secured by the Collateral under the terms of the
Collateral Documents.
"SECURITY AGREEMENT" has the meaning specified in Section 3.01(i)(ix).
"SECURITY AGREEMENT SUPPLEMENT" has the meaning specified in Section
22(b) of the Security Agreement.
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44
"SERIES A CERTIFICATE OF DESIGNATION" means the Certificate of
Designation of the Series A Preferred Stock, which describes the
designation and amount thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of
such series and the qualifications, limitations and restrictions thereof,
as amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof, but to the extent permitted under the
terms of the Loan Documents.
"SERIES A PREFERRED STOCK" has the meaning specified in Preliminary
Statement (4) to this Agreement.
"SINGLE EMPLOYER PLAN" means a single employer plan (as defined in
Section 4001(a)(15) of ERISA) that (a) is maintained for employees of any
of the Borrowers or any of the ERISA Affiliates and no Person other than
the Borrowers and the ERISA Affiliates or (b) was so maintained and in
respect of which any of the Borrowers or any of the ERISA Affiliates could
reasonably be expected to have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on any date
of determination, that, on such date:
(a) the fair value of the property and assets of such Person is
greater than the total amount of liabilities (including, without
limitation, contingent liabilities) of such Person;
(b) the present fair salable value of the property and assets of
such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become
absolute and matured;
(c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay
such debts and liabilities as they mature; and
(d) such Person is not engaged in business or in a transaction,
and is not about to engage in business or in a transaction, for which
such Person's property and assets would constitute an unreasonably
small capital.
The amount of contingent and unliquidated liabilities at any time shall be
computed as the amount that, in the light of all of the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability. In
addition, unmatured Obligations of any Person under any executory contract
(including, without limitation, leases) shall, subject to the limitations
set forth in the immediately preceding sentence, be considered a "net
liability" to the extent that, at any date of determination, the Fair
Market Value of the consideration to be received by such Person pursuant to
such executory contract is less than the Fair Market Value of the
consideration to be given by such Person pursuant to such executory
contract and shall be considered a "net asset" to the extent that, at any
date of determination, the Fair Market Value of the consideration to be
received by such Person pursuant to such executory contract is greater than
the Fair Market Value of the consideration to be given by such Person
pursuant to such executory contract.
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45
"SPECIAL ASSETS" means rights of every kind and nature in and to
literary, trademark, service mark, literary property, personal property,
photograph, name, likeness, character, motion picture, musical, dramatic or
other literary material of any kind or nature upon which, in whole or in
part, any item of Product is or may be based or from which it is or may be
adapted or inspired, or which may be or have been used or included in such
item of Product, including, without limitation, the screenplays therefor
and all other scripts, scenarios, screenplays, bibles, scores, treatments,
novels, outlines, books, play titles, characters, concepts, manuscripts,
music, musical compositions, and sound and related rights and copyrights of
every kind or nature in such literary or music property, in whatever state
of completion, and all drafts, versions and variations thereof, and
merchandising and licensing rights therefor, including, without limitation,
in trademarks.
"SPECIAL PURPOSE VEHICLE" means any Person that is not, and is not
required under the terms of the Loan Documents to be, a Loan Party (a)
which has been organized for the sole purpose of effecting one or more
Permitted Film Financings and acquiring, producing, exhibiting,
syndicating, exploiting or distributing television films and other
programming with the proceeds thereof, (b) which has no property, assets or
liabilities other than those directly acquired or incurred in connection
with such Permitted Film Financings, (c) all of the liabilities and other
Obligations of which are nonrecourse for the payment or performance thereof
to any other Person (including, without limitation, any of the Loan
Parties) and (d) the legal structure and capitalization of which has been
approved by the Administrative Agent, such approval not to be unreasonably
withheld or delayed.
"STOCKHOLDERS AGREEMENT" means the Amended and Restated Strategic
Stockholders Agreement dated as of August 1, 1997 by and among Haim Saban,
each of the Persons listed on Schedule A thereto, FBC, FBC Sub and Allen &
Co., as such agreement may be further amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof, but to the
extent permitted under the terms of the Loan Documents.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, joint venture, limited liability company, unlimited liability
company, trust or estate of which (or in which) more than 50% of:
(a) the issued and outstanding shares of capital stock having
ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at the time shares of
capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency);
(b) the interest in the capital or profits of such partnership,
joint venture, limited liability company or unlimited liability
company; or
(c) the beneficial interest in such trust or estate,
is at the time, directly or indirectly, owned or controlled by such Person,
by such Person and one or more of its other Subsidiaries or by one or more
of such Person's other Subsidiaries.
"SUBSTITUTE RATE" has the meaning specified in Section 2.09(e).
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46
"SURVIVING CORPORATION" has the meaning specified in Preliminary
Statement (6) to this Agreement.
"SURVIVING INDEBTEDNESS" has the meaning specified in Section 3.01(f).
"TAXES" has the meaning specified in Section 2.11(a).
"TERM ADVANCE" has the meaning specified in Section 2.01(c).
"TERM BORROWING" means a borrowing consisting of simultaneous Term
Advances of the same Type made by the Term Lenders.
"TERM COMMITMENT" means, with respect to any of the Term Lenders at
any time, the amount set forth opposite such Term Lender's name on Schedule
I hereto under the caption "Term Commitment" or, if such Term Lender has
entered into one or more Assignments and Acceptances, the amount set forth
for such Term Lender in the Register maintained by the Administrative Agent
pursuant to Section 9.08(d) as such Term Lender's "Term Commitment", as
such amount may be reduced at or prior to such time pursuant to Section
2.04.
"TERM FACILITY" means, at any time, the aggregate Term Commitments of
all of the Term Lenders at such time.
"TERM LENDER" means, at any time, any of the Lenders that has a Term
Commitment at such time.
"TERM NOTE" means a promissory note of Fox Kids payable to the order
of any of the Term Lenders, in substantially the form of Exhibit A-3
hereto, evidencing the indebtedness of Fox Kids to such Term Lender
resulting from the Term Advance made by such Term Lender.
"TERMINATION DATE" means (a) with respect to the Revolving Credit A
Facility and the Revolving Credit B Facility, the earlier of (i) September
29, 2004 and (ii) the date of termination in whole of the Revolving Credit
Commitments pursuant to Section 2.04 or 7.01 and (b) with respect to the
Term Facility, the earlier of (i) September 29, 2006 and (ii) the date of
termination in whole of the Commitments pursuant to Section 2.04 or 7.01.
"TERMINATION TO A&A AGREEMENT" means the Termination to Assignment and
Assumption Agreement dated as of June 11, 1997 by and between CBN and
Regent.
"TERMINATION TO SHAREHOLDER AGREEMENT" means the Termination to
Shareholder Agreement dated as of June 11, 1997 by and among M.G. "Pat"
Robertson, individually and as trustee of the Robertson Charitable
Remainder Unitrust, u/t/a dated January 22, 1990, and Timothy B. Robertson,
individually and as trustee of the Timothy and Lisa Robertson Children's
Trust, u/t/a dated September 18, 1995, CBN, Liberty IFE and IFE.
"TNCL" means The News Corporation Limited, a corporation organized and
existing under the laws of South Australia, Australia.
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47
"TNCL GROUP" means TNCL and its Subsidiaries; provided that, for
purposes of this definition, the Subsidiaries of TNCL shall also include
Twentieth Holdings Corporation and its Subsidiaries and any other Person in
which more than a majority in interest of the combined voting power of all
of the Voting Interests in such Person (on a fully diluted basis) are owned
directly or indirectly by the Murdoch Family.
"TNCL GROUP SUBORDINATED NOTES" means, collectively, the FBC
Subordinated Notes, the NAHI Subordinated Notes and the Permitted Affiliate
Subordinated Notes.
"TNCL GROUP SUBORDINATED NOTES DOCUMENTS" means, collectively, the FBC
Subordinated Notes Documents, the NAHI Subordinated Notes Documents and the
Permitted Affiliate Subordinated Notes.
"TRADEMARKS" has the meaning specified in Section 1(i) of the Security
Agreement.
"TRANSACTION" means, collectively, (a) the consummation of the
Acquisitions, the Merger and the Reorganization, (b) the issuance and sale
of the shares of Series A Preferred Stock and the other Equity Interests in
Fox Kids in connection with the Acquisitions and the Reorganization, (c)
the issuance of each of the FBC Subordinated Note and the NAHI Subordinated
Note in connection with the Reorganization, the Merger and the refinancing
of certain Indebtedness of Fox Kids LLC to FBC outstanding on the Phase I
Closing Date, (d) the entering into by Fox Kids and certain of its
Subsidiaries of the Loan Documents and the Transaction Documents to which
they are or are intended to be a party, (e) the refinancing of certain
outstanding Indebtedness of Saban and IFE and the termination of all
commitments thereunder and (f) the payment of the fees and expenses
incurred in connection with the consummation of the foregoing.
"TRANSACTION DOCUMENTS" means (a) the Purchase Agreements, the
Robertson Purchase Agreement Guaranty, the CBN Purchase Agreement Guaranty,
the Regent Purchase Agreement Guaranty, the Contribution and Exchange
Agreement, the Reorganization Agreement, the Fox Kids LLC Transfer
Agreement, the Merger Agreement, the Merger Agreement Guaranty, the
Consent, the Exchange Agreement, the Funding Agreement, the NPAL Charter
Amendment, the Termination to A&A Agreement, the Termination to Shareholder
Agreement, the Waiver, the Stockholders Agreement and each of the other
instruments, agreements or documents (other than correspondence) setting
forth the terms of or otherwise relating to the Acquisitions, the Merger or
the Reorganization and (b) except for purposes of Sections 5.01(k) and
5.02(o), the Series A Certificate of Designation, the FBC Subordinated
Notes Documents and the NAHI Subordinated Notes Documents.
"T.V.10" means T.V.10 B.V., a Netherlands limited company and an
indirect Subsidiary of Saban.
"TYPE" refers to the distinction between Advances bearing interest at
the Base Rate and Advances bearing interest at the Eurodollar Rate.
"U.K./FKE PLEDGE AGREEMENT" has the meaning specified in Section
3.01(i)(x)(B).
"U.K./SABAN U.K. PLEDGE AGREEMENT" has the meaning specified in
Section 3.01(i)(x)(A).
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48
"UNUSED REVOLVING CREDIT A COMMITMENT" means, with respect to any of
the Revolving Credit A Lenders at any time, (a) such Lender's Revolving
Credit A Commitment at such time less (b) the aggregate principal amount of
all Revolving Credit A Advances made by such Revolving Credit A Lender and
outstanding at such time.
"UNUSED REVOLVING CREDIT B COMMITMENT" means, with respect to any of
the Revolving Credit B Lenders at any time, (a) such Lender's Revolving
Credit B Commitment at such time less (b) the aggregate principal amount of
all Revolving Credit B Advances made by such Revolving Credit B Lender and
outstanding at such time.
"UNUSED REVOLVING CREDIT COMMITMENTS" means, at any time, the Unused
Revolving Credit A Commitments and the Unused Revolving Credit B
Commitments at such time.
"UNRESTRICTED SUBSIDIARY" means, at any time, any of the Subsidiaries
of Fox Kids that does not constitute a Borrower or a Restricted Subsidiary
at such time; provided, however, that none of the Special Purpose Vehicles
shall constitute an Unrestricted Subsidiary.
"VOTING EQUITY INTERESTS" has the meaning specified in Section
5.02(k)(v).
"VOTING INTERESTS" means shares of capital stock issued by a
corporation, or equivalent Equity Interests in any other Person, the
holders of which are ordinarily, in the absence of contingencies, entitled
to vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been suspended
by the happening of such a contingency.
"WAIVER" means the Waiver dated as of June 11, 1997 by each of Liberty
IFE and CBN to the Amended and Restated Shareholder Agreement dated as of
September 1, 1995 among M.G. "Pat" Robertson, individually and as trustee
of each of the Robertson Charitable Remainder Unitrust, u/t/a dated January
22, 1990, and Timothy B. Robertson, individually and as trustee of each of
the Timothy and Lisa Robertson Children's Trust, u/t/a dated September 18,
1995, CBN, Liberty IFE and IFE.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including", the word "through" means "through
and including" and the words "to" and "until" each mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
----------------
specifically defined herein shall be construed in accordance with GAAP;
provided, however, that, if any changes in accounting principles from those used
in the preparation of the Consolidated financial statements of Fox Kids and its
Subsidiaries for the Fiscal Quarter ending September 30, 1997 that are delivered
to the Lenders pursuant to Section 5.03(b) occur by reason of the promulgation
of rules, regulations, pronouncements, opinions or other requirements of the
Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar functions)
and such changes would affect (or would result in a change in the method of
calculation of) any of the covenants set forth in Section 5.02 or 5.04 or any of
the defined terms related thereto contained in Section 1.01, then Fox Kids shall
enter into negotiations in good faith with the Administrative Agent and the
Lenders, if and to the extent necessary, to amend in accordance with
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49
Section 9.01 all such covenants or terms as would be affected by such changes in
GAAP in such a manner as would maintain the economic terms of such covenants as
in effect under this Agreement prior to giving effect to the occurrence of any
such changes; and provided further, however, that, until the amendment of the
covenants and the defined terms referred to in the immediately preceding proviso
becomes effective, all covenants and defined terms shall be performed, observed
and determined, and any determination of compliance with any such covenant shall
be made, as though no such changes in accounting principles had been made.
SECTION 1.04. Currency Equivalents Generally. Any amount specified in
------------------------------
this Agreement (other than in Articles II, VIII and IX) or any of the other Loan
Documents to be in U.S. dollars shall also include the equivalent of such amount
in any currency other than U.S. dollars, such equivalent amount to be determined
at the rate of exchange quoted by Citibank in New York, New York, at the close
of business on the Business Day immediately preceding any date of determination
thereof, to prime banks in New York, New York for the spot purchase in the New
York foreign exchange market of such amount in U.S. dollars with such other
currency.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances. (a) The Revolving Credit A Advances.
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Each of the Revolving Credit A Lenders severally agrees, on the terms and
conditions hereinafter set forth, to make advances (together with the
Acquisitions Advances, the "REVOLVING CREDIT A ADVANCES") in U.S. dollars to the
Borrowers from time to time on any Business Day during the period from the date
of this Agreement until the Termination Date, in each case in an amount not to
exceed the Unused Revolving Credit A Commitment of such Revolving Credit A
Lender at such time. Each of the Revolving Credit A Borrowings shall be in an
aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess
thereof (or, if less, the amount of the aggregate Unused Revolving Credit A
Commitments at such time). Each of the Revolving Credit A Borrowings shall
consist of Revolving Credit A Advances made simultaneously by the Revolving
Credit A Lenders in accordance with their respective Pro Rata Shares of the
Revolving Credit A Facility. Within the limits of the Unused Revolving Credit A
Commitments of each of the Revolving Credit A Lenders in effect from time to
time and subject to the next succeeding sentence, each of the Borrowers may
borrow under this Section 2.01(a), prepay pursuant to Section 2.05(a) and
reborrow under this Section 2.01(a). Notwithstanding any of the other provisions
of this Agreement, Fox Kids may only borrow under this Section 2.01(a) on the
Phase II Closing Date, and then only to the extent necessary to finance in part
the Merger and to pay fees and expenses incurred in connection with the
consummation of the Transaction (although Fox Kids shall be and remain the
Borrower of the Acquisition Advance made to it on the Phase I Closing Date).
(b) The Revolving Credit B Advances. Each of the Revolving Credit B
-------------------------------
Lenders severally agrees, on the terms and conditions hereinafter set forth, to
make advances (each a "REVOLVING CREDIT B ADVANCE") in U.S. dollars to the
Borrowers from time to time on any Business Day during the period from the date
of this Agreement until the Termination Date in an amount for each such Advance
not to exceed the Unused Revolving Credit B Commitment of such Revolving Credit
B Lender at such time. Each of the Revolving Credit B Borrowings shall be in an
aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess
thereof (or, if less, the amount of the aggregate Unused Revolving Credit B
Commitments). Each of the Revolving Credit B Borrowings shall consist of
Revolving Credit B Advances
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50
made simultaneously by the Revolving Credit B Lenders in accordance with their
respective Pro Rata Shares of the Revolving Credit B Facility. Within the limits
of the Unused Revolving Credit B Commitment of each of the Revolving Credit B
Lenders in effect from time to time and subject to the next succeeding sentence,
each of the Borrowers may borrow under this Section 2.01(b), prepay pursuant to
Section 2.05(a) and reborrow under this Section 2.01(b). Notwithstanding any of
the other provisions of this Agreement, Fox Kids may only borrow under this
Section 2.01(b) on the Phase II Closing Date, and then only to the extent
necessary to finance in part the Merger and to pay fees and expenses incurred in
connection with the consummation of the Transaction.
(c) The Term Advances. Each of the Term Lenders severally agrees, on
-----------------
the terms and conditions hereinafter set forth, to make a single advance (a
"TERM ADVANCE") in U.S. dollars to Fox Kids on any Business Day during the
period from the date of this Agreement until November 30, 1997 in an amount not
to exceed the Term Commitment of such Term Lender at such time. The Term
Borrowing shall consist of Term Advances made simultaneously by the Term Lenders
in accordance with their respective Pro Rata Shares of the Term Facility.
Amounts borrowed under this Section 2.01(c) and repaid or prepaid may not be
reborrowed.
SECTION 2.02. Making the Advances. (a) Notices of Borrowing. Each
------------------- --------------------
of the Borrowings shall be made on notice, given not later than 11:00 A.M. (New
York City time) on the third Business Day prior to the date of the proposed
Borrowing in the case of a Borrowing comprised of Eurodollar Rate Advances or on
the first Business Day prior to the date of the proposed Borrowing in the case
of a Borrowing comprised of Base Rate Advances by an Appropriate Borrower to the
Administrative Agent, which shall give prompt notice thereof to each of the
Appropriate Lenders by telex or telecopier. Each notice of a Borrowing (a
"NOTICE OF BORROWING") shall be delivered by telephone, confirmed immediately in
writing, or by telex or telecopier, in substantially the form of Exhibit B-1
hereto, shall be duly executed by a Responsible Officer of such Appropriate
Borrower, and shall specify therein:
(i) the requested date of such Borrowing (which shall be a Business
Day);
(ii) the Facility under which such Borrowing is requested to be made;
(iii) the Type of Advances requested to comprise such Borrowing;
(iv) the requested aggregate amount of such Borrowing; and
(v) in the case of a Borrowing comprised of Eurodollar Rate
Advances, the requested duration of the initial Interest Period for each
such Advance (and, if the requested duration of such initial Interest
Period is specified to be nine months, the desired alternative Interest
Period for each such Eurodollar Rate Advance).
Each of the Appropriate Lenders shall, before 1:00 P.M. (New York City time) on
the date of each Borrowing, make available for the account of its Applicable
Lending Office to the Administrative Agent at the Administrative Agent's
Account, in same day funds, such Lender's Pro Rata Share of such Borrowing.
After the Administrative Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article III, the Administrative Agent
will make such funds available to the Borrower that requested such Borrowing by
crediting the Appropriate Borrower's Account (or, in the case of each of the
Borrowings to be
<PAGE>
51
made on the Phase II Closing Date, such other account as is agreed in writing
between the Appropriate Borrowers and the Administrative Agent).
(b) Limitations on Borrowings. Anything in Section 2.02(a) to the
-------------------------
contrary notwithstanding, none of the Borrowers may select (i) Eurodollar Rate
Advances for any Borrowing if the aggregate amount of such Borrowing is less
than $5,000,000 or if the obligation of the Appropriate Lenders to make
Eurodollar Rate Advances shall then be suspended pursuant to Section 2.08 or
2.09 or (ii) Interest Periods for Eurodollar Rate Advances comprising part of
any Borrowing that have a duration of more than one month during the period from
the date of this Agreement to September 30, 1997 (or such earlier date as shall
be specified by the Arranger in its sole discretion in a written notice to Fox
Kids and each of the Lenders). In addition, the Revolving Credit A Advances may
not be outstanding as part of more than eight separate Revolving Credit A
Borrowings, the Revolving Credit B Advances may not be outstanding as part of
more than eight separate Revolving Credit B Borrowings and the Term Advances may
not be outstanding as part of more than eight separate Term Borrowings.
(c) Binding Effect of Notices of Borrowing. Each Notice of Borrowing
--------------------------------------
shall be irrevocable and binding on the Borrower that requested such Borrowing.
In the case of any Borrowing that the related Notice of Borrowing specifies is
to be comprised of Eurodollar Rate Advances, the Borrower that requested such
Borrowing shall indemnify each of the Appropriate Lenders against any loss, cost
or expense incurred by such Lender as a result of any failure to fulfill on or
before the date specified in the Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss (including loss of anticipated profits other than any amount
attributable solely to the Applicable Margin), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund the Advance to be made by such Lender as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.
(d) Assumption of Administrative Agent. Unless the Administrative
----------------------------------
Agent shall have received notice from an Appropriate Lender prior to the date of
any Borrowing under a Facility under which such Lender has a Commitment that
such Lender will not make available to the Administrative Agent such Lender's
Pro Rata Share of such Borrowing, the Administrative Agent may assume that such
Lender has made such Pro Rata Share available to the Administrative Agent on the
date of such Borrowing in accordance with subsection (a) of this Section 2.02
and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower that requested such Borrowing on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such Pro Rata Share available to the Administrative Agent, such Lender and
the Borrower that requested such Borrowing severally agree to repay or to pay to
the Administrative Agent forthwith on demand such corresponding amount, together
with interest thereon, for each day from the date such amount is made available
to such Borrower until the date such amount is repaid or paid to the
Administrative Agent, at (i) in the case of such Borrower, the interest rate
applicable at such time under Section 2.06 to Advances comprising part of such
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall pay to the Administrative Agent such corresponding amount, such
amount so paid shall constitute such Lender's Advance as part of such Borrowing
for all purposes under this Agreement.
(e) Failure to Make Advances. The failure of any Lender to make the
------------------------
Advance to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its Advance on the date of
such Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on the date of any
Borrowing.
<PAGE>
52
SECTION 2.03. Repayment of Advances. (a) Revolving Credit A
--------------------- ------------------
Advances. Each of the Borrowers shall repay to the Administrative Agent for the
- --------
ratable account of the Revolving Credit A Lenders on the Termination Date the
aggregate principal amount of all of the Revolving Credit A Advances made to
such Borrower and outstanding on such date.
(b) Revolving Credit B Advances. Each of the Borrowers shall repay
---------------------------
to the Administrative Agent for the ratable account of the Revolving Credit B
Lenders on the Termination Date the aggregate principal amount of all of the
Revolving Credit B Advances made to such Borrower and outstanding on such date.
(c) Term Advances. Fox Kids shall repay to the Administrative Agent
-------------
for the ratable account of the Term Lenders the aggregate principal amount of
the Term Advances outstanding on the second Business Day prior to the last day
of each December, March, June and September (i) during the period commencing
December 30, 1997 through September 29, 2004, in an amount equal to $875,000 and
(ii) during the period commencing on December 30, 2004 through September 29,
2006, in an amount equal to $40,687,500 (in each case which amounts shall be
reduced as a result of the application of prepayments in accordance with the
order of priority set forth in Section 2.05); provided, however, that,
notwithstanding the foregoing provisions of this Section 2.03(c), the final
principal repayment installment of the Term Advances shall be repaid in full on
the Termination Date and in any event shall be in an amount equal to the
aggregate principal amount of all Term Advances outstanding on such date.
SECTION 2.04. Termination or Reduction of the Commitments. (a)
-------------------------------------------
Optional. The Appropriate Borrowers, upon at least three Business Days' notice
- --------
to the Administrative Agent, may terminate in whole or reduce in part the unused
portion of the Term Commitments or the Unused Revolving Credit Commitments;
provided, however, that each partial reduction of either the Term Facility or
the Revolving Credit Facilities shall be in an aggregate amount of $5,000,000 or
an integral multiple of $1,000,000 in excess thereof or, if less, the aggregate
amount of such Facility or Facilities; and provided further, however, that (i)
any reduction of the Unused Revolving Credit Commitments shall, notwithstanding
any notice to the contrary delivered by the Appropriate Borrowers, be applied
ratably to the permanent reduction of both the Unused Revolving Credit A
Commitments and the Unused Revolving Credit B Commitments and (ii) neither the
Unused Revolving Credit A Commitments nor the Unused Revolving Credit B
Commitments may be terminated in whole without a concurrent termination of the
Unused Revolving Credit B Commitments or the Unused Revolving Credit A
Commitments, respectively. Each reduction of the unused portions of the Term
Commitments pursuant to this Section 2.04(a) shall be applied to the Term
Facility and to the principal repayment installments thereof in inverse order of
maturity. Each reduction of the Unused Revolving Credit Commitments shall be
applied ratably to the Unused Revolving Credit A Commitments and the Unused
Revolving Credit B Commitments, and, in each case, to the mandatory commitment
reduction installments thereof on a pro rata basis.
(b) Mandatory. (i) On the date of the initial Term Borrowing, after
---------
giving effect to such Term Borrowing, and from time to time thereafter upon each
repayment or prepayment of the Term Advances, the Term Facility shall be
automatically and permanently reduced by an amount equal to the amount by which
the Term Facility immediately prior to such reduction exceeds the aggregate
unpaid principal amount of the Term Advances outstanding at such time.
(ii) If the Phase II Closing Date has not occurred on or prior to
November 30, 1997, (A) the Term Facility and the Revolving Credit B Facility
shall, without any further action by or notice to or from
<PAGE>
53
any of the Borrowers, be terminated in whole on such date and (B) the Revolving
Credit A Facility shall, without any further action by or notice to or from any
of the Borrowers, be terminated in whole on June 29, 1998.
(iii) The Revolving Credit Facilities shall be automatically and
permanently reduced, on a pro rata basis, on the following dates in the amounts
set forth opposite such dates (after giving effect to all reductions in such
amounts on or prior to any such date as a result of the application of
commitment reductions in accordance with the order of priority set forth in
subsection (a) of this Section 2.04 or clause (iv) or (v) of this Section
2.04(b)):
<TABLE>
<CAPTION>
DATE AMOUNT
---- ------
<S> <C>
December 28, 2000 $37,500,000
March 29, 2001 37,500,000
June 28, 2001 37,500,000
September 27, 2001 37,500,000
December 28, 2001 50,000,000
March 28, 2002 50,000,000
June 27, 2002 50,000,000
September 27, 2002 50,000,000
December 30, 2002 62,500,000
March 29, 2003 62,500,000
June 27, 2003 62,500,000
September 29, 2003 62,500,000
December 30, 2003 75,000,000
March 30, 2004 75,000,000
June 29, 2004 75,000,000
September 29, 2004 75,000,000
</TABLE>
provided, however, that, notwithstanding the foregoing provisions of this clause
(iii), the Commitments of the Appropriate Lenders under the Revolving Credit
Facilities shall be terminated in whole on the Termination Date.
(iv) The Facilities shall be automatically and permanently reduced,
on the tenth day following each date on which Fox Kids delivers to the Lenders
the audited Consolidated financial statements of Fox Kids and its Subsidiaries
referred to in Section 5.03(c) (but in any event within 130 days after the end
of each Fiscal Year), commencing with such audited Consolidated financial
statements for the Fiscal Year ending June 30, 1998, by an amount equal to the
product of (A) the ECF Percentage in effect on the last day of the related
Fiscal Year and (B) the amount of Excess Cash Flow for such Fiscal Year. Each
reduction of the Facilities pursuant to this clause (iv) shall be applied in the
manner set forth in clause (i) of Section 2.04(c).
(v) The Facilities shall be automatically and permanently reduced,
on the date of receipt of the Net Cash Proceeds by Fox Kids or any of its
Subsidiaries from:
<PAGE>
54
(A) the sale, lease, transfer or other disposition of any property or
assets of Fox Kids or any of its Subsidiaries (other than any property or
assets expressly permitted to be sold, leased, transferred or disposed of
under any of clauses (i) through (iv) or subclause (vii)(A) of Section
5.02(e) or, solely to the extent provided therein, clause (v) or (vi) of
Section 5.02(e));
(B) the incurrence or issuance by Fox Kids or any of its Subsidiaries
of any Indebtedness (other than Indebtedness expressly permitted to be
incurred or issued pursuant to subclause (i)(A), (i)(B), (ii), (iii)(E),
(iv)(A) or (iv)(B) of Section 5.02(b) or, to the extent the aggregate
amount of gross proceeds from all Indebtedness of the Borrowers and their
respective Subsidiaries issued or incurred under subclause (iii)(I) of
Section 5.02(b) on or prior to such date does not exceed $20,000,000,
subclause (iii)(I) of Section 5.02(b));
(C) the issuance or sale by Fox Kids or any of its Subsidiaries of
any Equity Interests therein (other than any such issuance or sale of
Equity Interests in Fox Kids or any of its Subsidiaries pursuant to
subclause (i)(C), (i)(D), (i)(E), (ii), (iv), (v) or (vi) of Section
5.02(g)); and
(D) any Extraordinary Receipt received by or paid to or for the
account of Fox Kids or any of its Subsidiaries and not otherwise included
in subclause (v)(A), (v)(B) or (v)(C) of this Section 2.04(b),
by an amount equal to the product of (1) the NCP Percentage in effect on the
date of receipt of such Net Cash Proceeds and (2) the amount of such Net Cash
Proceeds. Each reduction of the Facilities pursuant to this clause (v) shall be
applied in the manner set forth in clause (i) of Section 2.04(c).
(c) Application of Commitment Reductions. (i) Each reduction of the
------------------------------------
Facilities pursuant to clause (iv) or (v) of Section 2.04(b) shall be applied
ratably to the Facilities and, in the case of the Term Facility, to the
principal repayment installments thereof in inverse order of maturity until all
such principal repayment installments are terminated in whole, and, in the case
of each of the Revolving Credit Facilities, to the mandatory commitment
reduction installments thereof on a pro rata basis until all such mandatory
commitment reduction installments are terminated in whole; provided, however,
that, after the Phase II Closing Date, any of the Term Lenders, at its option,
may elect not to accept any such commitment reduction (and the corresponding
prepayment thereto pursuant to Section 2.05(b)(i)), in which event the
provisions set forth in the next three succeeding sentences of this clause (i)
shall apply. Promptly upon receipt by the Administrative Agent of the amount of
any Excess Cash Flow pursuant to clause (iv) of Section 2.04(b) or the amount of
any Net Cash Proceeds pursuant to clause (v) of Section 2.04(b) (the date of
each such receipt being a "RECEIPT DATE"), the Administrative Agent shall
deposit the amount of such Excess Cash Flow or such Net Cash Proceeds, as the
case may be, applicable to the reduction of the Term Facility (and available for
the prepayment of the outstanding Term Advances upon such reduction pursuant to
Section 2.05(b)(i)) into the Cash Collateral Account of Fox Kids (in the case of
any such amount of Excess Cash Flow) or the Cash Collateral Account of the
applicable Borrower (in the case of any such amount of Net Cash Proceeds),
pending application of such amount on the related Mandatory Commitment Reduction
Date, and promptly after such Receipt Date, the Administrative Agent shall give
written notice to each of the Term Lenders of (A) the amount of Excess Cash Flow
or Net Cash Proceeds, as the case may be, so prepaid that, pursuant to the terms
of the immediately preceding sentence, is applicable to the reduction of the
Term Facility (and available for the corresponding prepayment of the outstanding
Term Advances pursuant to Section 2.05(b)(i)) (the "MANDATORY COMMITMENT
REDUCTION AMOUNT") and (B) the date on which such commitment reduction shall be
made (the "MANDATORY COMMITMENT REDUCTION DATE"), which date shall be no later
than five Business Days
<PAGE>
55
after the Receipt Date. Any of the Term Lenders that wishes to decline its Pro
Rata Share of such reduction of the Term Facility (and its corresponding
prepayment of the outstanding Term Advances owing to it on the related Mandatory
Commitment Reduction Date) (a "DECLINING LENDER") shall give written notice
thereof to the Administrative Agent not later than 12:00 Noon (New York City
time) on the Business Day immediately preceding the related Mandatory Commitment
Reduction Date. The Administrative Agent shall, not later than 1:00 P.M. (New
York City time) on the related Mandatory Commitment Reduction Date, (1) apply an
amount equal to the aggregate amount so declined by all of the Declining Lenders
(the "MANDATORY DECLINED AMOUNT") to the ratable reduction of the Revolving
Credit Facilities and, in the case of each of the Revolving Credit Facilities,
to the mandatory commitment reduction installments thereof in direct order of
maturity (and shall withdraw a corresponding amount from the applicable Cash
Collateral Account and pay to each of the Revolving Credit Lenders its Pro Rata
Share of such amount for application to the outstanding Revolving Credit
Advances owing thereto) and (2) apply an amount equal to the difference between
(x) the Mandatory Commitment Reduction Amount and (y) the Mandatory Declined
Amount to reduce the Term Commitments of the Term Lenders other than the
Declining Lenders on a pro rata basis and to the principal repayment
installments owing to each such Term Lender in inverse order of maturity (and
shall withdraw a corresponding amount from the applicable Cash Collateral
Account and pay to each of the Term Lenders other than the Declining Lenders its
Pro Rata Share of such amount for application to the outstanding Term Advance
owing thereto).
(ii) Upon each reduction of any Facility pursuant to this Section
2.04 (subject to clause (i) of this Section 2.04(c)), the Commitment of each of
the Appropriate Lenders under such Facility shall be reduced by such Lender's
Pro Rata Share of the amount by which such Facility is reduced. If either of the
Revolving Credit Facilities shall be terminated in whole at any time prior to
the Termination Date, all commitment reductions that would have been applied to
such Revolving Credit Facility and to the mandatory commitment reduction
installments thereof pursuant to this Section 2.04 shall instead be applied to
the other Revolving Credit Facility and to the mandatory commitment reduction
installments thereof.
SECTION 2.05. Prepayments. (a) Optional. Each of the Appropriate
----------- --------
Borrowers may, upon at least three Business Days' notice to the Administrative
Agent stating the Facility under which Advances are proposed to be prepaid and
the proposed date and aggregate principal amount of the prepayment, and if such
notice is given such Borrower shall, prepay the aggregate principal amount of
Advances comprising part of the same Borrowing and outstanding on such date, in
whole or ratably in part; provided, however, that (i) each partial prepayment
shall be in an aggregate principal amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof and (ii) in the case of any such prepayment of a
Eurodollar Rate Advance on a date other than the last day of an Interest Period
therefor, the Borrower making such prepayment shall also pay any amounts owing
in respect of such Eurodollar Rate Advance pursuant to Section 9.05(b). Each
such prepayment of any Term Advances shall be applied to the Term Facility and
to the principal repayment installments thereof in inverse order of maturity.
(b) Mandatory. (i) The Appropriate Borrowers shall, on each Business
---------
Day, prepay:
(A) an aggregate principal amount of the Term Advances comprising
part of the same Term Borrowings equal to the amount by which (1) the
aggregate principal amount of all Term Advances outstanding on such
Business Day exceeds (2) the Term Facility on such Business Day (after
giving effect to any permanent reduction thereof pursuant to Section 2.04
on such Business Day), each such prepayment to be applied to the Term
Facility and to the principal repayment installments thereof in inverse
order of maturity until the Term Advances are paid in full;
<PAGE>
56
(B) an aggregate principal amount of the Revolving Credit A
Advances comprising part of the same Revolving Credit A Borrowings equal to
the amount by which (1) the aggregate principal amount of all Revolving
Credit A Advances outstanding on such Business Day exceeds (2) the
Revolving Credit A Facility on such Business Day (after giving effect to
any permanent reduction thereof pursuant to Section 2.04 on such Business
Day), each such prepayment to be applied to the Revolving Credit A Facility
and to the mandatory commitment reduction installments thereof on a pro
rata basis; and
(C) an aggregate principal amount of the Revolving Credit B
Advances comprising part of the same Revolving Credit B Borrowings equal to
the amount by which (1) the aggregate principal amount of all Revolving
Credit B Advances outstanding on such Business Day exceeds (2) the
Revolving Credit B Facility on such Business Day (after giving effect to
any permanent reduction thereof pursuant to Section 2.04 on such Business
Day), each such prepayment to be applied to the Revolving Credit B Facility
and to the mandatory commitment reduction installments thereof on a pro
rata basis.
Any Net Cash Proceeds remaining after the application thereof to the prepayment
of Advances outstanding on the date of receipt of such Net Cash Proceeds
pursuant to Section 2.04(b)(v) and this Section 2.05(b) may be retained by the
applicable Borrower for use in its businesses and operations in the ordinary
course or as otherwise permitted under the terms of this Agreement.
(ii) The Surviving Corporation shall, on the date of the receipt of
the Net Cash Proceeds by or on behalf of the Surviving Corporation or any of its
Subsidiaries from the sale, lease, transfer or other disposition of any of their
Equity Interests in, or the property and assets of, Cable Health TV, Inc. or FiT
TV Partnership expressly permitted to be made under Section 5.02(e)(vii)(A),
prepay an aggregate principal amount of the Revolving Credit Advances comprising
part of the same Borrowings by an amount equal to the product of (A) the NCP
Percentage in effect on the date of receipt of such Net Cash Proceeds and (B)
the amount of such Net Cash Proceeds. Each prepayment of Advances made pursuant
to this clause (ii) shall be applied ratably to the Revolving Credit Facilities.
(iii) Notwithstanding any of the other provisions of this Section
2.05(b), so long as no Default under Section 7.01(a) or 7.01(f) or Event of
Default shall have occurred and be continuing, if any prepayment of Eurodollar
Rate Advances is required to be made under this Section 2.05(b) other than on
the last day of the Interest Period therefor, the Borrower to which such
Eurodollar Rate Advances were made may, in its sole discretion, deposit the
amount of any such prepayment otherwise required to be made hereunder into the
Cash Collateral Account of such Borrower until the last day of such Interest
Period, at which time the Administrative Agent shall be authorized (without any
further action by or notice to or from such Borrower) to apply such amount to
the prepayment of such Advances in accordance with this Section 2.05(b).
(c) Prepayments to Include Accrued Interest. All prepayments under
---------------------------------------
this Section 2.05 shall be made together with (i) accrued and unpaid interest to
the date of such prepayment on the principal amount so prepaid and (ii) in the
case of any such prepayment of a Eurodollar Rate Advance on a date other than
the last day of an Interest Period therefor, any amounts owing in respect of
such Eurodollar Rate Advance pursuant to Section 9.05(b).
<PAGE>
57
SECTION 2.06. Interest on Advances. (a) Scheduled Interest. Each of
-------------------- ------------------
the Borrowers shall pay interest on the unpaid principal amount of each Advance
made to such Borrower from the date of such Advance until such principal amount
shall be paid in full, at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is a
------------------
Base Rate Advance, a rate per annum equal at all times to the sum of (A)
the Base Rate in effect from time to time and (B) the Applicable Margin for
such Advance in effect from time to time, payable in arrears quarterly on
the second Business Day prior to the last day of each September, December,
March and June during such periods and on the date such Base Rate Advance
shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such
------------------------
Advance is a Eurodollar Rate Advance, a rate per annum equal at all times
during each Interest Period for such Advance to the sum of (A) the
Eurodollar Rate for such Advance for such Interest Period and (B) the
Applicable Margin for such Advance in effect on the first day of such
Interest Period, payable in arrears on the last day of such Interest Period
and, if such Interest Period has a duration of more than three months, on
each day that occurs during such Interest Period every three months from
the first day of such Interest Period and on the date such Eurodollar Rate
Advance shall be Converted or paid in full.
(b) Default Interest. Upon the occurrence and during the continuance
----------------
of a Default under Section 7.01(a) or 7.01(f) or an Event of Default, the
Borrowers shall pay interest on (i) the unpaid principal amount of each Advance
owing to each of the Lenders, payable in arrears on the dates referred to in
clause (i) or (ii) of Section 2.06(a), as applicable, and on demand, at a rate
per annum equal at all times to 2% per annum above the rate per annum required
to be paid on such Advance pursuant to clause (i) or (ii) of Section 2.06(a), as
applicable, and (ii) to the fullest extent permitted by applicable law, the
amount of any interest, fee or other amount payable under this Agreement or any
of the other Loan Documents that is not paid when due, from the date such amount
shall be due until such amount shall be paid in full, payable in arrears on the
date such amount shall be paid in full and on demand, at a rate per annum equal
at all times to 2% per annum above the rate per annum required to be paid, in
the case of interest, on the Type of Advance on which such interest has accrued
pursuant to clause (i) or (ii) of Section 2.06(a), as applicable, and, in all
other cases, on Base Rate Advances pursuant to clause (i) of Section 2.06(a).
(c) Information from Reference Banks. Each of the Reference Banks
--------------------------------
hereby agrees to furnish to the Administrative Agent timely information for the
purpose of determining each Eurodollar Rate. If any one of the Reference Banks
shall not furnish such timely information to the Administrative Agent for the
purpose of determining any such interest rate, the Administrative Agent shall
determine such interest rate on the basis of timely information furnished by the
remaining Reference Banks. If, at any time after clause (b) of the definition
of "Reference Banks" set forth in Section 1.01 is in effect, fewer than two
Reference Banks furnish timely information to the Administrative Agent for the
purpose of determining the Eurodollar Rate for any Eurodollar Rate Advances:
(i) the Administrative Agent shall forthwith notify the Borrower
that requested the Borrowing to have been comprised of such Eurodollar Rate
Advances and the Appropriate Lenders that the interest rate cannot be
determined for such Eurodollar Rate Advances;
(ii) each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance (or, if such Advance is then a Base Rate Advance, will
continue as a Base Rate Advance); and
<PAGE>
58
(iii) the obligation of the Lenders to make Eurodollar Rate Advances,
or to Convert Advances into Eurodollar Rate Advances, shall be suspended
until the Administrative Agent shall notify the Borrowers and the Lenders
that the circumstances causing such suspension no longer exist.
(d) Notice of Interest Rate. Promptly after receipt of a Notice of
-----------------------
Borrowing pursuant to Section 2.02(a), the Administrative Agent shall give
notice to the Borrower that delivered such Notice of Borrowing and each of the
Appropriate Lenders of the applicable interest rate determined by the
Administrative Agent for purposes of clause (i) or (ii) of Section 2.06(a), as
applicable. If any Notice of Borrowing delivered pursuant to Section 2.02(a)
specifies that the requested duration of the initial Interest Period for the
Eurodollar Rate Advances to comprise the Borrowing requested therein is nine
months, then the Administrative Agent shall send written confirmation, given not
later than 11:00 A.M. (New York City time) on the second Business Day prior to
the date of such Borrowing, to each of the Appropriate Lenders, by telex or
telecopier, confirming the actual duration of the initial Interest Period for
all such Eurodollar Rate Advances determined in accordance with clause (c) of
the definition of "Interest Period" set forth in Section 1.01.
SECTION 2.07. Fees. (a) Commitment Fee. The Borrowers jointly and
---- --------------
severally agree to pay to the Administrative Agent for the account of the
Lenders a commitment fee (the "COMMITMENT FEE"), from the date of acceptance of
the Commitments of each of the Initial Lenders by Fox Kids in the case of each
such Initial Lender and from the effective date specified in the Assignment and
Acceptance pursuant to which it became a Lender in the case of each other Lender
until the Termination Date, payable in arrears quarterly on the second Business
Day prior to the last day of each September, December, March and June,
commencing September 29, 1997, and on the Termination Date, at a rate per annum
equal to the Applicable Percentage in effect from time to time on the average
daily unused portion of the Term Commitment of each of the Term Lenders during
such quarter, on the average daily Unused Revolving Credit A Commitment of each
of the Revolving Credit A Lenders during such quarter and on the average daily
Unused Revolving Credit B Commitment of each of the Revolving Credit B Lenders
during such quarter; provided, however, that no Commitment Fee shall accrue on
any of the Commitments of a Defaulting Lender so long as such Lender shall be a
Defaulting Lender.
(b) Administrative Agent's and Arranger's Fees. The Borrowers shall
------------------------------------------
pay to the Administrative Agent, for its own account and, if applicable, the
account of the Arranger, such fees as have been agreed in the fee letter dated
June 6, 1997 between Fox Kids, on behalf of itself and the other Borrowers, and
Citicorp Securities, on behalf of itself and the Administrative Agent, and as
may hereafter from time to time be agreed among one or more of the Borrowers, on
the one hand, and the Administrative Agent or the Arranger, on the other hand.
SECTION 2.08. Conversion of Advances. (a) Optional. Each of the
---------------------- --------
Borrowers may on any Business Day, upon notice given to the Administrative Agent
not later than 11:00 A.M. (New York City time) on the third Business Day prior
to the date of the proposed Conversion in the case of a Conversion of Base Rate
Advances into Eurodollar Rate Advances or of Eurodollar Rate Advances of one
Interest Period into Eurodollar Rate Advances of another Interest Period, or
11:00 A.M. (New York City time) on the Business Day immediately preceding the
date of the proposed Conversion in the case of a Conversion of Eurodollar Rate
Advances into Base Rate Advances, and subject to the provisions of Sections
2.06(c) and 2.09, Convert all or any portion of the Advances of one Type
comprising the same Borrowing into Advances of the other Type; provided,
however, that:
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59
(i) any Conversion of Eurodollar Rate Advances into Base Rate
Advances shall be made only on the last day of an Interest Period for such
Eurodollar Rate Advances;
(ii) any Conversion of Base Rate Advances into Eurodollar Rate
Advances shall be made only if no Default under Section 7.01(a) or 7.01(f)
or Event of Default shall have occurred and be continuing on the date of
such Conversion and shall be in an amount not less than the minimum amount
specified in clause (i) of Section 2.02(b); and
(iii) each Conversion of Advances comprising part of the same
Borrowing under any Facility shall be made among the Appropriate Lenders in
accordance with their respective Pro Rata Shares of such Borrowing.
Each notice of a Conversion (a "NOTICE OF CONVERSION") shall be delivered by
telephone, confirmed immediately in writing, or by telex or telecopier, in
substantially the form of Exhibit B-2 hereto, shall be duly executed by a
Responsible Officer of such Appropriate Borrower, and shall, within the
restrictions set forth in the immediately preceding sentence, specify therein:
(A) the requested date of such Conversion (which shall be a Business
Day);
(B) the Advances requested to be Converted; and
(C) if such Conversion is into Eurodollar Rate Advances, the
requested duration of the Interest Period for such Eurodollar Rate Advances
(and, if the requested duration of such Interest Period is specified to be
nine months, the desired alternative Interest Period therefor).
The Administrative Agent shall give each of the Appropriate Lenders prompt
notice of each Notice of Conversion received by it, by telex or telecopier.
Each Notice of Conversion shall be irrevocable and binding on the Borrower that
requested such Conversion.
(b) Mandatory. (i) On the date on which the aggregate unpaid
---------
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment, prepayment or otherwise, to less than $5,000,000, such
Eurodollar Rate Advances shall automatically Convert into Base Rate Advances.
(ii) If any of the Borrowers shall fail to select the duration of
any Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" set forth in Section
1.01, the Administrative Agent will forthwith so notify such Borrower and the
Appropriate Lenders, whereupon each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Eurodollar Rate Advance with an Interest Period of one month.
(iii) Upon the occurrence and during the continuance of any Default
under Section 7.01(a) or 7.01(f) or any Event of Default, (A) each Eurodollar
Rate Advance will automatically, on the last day of the then existing Interest
Period therefor, Convert into a Base Rate Advance and (B) the obligation of the
Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended.
SECTION 2.09. Increased Costs, Etc. (a) If, due to either (i) the
--------------------
introduction of or any change (other than any change by way of the imposition of
or increase in reserve requirements included in the Eurodollar Rate Reserve
Percentage) in or in the interpretation or application of any Requirement of Law
after the date of this Agreement or (ii) the compliance with (A) any official
directive, guideline or request from any central bank or other Governmental
Authority or (B) any change therein or in the interpretation or application,
implementation, administration or enforcement thereof, that, in the case of
subclause (ii)(A) or (ii)(B) of this Section 2.09(a), becomes effective or is
issued or made after
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60
the date of this Agreement (whether or not having the force of law), there shall
be any increase in the cost to any of the Lenders of agreeing to make or making,
agreeing to participate in or participating in, agreeing to renew or renewing or
funding or maintaining any Advances of either Type, or any reduction in the
amount owing to any of the Lenders or their respective Applicable Lending
Offices under this Agreement in respect of any Advances of either Type
(excluding, for purposes of this Section 2.09, any such increased costs
resulting from (1) Taxes or Other Taxes (as to which Section 2.11 shall govern)
and (2) changes in the basis of taxation of overall net income or overall gross
income by the United States of America or the jurisdiction under the laws of
which such Lender is organized or has either of its Applicable Lending Offices
or any political subdivision thereof), then the Borrowers hereby jointly and
severally agree to pay, from time to time upon demand by such Lender (with a
copy of such demand to the Administrative Agent), to the Administrative Agent
for the account of such Lender additional amounts sufficient to compensate or to
reimburse such Lender for all such increased costs or reduced amounts. A
certificate of the Lender requesting such additional compensation pursuant to
this Section 2.09(a), submitted to the Borrowers by such Lender and specifying
therein the amount of such additional compensation (including the basis of
calculation thereof), shall be conclusive and binding for all purposes, absent
manifest error.
(b) If any of the Lenders determines that compliance with any
Requirement of Law, or (i) any official directive, guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law) or (ii) any change therein or in the interpretation or application,
implementation, administration or enforcement thereof, that, in the case of
clause (i) or (ii) of this Section 2.09(b), is enacted or becomes effective, or
is implemented or is first required or expected to be complied with, after the
date of this Agreement affects the amount of capital required or expected to be
maintained by such Lender (or either of the Applicable Lending Offices of such
Lender) or by any Person controlling such Lender and that the amount of such
capital is increased by or is based upon the existence of the commitment of such
Lender to lend hereunder and other commitments of this type, then the Borrowers
hereby jointly and severally agree to pay, upon demand by such Lender (with a
copy of such demand to the Administrative Agent), to the Administrative Agent
for the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender or such Person in light
of such circumstances, to the extent that such Lender or such Person reasonably
determines such increase in capital to be allocable to the existence of the
commitment of such Lender to lend hereunder. A certificate of the Lender
requesting such additional compensation pursuant to this Section 2.09(b),
submitted to the Borrowers by such Lender and specifying therein the amount of
such additional compensation (including the basis of calculation thereof), shall
be conclusive and binding for all purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any of the
Facilities, Lenders owed or holding not less than a majority in interest of the
aggregate principal amount of all Advances outstanding under such Facility at
any time notify the Administrative Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Lenders of making, participating in or renewing, or funding or maintaining,
their Eurodollar Rate Advances for such Interest Period, the Administrative
Agent shall forthwith so notify the Appropriate Borrowers and the Appropriate
Lenders, whereupon (i) each such Eurodollar Rate Advance under such Facility
will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance and (ii) the obligation of the
Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Appropriate Borrowers (promptly following notice from the
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61
Appropriate Lenders) that such Appropriate Lenders have determined that the
circumstances causing such suspension no longer exist.
(d) Notwithstanding any of the other provisions of this Agreement, if
any Lender shall notify the Administrative Agent that the introduction of or any
change in or in the interpretation or application of any Requirement of Law
makes it unlawful, or any central bank or other Governmental Authority asserts
that it is unlawful, for such Lender or its Eurodollar Lending Office to perform
its obligations hereunder to make, to participate in or to renew, or to fund or
maintain, Eurodollar Rate Advances hereunder, then (i) each Eurodollar Rate
Advance of such Lender will automatically, on the last day of the then existing
Interest Period therefor, if permitted by applicable law, or otherwise upon
demand, Convert into a Base Rate Advance of such Lender and (ii) the obligation
of such Lender to make, or to Convert Advances into, Eurodollar Rate Advances
shall be suspended until the Administrative Agent shall notify the Borrowers
(promptly following notice from such Lender) that the circumstances causing such
suspension no longer exist. If the obligation of a Lender to make Eurodollar
Rate Advances is suspended pursuant to this Section 2.09(d), then, subject to
subsection (e) of this Section 2.09, until the circumstances that gave rise to
such suspension no longer apply to such Lender, all Eurodollar Rate Advances
that would otherwise be made by such Lender as part of any Borrowing shall be
made instead as Base Rate Advances and all payments of principal of and interest
on such Base Rate Advances shall be made at the same time as payments on the
Eurodollar Rate Advances otherwise comprising part of such Borrowing.
(e) If, at any time, the Administrative Agent shall notify any of the
Borrowers of the suspension of the obligations of Lenders owed or holding not
less than a majority in interest of the aggregate principal amount of all
Advances outstanding at any time (the "AFFECTED LENDERS") to make, participate
in or renew, or to fund or maintain, their Eurodollar Rate Advances pursuant to
Section 2.09(c) or 2.09(d), then the Administrative Agent (in consultation with
each of the Affected Lenders) and the Borrowers shall enter into negotiations in
good faith with a view to agreeing upon an alternative basis acceptable to the
Borrowers and the Affected Lenders for determining a substitute rate of interest
(the "SUBSTITUTE RATE") for the Eurodollar Rate that shall be applicable to the
Affected Lenders during the period of time that such suspension continues, which
Substitute Rate shall reflect the cost to each of the Affected Lenders of
making, participating in or renewing, or funding or maintaining, such Advances
under the circumstances that gave rise to such suspension from alternative
sources plus the Applicable Margin in effect from time to time for Eurodollar
Rate Advances under the applicable Facility; provided that if any of the
Affected Lenders shall be a Defaulting Lender at any such time, then such
Defaulting Lender shall not be entitled to participate in the negotiations for
determining a Substitute Rate and the approval of such Defaulting Lender shall
not be required for an alternative rate of interest to become a Substitute Rate.
If a Substitute Rate is so agreed to among the Borrowers and the Affected
Lenders, then, until the circumstances that gave rise to such suspension no
longer apply to the Affected Lenders, all Eurodollar Rate Advances that would
otherwise be made by the Affected Lenders as part of any Borrowing shall be made
instead as Advances bearing interest at the Substitute Rate and all payments of
principal of and interest on such Advances shall be made at the same time as
payments of principal of and interest on the Eurodollar Rate Advances otherwise
comprising part of such Borrowing. If at any time during which a Substitute
Rate is in effect the cost to any of the Affected Lenders of making,
participating in or renewing, or funding or maintaining, such Advances from
alternative sources increases, the Affected Lenders shall promptly notify the
Borrowers of the amount of such increase and the Borrowers shall have the option
either (i) to pay to the Administrative Agent for the account of each such
Affected Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Affected Lender for such increase or (ii)
to Convert each such Advance bearing interest at the Substitute Rate into a Base
Rate Advance. A certificate of any of the Affected Lenders pursuant to this
Section 2.09(e), submitted to the Borrowers by
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62
such Affected Lender and specifying therein the cost to such Affected Lender of
making, participating in or renewing, or funding or maintaining, Eurodollar Rate
Advances from alternative sources and the circumstances that gave rise to the
related suspension thereof, shall be conclusive and binding for all purposes,
absent manifest error.
(f) Each of the Lenders hereby agrees that, upon the occurrence of
any circumstances entitling such Lender to additional compensation or to cease
making, participating in or renewing, or funding or maintaining, Eurodollar Rate
Advances under any of the foregoing provisions of this Section 2.09, such Lender
shall use reasonable efforts (consistent with its existing internal policy
applied on a nondiscriminatory basis and with applicable legal and regulatory
restrictions) to designate a different Applicable Lending Office for any
Advances affected by such circumstances and/or to take any other reasonable
actions requested by the Borrowers if the making of such designation or the
taking of such actions, in the case of Section 2.09(a) or 2.09(b), would avoid
the need for such additional compensation or, in the case of Section 2.09(c) or
2.09(d), would allow such Lender to continue to perform its obligations to make,
to participate in or renew, or to fund or maintain, Eurodollar Rate Advances,
and, in any such case, would not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender. If any of the Lenders entitled to
additional compensation under any of the foregoing provisions of this Section
2.09 shall fail to designate a different Applicable Lending Office or to take
such reasonable actions as provided in this Section 2.09(f) or if the inadequacy
or illegality contemplated under Section 2.09(c) or 2.09(d), respectively, shall
continue with respect to such Lender notwithstanding such designation or such
reasonable actions, then, subject to the terms of Section 9.08(a), Fox Kids may
cause such Lender to (and, if Fox Kids so demands, such Lender shall) assign all
of its rights and obligations under this Agreement in accordance with Section
9.08(a); provided that if, upon such demand by Fox Kids, such Lender elects to
waive its request for additional compensation pursuant to Section 2.09(a) or
2.09(b), the demand by Fox Kids for such Lender to so assign all of its rights
and obligations under the Agreement shall thereupon be deemed withdrawn. Nothing
in this Section 2.09(f) shall affect or postpone any of the rights of any of the
Lenders or any of the obligations of the Borrowers under any of the foregoing
provisions of this Section 2.09 in any manner.
SECTION 2.10. Payments and Computations. (a) Each of the Borrowers
-------------------------
shall make each payment under this Agreement and under the Notes, irrespective
of any right of counterclaim or setoff (except as otherwise provided in Section
2.13), not later than 12:00 Noon (New York City time) on the day when due (or,
in the case of payments made by any of the Borrowers pursuant to Section 6.01,
on the date of demand therefor) in U.S. dollars to the Administrative Agent at
the Administrative Agent's Account in same day funds, with payments received by
the Administrative Agent after 12:00 Noon (New York City time) on any such day
being deemed to have been received on the next succeeding Business Day. The
Administrative Agent will promptly thereafter cause like funds to be distributed
(i) if such payment by any of the Borrowers is in respect of principal,
interest, Commitment Fees or any other Obligation then payable under this
Agreement and under the Notes to more than one of the Lenders, to such Lenders
for the account of their respective Applicable Lending Offices in accordance
with their respective Pro Rata Shares of the amounts of such respective
Obligations payable to such Lenders at such time and (ii) if such payment by any
of the Borrowers is in respect of any Obligation payable under this Agreement to
one of the Lenders at such time, to such Lender for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon the acceptance of an Assignment and Acceptance by
the Administrative Agent and the recording of the information contained therein
in the Register pursuant to Section 9.08(d), from and after the effective date
of such Assignment and Acceptance, the Administrative Agent shall make all
payments under this Agreement and the Notes in respect of the interest assigned
thereby to the Lender assignee thereunder,
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63
and the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.
(b) All computations of interest based on clause (a) of the
definition of "Base Rate" set forth in Section 1.01 shall be made by the
Administrative Agent on the basis of a year of 365 or 366 days, as the case may
be, and all computations of interest based on the Eurodollar Rate or the Federal
Funds Rate and all computations of fees (including, without limitation, fees
payable under Section 2.07) shall be made by the Administrative Agent on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest or fees are payable. Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.
(c) Whenever any payment under this Agreement or the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or fees, as the case
may be; provided, however, that if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
succeeding calendar month, such payment shall be made on the immediately
preceding Business Day.
(d) Unless the Administrative Agent shall have received notice from
the applicable Borrower prior to the date on which any payment is due from such
Borrower to any of the Lenders under this Agreement that such Borrower will not
make such payment in full, the Administrative Agent may assume that such
Borrower has made such payment in full to the Administrative Agent on such date
and the Administrative Agent may, in reliance upon such assumption, cause to be
distributed to such Lender on such date an amount equal to the amount due to
such Lender on such date. If and to the extent such Borrower shall not have so
made such payment in full to the Administrative Agent, each such Lender shall
repay to the Administrative Agent forthwith on demand such amount distributed to
such Lender, together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Administrative Agent, at the Federal Funds Rate.
(e) Whenever any payment received by the Administrative Agent under
this Agreement or any of the other Loan Documents is insufficient to pay in full
all amounts due and payable to the Agents and the Lenders under or in respect of
this Agreement and the other Loan Documents on any date, such payment shall be
distributed by the Administrative Agent and applied by the Agents and the
Lenders in the following order of priority:
(i) first, to the payment of all of the fees, indemnification
payments, costs and expenses that are due and payable to the Agents (solely
in their respective capacities as Agents) under or in respect of this
Agreement or any of the other Loan Documents on such date, ratably based
upon the respective aggregate amounts of all such fees, indemnification
payments, costs and expenses owing to the Agents on such date;
(ii) second, to the payment of all of the indemnification payments,
costs and expenses that are due and payable to the Lenders under Sections
9.04 and 9.05 hereof, Section 25 of the Security Agreement, Section 15 of
the Pledge Agreements, Section 12 of the Guarantee or the applicable
section of any of the other Loan Documents on such date, ratably based upon
the respective aggregate amounts of all such indemnification payments,
costs and expenses owing to the Lenders on such date;
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64
(iii) third, to the payment of all of the amounts that are due and
payable to the Administrative Agent and the Lenders under Sections 2.09 and
2.11 hereof or Section 5 of the Guarantee on such date, ratably based upon
the respective aggregate amounts thereof owing to the Administrative Agent
and the Lenders on such date;
(iv) fourth, to the payment of all of the fees that are due and
payable to the Lenders under Section 2.07(a) on such date, ratably based
upon the respective aggregate Commitments of the Lenders under all of the
Facilities on such date;
(v) fifth, to the payment of all of the accrued and unpaid interest
on the Obligations of the Borrowers under or in respect of the Loan
Documents that is due and payable to the Administrative Agent and the
Lenders under Section 2.06(b) on such date, ratably based upon the
respective aggregate amounts of all such interest owing to the
Administrative Agent and the Lenders on such date;
(vi) sixth, to the payment of all of the accrued and unpaid interest
on the Advances that is due and payable to the Administrative Agent and the
Lenders under Section 2.06(a) on such date, ratably based upon the
respective aggregate amounts of all such interest owing to the
Administrative Agent and the Lenders on such date;
(vii) seventh, to the payment of the principal amount of all of the
outstanding Advances that is due and payable to the Administrative Agent
and the Lenders on such date, ratably based upon the respective aggregate
amounts of all such principal owing to the Administrative Agent and the
Lenders on such date; and
(viii) eighth, to the payment of all other Obligations of the Loan
Parties owing under or in respect of the Loan Documents that are due and
payable to the Administrative Agent and the other Secured Parties on such
date, ratably based upon the respective aggregate amounts of all such
Obligations owing to the Administrative Agent and the other Secured Parties
on such date.
If the Administrative Agent receives funds for application to the Obligations of
the Loan Parties under or in respect of the Loan Documents under circumstances
for which the Loan Documents do not specify the Advances or the Facility to
which, or the manner in which, such funds are to be applied, the Administrative
Agent may, but shall not be obligated to, elect to distribute such funds to each
of the Lenders in accordance with such Lender's Pro Rata Share of the aggregate
principal amount of all Advances outstanding at such time, in repayment or
prepayment of such of the outstanding Advances or other Obligations owing to
such Lender, and, in the case of the Term Advances, for application to such
principal repayment installments thereof, as the Administrative Agent shall
direct.
SECTION 2.11. Taxes. (a) Any and all payments by any of the
-----
Borrowers under or in respect of this Agreement or any of the other Loan
Documents to which such Borrower is a party shall be made, in accordance with
Section 2.10 (or the applicable provisions of such other Loan Document), free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, duties, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each of the Lenders
and each of the Agents, taxes that are imposed on its overall net income by the
United States of America and taxes that are imposed on its overall net income
(and franchise taxes that are imposed in lieu thereof) by the state or foreign
jurisdiction under the laws of which such Lender or such Agent, as the case may
be, is
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65
organized or is a resident, or has a fixed place of business or a permanent
establishment, or any political subdivision of any of the foregoing, and, in the
case of each of the Lenders, taxes that are imposed on its overall net income
(and franchise taxes that are imposed in lieu thereof) by the state or foreign
jurisdiction of either of the Applicable Lending Offices of such Lender or any
political subdivision thereof (all such nonexcluded taxes, levies, imposts,
duties, deductions, charges, withholdings and liabilities in respect of payments
by any of the Borrowers under or in respect of this Agreement or any of the
other Loan Documents to which any such Borrower is a party being, collectively,
"TAXES"). If any of the Borrowers shall be required by applicable Requirements
of Law to deduct any Taxes from or in respect of any sum payable under or in
respect of this Agreement or any of the other Loan Documents to which such
Borrower is a party to any of the Lenders or any of the Agents, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.11) such Lender or such Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) such Borrower shall make such deductions and (iii) such Borrower shall pay
the full amount deducted to the relevant taxation authority or other
Governmental Authority in accordance with the applicable Requirements of Law.
(b) In addition, each of the Borrowers hereby agrees to pay any
present or future stamp, recording, documentary, excise, property or similar
taxes, charges or levies that arise from any payment made under or in respect of
this Agreement or any of the other Loan Documents to which such Borrower is a
party, or from the execution, delivery or registration of, or any performance
under, or otherwise with respect to, under or in respect of this Agreement or
any of the other Loan Documents to which such Borrower is a party (collectively,
"OTHER TAXES").
(c) Each of the Borrowers hereby agrees to indemnify each of the
Lenders and each of the Agents for the full amount of Taxes and Other Taxes, and
for the full amount of taxes imposed by any jurisdiction on amounts payable
under this Section 2.11, imposed on or paid by such Lender or such Agent, as the
case may be, and any liability (including penalties, additions to tax, interest
and expenses) arising therefrom or with respect thereto. The indemnity by the
Borrowers provided for in this subsection (c) shall apply and be made whether or
not the Taxes or Other Taxes for which indemnification hereunder is sought have
been correctly or legally asserted; provided, however, that such Lender or such
Agent seeking such indemnification shall take all reasonable actions (consistent
with its existing internal policy applied on a nondiscriminatory basis and legal
and regulatory restrictions) requested by any of the Borrowers to assist such
Borrower in recovering the amounts paid thereby pursuant to this subsection (c)
from the relevant taxation authority or other Governmental Authority. Amounts
payable by any of the Borrowers under the indemnity set forth in this subsection
(c) shall be paid within 30 days from the date on which the applicable Lender or
Agent, as the case may be, makes written demand therefor. With respect to each
payment by any of the Borrowers under or in respect of this Agreement or any of
the other Loan Documents to which such Borrower is a party, the amount of Taxes
due from such Borrower pursuant to this subsection (c) shall only be payable to
the extent such amount exceeds the amount of Taxes paid by such Borrower
pursuant to subsection (a) of this Section 2.11 with respect to such payment.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower making such payment (or on whose behalf such payment was made) shall
furnish to the Administrative Agent, at its address referred to in Section 9.02,
the original or a certified copy of a receipt evidencing payment thereof, to the
extent such a receipt is issued therefor, or other written proof of payment
thereof that is reasonably satisfactory to the Administrative Agent. In the
case of any payment under or in respect of this Agreement or any of the other
Loan Documents by or on behalf of any of the Borrowers through an account or
branch outside the
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66
United States, or on behalf of such Borrower by a payor that is not a United
States person, if such Borrower determines that no Taxes are payable in respect
thereof, such Borrower shall furnish, or shall cause such payor to furnish, to
the Administrative Agent, at its address referred to in Section 9.02, an opinion
of counsel reasonably acceptable to the Administrative Agent stating that such
payment is exempt from Taxes. For purposes of this subsection (d) and subsection
(e) of this Section 2.11, the terms "UNITED STATES" and "UNITED STATES PERSON"
shall have the meanings specified in Section 7701 of the Internal Revenue Code.
(e) Each of the Lenders organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of this Agreement in the case of each of the Initial Lenders, and on
the date of the Assignment and Acceptance pursuant to which it becomes a Lender
in the case of each of the other Lenders, and from time to time thereafter as
reasonably requested in writing by Fox Kids or the Administrative Agent (but
only so long thereafter as such Lender remains lawfully able to do so), provide
Fox Kids and the Administrative Agent with two original Internal Revenue Service
forms 1001 or 4224 or, in the case of any of the Lenders that is claiming
exemption from United States withholding tax under Section 871(h) or 881(c) of
the Internal Revenue Code with respect to payments of "portfolio interest", form
W-8 (and, if such Lender delivers a form W-8, a certificate representing that
such Lender is not (i) a "bank" for purposes of Section 881(c) of the Internal
Revenue Code, (ii) a ten-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of any of the Borrowers or (iii) a
controlled foreign corporation related to any of the Borrowers (within the
meaning of Section 864(d)(4) of the Internal Revenue Code), as appropriate), or
any successor or other form prescribed by the Internal Revenue Service,
certifying that such Lender is exempt from or entitled to a reduced rate of
United States withholding tax on payments pursuant to this Agreement or the
other Loan Documents or, in the case of a Lender delivering a form W-8,
certifying that such Lender is a foreign corporation, partnership, estate or
trust. If the forms referred to above in this subsection (e) that are provided
by a Lender at the time such Lender first becomes a party to this Agreement
indicate a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from Taxes unless and
until such Lender provides the appropriate form certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate shall be considered
excluded from Taxes solely for the periods governed by such form. However, if,
at the date of the Assignment and Acceptance pursuant to which a Lender assignee
becomes a party to this Agreement, the Lender assignor was entitled to payments
under subsection (a) of this Section 2.11 in respect of United States
withholding tax with respect to interest paid at such date, then, to such extent
(and only to such extent), the term "Taxes" shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includable in Taxes) United States withholding tax, if any, applicable with
respect to such Lender assignee on such date. If any of the forms, certificates
or other documents referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001,
4224 or W-8 (or the related certificate described above), that a Lender
reasonably considers to be confidential, such Lender shall give notice thereof
to Fox Kids and the Administrative Agent and shall not be obligated to include
in such form, certificate or document such confidential information. None of
the Lenders shall be entitled to payment pursuant to subsection (a), (b) or (c)
of this Section 2.11 with respect to any additional Taxes that resulted solely
and directly from the change in either of the Applicable Lending Offices of such
Lender (other than any such additional Taxes that are imposed as a result of a
change in the applicable Requirements of Law, or in the interpretation or
application thereof, occurring after the date of such change), unless such
change is made pursuant to the terms of Section 2.09(f) or 2.11(g) or as a
result of a request therefor by any of the Borrowers.
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(f) For any period with respect to which any of the Lenders has
failed (i) to provide Fox Kids with the appropriate form, certificate or other
document described in subsection (e) of this Section 2.11 (other than if such
failure is due to a change in the applicable Requirements of Law, or in the
interpretation or application thereof, occurring after the date on which a form,
certificate or other document originally was required to be provided or if such
form otherwise is not required under subsection (e) of this Section 2.11) or
(ii) to notify the Appropriate Borrowers of any change in either of the
Applicable Lending Offices of such Lender pursuant to the definition of "Base
Rate Lending Office" or "Eurodollar Lending Office" set forth in Section 1.01,
as applicable (other than any such change that is made pursuant to the terms of
Section 2.09(f) or 2.11(g) or as a result of a request therefor by any of the
Borrowers), such Lender shall not be entitled to any payment or indemnification
under subsection (a) or (c) of this Section 2.11 with respect to Taxes imposed
by the United States by reason of such failure; provided, however, that should
any of the Lenders become subject to Taxes because of its failure to deliver a
form, certificate or other document required hereunder, each of the Borrowers
hereby agrees to take such steps as such Lender shall reasonably request to
assist such Lender in recovering such Taxes.
(g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.11 hereby agrees to use reasonable efforts (consistent with its
existing internal policy applied on a nondiscriminatory basis and legal and
regulatory restrictions) to change the jurisdiction of either of its Applicable
Lending Offices and/or to take any other reasonable actions requested by Fox
Kids if the making of such a change or the taking of such reasonable actions
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender. If any Lender entitled to
additional compensation under any of the foregoing provisions of this Section
2.11 shall fail to change the jurisdiction of either of its Applicable Lending
Offices or to take such reasonable actions as provided in this subsection (g),
or if the failure of such Lender to disclose information which such Lender has
determined to be confidential in the form, certificate or other document
delivered by such Lender pursuant to subsection (e) of this Section 2.11 would
increase the liability of any of the Borrowers under this Section 2.11, then,
subject to the terms of Section 9.08(a), Fox Kids may cause such Lender to (and,
if Fox Kids so demands, such Lender shall) assign all of its rights and
obligations under this Agreement in accordance with Section 9.08(a); provided
that if, upon such demand by Fox Kids, such Lender elects to waive its right to
additional amounts payable pursuant to this Section 2.11, the demand by Fox Kids
for such Lender to so assign all of its rights and obligations under this
Agreement shall thereupon be deemed withdrawn. Nothing in this subsection (g)
shall affect or postpone any of the rights of any of the Lenders or any of the
obligations of any of the Borrowers under any of the foregoing provisions of
this Section 2.11 in any manner.
(h) All payments made by any of the Borrowers pursuant to subsection
(a), (b) or (c) of this Section 2.11 shall, to the fullest extent permitted by
applicable law, be treated by such Borrower as additional interest.
SECTION 2.12. Sharing of Payments, Etc. If any of the Lenders shall
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obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of setoff or otherwise) on account of (a) Obligations due
and payable to such Lender under or in respect of this Agreement and the other
Loan Documents at such time in excess of its ratable share (according to the
proportion of (i) the amount of such Obligations due and payable to such Lender
at such time (other than pursuant to Section 2.09, 2.11, 9.04, 9.05 or 9.08) to
(ii) the aggregate amount of the Obligations due and payable to all of the
Lenders under or in respect of this Agreement and the other Loan Documents at
such time) of payments on account of the Obligations due and payable to all of
the Lenders under or in respect of this Agreement and the other Loan
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68
Documents at such time obtained by all of the Lenders at such time or (b)
Obligations owing (but not due and payable) to such Lender under or in respect
of this Agreement and the other Loan Documents at such time in excess of its
ratable share (according to the proportion of (i) the amount of such Obligations
owing (but not yet due and payable) to such Lender at such time (other than
pursuant to Section 2.09, 2.11, 9.04, 9.05 or 9.08) to (ii) the aggregate amount
of the Obligations owing (but not due and payable) to all of the Lenders under
or in respect of this Agreement and the other Loan Documents at such time) of
payments on account of the Obligations owing (but not due and payable) to all of
the Lenders under or in respect of this Agreement and the other Loan Documents
at such time obtained by all of the Lenders at such time, such Lender shall
forthwith purchase from the other Lenders such participations in the Obligations
due and payable or owing to them, as the case may be, as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each of the
other Lenders shall be rescinded and such other Lender shall repay to the
purchasing Lender the purchase price to the extent of such other Lender's
ratable share (according to the proportion of (A) the purchase price paid to
such other Lender to (B) the aggregate purchase price paid to all of the
Lenders) of such recovery, together with an amount equal to such other Lender's
ratable share (according to the proportion of (1) the amount of such other
Lender's required repayment to (2) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Each of the
Borrowers hereby agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section 2.12 may, to the fullest extent
permitted by applicable law, exercise all of its rights of payment (including,
without limitation, the right of setoff) with respect to such participation as
fully as if such Lender were the direct creditor of such Borrower in the amount
of such participation.
SECTION 2.13. Defaulting Lenders. (a) If, at any time, (i) any of
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the Lenders shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe
one or more Defaulted Advances to any of the Borrowers and (iii) such Borrower
or any of the other Borrowers shall be required to make any payment under this
Agreement or any of the other Loan Documents to or for the account of such
Defaulting Lender, then the paying Borrower may, so long as no Default shall
have occurred and be continuing at such time and to the fullest extent permitted
by applicable law, set off and otherwise apply the obligation of such Borrower
and the other Borrowers to make such payment to or for the account of such
Defaulting Lender against the obligation of such Defaulting Lender to make such
Defaulted Advances. If, on any date, any of the Borrowers shall so set off and
otherwise apply its obligation or the obligation of any of the other Borrowers
to make any such payment against the obligation of such Defaulting Lender to
make any such Defaulted Advance on or prior to such date, the amount so set off
and otherwise applied by such Borrower shall constitute for all purposes of this
Agreement and the other Loan Documents an Advance under each of the Facilities
pursuant to which, and made on the respective dates on which, each such
Defaulted Advance was originally required to have been made by such Defaulting
Lender pursuant to Section 2.01 (and, in doing so, such setoff shall satisfy the
obligation of such Borrower to such Defaulting Lender to the extent of the
aggregate amount so set off or otherwise applied). Each such Advance shall be a
Base Rate Advance and shall be considered for all purposes of this Agreement to
comprise part of the Borrowing in connection with which such Defaulted Advance
was originally required to have been made pursuant to Section 2.01, even if the
other Advances comprising such Borrowing shall be Eurodollar Rate Advances on
the date such Advance is deemed to be made pursuant to this Section 2.13(a).
Each of the Borrowers shall promptly notify the Administrative Agent at any time
that such Borrower exercises its right of setoff or otherwise reduces the amount
of its obligation or the obligation of any of the other Borrowers to any
Defaulting Lender pursuant to this Section 2.13(a) and shall set forth in such
notice (A) the name of the Defaulting Lender and the Defaulted Advance required
to be made by such Defaulting Lender, (B) the obligation of the Borrowers to
such Defaulting Lender against which such Defaulted
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69
Advance was so set off and applied and (C) the amount set off and otherwise
applied in respect of such Defaulted Advance pursuant to this Section 2.13(a).
Any portion of such payment otherwise required to be made by any of the
Borrowers to or for the account of such Defaulting Lender that is paid by such
Borrower, after giving effect to the amount set off and otherwise applied by
such Borrower or any of the other Borrowers pursuant to this Section 2.13(a),
shall be applied by the Administrative Agent as specified in Section 2.13(b) or
2.13(c).
(b) If, at any time, (i) any of the Lenders shall be a Defaulting
Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to the
Administrative Agent or any of the other Lenders and (iii) any of the Borrowers
shall make any payment under or in respect of this Agreement or any of the other
Loan Documents to the Administrative Agent for the account of such Defaulting
Lender, then the Administrative Agent may, on its behalf or on behalf of such
other Lenders and to the fullest extent permitted by applicable law, apply at
such time the amount so paid by such Borrower to or for the account of such
Defaulting Lender to the payment of each such Defaulted Amount to the extent
required to pay such Defaulted Amount. If the Administrative Agent shall so
apply any such amount to the payment of any such Defaulted Amount on any date,
the amount so applied by the Administrative Agent shall constitute for all
purposes of this Agreement and the other Loan Documents payment, to such extent,
of such Defaulted Amount on such date. Any such amount so applied by the
Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Lenders in accordance with
the respective Pro Rata Shares of such Defaulted Amounts payable at such time to
the Administrative Agent and such other Lenders and, if the amount of such
payment made by such Borrower shall at such time be insufficient to pay all of
the Defaulted Amounts owing to the Administrative Agent and the other Lenders at
such time, in the following order of priority:
(A) first, to the Administrative Agent for any Defaulted Amount owing
to the Administrative Agent (solely in its capacity as Administrative
Agent) at such time; and
(B) second, to the Lenders for any Defaulted Amounts owing to the
Lenders at such time, ratably based upon the respective Defaulted Amounts
owing to the Lenders at such time.
Any portion of such amount paid by any of the Borrowers for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this Section 2.13(b), shall be applied by the
Administrative Agent as specified in Section 2.13(c).
(c) If, at any time, (i) any of the Lenders shall be a Defaulting
Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance or a
Defaulted Amount and (iii) any of the Borrowers, the Administrative Agent or any
of the other Lenders shall be required to pay or to distribute any amount under
or in respect of this Agreement or any of the other Loan Documents to or for the
account of such Defaulting Lender, then such Borrower or such other Lender shall
pay such amount to the Administrative Agent to be held by the Administrative
Agent, to the fullest extent permitted by applicable law, in escrow or the
Administrative Agent shall, to the fullest extent permitted by applicable law,
hold in escrow such amount otherwise held by it. Any funds held by the
Administrative Agent in escrow under this Section 2.13(c) shall be deposited by
the Administrative Agent in an account with Citibank, in the name and under the
control of the Administrative Agent, but subject to the provisions of this
Section 2.13(c). The terms applicable to such account, including the rate of
interest payable with respect to the credit balance of such account from time to
time, shall be Citibank's standard terms applicable to escrow accounts
maintained with it. Any interest credited to such account from time to time
shall be held by the Administrative Agent in escrow under, and
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70
applied by the Administrative Agent from time to time in accordance with the
terms of, this Section 2.13(c). The Administrative Agent shall, to the fullest
extent permitted by applicable law, apply all funds so held in escrow by it from
time to time to the extent necessary to make any Advances required to be made by
such Defaulting Lender to any of the Borrowers and to pay any other amounts
payable by such Defaulting Lender under this Agreement or any of the other Loan
Documents to the Administrative Agent or any of the other Lenders, as and when
such Advances or other amounts are required to be made or paid and, if the
amount so held in escrow shall at any time be insufficient to make all such
Advances and to pay all such other amounts required to be made or paid at such
time, in the following order of priority:
(A) first, to the Agents for any Advances and any other amounts due
and payable by such Defaulting Lender to the Agents (solely in their
respective capacities as Agents) under or in respect of this Agreement and
the other Loan Documents at such time, ratably based upon the respective
aggregate Advances and other amounts due and payable to the Agents at such
time;
(B) second, to the other Lenders for any amounts due and payable by
such Defaulting Lender to the other Lenders under or in respect of this
Agreement and the other Loan Documents at such time, ratably based upon the
respective aggregate amounts due and payable to the other Lenders at such
time; and
(C) third, to the Appropriate Borrower for any Advances required to
be made by such Defaulting Lender pursuant to a Commitment of such
Defaulting Lender.
If any of the Lenders that is a Defaulting Lender shall, at any time, cease to
be a Defaulting Lender, any funds held by the Administrative Agent in escrow at
such time with respect to such Lender shall be distributed by the Administrative
Agent to such Lender and applied by such Lender to the Obligations owing to such
Lender under or in respect of this Agreement and the other Loan Documents at
such time, ratably based upon the respective amounts of such Obligations
outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under this
Section 2.13 are in addition to other rights and remedies that any of the
Borrowers may have against such Defaulting Lender with respect to any Defaulted
Advances and that the Administrative Agent or any of the other Lenders may have
against such Defaulting Lender with respect to any Defaulted Amount.
SECTION 2.14. Use of Proceeds. The proceeds of the Acquisition
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Advances were available on the Phase I Closing Date and (a) Fox Kids used such
proceeds solely to finance the Acquisitions and to pay certain fees and expenses
incurred in connection with the consummation of the Acquisitions, the
Reorganization and the Original Facilities and (b) Saban used such proceeds
solely to refinance certain Indebtedness of Saban outstanding on the Phase I
Closing Date. The proceeds of (i) the other Revolving Credit Advances shall be
available on and from time to time after the Phase II Closing Date and (A) Fox
Kids hereby agrees that it shall use such proceeds solely to finance in part the
Merger (through a capital contribution of such proceeds to Merger Corporation)
and to pay certain fees and expenses incurred in connection with the
consummation of the Transactions and (B) each of the other Borrowers hereby
agrees that it shall use such proceeds solely to refinance certain Indebtedness
of IFE outstanding on the Phase II Closing Date, to pay certain fees and
expenses incurred in connection with the consummation of the Transaction and for
general corporate purposes not otherwise prohibited under the terms of the Loan
Documents and (ii) the Term Advances shall be available on the Phase II Closing
Date, and Fox Kids hereby agrees that it shall use such
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71
proceeds, solely to finance in part the Merger and to pay certain fees and
expenses incurred in connection with the consummation of the Transaction.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Initial Revolving Credit B
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Borrowing and/or Term Borrowing. The obligation of each of the Appropriate
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Lenders to make one or more Advances on the occasion of the initial Revolving
Credit B Borrowing and/or the initial Term Borrowing is subject to the
satisfaction of the following conditions precedent prior to or concurrently with
the initial Revolving Credit B Borrowing and/or the initial Term Borrowing:
(a) The Lenders shall be reasonably satisfied with the organizational
and legal structure and capitalization of each of the Loan Parties and IFE
and, if and to the extent reasonably requested by the Lenders, each of
their respective Subsidiaries (including, without limitation, the terms and
conditions of the Constitutive Documents and each class of Equity Interests
in each such Loan Party, IFE and each such Subsidiary and of each agreement
or instrument relating to such structure or capitalization).
(b) All of the Transaction Documents shall remain in full force and
effect in the form received by the Original Lender on or prior to the Phase
I Closing Date (unless any such Transaction Document has expired in
accordance with its terms prior to the Phase II Closing Date); and the
Merger shall have been consummated or shall be consummated concurrently
with the initial Revolving Credit B Borrowing and/or the initial Term
Borrowing in accordance with the terms of the Merger Agreement and the
Consent (without any waiver or amendment of any term or condition in the
Merger Agreement or the Consent not consented to by the Lenders) and in
compliance with all applicable Requirements of Law.
(c) All of the Governmental Authorizations, and all of the consents,
approvals and authorizations of, and notices and filings to or with, and
other actions by, any other Person necessary in connection with any aspect
of the Transaction, any of the Loan Documents or the Transaction Documents
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 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 Lenders that restrains,
prevents or imposes materially adverse conditions upon any aspect of the
Transaction, any of the Loan Documents or the Transaction Documents or any
of the other transactions contemplated thereby.
(d) Before giving effect and immediately after giving pro forma
effect to the Transaction, no material adverse change shall have occurred
in the business, condition (financial or otherwise), operations,
performance, properties or prospects of Fox Kids, IFE and their respective
Subsidiaries, taken as a whole, since December 31, 1996. No additional
information relating to IFE or any of its Subsidiaries or to any aspect of
the Transaction shall have come to the attention of the Lenders since
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72
the Phase I Closing Date that, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(e) There shall exist no action, suit, investigation, litigation,
arbitration or proceeding pending or, to the best knowledge of each of the
Borrowers, threatened against or affecting any of the Loan Parties, IFE or
any of their respective Subsidiaries or any of the property or assets
thereof in any court or before any arbitrator or by or before any
Governmental Authority of any kind (i) that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect
or (ii) in which there is a reasonable likelihood of an adverse
determination and which purports to affect the legality, validity, binding
effect or enforceability of any aspect of the Transaction, any of the Loan
Documents or the Transaction Documents or any of the other transactions
contemplated thereby.
(f) All of the Indebtedness of Fox Kids, IFE and their respective
Subsidiaries in existence on the Phase II Closing Date, other than the
Indebtedness of Fox Kids, IFE or any such Subsidiary described on Schedule
4.01(kk) hereto (the "SURVIVING INDEBTEDNESS"), shall have been prepaid,
redeemed or defeased in full or otherwise satisfied and extinguished, and
all commitments therefor shall have been terminated; and all of the
Surviving Indebtedness shall be on terms and conditions reasonably
satisfactory to the Lenders.
(g) Fox Kids shall have received at least $345,513,864 in Net Cash
Proceeds from the issuance and sale of the NAHI Subordinated Notes to NAHI,
all of which shall have been used or shall be used concurrently with the
initial Revolving Credit B Borrowing and/or the initial Term Borrowing to
finance in part the Merger and to pay fees and expenses incurred in
connection with the consummation of the Transaction; and all of the NAHI
Subordinated Notes Documents shall be on terms and conditions reasonably
satisfactory to the Lenders.
(h) All of the accrued fees and expenses of the Agents and the
Lenders (including, without limitation, all of the accrued fees and
expenses of counsel for the Agents and local, foreign and intellectual
property counsel for the Lenders) that are required to be paid by Fox Kids
or any of its Affiliates shall have been paid in full.
(i) The Administrative Agent shall have received on or before the
Phase II Closing Date the following, each dated such date (unless otherwise
specified), in form and substance reasonably satisfactory to the Lenders
(unless otherwise specified) and (except for the Notes) in sufficient
copies for each of the Lenders:
(i) The Revolving Credit A Notes, payable to the order of the
Revolving Credit A Lenders, the Revolving Credit B Notes, payable to
the order of the Revolving Credit B Lenders, and the Term Notes,
payable to the order of the Term Lenders, respectively.
(ii) Certified copies of the resolutions of the board of
directors (or persons performing similar functions) of each of the
Loan Parties (other than Haim Saban) and IFE approving each of the
Loan Documents and the Transaction Documents to which it is or is to
be a party, the consummation of each aspect of the Transaction
involving or affecting such Loan Party or IFE and the other
transactions contemplated by any of the foregoing, and of all
documents evidencing necessary Governmental Authorizations, or other
necessary
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73
consents, approvals, authorizations, notices, filings or actions, with
respect to any of the Loan Documents or the Transaction Documents to
which it is or is to be a party, the consummation of any aspect of the
Transaction involving or affecting such Loan Party or IFE or any of
the other transactions contemplated by any of the foregoing.
(iii) (A) A copy of all of the Constitutive Documents of each of
the Loan Parties (other than Haim Saban) and IFE and, if and to the
extent requested by the Lenders, each of their respective
Subsidiaries, and each amendment thereto, certified (as of a date
reasonably near the Phase I Closing Date or, in the case of IFE and
its Subsidiaries, the Phase II Closing Date) as being a true and
complete copy thereof by the Secretary of State (or similar
Governmental Authority) of the jurisdiction of organization of such
Person and (B) evidence reasonably satisfactory to the Lenders of the
recording of a certified copy of the certificate of incorporation of
the Surviving Corporation with the Secretary of State of the State of
Delaware.
(iv) A copy of a certificate of the Secretary of State (or
equivalent Governmental Authority) of the jurisdiction of organization
of each of the Loan Parties (other than Haim Saban) and IFE and, if
and to the extent requested by the Lenders, each of their respective
Subsidiaries, dated reasonably near the Phase I Closing Date or, in
the case of IFE and its Subsidiaries, the Phase II Closing Date,
listing the certificate or articles of incorporation (or similar
Constitutive Document) of such Loan Party, IFE or such Subsidiary and
each amendment thereto on file in the office of such Secretary of
State (or such Governmental Authority) and certifying that (A) such
amendments are the only amendments to such Person's certificate or
articles of incorporation (or similar Constitutive Document) on file
in its office, (B) such Person has paid all franchise taxes (or the
equivalent thereof) to the date of such certificate and (C) such
Person is duly organized and is in good standing under the laws of the
jurisdiction of its organization.
(v) A certified copy of the certificate of merger or other
confirmation from the Secretary of State of the State of Delaware
reasonably satisfactory to the Lenders of the consummation of the
Merger.
(vi) A copy of the certificate of the Secretary of State (or
the equivalent Governmental Authority) of each jurisdiction in which
any of the Loan Parties (other than Haim Saban), IFE or any of their
respective Subsidiaries is qualified or licensed as a foreign
corporation, partnership, limited liability company or other Person,
except where the failure to so qualify or be licensed, either
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect, in each case dated reasonably near the
Phase I Closing Date or, in the case of IFE and its Subsidiaries, the
Phase II Closing Date and stating that such Person is duly qualified
and in good standing as a foreign corporation, partnership, limited
liability company or other Person in such jurisdiction and has filed
all annual reports required to be filed, and has paid all franchise
taxes (or the equivalent thereof) required to be paid, in such
jurisdiction to the date of such certificate.
(vii) A certificate of each of the Loan Parties (other than Haim
Saban) and IFE, signed on behalf of such Loan Party or IFE by its
President or a Vice President and its Secretary or an Assistant
Secretary (or persons performing similar functions), dated the Phase
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74
II Closing Date (the statements made in which certificate shall be
true on and as of the Phase II Closing Date), certifying as to:
(A) the absence of any amendments to the certificate or
articles of incorporation (or similar Constitutive Document) of
such Loan Party or IFE since the date of the Secretary of State's
(or equivalent Governmental Authority's) certificate referred to
in clause (iv) of this Section 3.01(i), or any steps taken by the
board of directors (or persons performing similar functions) or
the shareholders, partners, members or equivalent persons of such
Loan Party or IFE to effect or authorize any further amendment,
supplement or other modification thereto;
(B) the accuracy and completeness of the bylaws (or
similar Constitutive Documents) of such Loan Party or IFE as in
effect on the date on which the resolutions of the board of
directors (or persons performing similar functions) of such Loan
Party or IFE referred to in clause (ii) of this Section 3.01(i)
were adopted and on the Phase II Closing Date (a copy of which
shall be attached to such certificate);
(C) the due organization and good standing of such Loan
Party or IFE 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 (except as a
result of the consummation of the Merger) of such Loan Party or
IFE or any of their respective Subsidiaries;
(D) the absence of any change in the jurisdiction of
organization of such Loan Party or IFE or, except as part of the
Transaction, (i) any merger, consolidation or other similar
transaction directly or indirectly involving such Loan Party or
IFE or (ii) any issuance or sale of any Equity Interests in such
Loan Party or IFE, in each case since December 31, 1996;
(E) the legal and beneficial ownership by such Loan Party
or IFE of all of the Collateral in which it (or, in the case of
IFE, the Surviving Corporation) 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 or expressly permitted under the Loan Documents;
(F) except in the case of IFE, the accuracy in all
material respects of the representations and warranties made by
such Loan Party in the Loan Documents to which it is or is to be
a party as though made on and as of the Phase II Closing Date,
before and after giving effect to all of the Borrowings to be
made on the Phase II Closing Date and to the application of
proceeds therefrom; and
(G) except in the case of IFE, the absence of any event
occurring and continuing, or resulting from any of the Borrowings
to be made on the Phase II Closing Date or the application of
proceeds therefrom, that would constitute a Default.
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75
(viii) A certificate of the Secretary or an Assistant
Secretary (or a person performing similar functions) of each of
the Loan Parties (other than Haim Saban) certifying the names and
true signatures of the officers of such Loan Party 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.
(ix) An amended and restated security agreement, in
substantially the form of Exhibit D-1 hereto (together with each
other security agreement delivered pursuant to Section 5.01(q)
and each Security Agreement Supplement and each other security
agreement delivered pursuant to Section 5.02(k), in each case as
amended, supplemented or otherwise modified hereafter from time
to time in accordance with the terms thereof and Section 9.01,
the "SECURITY AGREEMENT"), duly executed by each of the Loan
Parties (other than the Equity Investors), together with (unless
otherwise delivered to the Administrative Agent, in form and
substance reasonably satisfactory to the Lenders, in connection
with the Phase I Closing Date):
(A) certificates representing the Initial Pledged
Interests referred to therein, accompanied by undated
stock powers or other appropriate powers, duly executed in
blank;
(B) instruments evidencing the Initial Pledged
Indebtedness referred to therein, duly endorsed in blank;
(C) (1) completed requests for information, dated
reasonably near the Phase I Closing Date or, in the case
of IFE and its Subsidiaries, the Phase II Closing Date,
listing all of the effective financing statements filed in
the jurisdictions referred to in subclause (ix)(D) or
(ix)(E) of this Section 3.01(i) that name any of the Loan
Parties (other than the Equity Investors) or IFE as
debtor, together with copies of all such effective
financing statements, and (2) copyright search reports
prepared by Federal Research Corporation, Thomson &
Thomson or any other Person reasonably acceptable to the
Administrative Agent, dated reasonably near the Phase I
Closing Date, that reflect any existing Liens on the
Copyrights, Patents or Trademarks of any of the Loan
Parties (other than the Surviving Corporation and its
Subsidiaries) on record in the United States Copyright
Office or the United States Patent and Trademark Office;
(D) proper termination statements (Form UCC-3 or a
comparable form) or the equivalent thereof under the
Uniform Commercial Code (or any similar Requirements of
Law) of all jurisdictions that may be necessary or that
the Administrative Agent may reasonably deem desirable in
order to terminate or amend existing liens on and security
interests in the Collateral described in the Security
Agreement, in each case completed in a manner satisfactory
to the Lenders and duly executed by the appropriate
secured party;
(E) proper financing statements (Form UCC-1 or a
comparable form) or the equivalent thereof under the
Uniform Commercial Code (or any similar Requirements of
Law) of all jurisdictions that may be necessary or that
the
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76
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
Security Agreement, covering the Collateral described
therein, in each case completed in a manner satisfactory
to the Lenders and duly executed by the applicable Loan
Party;
(F) IP Collateral Assignments--Short Form, covering
all of the Copyrights, Patents, if any, and Trademarks of
each of the applicable Loan Parties (other than the
Surviving Corporation and its Subsidiaries), duly executed
by the applicable Loan Party;
(G) copies of the Assigned Agreements referred to in
the Security Agreement, in each case together with notice
from the applicable Loan Party to each of the other
Persons party to such Assigned Agreement, in substantially
the form of Exhibit C-1 to the Security Agreement or
otherwise in form and substance reasonably satisfactory to
the Lenders and duly executed by the applicable Loan
Party, of the assignment of such Assigned Agreement and
the rights and interest of such Loan Party thereunder to
the Administrative Agent pursuant to the Security
Agreement;
(H) each of the Cash Collateral Account Letters,
duly executed by the applicable Borrower and Citibank; and
(I) evidence that all of the other actions
(including, without limitation, the completion of all
other recordings and filings of or with respect to the
Security 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 Security Agreement (other than
the actions permitted to be taken on or prior to November
5, 1997 pursuant to Section 5.01(m) or 5.01(o)) have been
taken or will be taken in accordance with the terms of the
Loan Documents.
(x) (A) A memorandum of deposit of shares of equity
interests, in substantially the form of Exhibit D-2 hereto and
dated the Phase I Closing Date (as amended, supplemented or
otherwise modified hereafter from time to time in accordance with
the terms thereof and Section 9.01, the "U.K./SABAN U.K. PLEDGE
AGREEMENT"), duly executed by Saban, (B) a memorandum of deposit
of shares of equity interests, in substantially the form of
Exhibit D-3 hereto (as amended, supplemented or otherwise
modified hereafter from time to time in accordance with the terms
thereof and Section 9.01, the "U.K./FKE PLEDGE AGREEMENT"), duly
executed by each of FKE Holdings and Fox Kids Network, (C) a deed
of pledge, in substantially the form of Exhibit D-4 hereto (as
amended, supplemented or otherwise modified hereafter from time
to time in accordance with the terms thereof and Section 9.01,
the "NETHERLANDS PLEDGE AGREEMENT"), duly executed by FKE
Holdings and T.V.10, (D) an amended and restated pledge agreement
of shares, in substantially the form of Exhibit D-5 hereto (as
amended, supplemented or otherwise modified hereafter from time
to time in accordance with the terms thereof and Section 9.01,
the "NETHERLANDS ANTILLES PLEDGE AGREEMENT"), duly executed by
Saban and Saban International, N.V., (E) a pledge agreement, in
substantially the form of Exhibit D-6 hereto (as amended,
supplemented or otherwise modified hereafter from time to time in
accordance with the terms thereof and Section 9.01, the "GERMAN
PLEDGE AGREEMENT"), duly executed by Saban, (F) a deed of
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77
pledge of shares, in substantially the form of Exhibit D-7 hereto
(as amended, supplemented or otherwise modified hereafter from
time to time in accordance with the terms thereof and Section
9.01, the "FRENCH/FOX KIDS SARL PLEDGE AGREEMENT"), duly executed
by FKE Holdings, Fox Kids Network and Fox Kids France SARL, and
(G) a deed of pledge of shares, in substantially the form of
Exhibit D-8 hereto (as amended, supplemented or otherwise
modified hereafter from time to time in accordance with the terms
thereof and Section 9.01, the "FRENCH/SABAN SARL PLEDGE
AGREEMENT" and, 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 SARL Pledge Agreement,
the "FOREIGN SUBSIDIARY PLEDGE AGREEMENTS"), duly executed by
Saban and Saban International Paris SARL, together with evidence
of the due execution and delivery of all further instruments and
documents, and the taking of all further actions (including,
without limitation, the completion of all recordings and filings
of or with respect to any of the Foreign Subsidiary Pledge
Agreements 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 any of the Foreign
Subsidiary Pledge Agreements.
(xi) One or more amended and restated pledge agreements,
in each case in substantially the form of Exhibit E hereto
(together with each Pledge Agreement Supplement delivered
pursuant to Section 12(b) of the Pledge Agreements, in each case
as amended, supplemented or otherwise modified hereafter from
time to time in accordance with the terms thereof and Section
9.01, the "PLEDGE AGREEMENTS"), duly executed by each of the
Equity Investors, together with (unless otherwise delivered to
the Administrative Agent, in form and substance satisfactory to
the Lenders, in connection with the Phase I Closing Date):
(A) certificates representing the Initial Pledged
Interests referred to therein, accompanied by undated
stock powers or other appropriate powers, duly executed in
blank;
(B) instruments evidencing the Initial Pledged
Indebtedness referred to therein, duly endorsed in blank;
(C) completed requests for information, dated
reasonably near the Phase I Closing Date, listing all of
the effective financing statements filed in the
jurisdictions referred to in subclause (xi)(D) of this
Section 3.01(i) that name any of the Equity Investors as
debtor, together with copies of all such effective
financing statements;
(D) proper financing statements (Form UCC-1 or a
comparable form) or the equivalent thereof under the
Uniform Commercial Code (or any similar Requirements of
Law) 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 under the Pledge Agreements, covering
the Collateral described therein, in each case completed
in a manner satisfactory to the Lenders and duly executed
by the applicable Equity Investor; and
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78
(E) evidence that all of the other actions
(including, without limitation, the completion of all
other recordings and filings of or with respect to any of
the Pledge Agreements) 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 any of the Pledge Agreements have
been taken or will be taken in accordance with the terms
of the Loan Documents.
(xii) An amended and restated guarantee, in substantially
the form of Exhibit F hereto (together with each Guarantee
Supplement delivered pursuant to Section 5.02(k), in each case as
amended, supplemented or otherwise modified hereafter from time
to time in accordance with the terms thereof and Section 9.01,
the "GUARANTEE"), duly executed by each of the wholly owned
Domestic Subsidiaries.
(xiii) Certificates of each of the Borrowers, in
substantially the form of Exhibit G hereto, duly executed by the
respective chief financial officers thereof (or, in the case of
FCN Holding, a person performing similar functions), attesting to
the Solvency of such Borrower and its Subsidiaries, taken as a
whole, immediately before and immediately after giving pro forma
effect to the Transaction and the other transactions contemplated
thereby.
(xiv) Certified copies of all of the agreements,
instruments and other documents evidencing or setting forth the
terms and conditions of the Surviving Indebtedness that is
outstanding or has commitments for the extension of credit on the
Phase II Closing Date in an aggregate amount of at least
$1,000,000.
(xv) Certified copies of (A) each of the employment and
other compensation agreements with each senior executive officer
of any of the Loan Parties (other than the Equity Investors) or
IFE that are not being terminated and satisfied in full on the
Phase II Closing Date and (B) the Consulting Agreement and the
Consulting Agreement Guaranty.
(xvi) Certified copies of (A) the unaudited Consolidated
financial statements of FCN Holding and its Subsidiaries for the
fiscal quarter of FCN Holding ended March 31, 1997, together with
a certificate of a Responsible Officer of FCN Holding with
respect thereto, (B) the unaudited Consolidated financial
statements of Saban and its Subsidiaries for the fiscal quarter
of Saban ended March 31, 1997, together with a certificate of a
Responsible Officer of Saban with respect thereto, (C) the
audited Consolidated financial statements of IFE and its
Subsidiaries for the fiscal years of IFE ended December 31, 1995
and December 31, 1996, in each case accompanied by an unqualified
opinion of KPMG Peat Marwick LLP, independent accountants of IFE,
(D) the unaudited Consolidated financial statements of IFE and
its Subsidiaries for the fiscal quarter of IFE ended June 30,
1997, together with a certificate of a Responsible Officer of IFE
with respect thereto, (E) the audited combined financial
statements of Fox Kids and its Subsidiaries for the period ended
June 30, 1996, accompanied by an unqualified opinion of Ernst &
Young LLP, independent accountants of Fox Kids, (F) pro forma
Consolidated financial statements of Fox Kids and its
Subsidiaries as of June 30, 1997, after giving effect to the
Transaction, together with a certificate of a Responsible Officer
of Fox Kids with respect thereto, and (G) forecasts prepared by
management of Fox Kids, in form and substance reasonably
satisfactory to the Lenders, of Consolidated balance sheets,
income statements and cash flow statements of Fox Kids and its
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79
Subsidiaries on an annual basis for each Fiscal Year from the
Fiscal Year in which the Phase II Closing Date occurs through the
scheduled Termination Date.
(xvii) Evidence of all of the insurance of Fox Kids and
its Subsidiaries required to be maintained thereby under Section
5.01(d) and, in the case of each of the Borrowers and each of the
wholly owned Domestic Subsidiaries, naming the Administrative
Agent, on behalf of the Secured Parties, as an additional insured
and/or loss payee thereunder.
(xviii) A duly completed and executed Notice of Borrowing
for each of the Borrowings to be made on the Phase II Closing
Date.
(xix) A favorable opinion of Louis A. Isakoff, Esq.,
General Counsel of IFE, in substantially the form of Exhibit H-1
hereto, and addressing such other matters as any of the Lenders
through the Administrative Agent may reasonably request.
(xx) A favorable tax opinion of Squadron, Ellenoff,
Plesent & Sheinfeld, LLP, counsel for the Loan Parties, dated the
Phase I Closing Date and in substantially the form of Exhibit H-2
hereto.
(xxi) A favorable opinion of Squadron, Ellenoff,
Plesent & Sheinfeld, LLP, counsel for the Loan Parties, in
substantially the form of Exhibit H-3 hereto, and addressing such
other matters as any of the Lenders through the Administrative
Agent may reasonably request.
(xxii) A favorable opinion of Troop Meisinger Steuber &
Pasich, LLP, special counsel for the Loan Parties, in
substantially the form of Exhibit H-4 hereto, and addressing such
other matters as any of the Lenders through the Administrative
Agent may reasonably request.
(xxiii) A favorable opinion of (A) Westaway & Co.,
special United Kingdom counsel for Saban, dated the Phase I
Closing Date and in substantially the form of Exhibit H-5 hereto,
(B) Norton Rose, special United Kingdom counsel for FKE Holdings
and Fox Kids Network, in substantially the form of Exhibit H-6
hereto, (C) Trenite Van Doorne, special Netherlands counsel for
FKE Holdings, in substantially the form of Exhibit H-7 hereto,
(D) Promes Trenite Van Doorne, special Netherlands Antilles
counsel for Saban, in substantially the form of Exhibit H-8
hereto, (E) Deringer Tessin Herrmann & Sedemund, special German
counsel for Saban, in substantially the form of Exhibit H-9
hereto, and (F) Klein-Goddard Associes, special French counsel
for Saban, FKE Holdings and Fox Kids Network, in substantially
the form of Exhibit H-10 hereto and, in each of the foregoing
cases, addressing such other matters as any of the Lenders
through the Administrative Agent may reasonably request.
(xxiv) A favorable opinion of Finnegan, Henderson,
Farabow, Garrett & Dunner, LLP, intellectual property counsel for
the Lenders, in substantially the form of Exhibit H-11 hereto,
and addressing such other matters as any of the Lenders through
the Administrative Agent may reasonably request.
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80
(xxv) A favorable opinion of Shearman & Sterling,
counsel for the Agents, in form and substance satisfactory to the
Agents.
SECTION 3.02. Conditions Precedent to Each Borrowing. The obligation
--------------------------------------
of each of the Appropriate Lenders to make an Advance on the occasion of each
Borrowing (including each Borrowing made on the Phase II Closing Date) shall be
subject to the further conditions precedent that on the date of such Borrowing
(a) the following statements shall be true (and each of the giving of the
applicable Notice of Borrowing by any of the Borrowers and the acceptance by the
Borrower that requested such Borrowing of the proceeds of such Borrowing shall
constitute a representation and warranty by such Borrower that, both on the date
of such notice and on the date of such Borrowing, such statements are true):
(i) the representations and warranties contained in each of the Loan
Documents are correct in all material respects on and as of such date
(except, at any time prior to November 5, 1997, for the representation and
warranty contained in Section 8(g) of the Security Agreement), before and
after giving effect to such Borrowing and to the application of the
proceeds therefrom, as though made on and as of such date (other than any
such representation and warranty that, by its terms, refers to a specific
date other than the date of such Borrowing, in which case, as of such
specific date); and
(ii) no event has occurred and is continuing, or would result from
such Borrowing or from the application of the proceeds therefrom, that
constitutes a Default;
and (b) the Administrative Agent shall have received such other approvals,
authorizations, opinions, documents and information as any of the Appropriate
Lenders through the Administrative Agent may reasonably request.
SECTION 3.03. Determinations Under Section 3.01. For purposes of
---------------------------------
determining compliance with the conditions specified in Section 3.01, each of
the Lenders shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by, or acceptable or satisfactory to, the Lenders unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
prior to the Phase II Closing Date specifying its objection thereto and, if such
Lender has a Commitment on the Phase II Closing Date under any of the Facilities
under which a Borrowing is to be made on such date, such Lender shall not have
made available to the Administrative Agent such Lender's Pro Rata Share of such
Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. Each of the Borrowers
------------------------------
represents and warrants as follows:
(a) Each of the Loan Parties (other than Haim Saban) and each of
their respective Subsidiaries (i) are corporations, partnerships or limited
liability companies duly organized and validly existing under the laws of
the jurisdictions of their respective organization and, in the case of each
such Loan Party and each such Subsidiary organized under the laws of any
state of the United States of America, are in good standing under the laws
of such state and (ii) are duly qualified as foreign
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81
corporations, partnerships or limited liability companies and are in good
standing in each other jurisdiction in which the ownership, lease or
operation of their respective property and assets or the conduct of their
respective businesses require them to so qualify or be licensed, except,
solely in the case of this clause (ii), where the failure to so qualify or
be licensed or to be in good standing, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect. Each of the Loan Parties and each of their respective Subsidiaries
have all of the requisite power and authority, and the legal right, to own
or lease and to operate all of the property and assets they purport to own,
lease or operate and to conduct all of their respective businesses as now
conducted and as proposed to be conducted. Each of the Loan Parties has all
of the requisite power and authority, and the legal right, to execute and
deliver each of the Loan Documents and the Transaction Documents to which
it is or is to be a party, to perform all of its Obligations hereunder and
thereunder and to consummate the Transaction and all of the other
transactions contemplated hereby and thereby.
(b) Set forth on Schedule 4.01(b) hereto is a complete and accurate
list of all of the Subsidiaries of Fox Kids, showing, as of the date of
this Agreement, as to each such Subsidiary, the correct legal name thereof,
the legal structure thereof, the jurisdiction of its organization, the
number and type of each class of its Equity Interests authorized and the
number outstanding, and the percentage of each such class of its Equity
Interests outstanding on such date that are owned by any of the Loan
Parties. All of the outstanding Equity Interests in Fox Kids (other than
the Excluded Fox Kids Equity Interests) are owned directly by the Equity
Investors, free and clear of all Liens (including, without limitation,
preemptive or other similar rights of the holders thereof), except for the
liens and security interests created under the Pledge Agreements. All of
the outstanding Equity Interests in each of the other Borrowers are owned
directly by Fox Kids, free and clear of all Liens (including, without
limitation, preemptive or other similar rights of the holders thereof),
except for the liens and security interests created under the Security
Agreement. Except as set forth on Schedule 4.01(b) hereto, all of the
outstanding Equity Interests in each of the Subsidiaries of the Borrowers
are owned directly or indirectly by one or more of the Loan Parties, free
and clear of all Liens (including, without limitation, preemptive or other
similar rights of the holders thereof), except for the liens and security
interests created under the Collateral Documents. All of the outstanding
Equity Interests in Fox Kids and each of its Subsidiaries have been validly
issued and are fully paid and nonassessable.
(c) The execution, delivery and performance by each of the Loan
Parties of each of the Loan Documents and the Transaction Documents to
which it is or is to be a party, and the consummation of the Transaction
and the other transactions contemplated hereby and thereby, have been duly
authorized by all necessary action (including, without limitation, all
necessary shareholder, partner, member or other similar action) and do not:
(i) contravene the Constitutive Documents of such Loan Party;
(ii) violate any Requirement of Law;
(iii) conflict with or result in the breach of, or constitute a
default under, any loan agreement, indenture, mortgage, deed of trust,
lease, instrument, contract or other agreement binding on or affecting
such Loan Party, any of its Subsidiaries or any of their respective
property or assets; or
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82
(iv) except for the Liens created under the Loan Documents,
result in or require the creation or imposition of any Lien upon or
with respect to any of the property or assets of such Loan Party or
any of its Subsidiaries.
Neither any of the Loan Parties nor any of their respective Subsidiaries is
in violation of any Requirement of Law or in breach of any loan agreement,
indenture, mortgage, deed of trust, lease, instrument, contract or other
agreement referred to in the immediately preceding sentence, the violation
or breach of which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(d) Each of the Loan Parties and each of their respective
Subsidiaries own or possess all of the Governmental Authorizations that are
necessary to own or lease and operate their respective property and assets
and to conduct their respective businesses as now conducted and as proposed
to be conducted, except where and to the extent that the failure to obtain
or maintain in effect any such Governmental Authorization, either
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect. Neither any of the Loan Parties nor any of their
respective Subsidiaries has received any notice relating to or threatening
the revocation, termination, cancellation, denial, impairment or
modification of any such Governmental Authorization, or is in violation or
contravention of, or in default under, any such Governmental Authorization.
No Governmental Authorization, and no consent, approval or authorization
of, or notice to or filing with, or other action by, any other Person is
required for:
(i) the due execution, delivery, recordation, filing or
performance by any of the Loan Parties of any of the Loan Documents or
the Transaction Documents to which it is or is to be a party, or for
the consummation of any aspect of the Transaction or the other
transactions contemplated hereby or thereby;
(ii) the grant by any of the Loan Parties of the Liens granted
by it pursuant to the Collateral Documents;
(iii) the perfection or maintenance of the Liens created under
the Collateral Documents (including the first priority nature
thereof); or
(iv) the exercise by the Administrative Agent or any of the
Lenders of its rights under the Loan Documents or the remedies in
respect of the Collateral pursuant to the Collateral Documents;
except for the Governmental Authorizations, and the consents, approvals,
authorizations, notices, filings and other actions, described on Schedule
4.01(d) hereto. All of the Governmental Authorizations, and the consents,
approvals, authorizations, notices, filings and other actions, described on
Schedule 4.01(d) hereto have been or will have been duly obtained, taken,
given or made on or prior to the Phase II Closing Date and are, or on the
Phase II Closing Date will be, in full force and effect, or, if expressly
provided for on Schedule 4.01(d) hereto, will be duly obtained, taken,
given or made in accordance with the terms set forth therefor on Schedule
4.01(d) hereto and, thereafter, will be in full force and effect. All
applicable waiting periods in connection with each aspect of the
Transaction and the other transactions contemplated hereby and thereby have
expired without any action having been taken by any competent authority
restraining, preventing or imposing
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83
materially adverse conditions upon any aspect of the Transaction or the
rights of any of the Loan Parties or their respective Subsidiaries freely
to transfer or otherwise dispose of, or to create any Lien on, any property
or assets now owned or hereafter acquired by any of them.
(e) This Agreement has been, and each of the Notes, each of the other
Loan Documents and each of the Transaction Documents when delivered
hereunder will have been, duly executed and delivered by each of the Loan
Parties intended to be a party thereto. This Agreement is, and each of the
Notes, each of the other Loan Documents and each of the Transaction
Documents when delivered hereunder will be, the legal, valid and binding
obligations of each of the Loan Parties intended to be a party thereto,
enforceable against such Loan Party in accordance with their respective
terms, except to the extent such enforceability may be limited by the
effect of applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally.
(f) The Consolidated balance sheet of FCN Holding and its
Subsidiaries as of March 31, 1997, and the related Consolidated statements
of operations and cash flows of FCN Holding and its Subsidiaries for the
three-month period then ended, duly certified by a Responsible Officer of
FCN Holding, copies of which have been furnished to each of the Lenders,
fairly present (subject to normal year-end audit adjustments) the
Consolidated financial condition of FCN Holding and its Subsidiaries as at
such date and the Consolidated results of operations and cash flows of FCN
Holding and its Subsidiaries for the period ended on such date. All of the
Consolidated financial statements referred to above in this Section 4.01(f)
have been prepared in accordance with generally accepted accounting
principles applied consistently throughout the period covered thereby.
(g) The Consolidated balance sheet of Saban and its Subsidiaries as
of March 31, 1997, and the related Consolidated statements of operations
and cash flows of Saban and its Subsidiaries for the three-month period
then ended, duly certified by a Responsible Officer of Saban, copies of
which have been furnished to each of the Lenders, fairly present (subject
to normal year-end audit adjustments) the Consolidated financial condition
of Saban and its Subsidiaries as at such date and the Consolidated results
of operations and cash flows of Saban and its Subsidiaries for the period
ended on such date. All of the Consolidated financial statements referred
to above in this Section 4.01(g) have been prepared in accordance with
generally accepted accounting principles applied consistently throughout
the period covered thereby.
(h) The Consolidated balance sheets of IFE and its Subsidiaries as of
December 31, 1995 and December 31, 1996, and the related Consolidated
statements of liabilities, stockholders' equity and cash flows of IFE and
its Subsidiaries for the fiscal years of IFE ended December 31, 1995 and
December 31, 1996, in each case including the schedules and notes thereto
and accompanied by an opinion of KPMG Peat Marwick LLP, the independent
accountants of IFE, and the Consolidated balance sheet of IFE and its
Subsidiaries as of June 30, 1997, and the related Consolidated statements
of liabilities, stockholders' equity and cash flows of IFE and its
Subsidiaries for the three-month period then ended, duly certified by a
Responsible Officer of IFE, copies of all of which have been furnished to
each of the Lenders, fairly present (subject, in the case of such balance
sheet as of June 30, 1997 and such statements of liabilities, stockholders'
equity and cash flows for the three-month period then ended, to normal
year-end audit adjustments) the Consolidated financial condition of IFE and
its Subsidiaries as at such dates and the Consolidated results of
operations and cash flows of IFE and its Subsidiaries for the respective
periods ended on such dates. All of the Consolidated financial
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84
statements referred to above in this Section 4.01(h), including the
schedules and notes thereto, have been prepared in accordance with
generally accepted accounting principles applied consistently throughout
the respective periods covered thereby.
(i) The combined balance sheet of Fox Kids and its Subsidiaries as of
June 30, 1996, and the related combined statements of operations,
stockholders' equity and cash flows of Fox Kids and its Subsidiaries for
the eight-month period ended June 30, 1996, in each case including the
schedules and notes thereto and accompanied by an opinion of Ernst & Young
LLP, the independent accountants of Fox Kids, copies of which have been
furnished to each of the Lenders, fairly present the combined financial
condition of Fox Kids and its Subsidiaries as at such date and the combined
results of operations and cash flows of Fox Kids and its Subsidiaries for
the period ended on such date. All of the combined financial statements
referred to above in this Section 4.01(i), including the schedules and
notes thereto, have been prepared in accordance with generally accepted
accounting principles applied consistently throughout the period covered
thereby.
(j) The pro forma Consolidated balance sheet of Fox Kids and its
Subsidiaries as of June 30, 1997, and the related pro forma Consolidated
statements of operations and stockholders' equity of Fox Kids and its
Subsidiaries for the 12-month period ended June 30, 1997, duly certified by
a Responsible Officer of Fox Kids, copies of which have been furnished to
each of the Lenders, fairly present the pro forma Consolidated financial
condition of Fox Kids and its Subsidiaries as at such date and the pro
forma Consolidated results of operations and cash flows of Fox Kids and its
Subsidiaries for the period ended on such date, in each case after giving
effect to the Transaction.
(k) The forecasted Consolidated balance sheets, statements of
operation and cash flow statements of Fox Kids and its Subsidiaries
delivered to the Lenders pursuant to Section 3.01(i)(xvi)(G) or 5.03(e)
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were reasonable in the light of conditions existing at
the time of delivery of such forecasts, and represented, at the time of
delivery thereof to the Lenders, the Borrowers' reasonable estimates of
their future financial performance (although the actual results during the
periods covered by such forecasts may differ from the forecasted results).
(l) No material adverse change has occurred in the business,
condition (financial or otherwise), operations, performance or properties
of Fox Kids, IFE and their respective Subsidiaries, taken as a whole, since
December 31, 1996.
(m) The Information Memorandum (as supplemented by Schedule 4.01(m)
hereto) and all of the other written information (other than financial
projections and pro forma information) furnished by or on behalf of any of
the Loan Parties or any of their respective Subsidiaries to the
Administrative Agent or any of the Lenders in connection with the Loan
Documents or the Transaction Documents or any aspect of the Transaction or
any of the other transactions contemplated hereby or thereby does not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made therein, in light of the
circumstances in which any such statements were made, not misleading.
(n) There is no action, suit, investigation, litigation, arbitration
or proceeding pending or, to the best knowledge of each of the Borrowers,
threatened against or affecting any of the Loan Parties or any of their
respective Subsidiaries or any of the property or assets thereof in any
court or
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85
before any arbitrator or by or before any Governmental Authority
of any kind (i) that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or (ii) in which
there is a reasonable likelihood of an adverse determination and which
purports to affect the legality, validity, binding effect or enforceability
of any aspect of the Transaction, any of the Loan Documents or the
Transaction Documents or any of the other transactions contemplated
thereby.
(o) Each of the Loan Parties and each of their respective
Subsidiaries are the legal and beneficial owners of the Collateral
purported to be owned thereby under the Collateral Documents, free and
clear of all Liens, except for the liens and security interests created or
expressly permitted under the Loan Documents. The Collateral Documents
create valid and perfected first priority (subject to the liens and
security interests expressly permitted under the terms of the Loan
Documents) liens on and security interests in the Collateral in favor of
the Administrative Agent, for the benefit of the Secured Parties, securing
the payment of the Secured Obligations. All of the Equity Interests in Fox
Kids and its Subsidiaries that are purported to comprise part of the
Collateral have been delivered to the Administrative Agent as required
under the terms of the Collateral Documents, together with undated stock
powers or other appropriate powers duly executed in blank; all filings and
other actions necessary to perfect and protect the liens and security
interests of the Administrative Agent in the Collateral have been duly made
or taken and are in full force and effect or will be duly made or taken in
accordance with the terms of the Loan Documents; and all filing fees and
recording taxes have been paid in full.
(p) Each of the Loan Parties and each of their respective
Subsidiaries own or possess all of the licenses, permits, franchises,
authorizations, consents and approvals, and own or have the legal right to
use all of the patents, copyrights, service marks, trademarks and trade
names (or other rights thereto), that are necessary to own or lease and
operate their respective property and assets and to conduct their
respective businesses as now conducted and as proposed to be conducted,
without known conflict with the rights of any other Person. No action,
suit, investigation, litigation, arbitration or proceeding is pending or,
to the best knowledge of each of the Borrowers, is threatened challenging
the use by any of the Loan Parties or any of their respective Subsidiaries
of any such license, permit, franchise, authorization, consent, approval,
patent, copyright, service mark, trademark, trade name or other right, or
the validity or effectiveness thereof, except for any such action, suit,
investigation, litigation or proceeding that, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect. Except as described on Schedule 4.01(p) hereto:
(i) no product of any of the Loan Parties or any of their
respective Subsidiaries infringes in any material respect on any
license, permit, franchise, authorization, consent, approval, patent,
copyright, service mark, trademark, trade name or other right owned by
any other Person; and
(ii) there is no material violation by any Person of any right of
any of the Loan Parties or any of their respective Subsidiaries with
respect to any license, permit, franchise, authorization, consent,
approval, patent, copyright, service mark, trademark, trade name or
other right owned or used by any such Loan Party or any such
Subsidiary.
Neither the Administrative Agent nor any of the Lenders will, solely as a
result of their execution, delivery or performance of this Agreement or any
of the other Loan Documents, or the making of
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86
Advances or maintaining their Commitments hereunder, be subject to the
regulation or control of the FCC or any similar Governmental Authority.
(q) Neither Fox Kids nor any of its Subsidiaries is engaged in the
business of extending credit for the purpose of purchasing or carrying any
"margin stock" (within the meaning of Regulation G or U of the Board of
Governors of the Federal Reserve System (12 CFR 207)). Following
application of the proceeds of each Advance made on or after the Phase II
Closing Date, not more than 25 percent of the value of the property and
assets of any of the Borrowers, either individually or together with its
Subsidiaries, taken as a whole, subject to the provisions of Section
5.02(a) or 5.02(e) or subject to any restriction contained in any agreement
or instrument between any such Borrower and any of the Lenders or any
Affiliate of any of the Lenders relating to Indebtedness and within the
scope of Section 7.01(e), will be margin stock.
(r) Neither any of the Loan Parties nor any of their respective
Subsidiaries is an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" (each as
defined in the Investment Company Act of 1940, as amended). None of the
making of any Advances or the application of the proceeds therefrom, the
repayment of any of the Advances by any of the Borrowers, or the
consummation of the Transaction or any of the other transactions
contemplated hereby, will violate any provision of the Investment Company
Act of 1940, as amended, or any rule, regulation or order of the Securities
and Exchange Commission thereunder.
(s) Each of the Borrowers and its Subsidiaries, taken as a whole, is
Solvent.
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87
(t) Neither any of the Loan Parties nor any of their respective
Subsidiaries is a party to any loan agreement, indenture, mortgage, deed of
trust, lease, instrument, contract or other agreements or is subject to any
restriction in its Constitutive Documents or any other corporate,
partnership, limited liability company or similar restriction that, in each
case either individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
(u) Neither the business nor the property or assets of any of the
Loan Parties or any of their respective Subsidiaries have been affected by
any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo or other act of God or of the
public enemy or other casualty (whether or not covered by insurance) that,
either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
(v) There is (i) no unfair labor practice complaint pending or, to
the best knowledge of each of the Borrowers, threatened against any of the
Loan Parties or any of their respective Subsidiaries by or before any
Governmental Authority and no grievance or arbitration proceeding pending
or, to the best knowledge of each of the Borrowers, threatened against any
of the Loan Parties or any of their respective Subsidiaries which arises
out of or under any collective bargaining agreement, (ii) no strike, labor
dispute, slowdown, stoppage or similar action or grievance pending or, to
the best knowledge of each of the Borrowers, threatened against any of the
Loan Parties or any of their respective Subsidiaries and (iii) to the best
knowledge of each of the Borrowers, no union representation question
existing with respect to the employees of any of the Loan Parties or any of
their respective Subsidiaries and no union organizing activity taking place
with respect to any of the employees of any of them that, in the case of
any or all of clauses (i), (ii) and (iii) of this Section 4.01(v), either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(w) There exists no actual or threatened termination, cancellation or
limitation of, or modification to or change in, the business relationship
between (i) any of the Borrowers or any of their respective Subsidiaries,
on the one hand, and any carrier, any customer or any group thereof, on the
other hand, whose agreements with any such Borrower or any such Subsidiary
are, or whose use of the property and assets or services thereof is, either
individually or in the aggregate, material to the business or operations of
Fox Kids and its Subsidiaries, taken as a whole, or (ii) any of the
Borrowers or any of their respective Subsidiaries, on the one hand, and any
material supplier thereof, on the other hand; and, to the best knowledge of
each of the Borrowers, there exists no present state of facts or
circumstances that could reasonably be expected to give rise to or result
in any such termination, cancellation, limitation, modification or change.
(x) Set forth on Schedule 4.01(x) hereto is a complete and accurate
list, as of the date of this Agreement, of all of the Plans and
Multiemployer Plans of the Borrowers and the ERISA Affiliates. No
circumstances or conditions exist under any scheme or arrangement mandated
by any Governmental Authority other than Governmental Authorities of the
United States of America and the political subdivisions thereof that
require employer or employee contributions or compliance by any of the
Borrowers or any of their respective Subsidiaries, and neither any of the
Borrowers nor any of their respective Subsidiaries maintains or contributes
to any employee benefit plan that is not subject solely to the Requirements
of Law of the United States of America or any political subdivision
thereof, that, in any such case either individually or in the aggregate,
could reasonably be expected to result in any material liability of any of
the Borrowers or any of their respective Subsidiaries. None of the
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88
Equity Investors is a member of the "controlled group of corporations" (as
defined in Treasury Regulations 1.414(b) and 1.414(c)) of any of the
Borrowers.
(y) No ERISA Event has occurred or could reasonably be expected to
occur with respect to any Plan that has resulted or could reasonably be
expected to result in any material liability of any of the Borrowers or any
of the ERISA Affiliates.
(z) Schedule B (Actuarial Information) to the most recent annual
report (form 5500 series) for each of the Plans, copies of which have been
filed with the Internal Revenue Service and furnished to each of the
Lenders, is complete and accurate and fairly presents the funding status of
such Plan; and, since the date of such Schedule B, there has been no
material adverse change in the funding status of such Plan.
(aa) Neither any of the Borrowers nor any of the ERISA Affiliates (i)
has incurred or could reasonably be expected to incur any Withdrawal
Liability to any Multiemployer Plan or (ii) has been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no such Multiemployer Plan could reasonably be expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA, that in any of the foregoing cases under this Section 4.01(aa),
either individually or in the aggregate, could reasonably be expected to
result in any material liability of any of the Borrowers or any of the
ERISA Affiliates.
(bb) The operations and properties of each of the Loan Parties and
each of their respective Subsidiaries comply in all material respects with
all applicable Environmental Laws and Environmental Permits; all past
noncompliance with such Environmental Laws and Environmental Permits has
been resolved without any material ongoing obligations or costs; all
Environmental Permits that are necessary for the operations or properties
of any of the Loan Parties or any of their respective Subsidiaries have
been obtained and are in full force and effect; and no circumstances exist
that, either individually or in the aggregate, could reasonably be expected
to (i) form the basis of an Environmental Action against any of the Loan
Parties or any of their respective Subsidiaries or any of the properties
thereof that, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect or (ii) cause any such property
to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law that, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(cc) (i) None of the properties owned or operated by any of the Loan
Parties or any of their respective Subsidiaries is listed or proposed for
listing on the NPL or on the CERCLIS or any analogous foreign, state,
provincial or local list or, to the best knowledge of each of the
Borrowers, is adjacent to any such property; and (ii) except as, either
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect, (A) there are no and never have been any
underground or aboveground storage tanks or any surface impoundments,
septic tanks, pits, sumps or lagoons in which Hazardous Materials are being
or have been treated, stored or disposed of on any property owned or
operated by any of the Loan Parties or any of their respective Subsidiaries
or, to the best knowledge of each of the Borrowers, on any property
formerly owned or operated by any of the Loan Parties or any of their
respective Subsidiaries, (B) there is no asbestos or asbestos-containing
material on any property owned or operated by any of the Loan Parties or
any of their respective
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89
Subsidiaries, and (C) Hazardous Materials have not been released,
discharged or disposed of on any property owned or operated by any of the
Loan Parties or any of their respective Subsidiaries.
(dd) Neither any of the Loan Parties nor any of their respective
Subsidiaries is undertaking, and has not completed, either individually or
together with other potentially responsible parties, any investigation or
assessment or remedial or response action relating to any actual or
threatened release, discharge or disposal of Hazardous Materials at any
site, location or operation, either voluntarily or pursuant to the order of
any Governmental Authority or the requirements of any Environmental Law.
All Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property owned or operated by any of the Loan
Parties or any of their respective Subsidiaries have been disposed of in a
manner that, either individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
(ee) Each of the Loan Parties and each of their respective
Subsidiaries have filed, have caused to be filed or have been included in
all federal tax returns, reports and statements and all other material tax
returns, reports and statements (foreign, state, local and provincial)
required to be filed and have paid all taxes, assessments, levies, fees and
other charges shown thereon (or on any assessments received by any such
Person or of which any such Person has been notified) to be due and
payable, together with applicable interest and penalties, except for any
such taxes, assessments, levies, fees and other charges the amount,
applicability or validity of which is being contested in good faith and by
appropriate proceedings diligently conducted and with respect to which such
Loan Party or such Subsidiary, as the case may be, has established
appropriate and adequate reserves in accordance with GAAP. Except as set
forth on Schedule 4.01(ee) hereto, all of the tax returns, reports and
statements referred to in the immediately preceding sentence have been
prepared in good faith and are complete and accurate in all material
respects for the Loan Parties and their Subsidiaries for the periods
covered thereby.
(ff) Set forth on Schedule 4.01(ff) hereto is a complete and accurate
list, as of the date of this Agreement, of each Open Year of each of the
Loan Parties and each of their respective Subsidiaries. There are no
adjustments to (i) the federal income tax liability (including, without
limitation, interest and penalties) of any of the Loan Parties or any of
their respective Subsidiaries proposed in writing by the Internal Revenue
Service with respect to Open Years or (ii) any foreign, state, local or
provincial tax liability (including, without limitation, interest and
penalties) of any of the Loan Parties or any of their respective
Subsidiaries proposed in writing by any foreign, state, local or provincial
taxing authority that, in the aggregate for subclause (A) and (B) of this
sentence, would exceed $5,000,000. No issues have been raised by the
Internal Revenue Service in respect of Open Years or by any such foreign,
state, local or provincial taxing authorities that, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(gg) Except as set forth on Schedule 4.01(gg) hereto, neither any of
the Loan Parties nor any of their respective Subsidiaries has entered into
an agreement or waiver or been requested to enter into an agreement or
waiver extending any statute of limitations relating to the assessment,
reassessment, payment or collection of taxes of such Loan Party or any such
Subsidiary, or is aware of any circumstances that would cause the taxable
years or other taxable periods of such Loan Party or any such Subsidiary to
no longer be subject to the normally applicable statute of limitations.
Neither any of the Loan Parties nor any of their respective Subsidiaries
has provided, with respect to itself or any property held by it, any
consent under Section 341(f) of the Internal Revenue Code.
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90
(hh) No "ownership change" (as defined in Section 382(g) of the
Internal Revenue Code), and no event that would result in the application
of the "separate return year limitation" or the "consolidated return change
of ownership" limitations under the federal income tax consolidated return
regulations, has occurred at any time with respect to any of the Borrowers
or IFE, except as a direct result of the Reorganization or the Merger. As
of June 30, 1997: (i) Fox Kids and its Subsidiaries did not have any net
operating loss carryforwards for U.S. federal income tax purposes; (ii) FCN
Holding and its Subsidiaries had net operating loss carryforwards for U.S.
federal income tax purposes equal to at least $100,000 in the aggregate;
(iii) Saban and its Subsidiaries did not have any net operating loss
carryforwards for U.S. federal income tax purposes; and (iv) IFE and its
Subsidiaries did not have any net operating loss carryforwards for U.S.
federal income tax purposes.
(ii) Neither any of the Acquisitions nor the Merger will result in the
imposition of federal income taxes on or with respect to any of the Loan
Parties or any of their respective Subsidiaries. The contribution by
Liberty IFE to Fox Kids of all of the debt securities of, and Equity
Interests in, IFE owned or otherwise held by it in exchange for shares of
the Series A Preferred Stock and the share exchange contemplated by the
Reorganization Agreement qualify as a tax free exchange pursuant to Section
351 of the Internal Revenue Code, except to the extent that the exchange
rights granted to Liberty IFE and Liberty Media constitute taxable "boot"
under the Internal Revenue Code.
(jj) Set forth on Schedule 4.01(jj) hereto is a complete and accurate
list of all of the Persons (other than any of the Loan Parties) that any of
the Borrowers or any of the Restricted Subsidiaries employs or uses to
distribute or subdistribute any item of Product for distribution,
exhibition, syndication, exploitation or disposition and/or to collect or
otherwise receive (or have credited to its account) any receivables from
such distribution, exhibition, syndication, exploitation or disposition of
any item of Product.
(kk) Set forth on Schedule 4.01(kk) hereto is a complete and accurate
list, as of the date of this Agreement, of all of the Surviving
Indebtedness, showing, as of such date, each of the Loan Parties and/or
each of their respective Subsidiaries party thereto, the principal amount
outstanding thereunder, the interest rate thereon, the scheduled maturity
date thereof and the amortization schedule, if any, therefor.
(ll) Set forth on Part A of Schedule 4.01(ll) hereto is a complete and
accurate list, as of the date of this Agreement and as of the date of any
amendment or supplement to Schedule 4.01(ll) hereto (whether pursuant to
Section 5.03(f) or otherwise), of all of the real property owned by any of
the Loan Parties (other than the Equity Investors) or any of their
respective Subsidiaries, showing, as of such date, the street address,
county or other relevant jurisdiction, state and zip code therefor and the
record owner and the book value thereof. Each of the Loan Parties (other
than the Equity Investors) and each of their respective Subsidiaries has
good, marketable and insurable fee simple title to all such real property
owned thereby, free and clear of all Liens, except for the liens and
security interests created or expressly permitted under the Loan Documents.
Set forth on Part B of Schedule 4.01(ll) hereto is a complete and accurate
list, as of the date of this Agreement and as of the date of any amendment
or supplement to Schedule 4.01(ll) hereto (whether pursuant to Section
5.03(f) or otherwise), of all of the leases of real property under which
any of the Loan Parties (other than the Equity Investors) or any of their
respective Subsidiaries is the lessee, showing, as of such date, the street
address, county or other relevant jurisdiction, state and zip code therefor
and the lessor, lessee, expiration date and annual rental cost thereof.
Each of the leases referred to in the immediately
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91
preceding sentence is, to obligation of the lessor thereof, enforceable
against such lessor in accordance with its terms.
(mm) Set forth on Schedule 4.01(mm) hereto is a complete and accurate
list, as of the date of this Agreement, of all of the Investments (other
than Cash Equivalents and cash maintained in the Cash Collateral Accounts
and the Blocked Accounts) held by any of the Loan Parties (other than the
Equity Investors) or any of their respective Subsidiaries, showing, as of
such date, the amount, the obligor or issuer and the maturity, if any,
thereof.
(nn) Set forth on Schedule 4.01(nn) hereto is a complete and accurate
list, as of the date of this Agreement and as of the date of any amendment
or supplement to Schedule 4.01(nn) hereto (whether pursuant to Section
5.03(f), Section 15(a) of the Security Agreement or otherwise), of all of
the patents, trademarks, trade names, service marks and copyrights, and all
of the applications therefor and registrations thereof, of each of the Loan
Parties (other than the Equity Investors) and each of their respective
Subsidiaries, showing, as of such date, the jurisdiction in which
registered, the registration number thereof and the date of registration
and, in the case of each such patent, the expiration date thereof.
(oo) Set forth on Schedule 4.01(oo) hereto is a complete and accurate
list, as of the date of this Agreement and as of the date of any amendment
or supplement to Schedule 4.01(oo) hereto (whether pursuant to Section
5.01(n) or 5.03(f) or otherwise), of all of the Product Laboratories or
other film laboratory or video duplication facilities employed or engaged
by any of the Loan Parties (other than the Equity Investors).
(pp) Set forth on Schedule 4.01(pp) hereto is a complete and accurate
list, as of the date of this Agreement and as of the date of any amendment
or supplement to Schedule 4.01(pp) hereto (whether pursuant to Section
5.03(f) or otherwise), of all of the items of Product (including, without
limitation, all of the Special Assets) of each of the Loan Parties (other
than the Equity Investors) (other than such items of Product which, in the
aggregate, have neither a book value nor a Fair Market Value in excess of
1% of the aggregate book value or Fair Market Value of all of the items of
Product of the Borrowers and their Subsidiaries), showing, as of such date,
the nature and title thereof and, to the extent applicable, the license
period therefor.
(qq) Set forth on Schedule 4.01(qq) hereto is a complete and accurate
list, as of the date of this Agreement and as of the date of any amendment
or supplement to Schedule 4.01(qq) hereto (whether pursuant to Section
5.03(f), Section 14(a) of the Security Agreement or otherwise), of all of
the Material Agreements of each of the Loan Parties (other than the Equity
Investors), showing, as of such date, each of the Loan Parties and each of
the other Persons party thereto, the date of expiration or termination
thereof and whether or not each such Material Agreement, by its terms, is
assignable or otherwise transferable by each of the Loan Parties party
thereto. Each of the Material Agreements of each of the Loan Parties (other
than the Equity Investors) (i) has been duly authorized, executed and
delivered by such Loan Party and each of its Subsidiaries party thereto, to
the best knowledge of each of the Borrowers, by all of the other parties
thereto, is in full force and effect (unless such Material Agreement has
expired in accordance with its terms) and is binding upon and enforceable
against such Loan Party and each such Subsidiary and, to the best knowledge
of each of the Borrowers, against all of the other parties thereto in
accordance with its terms, except to the extent such enforceability may be
limited by the effect of applicable bankruptcy, insolvency, reorganization,
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92
moratorium or other similar laws affecting the enforcement of creditors'
rights generally, and (ii) has not been amended, supplemented or otherwise
modified, except to such extent as, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect. There exists no default under any of the Material Agreements of any
of the Loan Parties by any of the other Loan Parties or any of its or their
respective Subsidiaries party thereto or, to the best knowledge of each of
the Borrowers, by any of the other parties thereto.
ARTICLE V
COVENANTS OF THE BORROWERS
SECTION 5.01. Affirmative Covenants. So long as any of the Advances
---------------------
shall remain unpaid or any of the Lenders shall have any Commitment hereunder,
each of the Borrowers will, at all times (unless a specific time period is
specified herein):
(a) Compliance with Laws, Maintenance of Governmental Authorizations,
-----------------------------------------------------------------
Etc. (i) Comply, and cause each of its Subsidiaries to comply, in all
---
material respects, with all applicable Requirements of Law, such compliance
to include, without limitation, compliance with ERISA and the Racketeer
Influenced and Corrupt Organizations Chapter of the Organized Crime Control
Act of 1970, and (ii) except as provided in Section 5.01(e), obtain and
maintain in effect all Governmental Authorizations that are necessary (A)
to own or lease and operate their respective property and assets and to
conduct their respective businesses as now conducted and as proposed to be
conducted, except where and to the extent that the failure to obtain or
maintain in effect any such Governmental Authorization, either individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect, or (B) for the due execution, delivery, recordation, filing
or performance by any of the Borrowers or any of their respective
Subsidiaries of any of the Loan Documents or the Transaction Documents to
which it is or is to be a party, or for the consummation of any aspect of
the Transaction or any of the other transactions contemplated hereby and
thereby, except in the case of this subclause (ii)(B) for the Governmental
Authorizations, and the consents, approvals, authorizations, notices,
filings and other actions, described on Schedule 4.01(d) hereto as
otherwise being required to be duly obtained, taken, given or made in
accordance with the terms set forth therefor on Schedule 4.01(d) hereto.
This Section 5.01(a) shall not apply to compliance with Environmental Laws
or Environmental Permits (which is the subject of Section 5.01(c)).
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
---------------------
Subsidiaries to pay and discharge, to the extent due and payable and before
the same shall become delinquent, (i) all taxes, assessments,
reassessments, levies and other governmental charges imposed upon it or
upon its property, assets, income or franchises and (ii) all lawful claims
that, if unpaid, might by law become a Lien upon its property and assets or
any part thereof; provided, however, that neither any of the Borrowers nor
any of their respective Subsidiaries shall be required to pay or discharge
any such tax, assessment, reassessment, levy, charge or claim the amount,
applicability or validity of which is being contested in good faith and by
proper proceedings diligently conducted and as to which appropriate and
adequate reserves are being maintained in accordance with GAAP, unless and
until (i) such contest could subject any of the Borrowers or any of their
respective Subsidiaries to any criminal penalty or liability or the
Administrative Agent or any of the Lenders to any criminal penalty or
liability or (except for nonmaterial fines for which the Administrative
Agent or such Lender is fully
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93
indemnified under Section 9.04) any civil penalty or liability or (ii) any
Lien resulting therefrom attaches to a material portion of its property and
assets and enforcement, collection, execution, levy or foreclosure
proceedings shall have been commenced with respect thereto.
(c) Compliance with Environmental Laws. (i) Comply (and require all
----------------------------------
lessees and other Persons operating or occupying any of its properties to
comply), and cause each of its Subsidiaries to comply (and to require all
lessees and other Persons operating or occupying any of its properties to
comply), in all material respects, with all of the applicable Environmental
Laws and the Environmental Permits applicable to such Person or its
operations or properties; (ii) obtain and renew, and cause each of its
Subsidiaries to obtain and renew, all of the Environmental Permits
necessary for the ownership or operation of their respective properties or
the conduct of their respective businesses as now conducted and as proposed
to be conducted; and (iii) conduct, and cause each of its Subsidiaries to
conduct, any investigation, study, sampling or testing, and undertake, and
cause each of its Subsidiaries to undertake, any cleanup, removal, remedial
or other action, necessary to remove and clean up all of the Hazardous
Materials from any of its properties in accordance with the requirements of
all applicable Environmental Laws, except, in the case of clause (ii) or
(iii) of this Section 5.01(c), where the failure to obtain or renew any
such Environmental Permit, to conduct any such investigation, study,
sampling or testing or to undertake any such cleanup, removal, remedial or
other action, either individually or in the aggregate, could not reasonably
be expected (A) to have a Material Adverse Effect or (B) to subject any of
the Borrowers or any of their respective Subsidiaries to any criminal
penalty or liability or the Administrative Agent or any of the Lenders to
any criminal penalty or liability or (except for nonmaterial fines for
which the Administrative Agent or such Lender is fully indemnified under
Section 9.04) any civil penalty or liability; provided, however, that
neither any of the Borrowers nor any of their respective Subsidiaries shall
be required to undertake any such cleanup, removal, remedial or other
action otherwise required under this Section 5.01(c) to the extent that the
amount, applicability or validity thereof is being contested in good faith
and by proper proceedings diligently conducted and appropriate and adequate
reserves are being maintained in accordance with GAAP with respect to such
circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
------------------------
Subsidiaries to maintain, insurance for their respective properties, assets
and businesses (i) with insurance companies or associations that have, or
that have directly reinsured such insurance with insurance companies or
associations that have, an A.M. Best Company claims paying ability rating
of at least "A-" (or the then equivalent rating) and (ii) of such types
(including, without limitation, insurance against theft and fraud and
against loss or damage by fire, explosion or hazard of or to property,
errors and omissions insurance and insurance against liability for
defamation, libel, slander and invasion of privacy), in such amounts and
with such deductibles, covering such casualties and contingencies and
otherwise on such terms as are either (A) at least as favorable as those
usually carried by companies of established reputations engaged in similar
businesses and owning similar properties and assets in the same general
areas in which the applicable Borrower or Subsidiary of any of the
Borrowers operates or (B) as recommended by Alexander & Alexander or
another insurance broker of recognized national standing and, in any case,
as may otherwise be required by applicable Requirements of Law or by the
Collateral Documents; provided, however, that the Borrowers and their
Subsidiaries may effect workers' compensation insurance or similar coverage
with respect to their respective operations in any particular jurisdiction
through an insurance fund operated by such jurisdiction or by meeting the
self-insurance requirements of such jurisdiction so long as such Borrower
or such Subsidiary establishes and maintains appropriate and adequate
reserves therefor in accordance with GAAP.
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94
(e) Preservation of Corporate Existence, Etc. Preserve and maintain,
----------------------------------------
and cause each of its Subsidiaries to preserve and maintain, its existence,
legal structure, organization, rights (statutory and pursuant to its
Constitutive Documents), permits, licenses, approvals, privileges and
franchises; provided, however, that Fox Kids and its Subsidiaries (i) may
consummate any merger or consolidation otherwise expressly permitted under
Section 5.02(d), (ii) may wind up, liquidate or dissolve any of their
respective inactive Subsidiaries to the extent otherwise expressly
permitted under Section 5.02(e)(iv) and (iii) may amend, supplement or
otherwise modify their rights under their respective Constitutive Documents
to the extent otherwise expressly permitted under Section 5.02(m); and
provided further, however, that neither any of the Borrowers nor any of
their respective Subsidiaries shall be required to preserve any right,
permit, license, approval, privilege or franchise if the board of directors
(or persons performing similar functions) of such Borrower or such
Subsidiary shall determine in good faith that the preservation thereof is
no longer desirable in the conduct of the business of such Borrower or such
Subsidiary, as the case may be, and that the loss thereof is not
disadvantageous in any material respect to such Borrower, such Subsidiary
or the Lenders or, solely in the case of any such permit, license or
approval, that the loss thereof, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(f) Visitation Rights. At any reasonable time and from time to time,
-----------------
upon reasonable notice, permit the Administrative Agent or any of the
Lenders, or any agents or representatives thereof (so long as such agent or
representative is or agrees to be bound by the provisions of Section 9.09),
to examine and make copies of and abstracts from the records and books of
account of, and to visit during normal business hours the properties of,
any of the Borrowers or any of their respective Subsidiaries, and to
discuss the affairs, finances and accounts of any of the Borrowers or any
of their respective Subsidiaries with any of their officers or directors
and with their independent public accountants.
(g) Keeping of Books. Keep, and cause each of its Subsidiaries to
----------------
keep, proper books of record and account in which full and accurate entries
shall be made of all of the financial transactions and the property, assets
and businesses of each of the Borrowers and each of their respective
Subsidiaries (including, without limitation, the establishment and
maintenance of adequate and appropriate reserves) in accordance with all
applicable Requirements of Law and with GAAP.
(h) Maintenance of Properties, Etc. (i) Maintain and preserve, and
------------------------------
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear and casualty and
condemnation excepted, and (ii) make, and cause each of its Subsidiaries to
make, from time to time, all necessary repairs, renewals, additions,
replacements, betterments and improvements of such properties in order to
permit the business and activities carried on in connection therewith to be
properly conducted at all times.
(i) Preparation of Environmental Reports. At the request of the
------------------------------------
Administrative Agent from time to time but in any event not more than once
in any two-year period for any real property or any leasehold interest in
real property of any of the Borrowers or any of their respective
Subsidiaries following:
(i) the acquisition or proposed acquisition of such real
property interest (whether fee or leasehold);
<PAGE>
95
(ii) the occurrence of any event or circumstance that causes
the Administrative Agent or any of the Lenders to reasonably believe
that Hazardous Materials may be present on such real property in any
manner or quantity that, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect; or
(iii) the occurrence and during the continuance of an Event of
Default,
provide to the Lenders within 60 days after such request, at the expense of
the Borrowers, an environmental site assessment report for each of the real
properties of any of the Borrowers or any of their respective Subsidiaries
described in such request, prepared by an environmental consulting firm
reasonably acceptable to the Administrative Agent, indicating the presence
or absence of Hazardous Materials and the estimated cost of any compliance,
removal or remedial action in connection with any Hazardous Materials on
such real properties. Without limiting the generality of the immediately
preceding sentence, if the Administrative Agent reasonably determines at
any time that a material risk exists that any such report will not be
provided within the time referred to above, the Administrative Agent may
retain, upon at least five Business Days' prior written notice to the
Borrowers, an environmental consulting firm to prepare such report at the
reasonable expense of the Borrowers, and each of the Borrowers hereby
grants, and agrees to cause each of its Subsidiaries that owns any of the
real property described in such request to grant, at the time of such
request, to the Administrative Agent, the Lenders, such firm and any agents
or representatives thereof an irrevocable nonexclusive license, subject to
the rights of tenants, to enter onto any such real property to undertake
such an assessment.
(j) Compliance with Terms of Leaseholds. (i) Make all payments and
-----------------------------------
otherwise perform all obligations in respect of all leases of real property
to which any of the Borrowers or any of their respective Subsidiaries is a
party, keep such leases in full force and effect and not allow such leases
to lapse or to be terminated or any rights to renew such leases to be
forfeited or cancelled, in each case except to the extent that, in the
reasonable business judgment of the Borrower or the Subsidiary of any of
the Borrowers that is the lessee thereof, it is in the best interest of
such Borrower or such Subsidiary, as the case may be, to allow or to cause
such nonperformance, lapse, termination, forfeiture or cancellation, and
such nonperformance, lapse, termination, forfeiture or cancellation, either
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect, and (ii) promptly notify the Administrative
Agent of (A) any default by any party with respect to any such lease that
could impair the interests of any of the Loan Parties or any of their
Subsidiaries therein in any material manner or the rights or interests of
the Administrative Agent or any of the Lenders in any manner, and cooperate
with the Administrative Agent to cure any such default, and (B) any
material nonperformance, or any lapse, termination, forfeiture or
cancellation of any lease otherwise permitted to occur under clause (i) of
this Section 5.01(j), and, in respect of each of the foregoing provisions
of this Section 5.01(j), cause each of its Subsidiaries to do so.
(k) Performance of Transaction Documents and Material Agreements. (i)
------------------------------------------------------------
Perform and observe all of the terms and provisions of each of the
Transaction Documents and each of the Material Agreements of Fox Kids or
any of its Subsidiaries to be performed or observed by it, maintain each
such Transaction Document and each such Material Agreement in full force
and effect (unless any such Transaction Document or any such Material
Agreement has expired in accordance with its terms) and enforce each such
Transaction Document and each such Material Agreement in accordance with
its terms, in each case except to such extent as, either individually or in
the aggregate, could not
<PAGE>
96
reasonably be expected to have a Material Adverse Effect, and take all such
action to such end as may be reasonably requested from time to time by the
Administrative Agent, and (ii) promptly upon the reasonable request of the
Administrative Agent, make to each other party to each of the Transaction
Documents and each of the Material Agreements of Fox Kids or any of its
Subsidiaries such demands and requests for information and reports or for
action as any of the Loan Parties or any of their respective Subsidiaries
is entitled to make under such Transaction Document or such Material
Agreement, as the case may be, and, in respect of each of the foregoing
provisions of this Section 5.01(k), cause each of its Subsidiaries to do
so.
(l) Transactions with Affiliates. Conduct, and cause each of its
----------------------------
Subsidiaries to conduct, directly or indirectly, all transactions or series
of related transactions (including, without limitation, the purchase, sale,
lease, transfer or exchange of property or assets of any kind or the
rendering of services of any kind) otherwise permitted under the Loan
Documents with any of their Affiliates on terms that are fair and
reasonable and no less favorable to any of the Borrowers or any of their
respective Subsidiaries than it would obtain in a comparable arm's-length
transaction with a Person not an Affiliate thereof, other than:
(i) the consummation of the Merger;
(ii) the performance by Fox Kids or any of its Subsidiaries of
its obligations under the Transaction Documents, in each case in
accordance with the terms thereof as in effect on the date of this
Agreement;
(iii) the performance by Fox Kids of its obligations under the
Consulting Agreement, as in effect on the date of this Agreement;
(iv) any transaction or series of related transactions solely
between or among one or more of the Borrowers, one or more of the
Borrowers and one or more of the Restricted Subsidiaries, one or more
of the Restricted Subsidiaries or one or more of the Unrestricted
Subsidiaries, in each case to the extent such transaction or series of
related transactions is not otherwise prohibited under the terms of
the Loan Documents;
(v) loans and advances by any of the Borrowers or any of their
respective Subsidiaries to one or more employees thereof, in each case
to the extent otherwise permitted under Section 5.02(f); and
(vi) the declaration and payment of dividends and the making of
distributions by, and the issuance and sale of Equity Interests in,
Fox Kids or any of its Subsidiaries, in each case to the extent
otherwise expressly permitted under Section 5.02(g)(i)(A),
5.02(g)(i)(D), 5.02(g)(i)(H), 5.02(g)(ii), 5.02(g)(iii) or 5.02(g)(v).
(m) Cash Collateral Accounts and Blocked Accounts. (i)
---------------------------------------------
Maintain each of the Cash Collateral Accounts with Citibank; (ii) establish
on or prior to November 5, 1997 and thereafter maintain, and cause each of
the Restricted Subsidiaries to establish on or prior to November 5, 1997
and thereafter maintain, one or more Lockboxes and/or
<PAGE>
97
Blocked Accounts with Citibank or one or more other banks selected by the
applicable Borrower or Restricted Subsidiary and reasonably acceptable to
the Administrative Agent which have accepted the assignment of the
Lockboxes and/or Blocked Accounts maintained thereby to the Administrative
Agent pursuant to the terms of the Security Agreement and the respective
Blocked Account Letters referred to therein; (iii) on and after November 5,
1997, cause all of the proceeds of the Collateral (including, without
limitation, all proceeds of Receivables) to be deposited directly into one
of the Cash Collateral Accounts, the Lockboxes or the Blocked Accounts;
provided that if causing the direct deposit of any such proceeds into the
Lockboxes or the Blocked Accounts would be disadvantageous to the business
of the applicable Borrower or Restricted Subsidiary in any material
respect, then, subject to Section 12(b) of the Security Agreement, such
Borrower or such Restricted Subsidiary may receive such proceeds in trust
for the benefit of the Administrative Agent and the other Secured Parties,
may segregate such proceeds from the other property and funds thereof and
may deposit such proceeds into any of the applicable Blocked Accounts
within two Business Days after the earlier of (A) the date on which such
proceeds are deposited into any deposit account (other than any of the Cash
Collateral Accounts or the Blocked Accounts) and (B) the date of receipt
thereof by or on behalf of such Borrower or such Restricted Subsidiary; and
(iv) establish and maintain cash management systems reasonably acceptable
to the Lenders; provided that it is hereby acknowledged and agreed that the
cash management systems of Fox Kids and its Subsidiaries agreed to between
Fox Kids and the Lenders and in effect on the Phase II Closing Date are
acceptable to the Lenders.
(n) Product Laboratories. (i) Obtain, and cause each of the
--------------------
Restricted Subsidiaries to obtain, a Product Laboratory Access Letter from
each of the Product Laboratories or other film laboratories or video
duplication facilities in which any of the Preprint Materials of or
pertaining to any item of Product are maintained or are to be deposited and
maintained by or on behalf of any of the Borrowers or any of the Restricted
Subsidiaries, covering all such Preprint Materials maintained or to be
maintained thereby, except for Product Laboratories or other film
laboratories or video duplication facilities that, at any date of
determination, are maintaining Preprint Materials of or pertaining to items
of Product of the Borrowers and the Restricted Subsidiaries which, in the
aggregate, do not have either a book value or a Fair Market Value in excess
of 10% of the aggregate book value or Fair Market Value of all of the items
of Product of the Borrowers and their Subsidiaries at such date and (ii)
prior to the deposit of any of the Preprint Materials of or pertaining to
any items of Product in any Product Laboratory or any other film laboratory
or video duplication facility, deliver, and cause each of the Restricted
Subsidiaries to deliver, to the Administrative Agent a written supplement
to Schedule 4.01(oo) hereto that specifies the name and address of such
Product Laboratory or such other film laboratory or video duplication
facility.
(o) Conditions Subsequent to the Phase II Closing Date. (i) As
--------------------------------------------------
promptly as practicable after the Phase II Closing Date, furnish to the
Administrative Agent:
(A) acknowledgment copies or stamped receipt copies of all of
the Uniform Commercial Code termination statements or the equivalent
thereof referred to in Section 3.01(i)(ix)(D) and of all of the
Uniform Commercial Code financing statements or the equivalent thereof
referred to in Sections 3.01(i)(ix)(E) and 3.01(i)(xi)(D); and
(B) completed requests for information listing the Uniform
Commercial Code financing statements referred to in subclause (i)(A)
of this Section 5.01(o) and all of the other effective Uniform
Commercial Code financing statements filed in the jurisdictions
referred to in subclause (i)(A) of this Section 5.01(o) that name any
of the Loan Parties as debtor or transferor, together with copies of
such other financing statements;
<PAGE>
98
(ii) as soon as practicable and in any event on or prior to November
5, 1997:
(A) furnish to the Administrative Agent, in sufficient copies
for each of the Lenders, (1) copyright search reports prepared by
Federal Research Corporation, Thomson & Thomson or any other Person
reasonably acceptable to the Administrative Agent, dated reasonably
near the date of delivery thereof, that reflect any existing Liens on
the Copyrights, Patents or Trademarks of the Surviving Corporation or
any of its Subsidiaries that constitute Restricted Subsidiaries on
record in the United States Copyright Office or the United States
Patent and Trademark Office, (2) in the case of each such Copyright,
all of the other Copyright Documentation related thereto, (3) evidence
that all instruments and documents have been filed and all other
actions have been taken that are necessary or in the reasonable
judgment of the Administrative Agent advisable to establish a clear
and unencumbered chain of title to, and to terminate all liens and
security interests of any Person other than the Administrative Agent
on, each of the Copyrights, Patents, if any, and Trademarks of the
Surviving Corporation and each of its Subsidiaries that constitute
Restricted Subsidiaries and (4) evidence of the proper filing of IP
Collateral Assignments--Short Form in the United States Copyright
Office or the United States Patent and Trademark Office, as
appropriate, covering all of the Copyrights, Patents, if any, and
Trademarks of the Surviving Corporation and each of its Subsidiaries
that constitute Restricted Subsidiaries, duly executed by the
Surviving Corporation and/or the applicable Restricted Subsidiary; and
(B) use commercially reasonable efforts, and cause each of the
Restricted Subsidiaries to use commercially reasonable efforts, to
obtain a consent, in substantially the form of Exhibit C-2 to the
Security Agreement or otherwise in form and substance reasonably
satisfactory to the Lenders, to the assignment of each of the Material
Agreements to which any of the Loan Parties (other than the Equity
Investors) is a party and the rights and interest of each such Loan
Party thereunder to the Administrative Agent, on behalf of the Secured
Parties, from each of the other Persons party to each such Material
Agreement from which such consent is necessary or in the reasonable
judgment of the Administrative Agent advisable, duly executed by each
such Person (it being understood and agreed that if, at any time, any
such Borrower or any such Restricted Subsidiary notifies the
Administrative Agent in writing that it has used commercially
reasonable efforts and remains unable to obtain any such consent,
then, with the approval of the Administrative Agent (such approval not
to be unreasonably withheld and to be deemed to have been given if the
Administrative Agent has not objected thereto within ten days of such
notice), the Material Agreement for which such consent was not
obtained shall be deemed to be included on Schedule V of the Security
Agreement).
(p) Further Assurances. Promptly upon the request of the
------------------
Administrative Agent, or any of the Lenders through the Administrative
Agent, at any time and from time to time:
(i) correct, and cause each of its Subsidiaries to correct, any
defect or error that may be discovered in any of the Loan Documents or
in the execution, acknowledgment, filing or recordation thereof; and
(ii) do, execute, acknowledge, deliver, record, rerecord, file,
refile, register and reregister, and cause each of its Subsidiaries
promptly to do, execute, acknowledge, deliver,
<PAGE>
99
record, rerecord, file, refile, register and reregister, any and all
further acts, conveyances, security agreements, assignments, floating
and fixed debentures, pledge agreements, estoppel certificates,
financing statements and continuations thereof, termination
statements, notices of assignment, transfers, mortgages, deeds of
trust, certificates, assurances and other instruments as the
Administrative Agent, or any of the Lenders through the Administrative
Agent, may reasonably require from time to time in order to (A) carry
out more effectively the purposes of this Agreement, the Notes or any
of the other Loan Documents, (B) subject any of the property, assets,
rights or interests of any of the Borrowers or any of the Restricted
Subsidiaries included or intended to be included in the Collateral to
the Liens created or now or hereafter intended to be created under any
of the Collateral Documents, (C) perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents or any
of the Liens created or intended to be created thereunder and (D)
assure, convey, grant, assign, transfer, preserve, protect and confirm
more effectively to the Administrative Agent and the Secured Parties
the rights granted or now or hereafter intended to be granted to the
Administrative Agent and the Secured Parties under any of the Loan
Documents or under any of the other instruments executed in connection
with any of the Loan Documents to which any of the Borrowers or any of
the Restricted Subsidiaries is or is to be a party.
(q) Covenant to Give Security. At any time following (i) the
-------------------------
occurrence and during the continuance of a Default under Section 7.01(a) or
7.01(f) or an Event of Default or (ii) the acquisition of any real property
or any leasehold interest in any real property, upon the reasonable request
of the Administrative Agent and at the expense of the Borrowers:
(A) within five Business Days after such request, furnish to the
Administrative Agent a description of the real and personal property
of each of the Borrowers and each of the Restricted Subsidiaries not
comprising part of the Collateral at such time, in detail reasonably
satisfactory to the Administrative Agent;
(B) within 15 Business Days after such request, duly execute and
deliver, and cause each of the applicable Restricted Subsidiaries to
duly execute and deliver, to the Administrative Agent mortgages,
pledges, assignments, floating and fixed debentures and other security
agreements (or other similar documents) covering the real and personal
property of each of the Borrowers and the Restricted Subsidiaries, as
specified by and in form and substance reasonably satisfactory to the
Administrative Agent, securing payment of all of the Obligations of
the applicable Loan Parties under or in respect of the Loan Documents
and constituting liens on and security interests in all such property;
(C) within 30 days after such request, take, and cause each of
the applicable Restricted Subsidiaries to take, whatever action
(including, without limitation, the recording of mortgages, the filing
of Uniform Commercial Code financing statements or the equivalent
thereof under any similar Requirements of Law, the giving of notices
and the endorsement of notices on title documents) may be necessary or
advisable in the reasonable opinion of the Administrative Agent to
vest in the Administrative Agent (or in any agent or representative of
the Administrative Agent designated by it) valid and subsisting first
liens on and security interests in the property purported to be
subject to the mortgages, pledges, assignments, floating and fixed
debentures and other security agreements (or other similar documents)
<PAGE>
100
delivered pursuant to this Section 5.01(q), enforceable against all
third parties in accordance with their terms;
(D) as promptly as practicable after such request, upon the
further request of the Administrative Agent, furnish to the
Administrative Agent, and cause each of the applicable Restricted
Subsidiaries to furnish to the Administrative Agent, surveys, title,
engineering, soils and other reports, fully paid American Land Title
Association's extended coverage title insurance policies and
environmental site assessment reports for each item of real property
which is to be subject to a mortgage pursuant to subclause (C) of this
Section 5.01(q), in each case in form and substance and prepared by a
Person reasonably satisfactory to the Lenders;
(E) within 60 days after such request, deliver, and cause each of
the applicable Restricted Subsidiaries to deliver, to the
Administrative Agent a signed copy of a favorable opinion of counsel
for the applicable Borrowers and/or Restricted Subsidiaries, addressed
to the Administrative Agent and reasonably acceptable thereto, as to
the matters contained in subclauses (B) and (C) of this Section
5.01(q), as to such mortgages, pledges, assignments, floating and
fixed debentures and other security agreements (or other similar
documents) being legal, valid and binding obligations of the
applicable Borrowers and/or Restricted Subsidiaries, enforceable
against such Borrowers and/or Restricted Subsidiaries in accordance
with their respective terms, and as to such other matters as the
Administrative Agent may reasonably request; and
(F) at any time and from time to time, promptly execute and
deliver, and cause each of the applicable Restricted Subsidiaries to
execute and deliver, any and all further instruments and documents and
take all such other actions as the Administrative Agent may reasonably
deem desirable in order to obtain the full benefits of, or in
preserving the liens and security interests created under, such
mortgages, pledges, assignments, floating and fixed debentures and
other security agreements (or other similar documents).
SECTION 5.02. Negative Covenants. So long as any of the Advances
------------------
shall remain unpaid or any of the Lenders shall have any Commitment hereunder,
each of the Borrowers will not, at any time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit
----------
any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien on or with respect to any of its property or assets of any character
(including, without limitation, accounts), whether now owned or hereafter
acquired, or sign or file or suffer to exist, or permit any of its
Subsidiaries to sign or file or suffer to exist, under the Uniform
Commercial Code or any similar Requirements of Law of any jurisdiction, a
financing statement (or the equivalent thereof) that names any of the
Borrowers or any of their respective Subsidiaries as debtor, or sign or
suffer to exist, or permit any of its Subsidiaries to sign or suffer to
exist, any security agreement authorizing any secured party thereunder to
file such financing statement (or the equivalent thereof), or sign or
suffer to exist, or permit any of its Subsidiaries to sign or suffer to
exist, any agreement or arrangement for the sale of any of its property or
assets subject to an understanding or agreement, contingent or otherwise,
to repurchase such property or assets (including sales of accounts
receivable with recourse to any of the Borrowers or any of their respective
Subsidiaries), or assign, or permit any of its Subsidiaries to assign, any
accounts or other right to receive income, excluding, however, from the
operation of the foregoing restrictions (i) with respect to Fox Kids, (A)
Liens created under the Loan Documents and (B)
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101
Permitted Liens of the type described in clauses (a), (g) and (h) of the
definition thereof set forth in Section 1.01 and (ii) with respect to the
Borrowers (other than Fox Kids) and their respective Subsidiaries, the
following:
(A) Liens created under the Loan Documents;
(B) Permitted Liens;
(C) Liens existing on the date of this Agreement and described
on Schedule 5.02(a) hereto;
(D) purchase money Liens upon or in real property or equipment
acquired or held by any of the Borrowers (other than Fox Kids) or any
of their respective Subsidiaries in the ordinary course of business to
secure the purchase price of such real property or equipment or to
secure Indebtedness incurred solely for the purpose of financing the
acquisition, construction or improvement of any such real property or
equipment to be subject to such Liens, or Liens existing on any such
real property or equipment at the time of or within 90 days after its
acquisition or the completion of its construction (other than any such
Liens created in contemplation of such acquisition that do not secure
the purchase price of such real property or equipment); provided,
however, that no such Lien shall extend to or cover any property or
assets other than the real property or equipment being so acquired,
constructed or improved; and provided further that (1) the principal
amount of Indebtedness secured by any such Lien shall not exceed the
cost (including all such Indebtedness secured thereby, whether or not
assumed) to the applicable Borrower or the applicable Subsidiary of
the real property or equipment to be subject to any such Lien and (2)
any Indebtedness secured by Liens shall otherwise be expressly
permitted under Section 5.02(b)(iii)(B) and shall not otherwise be
prohibited under the terms of the Loan Documents;
(E) Liens arising in connection with Capitalized Leases otherwise
permitted under Section 5.02(b)(iii)(C) and not otherwise prohibited
under the Loan Documents; provided that no such Lien shall extend to
or cover any property or assets other than the property or assets
subject to such Capitalized Leases;
(F) Liens upon any of the property and assets (other than any
property and assets of IFE or any of its Subsidiaries or any Equity
Interests in any Person) existing at the time such property or asset
is purchased or otherwise acquired by any of the Borrowers (other than
Fox Kids) or any of their respective Subsidiaries; provided that any
such Lien was not created in contemplation of such purchase or other
acquisition and does not extend to or cover any property or assets
other than the property or asset being so purchased or otherwise
acquired; and provided further that any Indebtedness or other
Obligations secured by such Liens shall otherwise be expressly
permitted under Section 5.02(b)(iii)(H) and shall not otherwise be
prohibited under the terms of the Loan Documents;
(G) Liens upon any of the property and assets (other than any
Equity Interests in any Person) of a Person and its Subsidiaries
(other than IFE and its Subsidiaries) existing at the time such Person
is merged into or consolidated with any of the Subsidiaries of Fox
Kids or any of their respective Subsidiaries, or becomes a Subsidiary
of any of the Borrowers, in
<PAGE>
102
accordance with the terms of the Loan Documents; provided that such
Lien was not created in contemplation of such merger, consolidation or
acquisition and does not extend to or cover any property or assets
other than property and assets of the Person and its Subsidiaries
being so merged into or consolidated with such Subsidiary or being
acquired by such Borrower or such Subsidiary, as the case may be; and
provided further that any Indebtedness or other Obligations secured by
such Lien shall otherwise be expressly permitted under Section
5.02(b)(iii)(H) and shall not otherwise be prohibited under the terms
of the Loan Documents;
(H) deposits and letters of credit to secure the performance of
leases of property (whether real, personal or mixed) of the Borrowers
(other than Fox Kids) and their Subsidiaries (excluding Capitalized
Leases) in the ordinary course of business; provided that no such Lien
shall extend to or cover any property or assets other than such
deposit or such letter of credit and the property and assets subject
to such lease, as applicable; and provided further that any such lease
is otherwise expressly permitted to be maintained under Section
5.02(c);
(I) Liens upon any item of Product and the rights directly
relating thereto in favor of the Screen Actors Guild, the Writers
Guild of America, the Directors Guild of America or any other unions,
guilds or collective bargaining units the collective bargaining
agreements of which apply to such item of Product, which Liens are
incurred in the ordinary course of business solely to secure the
payment of Residuals and other collective bargaining obligations
required to be paid by any of the Borrowers (other than Fox Kids) or
any of their respective Subsidiaries under any such collective
bargaining agreement in respect of such item of Product or such
directly related rights; provided that no such Lien shall extend to or
cover any property or assets other than the item or items of Product
giving rise to such Lien, the rights directly relating thereto and the
proceeds thereof;
(J) Liens arising in connection with Approved Completion
Guarantees entered into in the ordinary course of business and
consistent with then current industry practices, securing Obligations
(other than indebtedness for borrowed money) of any of the Borrowers
(other than Fox Kids) or any of their respective Subsidiaries not yet
due and payable; provided that, with respect to each Approved
Completion Guarantee covering one or more items of Product of any of
the Borrowers or any of the Restricted Subsidiaries, each such Lien
shall be subject to an intercreditor agreement, in form and substance
reasonably satisfactory to the Lenders, between the Person providing
any such Approved Completion Guarantee and the Administrative Agent,
on behalf of the Secured Parties, pursuant to which such Person
irrevocably agrees not to interfere with or otherwise disturb the
exploitation, exhibition, syndication, distribution or disposition of
the related items of Product by any of the Borrowers or any of their
respective Subsidiaries or by the Administrative Agent or any of the
Lenders or to exercise any rights with respect to such Lien, in each
case so long as the applicable Borrower or the applicable Restricted
Subsidiary (or the Administrative Agent on its behalf) does not
wrongfully reject delivery of such item of Product or fail to pay as
and when due and payable by such Borrower or such Restricted
Subsidiary the contractual amounts that are related to such item of
Product and are required to be paid in order for all of the rights,
title and interest in such item of Product to fully vest in such
Borrower or such Restricted Subsidiary; and provided further that if
the Person providing any such Approved
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103
Completion Guarantee pays off upon the abandonment of any of the items
of Product covered by such Approved Completion Guarantee, such Person
shall have the right to take all of the rights, title and interest in
such item of Product in accordance with the terms set forth in such
Approved Completion Guarantee;
(K) Liens upon any or all of the property and assets of any
Special Purpose Vehicle to secure Indebtedness arising under one or
more Permitted Film Financings otherwise permitted to be incurred
under Section 5.02(b)(iii)(E) and not otherwise prohibited under the
terms of the Loan Documents;
(L) Liens upon any item of Product and the rights directly
relating thereto in favor of suppliers and/or producers of such item
of Product that are incurred in the ordinary course to business solely
to secure the purchase price of such item of Product and such directly
related rights or the rendering of services necessary for the
production of such item of Product; provided, however, that no such
Lien shall extend to or cover any property or assets other than the
item of Product and the rights directly related thereto being so
acquired or produced; and provided further that any payment
Obligations secured by such Liens shall by their terms be payable
solely from the revenues of the applicable Borrower (other than Fox
Kids) or Subsidiary of any of the Borrowers that are derived directly
from the exhibition, syndication, exploitation, distribution or
disposition of such item of Product and/or such directly related
rights;
(M) Liens upon any item of Product and rights directly relating
thereto in favor of distributors of such item of Product that are
incurred in each case in the ordinary course of business solely to
secure delivery of such item of Product and the licensing of the
rights in such item of Product directly related thereto; provided,
however, that no such Lien shall extend to or cover any property or
assets other than the item of Product being so delivered and the
rights directly related thereto; and provided further that any payment
Obligations secured by such Liens shall by their terms be payable
solely from the revenues of the applicable Borrower (other than Fox
Kids) or Subsidiary of any of the Borrowers (or the applicable
distributor) that are derived directly from the exhibition,
syndication, exploitation, distribution or disposition of such item of
Product and/or such directly related rights; and
(N) the replacement, extension or renewal of any Lien otherwise
permitted to be created or to exist under subclauses (ii)(C) (except
to the extent Schedule 5.02(a) hereto provides that such Liens shall
not be replaced, extended or renewed), (ii)(D), (ii)(E) or (ii)(K) of
this Section 5.02(a) upon or in the same property and assets
theretofore subject thereto; provided that no such extension, renewal
or replacement shall extend to or cover any property or assets not
theretofore subject to the Lien being extended, renewed or replaced;
and provided further that any Indebtedness secured by such Liens shall
otherwise be expressly permitted under the terms of the Loan
Documents.
(b) Indebtedness. Create, incur, assume or suffer to exist, or
------------
permit any of its Subsidiaries to create, incur, assume or suffer to exist,
directly or indirectly, any Indebtedness other than:
(i) in the case of Fox Kids,
<PAGE>
104
(A) Indebtedness evidenced by the Series A Preferred
Stock,
(B) Indebtedness under the TNCL Group Subordinated Notes
and the other TNCL Group Subordinated Notes Documents,
(C) Indebtedness arising on the date of termination of the
employment of any of the Fox Kids Optionholders under the
employment agreement thereof with Fox Kids as in effect on the
date of this Agreement as a result of the purchase pursuant to
the terms of such employment agreement of the options granted to
such Fox Kids Optionholder to acquire shares of Class A Common
Stock, and the shares of Class A Common Stock issued upon the
exercise thereof, as of the date of termination thereof; provided
that the aggregate amount of all of the Indebtedness of Fox Kids
under this subclause (i)(C) shall not exceed $30,000,000 at any
time, and
(D) unsecured Indebtedness issued by Fox Kids in one or
more public offerings so long as (1) such Indebtedness has a
final maturity date at least one year after the scheduled
Termination Date, (2) the weighted average life to maturity of
such Indebtedness shall be at least one year longer that the
weighted average life to maturity of all of the Obligations of
the Borrowers under or in respect of this Agreement, (3) such
Indebtedness shall not be guaranteed or otherwise supported by
any of the other Loan Parties or any of their respective
Subsidiaries, (4) the other terms and conditions of such
Indebtedness (and of any agreement entered into and of any
instrument issued in connection therewith) shall be no less
favorable to Fox Kids and its Subsidiaries or to the
Administrative Agent and Lenders than the terms of the Loan
Documents and (5) immediately before and immediately after giving
pro forma effect to such Indebtedness, no Default shall have
occurred and be continuing;
(ii) in the case of the Borrowers, Indebtedness in respect of
interest rate Hedge Agreements entered into from time to time by one or
more of the Borrowers with counterparties that are Lenders at the time any
such interest rate Hedge Agreement is entered into in an aggregate notional
amount not to exceed (A) 100% of the aggregate Commitments under all of the
Facilities at the time any such interest rate Hedge Agreement is entered
into less (B) the aggregate notional amount of all interest rate Hedge
Agreements that constitute Investments made under Section 5.02(f)(iii) at
such time, provided that all such interest rate Hedge Agreements shall be
nonspeculative in nature (including, without limitation, with respect to
the term and purpose thereof);
(iii) in the case of the Borrowers (other than Fox Kids) and
their Subsidiaries,
(A) Surviving Indebtedness,
(B) Indebtedness secured by Liens expressly permitted
under Section 5.02(a)(ii)(D) in an aggregate principal amount not
to exceed, when aggregated with the principal amount of all
Indebtedness incurred under subclause (iii)(C) of this Section
5.02(b), $10,000,000 at any time outstanding,
<PAGE>
105
(C) Capitalized Leases that, when aggregated with the
principal amount of all Indebtedness incurred under subclause
(iii)(B) of this Section 5.02(b), do not exceed $10,000,000 at
any time outstanding,
(D) Indebtedness arising from Programming Liabilities, and
from Participations and Residuals incurred in connection with
items of Product and Rights in Product that are produced or
acquired by any of the Borrowers (other than Fox Kids) or any of
their respective Subsidiaries, in each case incurred in the
ordinary course of business,
(E) Indebtedness of one or more Special Purpose Vehicles
arising under one or more Permitted Film Financings in an
aggregate principal amount not to exceed $20,000,000 at any time
outstanding, provided that the aggregate principal amount of all
Indebtedness incurred under this subclause (iii)(E) by one or
more Special Purpose Vehicles organized under the laws of, or
having its principal place of business in, the United States of
America or any state thereof shall not exceed $10,000,000 at any
time outstanding,
(F) Indebtedness comprised of trade payables or other
accounts payable to trade creditors incurred in the ordinary
course of business to the extent otherwise included in the
definition of "Indebtedness" set forth in Section 1.01,
(G) Contingent Obligations of any of the Borrowers (other
than Fox Kids) or any of their respective Subsidiaries issued in
favor of one or more producers of items of Product in the
ordinary course of business to assure the right of any of the
Borrowers (other than Fox Kids) or any of their respective
Subsidiaries to purchase or otherwise acquire any such item of
Product and the rights directly relating thereto upon the
completion and delivery thereof; provided, however, that no such
producer shall be any Affiliate of any of the Loan Parties or any
of their respective Affiliates; and provided further, however,
that (1) no amounts shall be payable under any such Contingent
Obligation if such item of Product is not completed and delivered
to the applicable Borrower or Subsidiary of any of the Borrowers
in accordance with the terms of the agreement pursuant to which
such Contingent Obligation was incurred and (2) such Contingent
Obligation shall not guarantee or otherwise support any other
Indebtedness of any of the Loan Parties or any of their
Subsidiaries,
(H) Indebtedness existing at the time that any property or
asset is purchased or otherwise acquired by any of the Borrowers
(other than Fox Kids) or any of their respective Subsidiaries and
secured solely by such property or asset, or that any Person
(other than any of the other Borrowers or any of their respective
Subsidiaries) is merged into or consolidated with any of the
Subsidiaries of Fox Kids, or becomes a Subsidiary of any of the
Borrowers, in accordance with the terms of the Loan Documents, in
an aggregate principal amount not to exceed, when aggregated with
all of the Investments made by the Borrowers and their
Subsidiaries pursuant to Section 5.02(f)(ix)(A), (1) if the
Investment Grade Performance Test is not satisfied on the date on
which any such Indebtedness is incurred, $10,000,000 at
<PAGE>
106
any time outstanding and (2) if the Investment Grade Performance
Test is satisfied on the date on which any such Indebtedness is
incurred, $50,000,000 at any time outstanding, provided that (x)
no such Indebtedness shall be incurred in contemplation of any
such purchase or other acquisition or any such merger,
consolidation or acquisition and (y) immediately before and
immediately after giving pro forma effect to such Indebtedness,
no Default shall have occurred and be continuing,
(I) unsecured Indebtedness not otherwise permitted under
this Section 5.02(b) incurred in the ordinary course of business
and in an aggregate amount not to exceed, (1) if the Investment
Grade Performance Test is not satisfied on the date on which any
such Indebtedness is incurred, $10,000,000 at any time
outstanding and (2) if the Investment Grade Performance Test is
satisfied on the date on which any such Indebtedness is incurred,
$50,000,000 at any time outstanding, provided that, with respect
to any such Indebtedness issued or incurred pursuant to this
subclause (iii)(I), (w) such Indebtedness shall have a stated
maturity or redemption date of either (I) less than one year from
the date of creation thereof or (II) at least one year after the
scheduled Termination Date, (x) such Indebtedness shall not be
guaranteed or otherwise supported by any of the Loan Parties or
any of their respective Subsidiaries, (y) the other terms and
conditions of such Indebtedness (and of any agreement entered
into and of any instrument issued in connection therewith) shall
be no less favorable to Fox Kids and its Subsidiaries or to the
Administrative Agent and Lenders than the terms of the Loan
Documents and (z) immediately before and immediately after giving
pro forma effect to such Indebtedness, no Default shall have
occurred and be continuing, and
(J) endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business; and
(iv) in the case of Fox Kids or any of its Subsidiaries,
(A) Indebtedness under the Loan Documents,
(B) Indebtedness of (1) any of the Borrowers owing to any of
the other Borrowers or any of the Restricted Subsidiaries, (2)
any of the Restricted Subsidiaries owing to any of the Borrowers
or any of the other Restricted Subsidiaries, (3) any of the
Unrestricted Subsidiaries owing to any of the Borrowers or any of
the Restricted Subsidiaries to the extent the Investment in such
Unrestricted Subsidiary is otherwise expressly permitted under
Section 5.02(f)(iv)(C) or 5.02(f)(ix) and (4) any of the
Unrestricted Subsidiaries to any of the other Unrestricted
Subsidiaries, provided that all such intercompany Indebtedness
owing to any of the Borrowers or any of the Restricted
Subsidiaries shall be evidenced by an Intercompany Note and shall
be pledged under the terms of the Collateral Documents to the
Administrative Agent, on behalf of the Secured Parties,
immediately upon the creation thereof,
(C) Contingent Obligations of any of the Borrowers or any of
the Restricted Subsidiaries guaranteeing all or any portion of
the outstanding
<PAGE>
107
Indebtedness of any of the other Borrowers or any of the other
Restricted Subsidiaries; provided that such Indebtedness is
otherwise expressly permitted to be incurred or to exist under
this Section 5.02(b); and provided further that in the case of
any such Contingent Obligation of any of the Restricted
Subsidiaries at any time, such Restricted Subsidiary shall also
be a party to the Guarantee at such time, and
(D) Indebtedness extending the maturity of, or refunding or
refinancing, in whole or in part, any Indebtedness incurred under
any of subclauses (i)(B), (iii)(A) (except to the extent Schedule
4.01(kk) hereto provides that such Indebtedness shall not be
replaced, extended or renewed), (iii)(B), (iii)(C), (iii)(E) or
(iii)(I) of this Section 5.02(b), provided, however, that (1) the
aggregate principal amount of such extended, refunding or
refinancing Indebtedness shall not be increased above the
principal amount thereof and the premium, if any, thereon
outstanding immediately prior to such extension, refunding or
refinancing, (2) the direct and contingent obligors therefor
shall not be changed as a result of or in connection with such
extension, refunding, replacement or refinancing, (3) such
extended, refunding or refinancing Indebtedness shall not mature
prior to the earlier of (x) the stated maturity or redemption
date of such extended, refunding or refinancing Indebtedness and
(y) one year after the scheduled Termination Date, (4) if the
Indebtedness being so extended, refunded or refinanced is
subordinated in right of payment or otherwise to the Obligations
of Fox Kids or any of its Subsidiaries under or in respect of the
Loan Documents, such extended, refunded or refinanced
Indebtedness shall be subordinated to such Obligations to at
least the same extent, (5) the terms of any such extending,
refunding or refinancing Indebtedness (and of any agreement
entered into and of any instrument issued in connection
therewith) shall be no less favorable to Fox Kids and its
Subsidiaries or to the Administrative Agent and the Lenders than
the terms of the Indebtedness being so extended, refunded or
refinanced, and (6) immediately before and immediately after
giving pro forma effect to any such extension, refunding or
refinancing no Default shall have occurred and be continuing.
(c) Lease Obligations. Create, incur, assume or suffer to exist, or
-----------------
permit any of its Subsidiaries to create, incur, assume or suffer to exist,
any Obligations as lessee for the rental or hire of (i) real or personal
property in connection with any sale and leaseback transaction or (ii)
other real or personal property of any kind under leases or agreements to
lease (excluding Capitalized Leases and leases of transponders in the
ordinary course of business) having an original term of one year or more
that would cause the direct and contingent liabilities of Fox Kids and its
Subsidiaries, on a Consolidated basis, in respect of all such Obligations
to exceed $12,000,000 payable in any period of 12 consecutive months;
provided, however, that Fox Kids shall not create, incur, assume or suffer
to exist any such Obligations pursuant to which it is the lessee therefor.
(d) Mergers, Etc. Merge into or consolidate with any Person or
------------
permit any Person to merge into or consolidate with it, or permit any of
its Subsidiaries to do so, except that:
(i) Fox Kids and its Subsidiaries may consummate the Merger;
(ii) any of the Borrowers may merge into or consolidate with
any of the other Borrowers (other than Fox Kids);
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108
(iii) any of the Restricted Subsidiaries may merge into or
consolidate with any of the Borrowers (other than Fox Kids); provided
that such Borrower is the surviving corporation;
(iv) any of the Subsidiaries of Fox Kids (other than any of the
other Borrowers) may merge into or consolidate with any of the
Restricted Subsidiaries; provided that the Person formed by such
merger or consolidation is a Restricted Subsidiary;
(v) any of the Unrestricted Subsidiaries may merge into or
consolidate with any of the other Unrestricted Subsidiaries; and
(vi) any of the Subsidiaries of Fox Kids (other than any of the
other Borrowers) may merge into or consolidate with any Person;
provided that (A) if such Subsidiary is a Restricted Subsidiary, the
Person formed by such merger or consolidation shall be a Restricted
Subsidiary, (B) if such Subsidiary is a non-wholly owned Domestic
Subsidiary, the Person formed by such merger or consolidation shall be
a Domestic Subsidiary and (C) if such Subsidiary is a Foreign
Subsidiary, the Person formed by such merger or consolidation shall be
a Subsidiary of Fox Kids; and provided further that the Person into
which or with which such Subsidiary is merging or consolidating (1)
shall be engaged in one or more of the existing principal lines of
business of Fox Kids and its Subsidiaries, considered as a whole, in
the ordinary course and (2) shall not have any material contingent
liabilities (as determined in good faith by the board of directors (or
persons performing similar functions) of such Subsidiary).
In all cases under this Section 5.02(d), (1) such merger or consolidation
shall be effected in compliance with all applicable Requirements of Law,
(2) all Governmental Authorizations, and all consents, approvals and
authorizations of, and notices and filings to or with, and other actions
by, any other Person necessary in connection with such merger or
consolidation shall have been obtained or made, (3) the Consolidated Net
Worth of the Borrower or the Subsidiary thereof that is the surviving
entity of such merger shall, after giving pro forma effect to such merger
or consolidation, be at least equal to the Consolidated Net Worth of such
Borrower or such Subsidiary immediately prior to giving effect thereto, (4)
(x) immediately before and immediately after giving pro forma effect to
such merger or consolidation, no Default shall have occurred and be
continuing and (y) immediately after giving effect to such merger or
consolidation, 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 be determined on the basis of the Consolidated financial
statements of Fox Kids and its Subsidiaries most recently delivered to the
Lenders pursuant to Section 5.03(b) or 5.03(c) as though such merger or
consolidation had been consummated as of the beginning of the fiscal period
covered thereby and (5) one of the Borrowers shall notify the
Administrative Agent of the proposed merger or consolidation at least ten
Business Days prior to effecting such merger or consolidation and shall
deliver to the Administrative Agent, on behalf of the Lenders, at the time
such notice is delivered, a certificate of a Responsible Officer of such
Borrower, in form and substance reasonably satisfactory to the
Administrative Agent, certifying that all of the requirements set forth in
subclauses (1), (2), (3) and (4) of this paragraph have been satisfied and,
in the case of any merger or consolidation proposed to be effected pursuant
to clause (vi) of this Section 5.02(d), that all of the matters described
in the provisos to such clause (vi) have been satisfied.
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109
(e) Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose
---------------------
of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise
dispose of, any property or assets (including, without limitation,
substantially all of the property and assets constituting the business of a
division, branch or other unit of operation and any Equity Interests), or
grant any option or other right to purchase, lease or otherwise acquire any
property or assets, except that:
(i) the Borrowers (other than Fox Kids) and their respective
Subsidiaries may sell, distribute, license or otherwise exploit
Product and Rights in Product and may sell other Inventory, all in the
ordinary course of business;
(ii) Fox Kids and its Subsidiaries may sell, lease, transfer or
otherwise dispose of property and assets in a transaction otherwise
permitted by Section 5.02(a), 5.02(c), 5.02(d), 5.02(f) or 5.02(g);
(iii) (A) any of the Borrowers may sell, lease, transfer or
otherwise dispose of any of its property or assets to any of the other
Borrowers (other than Fox Kids) or any of the Restricted Subsidiaries,
(B) any of the Restricted Subsidiaries may sell, lease, transfer or
otherwise dispose of any of its property or assets to any of the
Borrowers (other than Fox Kids) or any of the other Restricted
Subsidiaries and (C) any of the Unrestricted Subsidiaries may sell,
lease, transfer or otherwise dispose of any of its property or assets
for Fair Market Value to any of the Borrowers (other than Fox Kids) or
any of their respective Subsidiaries; provided that immediately before
and immediately after giving pro forma effect to such sale, lease,
transfer or other disposition, no Default shall have occurred and be
continuing;
(iv) any of the Subsidiaries of Fox Kids that is no longer
actively engaged in any business or activities and does not have
property and assets with an aggregate book value or Fair Market Value
in excess of $1,000,000 may be wound up, liquidated or dissolved by
the applicable Borrower so long as such winding up, liquidation or
dissolution is determined in good faith to be in the best interests of
Fox Kids and its Subsidiaries by the board of directors of such
Borrower (as evidenced in a resolution set forth in a certificate of a
Responsible Officer of such Borrower delivered to the Administrative
Agent, on behalf of the Lenders, prior to effecting such winding up,
liquidation or dissolution);
(v) the Borrowers and their respective Subsidiaries (A) may
sell tangible property and assets that are replaced within 90 days
after the date of such sale with tangible property and assets of equal
or greater value and (B) may sell, lease, transfer or otherwise
dispose of any obsolete, damaged or worn out equipment thereof that is
no longer useful in the conduct of their businesses so long as the
aggregate book value of all of the property and assets of the
Borrowers and their Subsidiaries sold, leased, transferred or
otherwise disposed of pursuant to this subclause (v)(B) does not
exceed $10,000,000; provided, however, that in the case of subclause
(v)(A), if such tangible property and assets are not replaced within
such 90-day period, then the Net Cash Proceeds of such sale shall be
applied on the last day of such period to reduce the Commitments in
accordance with, and to the extent required under, Section 2.04(b)(v)
and to prepay the Advances outstanding at such time in accordance
with, and to the extent required under, Section 2.05(b);
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110
(vi) the Surviving Corporation may sell, transfer or otherwise
dispose of all or any portion of the shares of Flextech Common Stock
owned thereby on the date of this Agreement at any time and from time
to time prior to March 31, 1998; provided that:
(A) either (1) the gross proceeds received from any such
sale, transfer or other disposition shall be at least equal to
the product of (x) the trading price per share of the Flextech
Common Stock listed on the London Stock Exchange on the date of
such sale, transfer or other disposition multiplied by (y) the
number of shares of Flextech Common Stock that are being sold,
transferred or otherwise disposed of on such date or (2) all or a
portion of such shares of Flextech Common Stock shall be sold in
a "block sale" to an investment bank of recognized national
standing;
(B) all of the consideration received from any such sale,
transfer or other disposition shall be in cash;
(C) immediately before and immediately after giving pro
forma effect to any such sale, transfer or other disposition, no
Default shall have occurred and be continuing; and
(D) an aggregate amount of the Net Cash Proceeds received
from one or more of such sales, transfers or other dispositions
equal to the aggregate trading price for all such shares listed
on the London Stock Exchange on the Phase II Closing Date may be
used to pay outstanding principal of, and accrued and unpaid
interest on, the NAHI Subordinated Notes (or any of them as Fox
Kids shall elect), and the remaining amount of Net Cash Proceeds
from one or more such sales, if any, shall be applied to reduce
the Commitments in accordance with, and to the extent required
under, Section 2.04(b)(v) and to prepay the Advances outstanding
at such time in accordance with, and to the extent required
under, Section 2.05(b);
(vii) the Surviving Corporation and its applicable Subsidiaries
may sell, lease, transfer or otherwise dispose of all or a portion of
(A) their Equity Interests in, or the property and assets of, Calvin
Gilmore Production, Inc., Gilmore Acquisition Corp., Cable Health TV,
Inc. and/or FiT TV Partnership at any time prior to September 30,
1998, (B) their Equity Interests in, or the property and assets of,
MTM Holding Company, Inc. or any of its Subsidiaries at any time prior
to September 30, 1998 and (C) the Indebtedness owed by Del Wilbur
Associates, Inc. to the Surviving Corporation on the date of this
Agreement and described on Schedule 4.01(mm) hereto; provided that:
(1) the gross proceeds received from any such sale, lease,
transfer or other disposition are at least equal to the Fair
Market Value of the property and assets so sold, leased,
transferred or disposed of, determined at the time of such sale,
lease, transfer or other disposition;
(2) at least 90% of the value of the aggregate
consideration received from any such sale, lease, transfer or
other disposition shall be in cash;
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111
(3) immediately before and immediately after giving pro
forma effect to any such sale, lease, transfer or other
disposition, no Default shall have occurred and be continuing;
and
(4) all of the noncash consideration received in any such
sale, lease transfer or other disposition shall be pledged as
Collateral under, and in accordance with the terms of, the
Collateral Documents promptly upon receipt thereof; and
(viii) if the Investment Grade Performance Test is satisfied on
the date of the consummation of any such sale, lease, transfer or
other disposition, any of the Borrowers or any of their respective
Subsidiaries may sell, lease, transfer or otherwise dispose of
property and assets not otherwise permitted to be sold, leased,
transferred or disposed of pursuant to this Section 5.02(e) (other
than Equity Interests in any of the Borrowers or any of their
respective Subsidiaries) so long as the aggregate Fair Market Value of
all of the property and assets of the Borrowers and their Subsidiaries
sold, leased, transferred or otherwise disposed of pursuant to this
clause (viii) does not exceed $10,000,000; provided that:
(A) the gross proceeds received from any such sale, lease,
transfer or other disposition are at least equal to the Fair
Market Value of the property and assets so sold, leased,
transferred or disposed of, determined at the time of such sale,
lease, transfer or other disposition;
(B) at least 85% of the value of the aggregate
consideration received from any such sale, lease, transfer or
other disposition shall be in cash;
(C) immediately before and immediately after giving pro
forma effect to any such sale, lease, transfer or other
disposition, no Default shall have occurred and be continuing;
and
(D) all of the noncash consideration received in any such
sale, lease transfer or other disposition shall be pledged as
Collateral under, and in accordance with the terms of, the
Collateral Documents promptly upon receipt thereof.
(f) Investments in Other Persons. Make or hold, or permit any of its
----------------------------
Subsidiaries to make or hold, any Investment in any Person other than:
(i) Investments existing on the date of this Agreement and
described on Schedule 4.01(mm) hereto;
(ii) Investments by Fox Kids and its Subsidiaries in cash and
Cash Equivalents;
(iii) in the case of the Borrowers, Investments in respect of
interest rate Hedge Agreements entered into from time to time by one
or more of the Borrowers with one or more counterparties that are
Lenders at the time any such interest rate Hedge Agreement is entered
into in an aggregate notional amount not to exceed (A) 100% of the
aggregate Commitments under all of the Facilities at the time any such
interest rate Hedge Agreement is entered into less (B) the aggregate
notional amount of any interest rate Hedge Agreements
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112
that constitute Indebtedness incurred under Section 5.02(b)(ii) at
such time; provided that all such interest rate Hedge Agreements shall
be nonspeculative in nature (including, without limitation, with
respect to the term and purpose thereof);
(iv) Investments by (A) any of the Borrowers in any of the
other Borrowers (other than Fox Kids) or any of the Restricted
Subsidiaries, (B) any of the Subsidiaries of any of the Borrowers in
any of the Borrowers (other than Fox Kids) or any of the Restricted
Subsidiaries, (C) any of the Borrowers or any of the Restricted
Subsidiaries in one or more of the Unrestricted Subsidiaries in an
aggregate amount for all such Investments not to exceed $10,000,000 at
any time, (D) any of the Borrowers or any of the Restricted
Subsidiaries in one or more of the Foreign Subsidiaries in accordance
with the forecasted Consolidated statements of operations of Fox Kids
and its Subsidiaries delivered to the Lenders pursuant to Section
3.01(i)(xvi)(G) and in an aggregate amount for all such Investments
not to exceed $35,000,000 at any time and (E) any of the Unrestricted
Subsidiaries in any of the other Unrestricted Subsidiaries;
(v) loans and advances by the Borrowers and their Subsidiaries
to their respective employees in an aggregate principal amount not to
exceed at any time outstanding the lesser of (A)(1) the aggregate
principal amount of all such loans and advances outstanding on the
date of this Agreement plus (2) $5,000,000 and (B) $8,000,000;
(vi) Investments by the Borrowers (other than Fox Kids) and
their Subsidiaries in account debtors received in connection with the
bankruptcy or reorganization, or in settlement of the delinquent
obligations of suppliers or customers, in the ordinary course of
business and in accordance with applicable collection and credit
policies established by such Borrower or such Subsidiary, as the case
may be;
(vii) the acceptance of promissory notes, contingent payment
obligations and other noncash consideration received as partial
payment of the purchase price of any property or assets sold, leased,
transferred or otherwise disposed of in accordance with Section
5.02(e)(vii) or 5.02(e)(viii);
(viii) capital contributions by Fox Kids to one or more of the
other Borrowers solely in exchange for additional shares of common
stock thereof; provided that all such additional shares shall be
pledged as Collateral under the Security Agreement to the
Administrative Agent, on behalf of the Secured Parties, promptly upon
receipt thereof; and
(ix) Investments by the Borrowers and their Subsidiaries not
otherwise permitted under this Section 5.02(f) (A) in an aggregate
amount not to exceed, when aggregated with all of the Indebtedness
incurred by the Borrowers and their Subsidiaries pursuant to Section
5.02(b)(iii)(H), (1) if the Investment Grade Performance Test is not
satisfied on the date on which any such Investment is made,
$10,000,000 at any time outstanding and (2) if the Investment Grade
Performance Test is satisfied on the date on which any such Investment
is made, $50,000,000 at any time outstanding or (B) made solely with
the proceeds of Permitted Affiliate Investments, provided that, with
respect to any such Investment made pursuant to this clause (ix):
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113
(1) except to the extent of Investments made pursuant to
this clause (ix) in an aggregate amount not to exceed $10,000,000
at any time, any Subsidiary of any of the Borrowers acquired or
created as a result of or in connection with such Investment
shall be a Restricted Subsidiary, and the applicable Borrower
and/or Restricted Subsidiaries and such newly created or acquired
Subsidiary shall comply with the requirements of Section 5.02(k);
(2) any business acquired or invested in shall be one or
more of the existing principal lines of business of Fox Kids and
its Subsidiaries, considered as a whole, in the ordinary course;
(3) any Subsidiary of any of the Borrowers acquired or
created as a result of or in connection with such Investment
shall not have any material contingent liabilities (as determined
in good faith by the board of directors (or persons performing
similar functions) of the applicable Borrower); and
(4) (x) immediately before and after giving pro forma
effect to such Investment, no Default shall have occurred and be
continuing and (y) immediately after giving effect to such
Investment, 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 be determined on the basis of the Consolidated
financial statements of Fox Kids and its Subsidiaries most
recently delivered to the Lenders pursuant to Section 5.03(b) or
5.03(c) as though such Investment had been made as of the
beginning of the fiscal period covered thereby, and all of the
requirements set forth in this subclause (5) shall be certified
by a Responsible Officer of the applicable Borrower in a
certificate, in form and substance reasonably satisfactory to the
Administrative Agent, and delivered to the Administrative Agent,
on behalf of the Lenders, prior to making such Investment;
provided that, for purposes of this clause (ix), the determination of
the amount of any Investment comprised of the acquisition of any
Person or any property or assets of any Person shall be the aggregate
cash and noncash purchase price of such acquisition (including,
without limitation, all indemnities and other contingent payment
obligations to the sellers thereof, all write-downs of property and
assets and reserves for liabilities with respect thereto and all
assumptions of debt, liabilities and other obligations in connection
therewith).
(g) Dividends, Repurchases, Etc. Declare or pay any dividends on,
---------------------------
purchase, redeem, retire, defease or otherwise acquire for value any of its
Equity Interests, now or hereafter outstanding, return any capital to its
stockholders, partners or members (or the equivalent persons thereof) as
such, make any distribution of property, assets, Equity Interests,
obligations or securities to its stockholders, partners or members (or the
equivalent persons thereof) as such, or issue or sell any of its Equity
Interests, or permit any of its Subsidiaries to do any of the foregoing, or
permit any of its Subsidiaries to purchase, redeem, retire, defease or
otherwise acquire for value any Equity Interests in any of the Borrowers,
or to issue or sell any of its Equity Interests in order to acquire such
Equity Interests, except that, so long as no Default shall have occurred
and be continuing at the time of any action described in clause (i),
(ii)(C), (iv) or (v) of this Section 5.02(g) or shall occur as a result
thereof:
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114
(i) Fox Kids may:
(A) declare and make dividends and distributions payable
only in shares of its common stock, provided that such shares of
common stock shall be pledged as Collateral under the applicable
Pledge Agreements to the Administrative Agent, on behalf of the
Secured Parties, promptly following the issuance thereof,
(B) declare and pay scheduled ordinary dividends on the
outstanding shares of Series A Preferred Stock in an aggregate
amount not to exceed $31,050,000 in any Fiscal Year, provided
that any dividends declared by Fox Kids pursuant to this
subclause (i)(B) shall be paid to the holders of the shares of
Series A Preferred Stock within 30 days of the date of
declaration thereof,
(C) issue and sell additional shares of common stock of
Fox Kids to one or more of the Equity Investors so long as (1)
the gross proceeds received from any such issuance and sale are
at least equal to the Fair Market Value of the shares being so
issued and sold, determined at the time of such issuance and
sale, (2) all of the consideration received from any such
issuance and sale shall be in cash and (3) such issuance and sale
would not result in a Change of Control, provided that such
shares of common stock shall be pledged as Collateral under the
applicable Pledge Agreements or one or more Pledge Agreement
Supplements to the Administrative Agent, on behalf of the Secured
Parties, promptly following the issuance thereof,
(D) issue shares of its Class A Common Stock to the Fox
Kids Optionholders upon the exercise of the options for such
shares held thereby on the date of this Agreement, in each case
which issuance and sale shall be made in accordance with the
terms of the respective employment agreements of the Fox Kids
Optionholders as in effect on the date of this Agreement,
(E) issue and sell shares of the Permitted Preferred Stock
to any of its Affiliates so long as all of the consideration
received from any such issuance and sale is in cash and, upon the
conversion of any such shares of Permitted Preferred Stock in
accordance with its terms, issue shares of common stock of Fox
Kids to the holder thereof, provided that such shares of
Permitted Preferred Stock, and any shares of common stock of Fox
Kids issued upon the conversion thereof, shall be pledged as
Collateral under the applicable Pledge Agreements or one or more
Pledge Agreement Supplements to the Administrative Agent, on
behalf of the Secured Parties, promptly following the issuance
thereof,
(F) if the Investment Grade Performance Test is satisfied
on the date on which any such issuance and sale is consummated,
issue and sell shares of its common stock in one or more public
offerings so long as such issuance and sale would not result in a
Change of Control,
(G) commencing at any time after the Fiscal Quarter ending
September 30, 2000 and from time to time thereafter so long as
the Performance Level is not greater than Performance Level IV,
declare and pay dividends in cash to its
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115
stockholders, and purchase, redeem, retire, defease or otherwise
acquire for cash any of its outstanding Equity Interests if,
after giving effect thereto, the aggregate amount of all such
dividends, purchases, redemptions, retirements, defeasances and
other acquisitions paid or made pursuant to this subclause (i)(G)
and all payments in cash of outstanding principal of, and accrued
and unpaid interest on, the TNCL Group Subordinated Notes made
pursuant to Section 5.02(h)(i)(G) during the immediately
preceding twelve months would not exceed the lesser of (i)
$50,000,000 and (ii) 75% of Available Cash Flow for the most
recently completed Fiscal Year prior to such declaration,
purchase, redemption, retirement, defeasance or other
acquisition, provided that immediately after giving effect to any
such declaration, purchase, redemption, retirement, defeasance or
other acquisition, 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 be determined on the basis of the
Consolidated financial statements of Fox Kids and its
Subsidiaries most recently delivered to the Lenders pursuant to
Section 5.03(b) or 5.03(c) as though such declaration, purchase,
redemption, retirement, defeasance or other acquisition had been
paid or made as of the beginning of the fiscal period covered
thereby, and the Administrative Agent, on behalf of the Lenders,
shall have received a certificate from a Responsible Officer of
Fox Kids, in form and substance reasonably satisfactory to the
Administrative Agent, at least ten Business Days prior to the
date of any such declaration, purchase, redemption, retirement,
defeasance or other acquisition, setting forth in reasonable
detail all of the computations required to demonstrate compliance
with the terms of this subclause (i)(G), and provided further
that any dividends, purchases, redemptions, retirements,
defeasances or other acquisitions declared by Fox Kids pursuant
to this subclause (i)(G) shall be paid or made to the holders of
the applicable Equity Interests therein within 30 days of the
date of declaration thereof, and
(H) repurchase shares of Class A Common Stock and options
therefor held by any of the Fox Kids Optionholders upon the
termination of the employment of such Fox Kids Optionholder as
contemplated by, and to the extent expressly permitted under,
Section 5.02(b)(i)(C);
(ii) (A) any of the Subsidiaries of Fox Kids may declare and
make dividends and distributions to any of the Borrowers (other than
Fox Kids) or any of the Restricted Subsidiaries, (B) any of the
Unrestricted Subsidiaries may declare and make dividends and
distributions to any of the other Unrestricted Subsidiaries, (C) any
of the Subsidiaries of Fox Kids may declare and make dividends and
distributions to Fox Kids to the extent necessary from time to time in
order for Fox Kids (1) to repay Advances made to it when such Advances
are due, (2) to pay administrative and operating expenses incurred
thereby in the ordinary course of business, (3) to pay income and
franchise taxes owing from Fox Kids and its Subsidiaries when due, (4)
to declare and pay dividends and distributions in cash, and to
purchase, redeem, retire or otherwise acquire for cash any of its
outstanding Equity Interests, in each case to the extent otherwise
expressly permitted under subclause (i)(B) or (i)(G) of this Section
5.02(g) and (5) to pay outstanding principal of, and accrued and
unpaid interest on, the TNCL Group Subordinated Notes to the extent
otherwise permitted under Section 5.02(h)(i)(G) and (D) the Surviving
Corporation may declare and pay dividends and distributions to Fox
Kids solely from the Net Cash Proceeds received thereby from the sale
<PAGE>
116
of any of the shares of Flextech Common Stock pursuant to, and to the
extent expressly permitted under, Section 5.02(e)(vi)(D) in order for
Fox Kids to pay outstanding principal of, and accrued and unpaid
interest on, the NAHI Subordinated Notes pursuant to Section
5.02(h)(i)(F);
(iii) any of the Borrowers or any of their respective
Subsidiaries may declare and make dividends and distributions payable
only in shares of its common stock, provided that such shares of
common stock shall, to the extent required under the terms of the
applicable Collateral Documents, be pledged as Collateral thereunder
to the Administrative Agent, on behalf of the Secured Parties,
promptly following the issuance thereof;
(iv) any of the non-wholly owned Subsidiaries of Fox Kids may
declare and make dividends and distributions, and may issue and sell
additional Equity Interests therein, to its shareholders, partners or
members (or the equivalent persons thereof) generally so long as each
of the Loan Parties and/or each of their respective Subsidiaries that
own any of the Equity Interests in such non-wholly owned Subsidiary
receive at least their respective proportionate shares of any such
dividend, distribution or issuance of Equity Interests (based upon
their relative holdings of the Equity Interests therein and taking
into account the relative preferences, if any, of the various classes
of the Equity Interests therein);
(v) MTM Entertainment may issue shares of its common stock to
Anthony Thomopolous upon the exercise of his options therefor
outstanding on the date of this Agreement and described on Schedule
VIII to the Security Agreement, which shares shall not represent in
the aggregate more than 4.76% of the Equity Interests in MTM
Entertainment (on a fully diluted basis) on the date of any such
issuance thereof;
(vi) Cable Health TV, Inc. may issue shares of its common stock
to Stephen Lentz or Liberty CHC, Inc. upon the exercise of their
respective options therefor outstanding on the date of this Agreement
and described on Schedule 4.01(b) hereto, which shares shall not
represent in the aggregate more than 12.5% of the Equity Interests in
Cable Health TV, Inc. (on a fully diluted basis) on the date of any
such issuance thereof; and
(vii) T.V.10 may grant an option to Holland Media Group, S.A. to
acquire newly issued shares of common stock of T.V.10 representing not
more than 50% of the Equity Interests in T.V.10 (on a fully diluted
basis) and, upon the exercise of such option, may issue such shares to
Holland Media Group; S.A.; provided that:
(A) the gross proceeds received from the sale of such
option, and from the issuance of any such shares upon the
exercise of such option, shall be at least equal to the Fair
Market Value thereof, determined at the time of such sale;
(B) all of the consideration received from the sale of
such option and, if applicable, from the issuance of such shares
shall be in cash; and
(C) immediately before and immediately after giving pro
forma effect to such sale and to any such issuance, no Default
shall have occurred and be continuing.
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117
(h) Prepayments, Etc. of Indebtedness. (i) Prepay, redeem,
---------------------------------
purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner, or make any payment in violation of any
subordination terms of, any Indebtedness other than:
(A) the prepayment of Advances outstanding from time to time in
accordance with the terms of this Agreement,
(B) so long as no Default shall have occurred and be continuing
or shall occur as a result thereof, any regularly scheduled or
required redemption, repurchase or repayment of Surviving
Indebtedness,
(C) the satisfaction of any Indebtedness incurred under Sections
5.02(b)(iii)(B) and 5.02(b)(iii)(C) that is secured by a Lien on the
property or assets of the Borrower or the Subsidiary of any of the
Borrowers that incurred such Indebtedness, which property or assets
are otherwise permitted to be disposed of under Section 5.02(e),
(D) the regularly scheduled payment or required prepayment of any
Indebtedness that is refunded or refinanced in accordance with Section
5.02(b)(iv)(D),
(E) the prepayment, redemption, purchase, defeasance or other
satisfaction of Indebtedness of any Person existing at the time such
Person is being acquired by any of the Borrowers or any of their
respective Subsidiaries to the extent that such prepayment,
redemption, purchase, defeasance or other satisfaction is required by
the terms of such Indebtedness; provided that the acquisition of such
Person is otherwise expressly permitted under the terms of the Loan
Documents,
(F) in the case of Fox Kids, the payment in cash of outstanding
principal of, or accrued and unpaid interest on, the NAHI Subordinated
Notes (or any of them as Fox Kids shall elect) with the Net Cash
Proceeds received from the sale of the Flextech Common Stock in
accordance with Sections 5.02(e)(vi)(D) and 5.02(g)(ii)(D), and
(G) commencing at any time after the Fiscal Quarter ending
September 30, 2000 and from time to time thereafter so long as the
Performance Level is not greater than Performance Level IV, pay in
cash outstanding principal of, and accrued and unpaid interest on, the
TNCL Group Subordinated Notes (or any portion thereof as Fox Kids
shall elect) if, after giving effect thereto, the aggregate amount of
all such payments made pursuant to this subclause (i)(G) and all
dividends on, and all purchases, redemptions, retirements, defeasances
and other acquisitions of, Equity Interests in Fox Kids paid or made
pursuant to Section 5.02(g)(i)(G) during the immediately preceding
twelve months would not exceed the lesser of (i) $50,000,000 and (ii)
75% of Available Cash Flow for the most recently completed Fiscal Year
prior to such payment, provided that immediately after giving effect
to any such payment, 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 be determined on the basis of the Consolidated
financial statements of Fox Kids and its Subsidiaries most recently
delivered to the Lenders pursuant to Section 5.03(b) or 5.03(c) as
though such payment had been made as of the beginning of the fiscal
period covered thereby, and the Administrative Agent, on behalf of the
Lenders, shall have received a certificate from a Responsible Officer
of Fox
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118
Kids, in form and substance reasonably satisfactory to the
Administrative Agent, at least ten Business Days prior to the date of
any such payment, setting forth in reasonable detail all of the
computations required to demonstrate compliance with the terms of this
subclause (i)(G), and provided further that immediately before and
immediately after giving pro forma effect to any such payment, no
Default shall have occurred and be continuing;
(ii) Amend, modify or change in any manner any of the terms or
conditions of any of the Surviving Indebtedness, except as otherwise
permitted under Section 5.02(b)(iv)(D);
(iii) Amend, modify or change in any manner any of the terms or
conditions of the Series A Preferred Stock or any of the TNCL Group
Subordinated Notes Documents; and
(iv) Permit any of its Subsidiaries to do any of the foregoing,
other than to prepay any Indebtedness payable to any of the Borrowers or,
subject to the terms of the applicable Intercompany Notes, the Restricted
Subsidiaries.
(i) Negative Pledge. Enter into or suffer to exist, or permit any
---------------
of its Subsidiaries to enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any
of its property or assets other than:
(i) any such agreement with or in favor of the Secured
Parties or the Administrative Agent, on behalf of the Secured Parties;
(ii) in connection with (A) any Surviving Indebtedness to the
extent such agreement is in effect on the date of this Agreement, (B)
any Indebtedness otherwise permitted to be incurred under Section
5.02(b)(iv)(D) to the extent such agreement is on terms that are no
less favorable to Fox Kids or any of its Subsidiaries or the
Administrative Agent or the Lenders than the terms in effect for the
Indebtedness being refunded or refinanced immediately prior to
effecting such refunding or refinancing and (C) any Indebtedness
outstanding on the date any Person first becomes a Subsidiary of any
of the Borrowers; provided that such agreement was not created in
contemplation of the acquisition of such Person and does not extend to
or cover any property or assets other than property and assets of the
Person becoming such Subsidiary;
(iii) any such agreement prohibiting other encumbrances on
specific property and assets of any of the Borrowers (other than Fox
Kids) or any of their respective Subsidiaries, which agreement secures
the payment of Indebtedness incurred solely to acquire, construct or
improve such property or assets or to finance the purchase price
therefor and which Indebtedness is otherwise expressly permitted to be
incurred under the terms of this Agreement;
(iv) any agreement setting forth customary restrictions on the
subletting, assignment or transfer of any property or asset that is a
lease, license, conveyance or contract of similar property or assets;
and
(v) any restriction or encumbrance imposed pursuant to an
agreement that has been entered into by any of the Borrowers or any of
their respective Subsidiaries for the sale,
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119
lease, transfer or other disposition of any of its property or assets
so long as such sale, lease, transfer or other disposition is
otherwise expressly permitted to be made under Section 5.02(e).
(j) Dividends and Other Payment Restrictions Affecting
--------------------------------------------------
Subsidiaries. Enter into, create, assume or otherwise suffer to exist or
------------
become effective, or permit any of its Subsidiaries to enter into, create,
assume or otherwise suffer to exist or become effective, directly or
indirectly, any encumbrance or restriction of any kind on the ability of
any of its Subsidiaries (i) to pay dividends or to make any other
distributions on any of the Equity Interests in such Subsidiary owned or
otherwise held by Fox Kids or any of its Subsidiaries, (ii) to pay or
prepay or to subordinate any Indebtedness owed to Fox Kids or any of its
Subsidiaries, (iii) to make loans or advances to Fox Kids or any of its
Subsidiaries or (iv) to transfer any of its property or assets to Fox Kids
or any of its Subsidiaries; provided, however, that nothing in any of
clauses (i) through (iv) of this Section 5.02(j) shall prohibit or
restrict:
(A) this Agreement and the other Loan Documents;
(B) any agreements in effect on the date of this Agreement and
described on Schedule 5.02(j) hereto;
(C) any applicable law, rule or regulation (including, without
limitation, applicable currency control laws and applicable state
corporate statutes restricting the payment of dividends in certain
circumstances);
(D) in the case of clause (iv) of this Section 5.02(j), any
agreement setting forth customary restrictions on the subletting,
assignment or transfer of any property or asset that is a lease,
license, conveyance or contract of similar property or assets;
(E) in the case of clause (iv) of this Section 5.02(j), any
agreement with the holder of a Lien otherwise permitted to exist under
Section 5.02(a)(ii)(D) or 5.02(a)(ii)(E) restricting on customary
terms the transfer of any property or assets subject thereto;
(F) any agreement evidencing Indebtedness outstanding on the
date a Person first becomes a Subsidiary of any of the Borrowers;
provided that such agreement was not created in contemplation of the
acquisition of such Person by such Borrower and does not extend to or
cover any property or assets other than the property or assets of the
Person becoming such Subsidiary; and
(G) any agreement evidencing or setting forth the terms of any
refunding or refinancing Indebtedness otherwise permitted to be
incurred under Section 5.02(b)(iv)(D) that contains any such
restrictions to the extent such restrictions are no less favorable to
Fox Kids or any of its Subsidiaries or the Administrative Agent or the
Lenders than the terms in effect in the Indebtedness being so refunded
or refinanced immediately prior to such refunding or refinancing.
(k) New Subsidiaries. Create, organize, incorporate or acquire any
----------------
Subsidiary other than a Special Purpose Vehicle (any such newly created,
organized, incorporated or acquired Subsidiary
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120
other than a Special Purpose Vehicle being a "NEW SUBSIDIARY"), or permit
any of its Subsidiaries to create, organize, incorporate or acquire any New
Subsidiary, unless:
(i) either (A) such New Subsidiary constitutes a Restricted
Subsidiary or (B) if such New Subsidiary does not constitute a
Restricted Subsidiary, such New Subsidiary is otherwise expressly
permitted under the terms of Section 5.02(f)(ix);
(ii) the Administrative Agent shall have approved the legal
structure and capitalization of such New Subsidiary, such approval not
to be unreasonably withheld or delayed;
(iii) such New Subsidiary shall execute and deliver to the
Administrative Agent, on behalf of the Secured Parties, promptly
following the date of its creation, organization, incorporation or
acquisition, (A) if such New Subsidiary constitutes a Restricted
Subsidiary, a Guarantee Supplement, a Security Agreement Supplement,
and, if applicable, one or more IP Collateral Assignments--Short Form
and/or, if necessary or in the reasonable opinion of the
Administrative Agent desirable to properly create and perfect a lien
and security interest in the Equity Interests in, or the property and
assets of, such New Subsidiary, one or more other mortgages, security
agreements, floating and fixed debentures or pledge agreements (or
other similar documents), in form and substance reasonably
satisfactory to the Lenders, (B) if such New Subsidiary constitutes an
Unrestricted Subsidiary, such documentation as may be necessary or in
the reasonable opinion of the Administrative Agent desirable to
properly create and perfect a lien and security interest in the Equity
Interests of such Unrestricted Subsidiary referred to in clause (v) of
this Section 5.02(k) and (C) in each case, such other agreements,
instruments, certificates or documents as the Administrative Agent may
reasonably request, in each case in form and substance reasonably
satisfactory to the Lenders;
(iv) if such New Subsidiary constitutes a Restricted
Subsidiary, such New Subsidiary and the owners of all of the Equity
Interests therein shall have taken or shall take all of the other
actions that may be necessary or that the Administrative Agent may
reasonably deem desirable in order (A) to perfect and protect any
Liens granted under the Collateral Documents, the Security Agreement
Supplement and, if applicable, one or more IP Collateral Assignments--
Short Form and the other mortgages, security agreements, floating and
fixed debentures and pledge agreements referred to in clause (iii) of
this Section 5.02(k) and (B) to enable the Administrative Agent and
the Lenders to exercise and enforce their rights and remedies under
the Loan Documents;
(v) if such New Subsidiary constitutes an Unrestricted
Subsidiary, such New Subsidiary and each of the Borrowers and the
Restricted Subsidiaries that own any of the Equity Interests therein
shall have taken or shall take all of the other actions that may be
necessary or that the Administrative Agent may reasonably deem
desirable in order to perfect and protect any Liens granted or
intended to be granted under the Collateral Documents in (A) if such
New Subsidiary is not a Foreign Corporation, all of the Equity
Interests in such New Subsidiary that are owned or otherwise held by,
and all of the Indebtedness of such New Subsidiary owing from time to
time to, any of the Borrowers or any of the Restricted Subsidiaries
and (B) if such New Subsidiary is a Foreign Corporation, 66% of the
Equity Interests in such New Subsidiary entitled to vote (within the
meaning of Treasury Regulation
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121
Section 1.956-2(c)(2) promulgated under the Internal Revenue Code)
(the "VOTING EQUITY INTERESTS") (on a fully diluted basis) or, if
less, all of the Voting Equity Interests in such New Subsidiary owned
by the Borrowers and/or the Restricted Subsidiaries, and all of the
Equity Interests in such New Subsidiary not entitled to vote (within
the meaning of Treasury Regulation Section 1.956-2(c)(2) promulgated
under the Internal Revenue Code) now or hereafter owned by the
Borrowers and/or the Restricted Subsidiaries; provided, however, that,
if, as a result of any changes in the tax laws of the United States of
America after the date of this Agreement, the pledge by any of the
Borrowers or any of their respective wholly owned Subsidiaries of any
additional Equity Interests in any such Foreign Corporation to the
Administrative Agent, on behalf of itself and the other Secured
Parties, would not result in an increase in the aggregate net
consolidated tax liabilities of Fox Kids and its Subsidiaries, then,
promptly after the changes in such laws, all such additional Equity
Interests shall be pledged to the Administrative Agent, on behalf of
the Secured Parties, pursuant to the terms and conditions of the
Collateral Documents and/or one or more additional pledge agreements
(or other similar documents), in form and substance reasonably
acceptable to the Lenders; and
(vi) upon the reasonable request of the Administrative Agent,
signed copies of one or more favorable opinions of special and
appropriate local and/or foreign counsel for such New Subsidiary and,
if appropriate, counsel for each of the owners of the Equity Interests
therein as the Administrative Agent shall reasonably request,
addressed to the Administrative Agent, on behalf of the Secured
Parties, and reasonably acceptable to the Administrative Agent and
each of the other Secured Parties, as to the Guarantee Supplement, the
Security Agreement Supplement, the IP Collateral Assignments--Short
Form, the mortgages, the security agreements, the floating and fixed
debentures and the pledge agreements (or other similar documents)
referred to in clause (iii) of this Section 5.02(k) being the legal,
valid and binding obligations of such New Subsidiary or such owners of
the Equity Interests therein, as the case may be, enforceable against
such New Subsidiary or each such owner in accordance with their
respective terms, as to the creation, perfection and priority of the
liens and security interests created or purported to be created
therein, as to the choice of New York law being recognized in the
courts of the jurisdiction in which such New Subsidiary is organized
and as such other matters as the Administrative Agent, or any of the
Lenders through the Administrative Agent, may reasonably request.
It is understood and agreed that the only direct Subsidiaries of Fox Kids
at any time shall be the other Borrowers.
(l) Change in Nature of Business. Make, or permit any of its
----------------------------
Subsidiaries to make, any change in the nature of its business that would
cause Fox Kids and its Subsidiaries, considered as a whole, to cease to be
primarily engaged in the businesses and activities they are engaged in on
the date of this Agreement or, upon consummation of the Merger, such other
businesses and activities as IFE and its Subsidiaries are engaged in on the
date of this Agreement.
(m) Amendments to Constitutive Documents. Amend, or permit any of
------------------------------------
its Subsidiaries to amend, its Constitutive Documents, except that (i) Fox
Kids may amend its Restated Certificate of Incorporation to include
certificates of designation for one or more series of preferred stock
thereof that, in each case, will qualify as Permitted Preferred Stock and
(ii) Fox Kids or any such Subsidiary
<PAGE>
122
may amend its bylaws (or other similar organizational 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 Restated Certificate of Incorporation of Fox Kids or
the bylaws (or other similar organizational document) of Fox Kids or any of
its Subsidiaries 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.
(n) Accounting Changes, Etc. Make or permit, or permit any of its
-----------------------
Subsidiaries to make or permit, any change in (i) its accounting policies
or reporting practices, except as required by applicable Requirements of
Law or by GAAP or (ii) its Fiscal Year.
(o) Amendments, Etc. of Transaction Documents and Material
------------------------------------------------------
Agreements. Cancel or terminate any of the Transaction Documents or any of
----------
the Material Agreements of Fox Kids or any of its Subsidiaries or consent
to or accept any cancellation or termination thereof, amend, modify or
change in any manner any term or condition of any of the Transaction
Documents or any of the Material Agreements of Fox Kids or any of its
Subsidiaries or give any consent, waiver or approval thereunder, waive any
default under or any breach of any term or condition of any of the
Transaction Documents or any of the Material Agreements of Fox Kids or any
of its Subsidiaries, agree in any manner to any other amendment,
modification or change of any term or condition of any of the Transaction
Documents or any of the Material Agreements of Fox Kids or any of its
Subsidiaries, or take any other action in connection with any of the
Transaction Documents or any of the Material Agreements of Fox Kids or any
of its Subsidiaries that, in each of the foregoing cases under this Section
5.02(o), either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, or permit any of its
Subsidiaries to do any of the foregoing; provided, however, that,
notwithstanding the foregoing provisions of this Section 5.02(o), no
amendment, modification or change of any term or condition of (i) any of
the Transaction Documents, and no consent, waiver or approval thereunder,
shall be given on or prior to the Phase II Closing Date without the prior
written consent of all of the Lenders or (ii) Section 14 of the
Stockholders Agreement shall be made at any time without the prior written
consent of the Required Lenders.
(p) Partnerships, Etc. Become a general partner in any general or
-----------------
limited partnership or joint venture, or permit any of its Subsidiaries to
do so, other than any Subsidiary the sole assets of which consist of its
interest in such partnership or joint venture.
(q) Speculative Transactions. Engage, or permit any of its
------------------------
Subsidiaries to engage, in any transaction involving commodity options or
futures contracts or any similar speculative transactions.
SECTION 5.03. Reporting Requirements. So long as any of the Advances
----------------------
shall remain unpaid or any of the Lenders shall have any Commitment hereunder,
the Borrowers will furnish to the Lenders:
(a) Default Notices. As soon as possible and in any event within
---------------
three Business Days after the occurrence of each Default or any event,
development or occurrence that, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect continuing
on the date of such statement, a statement of a Responsible Officer of such
Borrower setting forth the details of such Default, event, development or
occurrence (including, without limitation, the anticipated effect
<PAGE>
123
thereof) and the action that the Borrowers (or any of them) have taken
and/or propose to take with respect thereto.
(b) Quarterly Financials. As soon as available and in any event
--------------------
within 60 days after the end of each of the first three Fiscal Quarters of
each Fiscal Year, a Consolidated balance sheet of Fox Kids and its
Subsidiaries as of the end of such Fiscal Quarter and Consolidated
statements of operations, stockholders' equity and cash flows of Fox Kids
and its Subsidiaries for the period commencing at the end of the previous
Fiscal Quarter and ending with the end of such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year and ending with
the end of such Fiscal Quarter, setting forth in comparative form, in the
case of each such Consolidated balance sheet, the corresponding figures as
of the last day of the corresponding period in the immediately preceding
Fiscal Year from the Consolidated balance sheet of Fox Kids and its
Subsidiaries for such corresponding period and, in the case of each such
Consolidated statement of operations, stockholders' equity or cash flows,
the corresponding figures for the corresponding period in the immediately
preceding Fiscal Year, all in reasonable detail.
(c) Annual Financials. As soon as available and in any event
-----------------
within 120 days after the end of each Fiscal Year, (i) a copy of the annual
audit report for such Fiscal Year for Fox Kids and its Subsidiaries,
including therein the Consolidated balance sheet of Fox Kids and its
Subsidiaries as of the end of such Fiscal Year and Consolidated statements
of operations, stockholders' equity and cash flows of Fox Kids and its
Subsidiaries for such Fiscal Year, accompanied by an unqualified opinion or
an opinion otherwise acceptable to the Required Lenders of Ernst & Young
LLP or other independent public accountants of recognized standing
reasonably acceptable to the Required Lenders and (ii) unaudited
Consolidated balance sheets of each of FCN Holding and its Subsidiaries,
Saban and its Subsidiaries and the Surviving Corporation and its
Subsidiaries as of the end of such Fiscal Year and unaudited Consolidated
statements of operations, stockholders' equity and cash flows of each of
FCN Holding and its Subsidiaries, Saban and its Subsidiaries and the
Surviving Corporation 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 (A) a schedule in form reasonably
satisfactory to the Administrative Agent of the computations used by such
accountants in determining, as of the end of such Fiscal Year, compliance
with the covenants contained in Sections 5.02(g)(i)(G), 5.02(h)(i)(G) and
5.04 (including with respect to each such Section, where applicable, the
calculations of the maximum or minimum amount, ratio or percentage, as the
case may be, permissible under the terms of such Section, and the
calculation of the amount, ratio or percentage then in existence) and (B)
in the event of any change in the generally accepted accounting principles
used by such accountants in the preparation of the audited financial
statements referred to in clause (i) of this Section 5.03(c), such
accountants shall also provide a reasonably detailed description of such
changes and, if and to the extent necessary for the determination of
compliance with Section 5.02(g)(i)(G), 5.02(h)(i)(G) or 5.04, a statement
of reconciliation conforming such audited financial statements to the
generally accepted accounting principles applied in the preparation of the
Consolidated financial statements of Fox Kids and its Subsidiaries for the
Fiscal Quarter ending September 30, 1997.
<PAGE>
124
(d) Compliance Certificate. Together with each delivery to the
----------------------
Lenders of the financial statements of Fox Kids and its Subsidiaries
referred to in Section 5.03(b) and 5.03(c), a certificate of the Chief
Financial Officer of Fox Kids, in form and substance reasonably
satisfactory to the Administrative Agent:
(i) duly certifying that, subject, in the case of any such
financial statements delivered to the Lenders pursuant to Section
5.03(b), to normal year-end audit adjustments, the Consolidated
financial statements delivered with such certificate fairly present
the Consolidated financial condition of Fox Kids and its Subsidiaries
as of the last day of such Fiscal Quarter or such Fiscal Year, as the
case may be, and the Consolidated results of operations and cash flows
of Fox Kids and its Subsidiaries for the Fiscal Quarter or the Fiscal
Year ended on such date;
(ii) in the case of any such financial statements delivered to
the Lenders pursuant to Section 5.03(c)(ii), duly certifying that the
Consolidated financial statements delivered with such certificate
fairly present the Consolidated financial condition of FCN Holding and
its Subsidiaries, Saban and its Subsidiaries or the Surviving
Corporation and its Subsidiaries, as appropriate, as of the last day
of such Fiscal Year and the Consolidated results of operations and
cash flows of FCN Holding and its Subsidiaries, Saban and its
Subsidiaries or the Surviving Corporation and its Subsidiaries, as
appropriate, for the Fiscal Year ended on such date;
(iii) duly certifying that, subject, in the case of any such
financial statements delivered to the Lenders pursuant to Section
5.03(b), to normal year-end audit adjustments, the Consolidated
financial statements delivered with such certificate have been
prepared in accordance with GAAP for such Fiscal Quarter or such
Fiscal Year, as the case may be;
(iv) duly certifying that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a
statement as to the nature thereof and the action that the Borrowers
(or any of them) have taken and/or propose to take with respect
thereto;
(v) in the case of any such financial statements delivered to
the Lenders pursuant to Section 5.03(b), setting forth a schedule of
the computations used by the Borrowers in determining compliance with
the covenants contained in Sections 5.02(g)(i)(G), 5.02(h)(i)(G) and
5.04 (including with respect to each such Section, where applicable,
the calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such
Section, and the calculation of the amount, ratio or percentage then
in existence); and
(vi) in the case of any such financial statements delivered to
the Lenders pursuant to Section 5.03(b), setting forth (A) a
description in reasonable detail of all of the changes in the
generally accepted accounting principles applied in the preparation of
such financial statements from the generally accepted accounting
principles applied in the preparation of the Consolidated financial
statements of Fox Kids and its Subsidiaries for the Fiscal Quarter
ending September 30, 1997 and (B) a statement of reconciliation, if
and to the extent necessary for determining whether any of the changes
in the generally accepted accounting principles applied in the
preparation of such financial statements would affect the calculation
<PAGE>
125
of, or compliance with, Section 5.02(g)(i)(G), 5.02(h)(i)(G) or 5.04,
conforming such financial statements to the generally accepted
accounting principles applied in the preparation of the Consolidated
financial statements of Fox Kids and its Subsidiaries for the Fiscal
Quarter ending September 30, 1997.
(e) Annual Business Plan and Forecasts. As soon as available and in
----------------------------------
any event within 30 days after the first day of each Fiscal Year,
commencing with the Fiscal Year ended June 30, 1998, the annual business
plan of Fox Kids and its Subsidiaries for such Fiscal Year, together with
Consolidated forecasts prepared by the management of Fox Kids of balance
sheets and statements of operations and cash flows on an annual basis for
such Fiscal Year and for each of the Fiscal Years thereafter through the
scheduled Termination Date, in the form of the forecasts delivered by Fox
Kids pursuant to Section 3.01(i)(xvi)(G) or otherwise in a form reasonably
satisfactory to the Administrative Agent and setting forth in comparative
form the corresponding figures for the immediately preceding Fiscal Year.
(f) Schedule Updates. Promptly and in any event within 30 days of
----------------
the end of each Fiscal Quarter and together with any amendment, waiver or
other modification of any of the Loan Documents, amendments and supplements
to all of the Schedules to the Loan Documents (other than (i) Schedules
4.01(b), 4.01(d), 4.01(m), 4.01(p), 4.01(x), 4.01(ee), 4.01(ff), 4.01(gg),
4.01(kk), 4.01(mm), 5.02(a) and 5.02(j) hereto, (ii) Schedules II, V, VIII,
IX and X of the Security Agreement and (iii) all of the Schedules to the
Pledge Agreements), so as to ensure that, at the time of the delivery of
such amendments and supplements, such Schedules are complete and correct in
all material respects as to the subject matter thereof; provided that any
such Schedule shall only be amended, supplemented or otherwise modified by
any such amendment or supplement if and to the extent that the disclosure
thereof is in form and substance reasonably satisfactory to the Lenders and
the Lenders agree to the amendment, supplement or other modification
thereof in accordance with the terms of Section 9.01.
(g) Licenses, Etc. Promptly and in any event within three Business
-------------
Days after receipt thereof, notice of any actual, pending or threatened
suspension, termination, or revocation of any of the Governmental
Authorizations of Fox Kids or any of its Subsidiaries that are necessary to
own or lease and operate their respective property and assets and to
conduct their respective businesses as now conducted and as proposed to be
conducted, or any enjoinment, barring or suspension of the ability of Fox
Kids or any such Subsidiary to conduct any of its businesses in the
ordinary course.
(h) Litigation. Promptly and in any event within five Business
----------
Days after the commencement thereof, notice of all actions, suits,
investigations, litigation, arbitrations and proceedings against or
affecting any of the Loan Parties or any of their respective Subsidiaries
or any of the property or assets thereof in any court or before any
arbitrator or by or before any Governmental Authority of any kind (i) that,
either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect or (ii) that purports to affect the
legality, validity, binding effect or enforceability of any aspect of the
Transaction, any of the Loan Documents or the Transaction Documents or any
of the other transactions contemplated thereby; and, promptly after the
occurrence thereof, notice of any adverse change in the status or any
materially adverse financial effect on any of the Loan Parties or any of
their respective Subsidiaries of any such action, suit, investigation,
litigation, arbitration or proceeding; and, in each case, upon the
reasonable request of the Administrative Agent, any other information
available to any of the Loan Parties or any of their
<PAGE>
126
respective Subsidiaries with respect to any of the foregoing that would
enable the Administrative Agent and the Lenders to more fully evaluate such
action, suit, investigation, litigation, arbitration or proceeding.
(i) ERISA Events and ERISA Reports; Plan Terminations, Etc. (i)
------------------------------------------------------
Promptly and in any event within ten days after any of the Borrowers or any
of the ERISA Affiliates knows or has reason to know that any ERISA Event
has occurred, a statement of a Responsible Officer of a Borrower describing
such ERISA Event and the action, if any, that such Borrower or such ERISA
Affiliate has taken and/or proposes to take with respect thereto, together
with all materials or information filed or to be filed with any
Governmental Authority or any trustee for any Plan as a result of such
ERISA Event; (ii) on the date on which any records, documents or other
information must be furnished to the PBGC with respect to any Plan pursuant
to Section 4010 of ERISA, a copy of such records, documents and
information; (iii) promptly and in any event within two Business Days after
receipt thereof by any of the Borrowers or any of the ERISA Affiliates,
copies of each notice from the PBGC stating its intention to terminate any
Plan or to have a trustee appointed to administer any Plan; (iv) promptly
and in any event within 30 days after the filing thereof with the Internal
Revenue Service, a copy of Schedule B (Actuarial Information) to the annual
report (form 5500) with respect to each of the Plans; and (v) promptly and
in any event within five Business Days after receipt thereof by any of the
Borrowers or any of the ERISA Affiliates from the sponsor of a
Multiemployer Plan, copies of each notice concerning (A) the imposition of
Withdrawal Liability by any such Multiemployer Plan, (B) the reorganization
or termination, within the meaning of Title IV of ERISA, of any such
Multiemployer Plan or (C) the amount of liability incurred, or that could
reasonably be expected to be incurred, by any such Borrower or any such
ERISA Affiliate in connection with any event described in subclause (v)(A)
or (v)(B) of this Section 5.03(i); provided, however, that, notwithstanding
the foregoing provisions of this Section 5.03(i), none of the Borrowers
shall be required to notify the Administrative Agent or any of the Lenders
of the occurrence of any of the events, developments or circumstances, or
to deliver any of the reports or notices, referred to above under this
Section 5.03(i) unless and until the aggregate liability that could
reasonably be expected to be incurred by the Borrowers and the ERISA
Affiliates as a result thereof exceeds $2,500,000.
(j) Securities Reports. Promptly and in any event within five
------------------
Business Days after the sending or filing thereof, copies of all proxy
statements, financial statements, material change reports and other
material reports that Fox Kids or any of its Subsidiaries sends to its
stockholders, partners or members (or equivalent persons thereto), and
copies of all regular, periodic and special reports and information forms,
and all registration statements, prospectuses and information memoranda,
that Fox Kids or any of its Subsidiaries files with the Securities and
Exchange Commission or any Governmental Authority that may be substituted
therefor, or with any national or international securities exchange.
(k) Creditor Reports. Promptly and in any event within five
----------------
Business Days after the furnishing or receipt thereof, copies of any
statement or report furnished to or received from any other holder of the
securities of Fox Kids or any of its Subsidiaries pursuant to the terms of
any indenture, loan or credit agreement or similar agreement of Fox Kids or
any of its Subsidiaries with amounts outstanding or having commitments to
extend credit in an aggregate principal amount of at least $10,000,000
(including, without limitation, any amendments, waivers or consents given
or requested in respect thereof and any notices of default delivered
thereunder) and not otherwise required to be furnished to the Lenders
pursuant to any other clause of this Section 5.03.
<PAGE>
127
(l) Transaction Document Notices. Promptly and in any event within
----------------------------
five Business Days after the furnishing or receipt thereof, copies of all
notices, requests and other documents received by any of the Loan Parties
or any of their Affiliates under or pursuant to any of the Transaction
Documents and, from time to time upon the reasonable request of the
Administrative Agent, such information and reports regarding the
Transaction Documents as the Administrative Agent, or any of the Lenders
through the Administrative Agent, may reasonably request.
(m) Material Agreements. Promptly and in any event within five
-------------------
Business days after the execution and delivery thereof, copies of all
Material Agreements of any of the Loan Parties (other than the Equity
Investors) and, from time to time upon the reasonable request of the
Administrative Agent, such information and reports regarding any such
Material Agreement as the Administrative Agent, or any of the Lenders
through the Administrative Agent, may reasonably request.
(n) Tax Reports and Notices. (i) Within ten Business Days after
-----------------------
receipt thereof, copies of all Revenue Agent Reports (Internal Revenue
Service form 886) or other written proposals of the Internal Revenue
Service that propose, determine or otherwise set forth adjustments (whether
positive or negative) to the United States federal income tax liability of
the affiliated group (within the meaning of Section 1504(a)(1) of the
Internal Revenue Code) of which the Borrowers are members aggregating
$5,000,000 or more; (ii) promptly and in any event within five Business
Days after the due date (after giving effect to all applicable extensions)
for filing the final federal income tax return in respect of each taxable
year of Fox Kids, a certificate of Fox Kids, duly executed by a Responsible
Officer thereof, stating that the common parent of the affiliated group
(within the meaning of Section 1504(a)(1) of the Internal Revenue Code) of
which the Borrowers are members has paid to the Internal Revenue Service or
other relevant taxation authority, or to the applicable Borrower, the full
amount that such affiliated group is required to pay in respect of United
States federal income taxes for such taxable year and that Fox Kids and
each of its Subsidiaries have received any amount payable to them, and have
not paid amounts in respect of taxes (federal, state, local or foreign) in
excess of the amount Fox Kids or such Subsidiary is required to pay, under
the established tax sharing arrangements of Fox Kids and its Affiliates in
respect of such taxable year; and (iii) promptly and in any event within
ten Business Days after receipt thereof, copies of the determination of any
request for a ruling or determination letter from the Internal Revenue
Service or any other taxation authority regarding the actual or asserted
tax liability or deficiency of any of the Loan Parties or any of their
respective Subsidiaries.
(o) Environmental Conditions. Promptly and in any event within
------------------------
five Business Days after a Responsible Officer becomes aware of the
assertion or occurrence thereof:
(i) notice of any condition or occurrence on or arising from
any property owned or operated by any of the Loan Parties or any of
their respective Subsidiaries that resulted or is alleged to have
resulted in noncompliance by any such Loan Party or any such
Subsidiary with any applicable Environmental Law or Environmental
Permit in such a manner as, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect;
(ii) any condition or occurrence on any property owned or
operated by any of the Loan Parties or any of their respective
Subsidiaries that could reasonably be expected to cause such property
to be subject to any restrictions on the ownership, occupancy, use or
<PAGE>
128
transferability by any such Loan Party or any such Subsidiary of such
property under any Environmental Law which, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect; and
(iii) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Materials on any
property owned or operated by any of the Loan Parties or any of their
respective Subsidiaries as required by any Environmental Law, any
Environmental Permit or any Governmental Authority.
All such notices shall describe in reasonable detail the nature of the
condition, occurrence, removal or remedial action and, in the case of each
such condition or occurrence, the action that such Loan Party or such
Subsidiary has taken and/or proposes to take with respect thereto.
(p) Insurance. As soon as available and in any event within 30
---------
days after the end of each Fiscal Year, a report summarizing the insurance
coverage in effect for Fox Kids and each of its Subsidiaries, specifying
therein the type, carrier, amount, deductibles, co-insurance requirements
and expiration dates thereof and containing such additional information as
any of the Lenders, through the Administrative Agent, may reasonably
request.
(q) NPAL Assets Compliance Certificate. As soon as available and
----------------------------------
in any event no later than September 30 of each calendar year, a
certificate of a Responsible Officer of each of TNCL and NPAL stating that,
during the consecutive 12-month period ending on the immediately preceding
June 30 (or if no such certificate has been previously delivered, during
the period from June 11, 1997 to June 30, 1998), no Default has occurred
and is continuing under Section 7.01(n) or, if a Default has occurred and
is continuing under Section 7.01(n), a statement as to the nature thereof
and the action that TNCL or NPAL (or either of them) has taken and/or
proposes to take with respect thereto.
(r) Other Information. Such other information respecting the
-----------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of any of the Loan Parties or any of their
respective Subsidiaries as any of the Lenders, through the Administrative
Agent, may from time to time reasonably request.
SECTION 5.04. Financial Covenants. So long as any of the Advances
-------------------
shall remain unpaid or any of the Lenders shall have any Commitment hereunder,
Fox Kids will:
(a) Leverage Ratio. Maintain a Leverage Ratio at all times during
--------------
each Measurement Period of not more than the amount set forth below for
each Measurement Period set forth below:
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
ENDING IN RATIO
------------------- -----------
<S> <C>
December 1997 7.95:1
March 1998 7.95:1
June 1998 7.95:1
</TABLE>
<PAGE>
129
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
ENDING IN RATIO
------------------ -----
<S> <C>
September 1998 7.95:1
December 1998 7.50:1
March 1999 7.25:1
June 1999 6.50:1
September 1999 6.50:1
December 1999 5.75:1
March 2000 5.75:1
June 2000 5.00:1
September 2000 5.00:1
December 2000 and 4.50:1
thereafter
</TABLE>
(b) Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage
---------------------------
Ratio as of the last day of each Measurement Period of not less than the
amount set forth below for each Measurement Period set forth below:
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
ENDING IN RATIO
------------------ ------
<S> <C>
December 1997 1.10:1
March 1998 1.10:1
June 1998 1.10:1
September 1998 1.00:1
December 1998 1.00:1
March 1999 1.00:1
June 1999 1.00:1
September 1999 and 1.10:1
thereafter
</TABLE>
<PAGE>
130
(c) Interest Coverage Ratio. Maintain an Interest Coverage Ratio as
-----------------------
of the last day of each Measurement Period of not less than the amount set
forth below for each Measurement Period set forth below:
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
ENDING IN RATIO
------------------- -----
<S> <C>
December 1997 1.10:1
March 1998 1.10:1
June 1998 1.10:1
September 1998 1.15:1
December 1998 1.15:1
March 1999 1.15:1
June 1999 1.40:1
September 1999 1.40:1
December 1999 1.50:1
March 2000 1.50:1
June 2000 2.00:1
September 2000 2.00:1
December 2000 2.25:1
March 2001 2.25:1
June 2001 and 2.50:1
thereafter
</TABLE>
(d) Consolidated Net Worth. Maintain a Consolidated Net Worth at all
----------------------
times during each Fiscal Quarter of not less than the amount set forth
below for each Fiscal Quarter set forth below:
<TABLE>
<CAPTION>
FISCAL QUARTER
ENDING IN AMOUNT
-------------- ------
<S> <C>
December 1997 $350,000,000
</TABLE>
<PAGE>
131
<TABLE>
<CAPTION>
FISCAL QUARTER
ENDING IN AMOUNT
-------------- ------
<S> <C>
March 1998 325,000,000
June 1998 300,000,000
September 1998 300,000,000
December 1998 $270,000,000
March 1999 270,000,000
June 1999 270,000,000
September 1999 270,000,000
December 1999 270,000,000
March 2000 270,000,000
June 2000 270,000,000
September 2000 270,000,000
December 2000 270,000,000
March 2001 270,000,000
June 2001 320,000,000
September 2001 and
thereafter 350,000,000
</TABLE>
SECTION 5.05. Covenant of Fox Kids. So long as any of the Advances
--------------------
shall remain unpaid or any of the Lenders shall have any Commitment hereunder,
Fox Kids will not, at any time, enter into or conduct any business or engage in
any activity other than:
(i) the holding of all of the Equity Interests in each of the other
Borrowers;
(ii) the performance of its Obligations under each of the Loan
Documents and the Transaction Documents to which it is or is to be a party,
in accordance with the respective terms thereof, but subject to the
limitations and restrictions set forth in this Agreement and the other Loan
Documents; and
(iii) the conduct of any business or the engagement in any activity
otherwise expressly permitted to be made or taken by Fox Kids under this
Agreement and the other Loan Documents.
<PAGE>
132
ARTICLE VI
BORROWERS GUARANTEE
SECTION 6.01. Borrowers Guarantee. (a) Each of the Borrowers
-------------------
unconditionally and irrevocably guarantees (the undertaking by each of the
Borrowers under this Article VI being the "BORROWERS GUARANTEE") the punctual
payment when due, whether at scheduled maturity or at a date fixed for
prepayment or by acceleration, demand or otherwise, of all of the Obligations of
each of the other Loan Parties now or hereafter existing under or in respect of
the Loan Documents (including, without limitation, any extensions,
modifications, substitutions, amendments or renewals of any or all of the
foregoing Obligations), whether direct or indirect, absolute or contingent, and
whether for principal, interest, premium, fees, indemnification payments,
contract causes of action, costs, expenses or otherwise (such Obligations being
the "GUARANTEED OBLIGATIONS"), and agrees to pay any and all expenses
(including, without limitation, reasonable fees and expenses of counsel)
incurred by the Administrative Agent or any of the other Secured Parties in
enforcing any rights under this Borrowers Guarantee. Without limiting the
generality of the foregoing, each of the Borrowers' liability shall extend to
all amounts that constitute part of the Guaranteed Obligations and would be owed
by any of the other Loan Parties to the Administrative Agent or any of the other
Secured Parties under or in respect of the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other Loan Party.
(b) Each of the Borrowers, and by its acceptance of this Borrowers
Guarantee, the Administrative Agent and each of the other Secured Parties,
hereby confirm that it is the intention of all such Persons that this Borrowers
Guarantee and the Obligations of each of the Borrowers hereunder not constitute
a fraudulent transfer or conveyance for purposes of the United States Federal
Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state Requirements of Law covering the
protection of creditors' rights or the relief of debtors to the extent
applicable to this Borrowers Guarantee and the Obligations of each of the
Borrowers hereunder. To effectuate the foregoing intention, each of the
Borrowers, the Administrative Agent and each of the other Secured Parties hereby
irrevocably agrees that, solely with respect to the Guaranteed Obligations and
the other liabilities of (i) each of the Borrowers under this Borrowers
Guarantee which result from or arise out of its guarantee under subsection (a)
of this Section 6.01 of the Obligations of the Equity Investors under or in
respect of the Pledge Agreements and (ii) each of the Borrowers (other than Fox
Kids) under this Borrowers Guarantee which result from or arise out of its
guarantee under subsection (a) of this Section 6.01 of the Obligations of Fox
Kids under or in respect of the Loan Documents, such Guaranteed Obligations and
other liabilities shall be limited to the maximum amount as will, after giving
effect to such maximum amount and all other contingent and fixed liabilities of
such Borrower that are relevant under such Requirements of Law, and after giving
effect to any collections from, any rights to receive contributions from, or
payments made by or on behalf of, any of the Subsidiaries of such Borrower in
respect of the Obligations of such Subsidiary under the Guarantee and, in the
case of the Borrowers, this Borrowers Guarantee, result in the Guaranteed
Obligations and all other liabilities of such Borrower under this Borrowers
Guarantee not constituting a fraudulent transfer or conveyance.
(c) Each of the Borrowers hereby unconditionally and irrevocably
agrees that, in the event any payment shall be required to be made to the
Secured Parties under this Borrowers Guarantee, the Guarantee or any other
guarantee, such Borrower will contribute, to the fullest extent permitted by
applicable law, such amounts to each of the Subsidiaries of Fox Kids party to
the Guarantee or this Borrowers Guarantee and each other guarantor as would
maximize the aggregate amount paid to the Secured Parties under or in respect of
the Loan Documents.
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SECTION 6.02. Guarantee Absolute. (a) Each of the Borrowers
------------------
guarantees that all of the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Loan Documents, regardless of any Requirements
of Law now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Administrative Agent or any of the other Secured
Parties with respect thereto. The Obligations of each of the Borrowers under
this Borrowers Guarantee are independent of the Guaranteed Obligations or any
other Obligations of any of the other Loan Parties under or in respect of the
Loan Documents, and a separate action or actions may be brought and prosecuted
against each of the Borrowers to enforce this Borrowers Guarantee, irrespective
of whether any action is brought against any of the other Loan Parties or
whether any of the other Loan Parties is joined in any such action or actions.
The liability of each of the Borrowers under this Borrowers Guarantee shall be
absolute, unconditional and irrevocable irrespective of, and each of the
Borrowers hereby irrevocably waives any defenses it may now have or may
hereafter acquire in any way relating to, any and all of the following:
(i) any lack of validity or enforceability of any of the Loan
Documents or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations or any other
Obligations of any of the Loan Parties under or in respect of the Loan
Documents, or any other amendment or waiver of or any consent to departure
from any of the Loan Documents (including, without limitation, any increase
in the Guaranteed Obligations resulting from the extension of additional
credit to any of the Loan Parties or any of their respective Subsidiaries
or otherwise);
(iii) any taking, exchange, release or nonperfection of any of the
Collateral, or any taking, release or amendment or waiver of, or consent to
departure from, the Guarantee or any other guarantee, for all or any of the
Guaranteed Obligations;
(iv) any manner of application of Collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any of the Loan Parties under or in respect of
the Loan Documents, or any other property and assets of any of the other
Loan Parties or any of their respective Subsidiaries;
(v) any change, restructuring or termination of the legal
structure or existence of any of the other Loan Parties or any of their
respective Subsidiaries;
(vi) any failure of any of the Secured Parties to disclose to any
of the Loan Parties any information relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects
of any of the other Loan Parties now or hereafter known to such Secured
Party;
(vii) the failure of any other Person to execute the Guarantee or
any other guarantee or agreement or the release or reduction of liability
of any other guarantor or surety with respect to the Guaranteed
Obligations; or
(viii) any other circumstance (including, without limitation, any
statute of limitations or any existence of or reliance on any
representation by the Administrative Agent or any of the other Secured
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134
Parties) that might otherwise constitute a defense available to, or a
discharge of, such Borrower, any of the other Loan Parties or any other
guarantor or surety.
This Borrowers Guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the Administrative Agent or any of
the other Secured Parties or by any other Person upon the insolvency, bankruptcy
or reorganization of any of the other Loan Parties or otherwise, all as though
such payment had not been made, and each of the Borrowers hereby unconditionally
and irrevocably agrees that it will indemnify the Administrative Agent and each
of the other Secured Parties, upon demand, for all of the costs and expenses
(including, without limitation, reasonable fees and expenses of counsel)
incurred by the Administrative Agent or such other Secured Party in connection
with any such rescission or restoration, including any such costs and expenses
incurred in defending against any claim alleging that such payment constituted a
preference, a fraudulent transfer or a similar payment under any bankruptcy,
insolvency or similar Requirements of Law.
(b) Each of the Borrowers hereby further agrees that, as between such
Borrower, on the one hand, and the Administrative Agent and the Secured Parties,
on the other hand, (i) the Guaranteed Obligations of such Borrower may be
declared to be forthwith due and payable as provided in Section 7.01 (and shall
be deemed to have become automatically due and payable in the circumstances
provided in Section 7.01) for purposes of Section 6.01, notwithstanding any
stay, injunction or other prohibition preventing such declaration in respect of
the Obligations of any of the Loan Parties guaranteed hereunder (or preventing
such Guaranteed Obligations from becoming automatically due and payable) as
against any other Person and (ii) in the event of any declaration of
acceleration of such Guaranteed Obligations (or such Guaranteed Obligations
being deemed to have become automatically due and payable) as provided in
Section 7.01, such Guaranteed Obligations (whether or not due and payable by any
other Person) shall forthwith become due and payable by such Borrower for all
purposes of this Borrowers Guarantee.
SECTION 6.03. Waivers and Acknowledgments. (a) Each of the
---------------------------
Borrowers hereby unconditionally and irrevocably waives promptness, diligence,
notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, protest, dishonor and any other notice with respect to
any of the Guaranteed Obligations and this Borrowers Guarantee, and any
requirement that the Administrative Agent or any of the other Secured Parties
protect, secure, perfect or insure any Lien or any property or assets subject
thereto or exhaust any right or take any action against any of the other Loan
Parties or any other Person or any Collateral.
(b) Each of the Borrowers hereby waives (i) any defense arising by
reason of any claim or defense based upon an election of remedies by the
Administrative Agent or the other Secured Parties which in any manner impairs,
reduces, releases or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of such Borrower or any
other rights of such Borrower to proceed against any of the other Loan Parties,
any other guarantor or any other Person or any Collateral, and (ii) any defense
based on any right of setoff or counterclaim against or in respect of the
Obligations of such Borrower under this Borrowers Guarantee.
(c) Each of the Borrowers hereby acknowledges that the Administrative
Agent may, without notice to or demand upon such Borrower and without affecting
the liability of such Borrower under this Borrowers Guarantee, foreclose under
any mortgage comprising part of the Collateral Documents by nonjudicial sale,
and such Borrower hereby waives any defense to the recovery by the
Administrative Agent
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135
and the other Secured Parties against such Borrower of any deficiency after such
nonjudicial sale and any defense or benefits that may be afforded by applicable
Requirements of Law.
(d) Each of the Borrowers hereby unconditionally and irrevocably
waives any duty on the part of the Administrative Agent or any of the other
Secured Parties to disclose to such Borrower any matter, fact or thing relating
to the business, condition (financial or otherwise), operations, performance,
properties or prospects of any of the other Loan Parties or any of their
respective Subsidiaries or the property and assets thereof now or hereafter
known by the Administrative Agent or such Secured Party.
(e) Each of the Borrowers hereby unconditionally waives any right to
revoke this Borrowers Guarantee, and acknowledges that this Borrowers Guarantee
is continuing in nature and applies to all Guaranteed Obligations, whether
existing now or in the future.
(f) Each of the Borrowers hereby acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth in Section
6.02 and in this Section 6.03 are knowingly made in contemplation of such
benefits.
SECTION 6.04. Subrogation. Each of the Borrowers hereby
-----------
unconditionally and irrevocably agrees not to exercise any rights that it may
now have or may hereafter acquire against any of the other Loan Parties or any
other insider guarantor that arise from the existence, payment, performance or
enforcement of the Obligations of such Borrower under this Borrowers Guarantee
or any of the other Loan Documents, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Administrative Agent or any
of the other Secured Parties against such other Loan Party or any other insider
guarantor or any Collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute, common law or any other Requirements of
Law, including, without limitation, the right to take or receive from such other
Loan Party or any other insider guarantor, directly or indirectly, in cash or
other property or by set off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until such time as all of the
Guaranteed Obligations and all of the other amounts payable under this Borrowers
Guarantee shall have been paid in full in cash, all of the Bank Hedge Agreements
shall have expired or been terminated and the Commitments shall have expired or
terminated. If any amount shall be paid to any of the Borrowers in violation of
the immediately preceding sentence at any time prior to the latest of (a) the
payment in full in cash of all of the Guaranteed Obligations and all of the
other amounts payable under this Borrowers Guarantee, (b) the expiration or
termination of all of the Bank Hedge Agreements and (c) the Termination Date,
such amount shall be received and held in trust for the benefit of the
Administrative Agent and the other Secured Parties, shall be segregated from the
other property and funds of such Borrower and shall be delivered forthwith to
the Administrative Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and the other amounts payable under this Borrowers Guarantee,
whether matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as Collateral for any of the Guaranteed Obligations or
any of the other amounts payable under this Borrowers Guarantee thereafter
arising. If (i) any of the Borrowers shall pay to the Administrative Agent all
or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all of the other amounts payable under this Borrowers Guarantee
shall have been paid in full in cash, (iii) all of the Bank Hedge Agreements
shall have expired or been terminated and (iv) the Termination Date shall have
occurred, the Administrative Agent and the other Secured Parties will, at such
Borrower's request and expense, execute and deliver to such Borrower appropriate
documents, without recourse and without representation or warranty, necessary to
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136
evidence the transfer of subrogation to such Borrower of an interest in the
Guaranteed Obligations resulting from the payment made by such Borrower under
this Borrowers Guarantee.
SECTION 6.05. Continuing Guarantee; Assignments. This Borrowers
---------------------------------
Guarantee is a continuing guarantee and shall (a) remain in full force and
effect until the latest of (i) the payment in full in cash of all of the
Guaranteed Obligations and all of the other amounts payable under this Borrowers
Guarantee, (ii) the expiration or termination of all of the Bank Hedge
Agreements and (iii) the Termination Date, (b) be binding upon each of the
Borrowers and their respective successors and assigns and (c) inure to the
benefit of, and be enforceable by, the Administrative Agent and the other
Secured Parties and their respective successors, transferees and assigns.
Without limiting the generality of clause (c) of the immediately preceding
sentence, any of the Lenders may assign or otherwise transfer all or any portion
of its rights and obligations under this Agreement (including, without
limitation, all or any portion of its Commitment or Commitments, the Advances
owing to it and the Note or Notes held by it) to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Lender under this Article VI or otherwise, in each case
as provided in Section 9.08.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. If any of the following events
-----------------
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) (i) any of the Borrowers shall fail to pay any principal of any
Advance made to it when the same shall become due and payable, whether by
scheduled maturity or at a date fixed for prepayment or by acceleration,
demand or otherwise, or (ii) any of the Borrowers shall fail to pay any
interest on any Advance made to it, or any of the other Loan Parties shall
fail to make any other payment under or in respect of any of the Loan
Documents required to have been made by it, whether by scheduled maturity
or at a date fixed for payment or prepayment or by acceleration, demand or
otherwise, and, in each case under this clause (ii), such default remains
unremedied for at least five consecutive days after the same becomes due
and payable; or
(b) any representation or warranty made by any of the Loan Parties
(or any of their respective officers) under or in connection with any of
the Loan Documents shall prove to have been incorrect in any material
respect on the date as of which it was made or deemed made; or
(c) (i) any of the Borrowers shall fail to perform or observe any
term, covenant or agreement contained in Section 2.14, 5.01(a)(ii),
5.01(b), 5.01(e) or 5.01(f), any of Sections 5.01(i) through 5.01(n) or
Section 5.01(o)(ii), 5.01(q), 5.02, 5.03, 5.04 or 5.05 on its part to be
performed or observed or (ii) any of the Loan Parties shall fail to perform
or observe any term, covenant or agreement contained in Section 5, 7 or
10(a) or any of Sections 11 through 16 of the Security Agreement or Section
4 or 7 of the Guarantee; or
(d) any of the Loan Parties shall fail to perform any term, covenant
or agreement contained in any of the Loan Documents on its part to be
performed or observed that is not otherwise referred to in Section 7.01(c)
if such failure shall remain unremedied for at least 15 consecutive
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Business Days after the earlier of the date on which (i) a Responsible
Officer of any of the Loan Parties first becomes aware of such failure and
(ii) written notice thereof shall have been given to any of the Borrowers
by the Administrative Agent or any of the Lenders; or
(e) (i) any of the Loan Parties or any of their respective
Subsidiaries shall fail to pay any principal of, premium or interest on, or
any other amount payable in respect of, one or more items of Indebtedness
of the Loan Parties and their Subsidiaries (excluding Indebtedness
outstanding hereunder) that is outstanding (or under which one or more
Persons have a commitment to extend credit) in an aggregate principal or
notional amount of at least $10,000,000 when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable
grace period, if any, specified in the agreements or instruments relating
to all such Indebtedness; or (ii) any other event shall occur or condition
shall exist under the agreements or instruments relating to one or more
items of Indebtedness of the Loan Parties and their Subsidiaries (excluding
Indebtedness outstanding hereunder) that is outstanding (or under which one
or more Persons have a commitment to extend credit) in an aggregate
principal or notional amount of at least $10,000,000, and such other event
or condition shall continue after the applicable grace period, if any,
specified in all such agreements or instruments, if the effect of such
event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Indebtedness or otherwise to cause, or to permit the
holder thereof to cause, such Indebtedness to mature; or (iii) one or more
items of Indebtedness of the Loan Parties and their Subsidiaries (excluding
Indebtedness outstanding hereunder) that is outstanding (or under which one
or more Persons have a commitment to extend credit) in an aggregate
principal or notional amount of at least $10,000,000 shall be declared to
be due and payable or required to be prepaid or redeemed (other than by a
regularly scheduled or required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case prior to the stated
maturity thereof; or
(f) any of the Loan Parties or any of their respective Subsidiaries
shall generally not pay its debts as such debts become due, or shall admit
in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against any of the Loan Parties or any of their respective
Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or (other
than for the purpose of a solvent amalgamation or reconstruction) seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of a
receiver, trustee, administrator or other similar official for it or for
any substantial part of its property and assets and, in the case of any
such proceeding instituted against it (but not instituted by it) that is
being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of at least 60
consecutive days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against,
or the appointment of a receiver, trustee, custodian or other similar
official for, it or any substantial part of its property and assets) shall
occur; or any event or action analogous to or having a substantially
similar effect to any of the events or actions set forth above in this
Section 7.01(f) (other than a solvent reorganization) shall occur under the
Requirements of Law of any jurisdiction applicable to any of the Loan
Parties or any of their respective Subsidiaries; or any of the Loan Parties
or any of their respective Subsidiaries shall take any corporate,
partnership, limited liability company or other similar action to authorize
any of the actions set forth above in this Section 7.01(f); or
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138
(g) one or more judgments or orders for the payment of money in
excess of $10,000,000 in the aggregate shall be rendered against one or
more of the Loan Parties and their Subsidiaries and shall remain
unsatisfied and either (i) enforcement proceedings shall have been
commenced by any creditor upon any such judgment or order or (ii) there
shall be any period of at least 20 consecutive days during which a stay of
enforcement of any such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; provided, however, that any such
judgment or order shall not give rise to an Event of Default under this
Section 7.01(g) if and for so long as (A) the amount of such judgment or
order is covered by a valid and binding policy of insurance between the
defendant and the insurer covering full payment thereof and (B) such
insurer has been notified, and has not disputed the claim made for payment,
of the amount of such judgment or order; or
(h) one or more nonmonetary judgments or orders (including, without
limitation, writs or warrants of attachment, garnishment, execution,
distraint or similar process) shall be rendered against any of the Loan
Parties or any of their respective Subsidiaries that, either individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, and there shall be any period of at least 20 consecutive
days during which a stay of enforcement of any such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(i) any provision of any of the Loan Documents after delivery thereof
pursuant to Section 3.01, 5.01(q) or 5.02(k) shall for any reason (other
than pursuant to the terms thereof) cease to be valid and binding on or
enforceable against any of the Loan Parties intended to be a party to it,
or any such Loan Party shall so state in writing; or
(j) any of the Collateral Documents after delivery thereof pursuant
to Section 3.01, 5.01(q) or 5.02(k) shall for any reason (other than
pursuant to the terms thereof) cease to create a valid and perfected first
priority (subject to the liens and security interests expressly permitted
under the terms of the Loan Documents) lien on and security interest in the
Collateral purported to be covered thereby; or
(k) any of the following events or conditions shall have occurred and
such event or condition, when aggregated with any and all other such events
or conditions, has resulted or could reasonably be expected to result in
liabilities of one or more of the Borrowers and/or the ERISA Affiliates in
an aggregate amount exceeding $10,000,000 at any time:
(i) any ERISA Event shall have occurred with respect to a Plan;
or
(ii) any of the Borrowers or any of the ERISA Affiliates shall
have been notified by the sponsor of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan; or
(iii) any of the Borrowers or any of the ERISA Affiliates shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization, is insolvent or is being
terminated, within the meaning of Title IV of ERISA, and, as a result
of such reorganization, insolvency or termination, the aggregate
annual contributions of the Borrowers and the ERISA Affiliates to all
of the Multiemployer Plans that are in reorganization, are insolvent
or being terminated at such time have been or will be increased over
the amounts contributed to such Multiemployer Plans for the plan years
of such
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139
Multiemployer Plans immediately preceding the plan year in which such
reorganization, insolvency or termination occurs; or
(iv) any "accumulated funding deficiency" (as defined in Section
302 of ERISA and Section 412 of the Internal Revenue Code), whether or
not waived, shall exist with respect to one or more of the Plans, or
any Lien shall exist on the property and assets of any of the
Borrowers or any of the ERISA Affiliates in favor of the PBGC or any
Plan; or
(l) any of the Governmental Authorizations necessary in order to
permit Fox Kids or any of its Subsidiaries to fully own or lease and
operate their respective property and assets or to properly conduct their
respective businesses shall cease to be in effect or Fox Kids or such
Subsidiary shall cease to have the full intended benefit thereof or rights
thereunder, unless the revocation, termination, cancellation, denial,
impairment or modification of such Governmental Authorization, either
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect; or
(m) Fox Kids and its Subsidiaries shall be unable to transmit
programming for more than ten consecutive days as a result of the loss of
all of their transponders and the inability of any of the applicable
Subsidiaries of Fox Kids to arrange for the use of suitable substitute
transponders; or
(n) (i) NPAL, together with its consolidated subsidiaries, shall own
less than 50% of the Fair Market Value of the total assets of TNCL
(together with any successor by merger thereto), together with its
consolidated subsidiaries, located in the United States of America as of
June 11, 1997 and the proceeds of any disposition of any such assets
subsequent to the Phase I Closing Date and (ii) the total assets of NPAL,
its consolidated subsidiaries and its investments accounted for by the
equity method, as determined on the basis of the Fair Market Value of such
assets, shall at any time not exceed by at least $2,500,000,000 all of the
Indebtedness of NPAL, its consolidated subsidiaries and its investments
accounted for by the equity method; or
(o) a Change of Control shall occur;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrowers,
declare the obligation of each of the Lenders to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall at the request, or
may with the consent, of the Required Lenders, by notice to the Borrowers,
declare the Notes, all interest thereon and all other amounts payable under or
in respect of this Agreement and the other Loan Documents to be forthwith due
and payable, whereupon the Notes, all such interest and all such other amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by each of the Borrowers; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to any of the Loan Parties
under the United States Federal Bankruptcy Code or a similar order or action
under any other Requirements of Law covering the protection of creditors' rights
or the relief of debtors applicable to such Loan Party, (A) the obligation of
each of the Lenders to make Advances shall automatically be terminated and (B)
the Notes, all such interest and all such amounts shall automatically become and
be due and payable, without presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived by each of the Borrowers.
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140
ARTICLE VIII
THE AGENTS
SECTION 8.01. Authorization and Action. (a) Each of the Lenders
------------------------
hereby appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement and the other Loan Documents as are delegated to the Administrative
Agent by the terms hereof and thereof, together with such powers and discretion
as are reasonably incidental thereto. As to any matters not expressly provided
for under the Loan Documents (including, without limitation, enforcement or
collection of the Notes), the Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all of the Lenders and all holders of Notes;
provided, however, that the Administrative Agent shall not be required to take
any action (i) that exposes the Administrative Agent to personal liability or
that is contrary to this Agreement or to applicable Requirements of Law or (ii)
as to which the Administrative Agent has not received adequate security or
indemnity (whether pursuant to Section 8.05 or otherwise). If the security or
indemnity furnished to the Administrative Agent for any purpose under or in
respect of the Loan Documents shall, in the good faith opinion of the
Administrative Agent, be insufficient or become impaired, then the
Administrative Agent may require additional security or indemnity and cease, or
not commence, to follow the directions or take the actions indemnified against
until such additional security or indemnity is furnished. The Administrative
Agent agrees to give to each of the Lenders prompt notice of each notice given
to it by the Borrowers pursuant to the terms of this Agreement.
(b) The Administrative Agent shall also act as the "collateral agent"
under the Loan Documents, and each of the Lenders (in its capacity as a Lender
and a Secured Party) hereby appoints and authorizes the Administrative Agent to
act as the agent of such Lender for purposes of acquiring, holding and enforcing
any and all Liens on Collateral granted by any of the Loan Parties to secure any
of the Secured Obligations, together with such powers and discretion as are
reasonably incidental thereto. The Administrative Agent may from time to time
in its discretion appoint any of the other Lenders or any of the Affiliates of a
Lender to act as its co-agent or sub-agent for purposes of holding or enforcing
any Lien on the Collateral (or any portion thereof) granted under the Collateral
Documents or of exercising any rights and remedies thereunder at the direction
of the Administrative Agent. In this connection, the Administrative Agent, as
"collateral agent", and such co-agents and sub-agents shall be entitled to the
benefits of all provisions of this Article VIII (including, without limitation,
Section 8.05, as though such co-agents or sub-agents were the "collateral agent"
under the Loan Documents) as if set forth in full herein with respect thereto.
(c) The Arranger shall have no powers or discretion under this
Agreement or any of the other Loan Documents other than those bestowed upon it
as a co-agent or sub-agent from time to time by the Administrative Agent
pursuant to subsection (b) of this Section 8.01, and each of the Lenders hereby
acknowledges that the Arranger has no liability under this Agreement or under
any of the other Loan Documents.
SECTION 8.02. Administrative Agent's Reliance, Etc. Neither the
------------------------------------
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with the Loan Documents, except for its or their own gross
negligence
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141
or willful misconduct as determined in a final, nonappealable judgment by a
court of competent jurisdiction. Without limitation of the generality of the
immediately preceding sentence, the Administrative Agent:
(a) may treat the payee of any Note as the holder thereof until the
Administrative Agent receives and accepts an Assignment and Acceptance
entered into by the Lender that is the payee of such Note, as assignor, and
an Eligible Assignee, as assignee, as provided in Section 9.08;
(b) may consult with legal counsel (including counsel for any of the
Loan Parties), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants
or experts;
(c) makes no representation or warranty to any of the Secured Parties
and shall not be responsible to any of the Secured Parties for any
statements, representations or warranties (whether written or oral) made in
or in connection with the Loan Documents;
(d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of
any of the Loan Documents on the part of any of the Loan Parties or to
inspect the property and assets (including the books and records) of any of
the Loan Parties;
(e) shall not be responsible to any of the Secured Parties for the
due execution, legality, validity, enforceability, genuineness, sufficiency
or value of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with any of the
Loan Documents or any other instrument or document furnished pursuant
thereto; and
(f) shall incur no liability under or in respect of any of the Loan
Documents by acting upon any notice, consent, order, certificate or other
instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or
parties.
SECTION 8.03. Citicorp USA and Affiliates. With respect to its
---------------------------
Commitment or Commitments, the Advances made by it and the Note or Notes issued
to it, Citicorp USA shall have the same rights and powers under the Loan
Documents as any of the other Lenders and may exercise the same as though it
were not the Administrative Agent; and the term "Lender", "Lenders", "Secured
Party" or "Secured Parties" shall, unless otherwise expressly indicated, include
Citicorp USA and its Affiliates parties hereto in their respective individual
capacities. Citicorp USA, Citicorp Securities and their respective Affiliates
(whether or not parties hereto) may accept deposits from, lend money to, act as
trustee under indentures of, accept investment banking engagements from and
generally engage in any kind of business with, any of the Loan Parties, any of
their respective Subsidiaries and any Person who may do business with or own
securities of any of the Loan Parties or any such Subsidiary, all as if Citicorp
USA and Citicorp Securities were not the Agents and without any duty to account
therefor to the other Lenders.
SECTION 8.04. Lender Credit Decision. Each of the Lenders hereby
----------------------
acknowledges that it has, independently and without reliance upon any of the
Agents or any of the other Lenders and based on the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each of the Lenders also hereby acknowledges that it will,
independently and without reliance upon any of the Agents or any of the
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other Lenders and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 8.05. Indemnification. Each of the Lenders hereby severally
---------------
agrees to indemnify the Administrative Agent (to the extent not promptly
reimbursed by the Borrowers) from and against such Lender's ratable share
(determined as provided below in this Section 8.05) of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by the Administrative Agent under the Loan Documents (collectively, the "LENDER
INDEMNIFIED COSTS"); provided, however, that none of the Lenders shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct as determined in a
final, nonappealable judgment by a court of competent jurisdiction. In the case
of any claim, investigation, litigation or proceeding giving rise to any Lender
Indemnified Costs, the indemnification provided by the Lenders under this
Section 8.05 shall apply whether or not any such claim, investigation,
litigation or proceeding is brought by the Administrative Agent, any of the
Lenders or a third party. Without limiting any of the provisions of the
immediately preceding sentence, each of the Lenders hereby agrees to reimburse
the Administrative Agent promptly upon demand for its ratable share of any costs
and expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any of the other Loan Documents, to the extent that the Administrative Agent
is not promptly reimbursed for such costs and expenses by the Borrowers. For
purposes of this Section 8.05, the Lenders' respective ratable shares of any
amount shall be determined, at any time, according to the sum of (a) the
aggregate principal amount of all Advances outstanding at such time and owing to
the respective Lenders, (b) the aggregate unused portion of the Term Commitment
of the respective Lenders and (c) the aggregate Unused Revolving Credit
Commitments of the respective Lenders. If one or more Defaulted Advances shall
be owing by any Defaulting Lender at any time, such Defaulting Lender's
Commitment under each of the Facilities under which any such Defaulted Advance
was required to have been made shall be considered unused for purposes of this
Section 8.05 to the extent of such Defaulted Advance. The failure of any of the
Lenders to reimburse the Administrative Agent promptly upon demand for its
ratable share of any amount required to be paid by the Lenders to the
Administrative Agent as provided in this Section 8.05 shall not relieve any of
the other Lenders of its obligation hereunder to reimburse the Administrative
Agent for its ratable share of such amount, but none of the Lenders shall be
responsible for the failure of any of the other Lenders to reimburse the
Administrative Agent for such other Lender's ratable share of such amount.
Without prejudice to the survival of any other agreement of any of the Lenders
hereunder, the agreement and obligations of each of the Lenders contained in
this Section 8.05 shall survive the payment in full of all principal, interest
and other amounts payable under this Agreement and the other Loan Documents.
SECTION 8.06. Successor Administrative Agent. The Administrative
------------------------------
Agent may resign as to any or all of the Facilities at any time by giving
written notice thereof to the Lenders and the Borrowers and may be removed as to
all of the Facilities at any time with or without cause by the Required Lenders.
Upon any such resignation or removal, the Required Lenders shall have the right
to appoint a successor Administrative Agent as to such of the Facilities as to
which the Administrative Agent has resigned or been removed. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice
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143
of resignation or the Required Lenders' removal of the retiring Administrative
Agent, then the retiring Administrative Agent may, on behalf of the Lenders and
the other Secured Parties, appoint a successor Administrative Agent, which shall
be a commercial bank organized under the laws of the United States of America or
of any state thereof and having a combined capital and surplus of at least
$5,000,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent as to all of the Facilities and
upon the execution and filing or recording of such Uniform Commercial Code
financing statements (or the equivalent thereof), or amendments thereto, such
amendments or supplements to the mortgages, if any, comprising part of the
Collateral Documents, and such other instruments or notices, as may be necessary
or desirable, or as the Required Lenders may reasonably request, in order to
continue the perfection of the Liens granted or purported to be granted under
the Collateral Documents, such successor Administrative Agent shall succeed to
and become vested with all the rights, powers, discretion, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations under the Loan Documents.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent as to less than all of the Facilities and upon
the execution and filing or recording of such Uniform Commercial Code financing
statements (or the equivalent thereof), or amendments thereto, such amendments
or supplements to the mortgages, if any, comprising part of the Collateral
Documents, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may reasonably request, in order to
continue the perfection of the Liens granted or purported to be granted under
the Collateral Documents, such successor Administrative Agent shall succeed to
and become vested with all the rights, powers, discretion, privileges and duties
of the retiring Administrative Agent as to such Facilities, other than with
respect to funds transfers and other similar aspects of the administration of
Borrowings under such Facilities and payments by the Appropriate Borrowers in
respect of such Facilities, and the retiring Administrative Agent shall be
discharged from its duties and obligations under the Loan Documents as to such
Facilities, other than as aforesaid. After any retiring Administrative Agent's
resignation or removal hereunder as Administrative Agent as to all of the
Facilities, the provisions of this Article VIII shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative Agent
as to any of the Facilities under this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement or the Notes or, to the extent not otherwise
provided for therein, any of the other Loan Documents, nor consent to any
departure by any of the Loan Parties therefrom, shall in any event be effective
unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to) by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that:
(a) no amendment, waiver or consent shall, unless in writing and
signed by all of the Lenders (other than any of the Lenders that is, at
such time, a Defaulting Lender), do any of the following at any time:
(i) waive any of the conditions specified in Section 3.01 or,
in the case of the initial Borrowing under any of the Facilities,
Section 3.02;
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144
(ii) change the number of Lenders or the percentage of the
Commitments or the aggregate outstanding principal amount of Advances
that, in any case, shall be required for the Lenders or any of them to
take any action hereunder;
(iii) reduce or limit the obligations of any of the Borrowers
under Article VI or any of the Subsidiaries of the Borrowers party to
the Guarantee under Section 1 of the Guarantee or otherwise limit any
of the Borrowers' or any such Subsidiaries' liability with respect to
the Obligations owing to the Administrative Agent and the other
Secured Parties under or in respect of the Loan Documents;
(iv) release all or substantially all of the Collateral in any
transaction or any series of related transactions;
(v) permit the creation, incurrence, assumption or existence
of any Lien on any material portion of the Collateral in any
transaction or series of related transactions to secure any
Obligations other than Obligations owing to the Administrative Agent
and the other Secured Parties under or in respect of the Loan
Documents and other than Indebtedness owing to any other Person,
provided that, in the case of any Lien on a material portion of the
Collateral to secure Indebtedness owing to any other Person, (A) the
Borrowers shall, on the date such Indebtedness shall be incurred or
issued, reduce the Commitments pursuant to, and to the extent required
under, Section 2.04(b)(v), and prepay the Advances pursuant to, and to
the extent required under, Section 2.05(b), in an aggregate principal
amount equal to the amount of the Net Cash Proceeds received from the
incurrence or issuance of such Indebtedness to the extent required to
do so under Section 2.04(b)(v), (B) such Lien shall be subordinate to
the Liens created under the Loan Documents on terms reasonably
acceptable to the Required Lenders and (C) the Required Lenders shall
otherwise permit the creation, incurrence, assumption or existence of
such Lien and, to the extent not otherwise permitted under Section
5.02(b), such Indebtedness; or
(vi) amend this Section 9.01; and
(b) no amendment, waiver or consent shall, unless in writing and
signed by the Required Lenders and each of the Lenders that has a
Commitment under the Term Facility, the Revolving Credit A Facility or the
Revolving Credit B Facility if affected by such amendment, waiver or
consent:
(i) increase the Commitments of such Lender or subject such
Lender to any additional Obligations;
(ii) reduce the principal of, or interest on, the Notes held by
such Lender or any fees or other amounts payable hereunder to such
Lender;
(iii) postpone any date fixed for any payment of principal of,
or interest on, the Notes held by such Lender or any fees or other
amounts payable hereunder to such Lender; or
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145
(iv) change the order of application of any prepayment set
forth in Section 2.05 in any manner that materially affects such
Lender;
provided further that no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent in addition to the Lenders required above
to take such action, affect the rights or duties of the Administrative Agent
under this Agreement or any of the other Loan Documents. Notwithstanding any of
the foregoing provisions of this Section 9.01, none of the defined terms set
forth in Section 1.01 shall be amended, supplemented or otherwise modified in
any manner that would change the meaning, purpose or effect of this Section 9.01
or any section referred to herein unless such amendment, supplement or
modification is agreed to in writing by the number and percentage of Lenders
(and the Administrative Agent, if applicable) otherwise required to amend such
section under the terms of this Section 9.01.
SECTION 9.02. Notices, Etc. (a) All notices and other
------------
communications provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication) and mailed by certified mail
return receipt requested, telegraphed, telecopied, telexed or delivered:
(i) if to any of the Borrowers, at its address at 10960 Wilshire
Boulevard, Los Angeles, California 90024, Telecopier No.: (310) 235-5552,
Attention: Mr. Mel Woods;
(ii) if to any of the Initial Lenders, at its Base Rate Lending
Office specified opposite its name on Schedule I hereto;
(iii) if to any of the other Lenders, at its Base Rate Lending Office
specified on Schedule I to the Assignment and Acceptance pursuant to which
it became a Lender; and
(iv) if to the Administrative Agent or the Arranger, at its address
at 399 Park Avenue, New York, New York 10043, Telecopier No.: (212) 793-
8879, Attention: Mr. Andrew Sriubas; or
(v) as to each of the Borrowers and the Administrative Agent, at
such other address as shall be designated by such party in a written notice
to each of the other parties and, as to each other party, at such other
address as shall be designated by such party in a written notice to each of
the Borrowers and the Administrative Agent.
Notwithstanding any of the other provisions of the Loan Documents, any notice to
the Borrowers or to any of them required to be made under this Agreement or any
of the other Loan Documents that is delivered to Fox Kids in accordance with
this Section 9.02 shall constitute effective notice to the Borrowers or to any
such Borrower. All such notices and communications shall, when mailed,
telegraphed, telecopied or telexed, be effective when deposited in the mails,
delivered to the telegraph company, transmitted by telecopier or confirmed by
telex answerback, respectively, addressed as aforesaid, except that notices and
communications to the Administrative Agent pursuant to Article II, III or VIII
shall not be effective until received by the Administrative Agent. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or the Notes or of any Exhibit hereto to be executed
and delivered hereunder shall be effective as delivery of a manually executed
counterpart thereof.
(b) If any notice required under this Agreement or any of the other
Loan Documents is permitted to be made, and is made, by telephone, actions taken
or omitted to be taken in reliance thereon by the Administrative Agent or any of
the Lenders shall be binding upon the Borrowers notwithstanding any
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146
inconsistency between the notice provided by telephone and any subsequent
writing in confirmation thereof provided to the Administrative Agent or such
Lender; provided that any such action taken or omitted to be taken by the
Administrative Agent or such Lender shall have been in good faith and in
accordance with the terms of this Agreement.
SECTION 9.03. No Waiver; Remedies. No failure on the part of any of
-------------------
the Lenders or the Administrative Agent to exercise, and no delay in exercising,
any right, power or privilege hereunder or under any Note shall operate as a
waiver thereof or consent thereto; nor shall any single or partial exercise of
any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
applicable law.
SECTION 9.04. Indemnification. (a) Each of the Borrowers hereby
---------------
jointly and severally agrees to indemnify and hold harmless each of the Agents,
each of the Lenders and each of their respective affiliates and their respective
officers, directors, employees, agents, representatives and advisors (each, an
"INDEMNIFIED PARTY") from, and hold each of them harmless against, any and all
claims, damages, losses, liabilities and reasonable expenses (including, without
limitation, reasonable fees and expenses of counsel), joint or several, that may
be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation or proceeding or
the preparation of a defense in connection therewith) (i) the Transaction (or
any aspect thereof) or any similar transaction of Fox Kids or any of its
Subsidiaries, (ii) the Facilities, the actual or proposed use of the proceeds of
any Advances, the Loan Documents or any of the other transactions contemplated
thereby, (iii) any acquisition or proposed acquisition by Fox Kids or any of its
Subsidiaries or Affiliates of all or any portion of the Equity Interests in, or
substantially all of the property and assets of, any other Person or (iv) the
actual or alleged presence of Hazardous Materials on any property of any of the
Loan Parties or any of their respective Subsidiaries or any Environmental Action
relating in any way to any of the Loan Parties or any of their respective
Subsidiaries (collectively, the "INDEMNIFIABLE MATTERS"), except to the extent,
in the case of any such Indemnified Party, that such claim, damage, loss,
liability or expense is found in a final, nonappealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. In the case of any investigation, litigation
or proceeding for which the indemnity under this Section 9.04(a) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by any of the Loan Parties, IFE, their respective
directors, stockholders, partners, members or creditors or an Indemnified Party
or any Indemnified Party is otherwise a party thereto and whether or not the
Transaction (or any part thereof) or any of the other transactions contemplated
hereby is consummated. Notwithstanding any of the foregoing provisions of this
Section 9.04(a), in the event of any Indemnifiable Matter of any of the Lenders
solely against one or more other Lenders (and not any Indemnifiable Matter by
one or more Lenders against the Administrative Agent or the Arranger), none of
the Borrowers shall be obligated to indemnify such Lender or any of its
affiliates or any of its officers, directors, employees, agents or advisors for
any claim, damage, loss, liability or expense resulting from such Indemnifiable
Matter, except to the extent such claim, damage, loss, liability or expense is
found in the final, nonappealable judgment of a court of competent jurisdiction
to have resulted from the action, inaction, participation or contribution of any
of the Loan Parties, IFE or any of their respective Affiliates or any of their
respective officers, directors, stockholders, partners, members, employees,
agents, representatives or advisors, and then only to the extent of their
collective action, inaction, participation or contribution.
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147
(b) Promptly after receipt by any of the Indemnified Parties of
notice of the commencement of any Indemnifiable Matter, such Indemnified Party
shall, if indemnification therefor is to be sought from any or all of the
Borrowers pursuant to subsection (a) of this Section 9.04, give notice to Fox
Kids of the commencement of such Indemnifiable Matter; provided, however, that
the failure of such Indemnified Party to give such notice to Fox Kids shall not
relieve Fox Kids or any of the other Borrowers of any of their Obligations under
this Section 9.04, unless, and then only to the extent that, such failure
results in the forfeiture of rights or defenses and the Borrowers incur an
increased indemnification obligation to such Indemnified Party under the terms
of subsection (a) of this Section 9.04 on account of such failure.
Notwithstanding the delivery of such notice to Fox Kids, such Indemnified Party
may defend against such Indemnifiable Matter in any manner such Indemnified
Party shall reasonably deem appropriate; provided that, in the event that Fox
Kids shall notify such Indemnified Party, promptly following the delivery of
such notice to Fox Kids, that Fox Kids is assuming the defense of such
Indemnifiable Matter, then (i) so long as the Indemnifiable Matter referred to
in such notice has not been commenced by any of the Loan Parties, IFE or any of
their respective Affiliates or any of their officers, directors, stockholders,
partners, members, employees, agents, representatives or advisors and (ii)
unless in the reasonable opinion of counsel for such Indemnified Party (A) a
conflict of interest between such Indemnified Party and any of the Loan Parties
or any of their respective Affiliates may exist in respect of such Indemnifiable
Matter and representation of both such Indemnified Party and any such Loan Party
or any such Affiliate would be inappropriate or (B) there may be one or more
legal defenses available to such Indemnified Party that are different from or in
addition to, but in any such case are adverse to, any of the Loan Parties or any
of their respective Affiliates, Fox Kids shall be entitled to participate in and
to assume the defense of such Indemnifiable Matter solely on the following terms
and conditions:
(1) any and all counsel selected by Fox Kids to participate in the
defense of any such Indemnifiable Matter shall be reasonably satisfactory
to such Indemnified Party, and the Borrowers shall be responsible for all
of the fees and expenses of each such counsel;
(2) such Indemnified Party shall have the right (but not any
obligation) to retain separate co-counsel and shall have the right, but not
the obligation, to assert any and all defenses, cross-claims and
counterclaims that it may have, and the fees and expenses of any such co-
counsel shall be at the expense of such Indemnified Party (except that the
Borrowers shall be responsible for the fees and expenses of the separate
co-counsel (x) to the extent such Indemnified Party reasonably concludes
that any of the counsel chosen by Fox Kids to participate in the defense of
any such Indemnifiable Matter has a conflict of interest, (y) if Fox Kids
does not employ counsel reasonably satisfactory to such Indemnified Party
or (z) if Fox Kids or its counsel does not at all times defend such
Indemnifiable Matter vigorously and in good faith; and
(3) the Borrowers shall confirm (in a writing reasonably satisfactory
to such Indemnified Party) that all of the liabilities and obligations with
respect to such Indemnifiable Matter will, upon the election by Fox Kids to
participate in or assume the defense of such Indemnifiable Matter, be
solely the joint and several liabilities and Obligations of the Borrowers,
and Fox Kids will not consent to the entry of any judgment or enter into
any settlement with respect to such Indemnifiable Matter without providing
reasonable prior notice to such Indemnified Party and, if such Indemnified
Party does not exercise the rights afforded to it under the next succeeding
proviso, without obtaining (in a writing reasonably acceptable to such
Indemnified Party) a full and unconditional release and discharge of the
applicable Indemnified Party from all liability and potential liability on
claims that are the subject matter of such Indemnifiable Matter; provided,
however, that, notwithstanding any of
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the foregoing provisions of this subclause (3), if the applicable
Indemnified Party objects to the entry of any such judgment or any such
settlement, such Indemnified Party may thereafter assume the defense of the
Indemnifiable Matter and the Borrowers shall be released from their
respective Obligations under subsection (a) of this Section 9.04 for all
fees and expenses relating to such Indemnifiable Matter arising after such
objection and their respective liabilities and Obligations hereunder for
other claims, damages, losses, liabilities and expenses relating to such
Indemnifiable Matter shall be limited in dollar amount to the amount of the
proposed judgment or settlement, as the case may be.
In connection with the election by Fox Kids to participate in or assume the
defense of any Indemnifiable Matter in accordance with the terms provided in
this subsection (b), each of the Indemnified Parties subject thereto shall
supply Fox Kids with all such information reasonably requested thereby (and that
is reasonably necessary or appropriate and would not, in the judgment of such
Indemnified Party, be materially disadvantageous to such Indemnified Party) in
order to cooperate in Fox Kids' participation in and assumption of the defense
of such Indemnifiable Matter.
(c) None of the Borrowers shall be liable to any of the Indemnified
Parties for the settlement by such Indemnified Party of any pending or
threatened litigation or proceeding for which such Indemnified Party may seek
indemnity under Section 9.04(a) without the prior written consent of such
Borrower (which consent shall not be unreasonably withheld or delayed and shall
be deemed to have been given if the Borrower to which such notice was provided
has not objected to such settlement within 20 days after the date of notice
thereto of such proposed settlement). In turn, none of the Borrowers or any of
their respective Affiliates or their respective officers, directors,
stockholders, partners, members, employees, agents, representatives or advisors
shall effect the settlement of any such pending or threatened litigation or
proceeding unless either (i) such settlement includes a full and unconditional
release and discharge of each of the Indemnified Parties subject to such action
or proceeding from all liability and potential liability on claims that are the
subject matter of such action or proceeding or (ii) each of the Indemnified
Parties subject to such action or proceeding shall give their prior written
consent to the settlement thereof (which consent shall not be unreasonably
withheld or delayed).
(d) Upon payment in full in cash of any Indemnifiable Matter by or on
behalf of any of the Borrowers to or on behalf of any of the Indemnified
Parties, the applicable Borrower (or the Person making payment on its behalf)
shall be subrogated to any claims that such Indemnified Party may have to seek
reimbursement from any other Person relating to such Indemnifiable Matter;
provided, however, that the applicable Borrower (or the Person making payment on
its behalf) shall not exercise any rights of subrogation, reimbursement,
contribution or indemnification that it may now or hereafter acquire against any
of the Loan Parties or any of their respective Subsidiaries or against any of
the Indemnified Parties until such time as all of the Advances and all of the
other amounts owing by any of the Loan Parties under or in respect of the Loan
Documents shall have been paid in full in cash, all of the Bank Hedge Agreements
shall have expired or been terminated and all of the Commitments shall have
expired or terminated. Each of the Indemnified Parties, if reasonably requested
by and at the expense of any of the Borrowers, will execute and deliver to such
Borrower appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer of subrogation to Fox Kids of an
interest in such claims resulting from the payment made by such Borrower under
the indemnity set forth in subsection (a) of this Section 9.04.
(e) Each of the Borrowers hereby also severally agrees that none of
the Indemnified Parties shall have any liability (whether direct or in direct,
in contract, tort or otherwise) to any of the Loan
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Parties, IFE or any of their respective Affiliates or their respective officers,
directors, stockholders, partners, members, employees, agents, representatives
or advisors, and each of the Borrowers hereby severally agrees not to assert any
claim against any of the Indemnified Parties on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or otherwise
relating to the Transaction (or any aspect thereof), the Facilities, the actual
or proposed use of the proceeds of any Advances, the Loan Documents or any of
the other transactions contemplated thereby, except to the extent, in the case
of any such Indemnified Party, that such claim, damage, loss, liability or
expense is found in a final, nonappealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct.
SECTION 9.05. Costs and Expenses. (a) Each of the Borrowers hereby
------------------
agrees to pay, upon demand, (i) all reasonable and properly documented out-of-
pocket costs and expenses of each of the Agents in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents (including, without limitation, (A) all reasonable due
diligence, collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
for the Agents (which shall include only one counsel in each applicable
jurisdiction and one additional intellectual property counsel) with respect
thereto, with respect to advising each of the Agents as to their respective
rights and responsibilities, or the perfection, protection or preservation of
rights or interests, under the Loan Documents, with respect to negotiations with
any of the Loan Parties or with other creditors of any of the Loan Parties or
any of their respective Subsidiaries arising out of any Default or any events or
circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto) and (ii) all reasonable and properly documented
out-of-pocket costs and expenses of the Agents and the Lenders in connection
with the enforcement of the Loan Documents, whether through negotiations, in any
action, suit or litigation, or in any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally or otherwise (including,
without limitation, the reasonable fees and expenses of counsel for the Agents
and the Lenders, collectively, with respect thereto (which shall include only
one counsel in each applicable jurisdiction and one additional intellectual
property counsel, each of which counsel shall be counsel selected by, and
counsel for, the Administrative Agent, unless (i) any of the Lenders shall
reasonably determine that a conflict of interest exists such that counsel for
the Administrative Agent is precluded by applicable Requirements of Law or by
standards of conduct from representing the Administrative Agent and the Lenders
as a group, in which case each of the Borrowers hereby agrees to pay, upon
demand, all reasonable and properly documented out-of-pocket fees and expenses
of the minimum number of counsel necessary in the reasonable judgment of the
Lenders to provide the Administrative Agent and each Lender with appropriate
legal representation in connection with the enforcement of their respective
rights under this Agreement and the other Loan Documents and (ii) any of the
Lenders elects to pursue its rights and remedies under this Agreement and the
other Loan Documents for nonpayment of any amounts due and payable hereunder or
thereunder in a proceeding separate from that of the Administrative Agent and/or
the other Lenders, in which case each of the Borrowers hereby agrees to pay,
upon demand, all reasonable and properly documented out-of-pocket fees and
expenses of one additional counsel for each such Lender in each of the
applicable jurisdictions)).
(b) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by any of the Borrowers to or for the account of any of the
Lenders other than on the last day of the Interest Period for such Advance, as a
result of a payment, repayment or Conversion pursuant to Section 2.08(b)(i) or
2.09(d), a prepayment pursuant to Section 2.05, acceleration of the maturity of
the Notes
<PAGE>
150
pursuant to Section 7.01 or for any other reason, or by an Eligible Assignee to
a Lender other than on the last day of the Interest Period for such Advance upon
an assignment of rights and obligations under this Agreement pursuant to Section
9.08 as a result of a demand by Fox Kids pursuant to Section 9.08(a), such
Borrower shall, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender any amounts required to compensate such Lender for any additional losses
(including losses of anticipated profits other than any amount attributable
solely to the Applicable Margin), costs or expenses that it may reasonably incur
as a result of such payment, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any of the Lenders to fund or maintain such Advance.
(c) If any of the Loan Parties fails to pay when due any costs,
expenses or other amounts payable by it under or in respect of any of the Loan
Documents (including, without limitation, any reasonable fees and expenses of
counsel or any indemnities), such amount may be paid on behalf of such Loan
Party by the Administrative Agent or any of the Lenders, in its sole discretion.
(d) Without prejudice to the survival of any other agreement of any
of the Loan Parties under this Agreement or any of the other Loan Documents, the
agreements and obligations of each of the Borrowers contained in Sections 2.09,
2.11 and 9.04 and this Section 9.05 shall survive the payment in full of all
principal, interest and all other amounts payable under this Agreement and any
of the other Loan Documents.
SECTION 9.06. Right of Setoff. Upon (a) the occurrence and during
---------------
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 7.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 7.01, each of the Lenders and each of their respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by applicable law, to set off and otherwise apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender or such
Affiliate to or for the credit or the account of any of the Borrowers against
any and all of the Obligations of the Borrowers now or hereafter existing under
this Agreement and the Note or Notes, if any, held by such Lender, irrespective
of whether such Lender shall have made any demand under this Agreement or such
Note or Notes and although such obligations may be unmatured. Each of the
Lenders hereby agrees to notify the applicable Borrower promptly after any such
setoff and application shall be made by such Lender or any of its Affiliates;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each of the Lenders and
each of their respective Affiliates under this Section 9.06 are in addition to
other rights and remedies (including, without limitation, any other rights of
setoff) that such Lender and its Affiliates may have.
SECTION 9.07. Binding Effect. This Agreement shall become effective
--------------
when it shall have been executed by each of the Borrowers and the Administrative
Agent and when the Administrative Agent shall have been notified by each of the
Initial Lenders that such Initial Lender has executed it and, thereafter, shall
be binding upon and inure to the benefit of, and be enforceable by, each of the
Borrowers, each of the Agents and each of the Lenders and their respective
successors and assigns, except that none of the Borrowers shall have the right
to assign their respective rights hereunder or any interest herein without the
prior written consent of all of the Lenders.
SECTION 9.08. Assignments and Participations. (a) Each of the
------------------------------
Lenders may, and, if demand is made by Fox Kids (following (i) a demand by such
Lender for the payment of additional
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151
compensation pursuant to Section 2.09(a), 2.09(b) or 2.11, (ii) an assertion by
such Lender pursuant to Section 2.09(c) or 2.09(d) that it is impractical or
unlawful for such Lender to make Eurodollar Rate Advances or (iii) a refusal by
such Lender to approve any amendment or waiver of, or consent to departure from,
any of the terms or conditions of this Agreement or any of the other Loan
Documents; provided that Fox Kids may not demand the replacement of one or more
Lenders pursuant to this subclause (iii) holding, in the aggregate, more than 5%
of the aggregate Commitments under all of the Facilities as of the date of any
such proposed amendment, waiver or consent or the date of any such proposed
demand), upon at least 30 days' notice (or, solely in the case of clause (iii)
of this Section 9.08(a), upon at least five Business Days' prior notice) to such
Lender and the Administrative Agent, each of the Lenders will, assign to one or
more Persons all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment or
Commitments, the Advances owing to it and the Note or Notes held by it);
provided, however, that:
(A) each such assignment with respect to any of the Facilities shall
be of a uniform, and not a varying, percentage of all rights and
obligations under and in respect of such Facility;
(B) except in the case of an assignment to a Person that immediately
prior to such assignment was a Lender or an assignment of all of a Lender's
rights and obligations under one or more of the Facilities, the aggregate
amount of the Commitments of the assigning Lender under all of the
Facilities being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $10,000,000;
(C) each such assignment shall be to an Eligible Assignee;
(D) until such time as the Arranger shall have notified the Lenders
that syndication of the Commitments has been completed, no such assignment
shall be permitted, and no Lender shall engage in any discussions with any
Person relating to any such assignment or potential assignment, without the
prior written consent of the Administrative Agent;
(E) each such assignment made as a result of a demand by Fox Kids
pursuant to this Section 9.08(a) shall be arranged by Fox Kids with the
approval of the Administrative Agent, which approval shall not be
unreasonably withheld or delayed, and shall be either an assignment of all
of the rights and obligations of the assigning Lender under this Agreement
or an assignment of a portion of such rights and obligations made
concurrently with another such assignment or other such assignments that,
in the aggregate, cover all of the rights and obligations of the assigning
Lender under this Agreement;
(F) no Lender shall be obligated to make any such assignment as a
result of a demand by Fox Kids pursuant to this Section 9.08(a) unless and
until such Lender shall have received one or more payments from one or more
Eligible Assignees in an aggregate amount at least equal to the aggregate
outstanding principal amount of all Advances owing to such Lender, together
with accrued and unpaid interest thereon to the date of payment of such
principal amount, and from the Borrowers and/or one or more Eligible
Assignees in an aggregate amount equal to all other amounts payable to such
Lender under this Agreement and the Notes (including, without limitation,
any amounts owing under Sections 2.09, 2.11, 9.04 and 9.05);
<PAGE>
152
(G) except in the case of any assignment made as a result of a demand
by Fox Kids pursuant to Section 9.08(a), the Lender assignor or the
Administrative Agent shall have given Fox Kids at least two Business Days'
prior notice of the intended assignment and the Person to which such
assignment is proposed to be made;
(H) the parties to each such assignment shall execute and deliver to
the Administrative Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance, together with any Note or Notes subject to
such assignment; and
(I) the Lender assignor (or, if such assignment is being made
pursuant to a demand by Fox Kids therefor under this Section 9.08(a), the
Borrowers or the Lender assignee) shall pay to the Administrative Agent a
processing and recordation fee of $3,500.
(b) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (i) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (ii) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (other than its rights under Sections 2.09, 2.11, 9.04 and
9.05 (and other similar provisions of the other Loan Documents that are
specified under the terms of such other Loan Documents to survive the payment in
full of the Obligations of the Loan Parties under or in respect of the Loan
Documents) to the extent any claim thereunder relates to an event arising prior
to such assignment) and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the
other Loan Documents, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any
lien or security interest created or purported to be created under or in
connection with, this Agreement or any of the other Loan Documents, or any
other instrument or document furnished pursuant hereto or thereto;
(ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any of
the Borrowers or any of the other Loan Parties or the performance or
observance by any of the Borrowers or any of the other Loan Parties of any
of its Obligations under or in respect of any of the Loan Documents, or any
other instrument or document furnished pursuant thereto;
(iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and
<PAGE>
153
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon any
of the Agents, such assigning Lender or any of the other Lenders and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement;
(v) such assignee confirms that it is an Eligible Assignee;
(vi) such assignee appoints and authorizes the Administrative Agent
to take such action as an agent on its behalf and to exercise such powers
and discretion under the Loan Documents as are delegated to the
Administrative Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Agreement are
required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose (but only for
this purpose) as the agent of each of the Borrowers, shall maintain at its
address set forth in Section 9.02 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitment under each of the Facilities of,
and principal amount of the Advances owing under each of the Facilities to, each
of the Lenders from time to time (the "REGISTER"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Administrative Agent and the Lenders shall treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by any of the
Borrowers, any of the Agents or any of the Lenders at any reasonable time and
from time to time during normal business hours upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Note or Notes subject to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Appropriate Borrowers. In the case of any assignment by a Lender, within five
Business Days after its receipt of such notice, each of the Appropriate
Borrowers, at its own expense, shall execute and deliver to the Administrative
Agent in exchange for the surrendered Note or Notes a new Note or Notes from
such Borrower payable to or to the order of such Eligible Assignee in an amount
equal to the Commitment assumed by it under each Facility pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Commitment
under such Facility, a new Note or Notes from each such Appropriate Borrower
payable to or to the order of the assigning Lender in an amount equal to the
Commitment retained by it under such Facility. Each of the new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A-1, Exhibit A-2 or Exhibit A-3 hereto, as appropriate.
(f) Each of the Lenders may sell participations to one or more
Persons (other than any of the Loan Parties or any of their respective
Affiliates) in or to all or a portion of its rights and obligations
<PAGE>
154
under this Agreement (including, without limitation, all or a portion of its
Commitment or Commitments, the Advances owing to it and the Note or Notes, if
any, held by it); provided, however, that:
(i) such Lender's obligations under this Agreement (including,
without limitation, its Commitments) shall remain unchanged;
(ii) the aggregate amount of the Commitments of the participating
Lender under all of the Facilities being sold in each such participation
(determined as of the date such participation is effected) shall in no
event be less than $5,000,000;
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of any such Note for all
purposes of this Agreement;
(v) the Borrowers, the Administrative Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and the
other Loan Documents; and
(vi) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of any of the
Loan Documents, or any consent to any departure by any of the Loan Parties
therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Notes or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation, or release all or
substantially all of the Collateral.
(g) Any of the Lenders may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.08, disclose to the assignee or participant or proposed assignee or
participant, any information relating to Fox Kids or any of its Subsidiaries or
IFE or any of its Subsidiaries, or to any aspect of the Transaction, furnished
to such Lender by or on behalf of any of the Borrowers; provided, however, that,
prior to any such disclosure, the assignee or participant or proposed assignee
or participant shall agree to preserve the confidentiality of any Confidential
Information received by it from such Lender on substantially the same terms as
those set forth in Section 9.09.
(h) Any of the Lenders may at any time create a security interest
in all or any portion of its rights under this Agreement (including, without
limitation, the Advances owing to it and the Note or Notes held by it) in favor
of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.
SECTION 9.09. Confidentiality. Neither any of the Agents nor any of
---------------
the Lenders shall disclose any Confidential Information to any Person without
the consent of Fox Kids, other than (a) to such Agent's or such Lender's
respective Affiliates and their respective officers, directors, employees,
agents, representatives, attorneys, auditors and other advisors on a
confidential basis, (b) to actual or prospective Eligible Assignees and
participants in each case on a confidential basis and otherwise in accordance
with
<PAGE>
155
Section 9.08(g), (c) as required by any applicable Requirements of Law or by
subpoena or any other judicial or other legal process, provided that solely with
respect to this clause (c), such Agent or such Lender shall notify Fox Kids of
the requirement or request that it disclose any such Confidential Information
prior to doing so unless such notification is prohibited by any applicable
Requirements of Law or judicial or legal process (although neither Fox Kids nor
any other Person having any right or interest in such Confidential Information
shall have any recourse against any such Agent or any such Lender for the
failure to deliver such notice to Fox Kids), (d) to other Agents and Lenders and
(e) as requested or required by any Governmental Authority or any state, federal
or foreign authority or examiner regulating banks or banking.
SECTION 9.10. Execution in Counterparts. This Agreement 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
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.11. Governing Law; Jurisdiction, Etc. (a) This Agreement
--------------------------------
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.
(b) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property and assets, to the nonexclusive
jurisdiction of any New York state court or any federal court of the United
States of America sitting in New York City, New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment in respect thereof, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York state court or, to the fullest extent permitted by applicable law, in
any such federal court. Each of the parties hereto hereby irrevocably consents
to the service of copies of any summons and complaint and any other process
which may be served in any such action or proceeding by certified mail, return
receipt requested, or by delivering a copy of such process to such party, at its
address specified in Section 9.02, or by any other method permitted by
applicable law. Each of the parties hereto hereby agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
applicable law. Nothing in this Agreement shall affect any right that any of
the parties hereto may otherwise have to bring any action or proceeding relating
to this Agreement or any of the other Loan Documents in the courts of any
jurisdiction.
(c) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any action
or proceeding arising out of or relating to this Agreement or any of the other
Loan Documents to which it is a party in any New York state court or federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE
--------------------
AGENTS AND THE LENDERS IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
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156
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS, ANY DOCUMENTS DELIVERED PURSUANT TO THE LOAN
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE>
157
DOCUMENTS, THE ADVANCES, THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE
ACTIONS OF ANY OF THE AGENTS OR ANY OF THE LENDERS IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE BORROWERS
FOX KIDS WORLDWIDE, INC.
By /s/ Jay Itzkowitz
-----------------------------------
Name: Jay Itzkowitz
Title: Vice President and Assistant
Secretary
FCN HOLDING, INC.
By /s/ Jay Itzkowitz
-----------------------------------
Name: Jay Itzkowitz
Title: Vice President and Assistant
Secretary
FOX KIDS MERGER CORPORATION
By /s/ Jay Itzkowitz
-----------------------------------
Name: Jay Itzkowitz
Title: Chief Executive Officer and
Assistant Secretary
SABAN ENTERTAINMENT, INC.
By /s/ Jay Itzkowitz
-----------------------------------
Name: Jay Itzkowitz
Title: Vice President and Assistant
Secretary
<PAGE>
158
THE ADMINISTRATIVE AGENT
CITICORP USA, INC.
By /s/ Carolyn A. Kee
--------------------------
Name: Carolyn A. Kee
Title: Attorney-in-fact
THE ARRANGER
CITICORP SECURITIES, INC.
By /s/ Jay Schiff
---------------------------------
Name: Jay Schiff
Title: Vice President
THE INITIAL LENDER
CITICORP USA, INC.
By /s/ Carolyn A. Kee
-----------------------------
Name: Carolyn A. Kee
Title: Attorney-in-fact
<PAGE>
EX.2
FIRST AMENDMENT TO SUBORDINATED NOTE AGREEMENT
----------------------------------------------
This FIRST AMENDMENT TO SUBORDINATED NOTE AGREEMENT (the "First
Amendment"), is made the 4th day of September, 1997, by and among FOX
BROADCASTING COMPANY, a Delaware Corporation ("Lender"), FOX KIDS WORLDWIDE,
INC. (together with any successors or assigns, the "Borrower"), a Delaware
corporation, and CITICORP USA, INC., as administrative agent under the Senior
Loan Agreement.
WHEREAS, the parties hereto are parties to a certain Subordinated Note
Agreement, dated July 31, 1997 (the "Note Agreement"); and
WHEREAS, the parties hereto desire to amend the Note Agreement to change
the Maturity Date thereunder and to make certain correction thereto;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein which are defined in
-----------
the Note Agreement and not otherwise defined herein shall have their meanings as
defined in the Note Agreement.
2. Amendment to Section 2.2. Section 2.2 of the Note Agreement is hereby
------------------------
amended to delete the Maturity Date of "August 1, 2007" and to insert in lieu
thereof "September 30, 2007".
3. Amendment to Section 8.3. Section 8.3(A) of the Note Agreement is
------------------------
hereby amended to delete the words "Senior Agent and the other Senior Lenders"
from the seventh line thereof and to insert in lieu thereof the words "Senior
Agent or any of the other Senior Lenders."
4. Amendment to Section 8.4. Section 8.4 of the Note Agreement is hereby
------------------------
amended to delete the words "for the account of the Senior Lenders," from the
third line thereof.
5. Amendments to Section 8.5.
-------------------------
5.1 Section 8.5 of the Note Agreement is hereby amended to insert the
words "any applicable" before the words "Insolvency Law" on the fourth line
thereof.
5.2 Section 8.5 of the Note Agreement is hereby amended to insert the
word "applicable" before the words "Insolvency Law" on the eleventh line
thereof.
1
<PAGE>
6. Amendments to Section 8.8.
-------------------------
6.1 Section 8.8 of the Note Agreement is hereby amended to delete the
word "Lender" from the fourth line thereof and insert in lieu thereof the word
"Borrower".
6.2 Section 8.8 of the Note Agreement is hereby amended to delete the
words "and assets" from ninth line thereof.
7. Amendments to Section 8.9.
-------------------------
7.1 Section 8.9(A) of the Note Agreement is hereby amended to insert
the word "of" after the word "payment" on the first line thereof.
7.2 Section 8.9(A) of the Note Agreement is hereby amended to delete
the word "agreement" from the fourth line thereof and insert in lieu thereof the
words "instrument, agreement or other document".
7.3 Section 8.9(B) of the Note Agreement is hereby amended to insert
the words "of the" before the word "property" on the first line thereof.
7.4 Section 8.9(B) of the Note Agreement is hereby amended to insert
the words "of any person" after the word "assets" on the second line thereof.
8. Miscellaneous.
-------------
8.1 On and after the date hereof, each reference in the Note
Agreement to the terms "this Agreement," "hereunder," "hereof," "hereby,"
"herein" or other similar terms shall be deemed to be a reference to the Note
Agreement as amended by this First Amendment.
8.2 Except as hereby amended, the Note Agreement shall continue in
full force and effect.
8.3 This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts taken together shall constitute but one and the same
instrument.
2
<PAGE>
IN WITNESS WHEREOF, this First Amendment has been duly executed on the day
and year specified at the beginning hereof.
Borrower: FOX KIDS WORLDWIDE, INC.
By: /s/ Jay Itzkowitz
-------------------------------
Name: Jay Itzkowitz
Title: Vice President and Assistant Secretary
Lender: FOX BROADCASTING COMPANY
By: /s/ Jay Itzkowitz
---------------------------------
Name: Jay Itzkowitz
Title:
Senior Agent: CITICORP USA, INC.
By: /s/ Carolyn A. Kee
Name: Carolyn A. Kee
Title: Attorney-in-fact
3
<PAGE>
EX.3
THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED IN THE MANNER AND TO THE
EXTENT SET FORTH IN SECTION 8 HEREOF. EACH HOLDER OF THIS NOTE, BY ITS
ACCEPTANCE HEREOF, SHALL BE BOUND BY THE SUBORDINATION PROVISIONS OF THIS
AGREEMENT.
SUBORDINATED NOTE AGREEMENT
---------------------------
THIS SUBORDINATED NOTE AGREEMENT is made the 29th day of August, 1997, by
and among NEWS AMERICA HOLDINGS INCORPORATED, a Delaware Corporation ("Lender"),
FOX KIDS WORLDWIDE, INC. (together with any successors or assigns, the
"Borrower"), a Delaware corporation, and CITICORP USA, INC., as administrative
agent under the Senior Loan Agreement (as hereinafter defined).
WHEREAS, Lender has agreed to loan to Borrower, and Borrower has agreed to
borrow from Lender, $345,513,864.31, upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
ARTICLE 1. GENERAL DEFINITIONS
-------------------
1.1 Defined Terms. When used herein, the following terms shall have the
-------------
following meanings:
Affiliate - when used in reference to any specified Person, any Person that
---------
directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the specified Person.
Agreement - this Subordinated Note Agreement, as the same may be modified
---------
or amended from time to time.
Business Day - a day on which the Federal Reserve Bank of New York is open
------------
for business in New York, New York.
Closing Date - August 31, 1997.
------------
Code - the Internal Revenue Code of 1986, as amended.
----
Dollars and the symbol $ - lawful money of the United States of America.
------- -
Event of Default - as defined in Section 7.1 of this Agreement.
----------------
GAAP - U.S. generally accepted accounting principles, consistently applied.
----
<PAGE>
Indebtedness - as applied to any Person, means: (a) all indebtedness for
------------
borrowed money; (b) that portion of obligations with respect to capital leases
that is properly classified as a liability on a balance sheet in conformity with
GAAP; (c) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money; (d) any obligation
owed for all or any part of the deferred purchase price of property or services
if the purchase price is due more than six (6) months from the date the
obligation is incurred or is evidenced by a note or similar written instrument;
and (e) all indebtedness secured by any Lien on any property or asset owned or
held by that Person regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is nonrecourse to the credit of that Person.
Indemnities - as defined in Section 9.1 of this Agreement.
-----------
Interest - as defined in Section 3.1(A) of this Agreement.
--------
Insolvency Laws - as defined in Section 8.1 of this Agreement.
---------------
Insolvency Proceedings - as defined in Section 8.1 of this Agreement.
----------------------
Interest Payment Date - commencing on September 30, 1997, and each
---------------------
successive December 31, March 31, June 30 and September 30 on which the Loan is
outstanding.
Lien - any mortgage, deed of trust, pledge, lien, security interest, charge
----
or other encumbrance or security arrangement of any nature whatsoever, including
but not limited to any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the effect of,
security.
Loan - as defined in Section 2.1 of this Agreement.
----
Loan Documents - this Agreement, the Note, and any and all agreements,
--------------
instruments and documents executed therewith.
Maturity Date - as defined in Section 2.2 of this Agreement.
-------------
Note - the subordinated promissory note to be made by Borrower on the
----
Closing Date in favor of Lender to evidence the Loan, which shall be in the form
of Exhibit A annexed hereto, and any note or notes issued in replacement or
substitution therefor, as any such note or notes may be further amended,
modified, or supplemented from time to time after the execution and delivery
hereof.
Obligations - (i) the obligations of Borrower to pay, as and when due and
-----------
payable (by scheduled maturity or otherwise), all amounts from time to time
owing by it in respect of any Loan Document, whether for principal, Interest
(including, without limitation, all Interest that accrues after the commencement
of any case, proceeding or other action relating to any Insolvency Proceeding of
Borrower), fees, indemnification payments, contract causes of action, costs,
expenses or otherwise and (ii) the obligations of Borrower to perform or observe
all of its other obligations from time to time existing under any Loan Document.
2
<PAGE>
Person - an individual, partnership, association, corporation, limited
------
liability company, joint stock or other company, entity, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
Prepayment Date - any date upon which the Loan is being prepaid, in whole
---------------
or in part, pursuant to Section 3.2 of this Agreement.
Principal Amount - as defined in Section 2.1 of this Agreement.
----------------
Senior Agent - Citicorp USA, Inc., as administrative agent under the Senior
------------
Loan Agreement, and any successor or assignee thereof or any authorized
representative of the holders of a majority of the outstanding amount of the
Senior Obligations.
Senior Lenders - any and all lenders that provide financial accommodation,
--------------
advances and/or credit under the Senior Loan Agreement.
Senior Loan Agreement - the Credit Agreement, dated as of August 1, 1997,
---------------------
by and among Borrower, FCN Holding, Inc., Fox Kids Merger Corporation and Saban
Entertainment, Inc., as borrowers; Citicorp USA, Inc., as administrative agent;
Citicorp Securities, Inc., as arranger; and the lenders named therein, as
lenders, as the same may be further amended or supplemented, amended and
restated, refinanced or otherwise modified from time to time after the execution
and delivery hereof.
Senior Loan Documents - the Senior Loan Agreement and any and all
---------------------
agreements, instruments and documents executed in connection with the Senior
Loan Agreement, as the same may be further modified, amended or supplemented
after the execution and delivery thereof.
Senior Obligations - all of the obligations of Borrower, whether now or
------------------
hereafter existing, under or in respect of: (i) the Senior Loan Agreement and
the other Senior Loan Documents, whether direct or indirect, absolute or
contingent, and whether for principal, interest (including, without limitation,
interest accruing after the filing of a petition initiating any Insolvency
Proceeding, whether or not such interest accrues after the filing of such
petition for purposes of any applicable Insolvency Law, or is an allowed claim
in such Insolvency Proceeding), premium, fees, indemnification payments,
contract causes of action, costs, expenses or otherwise; and (ii) all
extensions, modifications, substitutions, amendments, renewals, refinancings,
replacements and refundings of any or all of the Senior Obligations referred to
in clause (i) of this paragraph, and any instrument or agreement evidencing or
otherwise setting forth the terms of any Indebtedness or other Senior
Obligations incurred in any such extension, modification, substitution,
amendment, renewal, refinancing, replacement or refunding.
Subsidiary - with respect to any Person, any other Person of which such
----------
Person owns or controls the voting of, directly or indirectly through one or
more intermediaries, more than fifty percent (50%) of the voting stock or other
ownership interests representing more than fifty percent (50%) of the ordinary
voting power of such entity at the time of determination.
Tax - any tax, levy, impost, duty, withholding, assessment, fee or other
---
charge which is assessed, levied or imposed or calculated for any government,
governmental, semi-governmental
3
<PAGE>
administrative, fiscal or judicial body, department, commission, authority,
tribunal, agency or entity (including without limitation any penalty, addition
to tax or interest payable in connection or with any failure to pay or any delay
in paying any of the same).
Voided Payment - as defined in Section 8.5 of this Agreement.
--------------
1.2 Certain Matters of Construction. Terms defined herein in the singular
-------------------------------
shall have the correlative meaning when used in the plural and vice versa. The
terms "herein," "hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to refer to the masculine,
feminine and neuter genders. The Section titles, table of contents and list of
exhibits appear as a matter of convenience only and shall not affect the
interpretation of this Agreement. All references to the knowledge of Borrower
(and phrases of similar import) shall include the knowledge of each of the
Subsidiaries of Borrower.
1.3 Time References. Unless otherwise indicated herein, all references to
---------------
time of day refer to Pacific standard time or Pacific daylight savings time, as
in effect in Los Angeles, California on such day. For purposes of the
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding"; provided, however, that with respect to a computation
of fees or interest payable to Lender, such period shall in any event consist of
at least one (1) full day.
ARTICLE 2. THE LOAN
--------
2.1 The Loan. Lender shall make a loan (the "Loan") to Borrower in the
--------
principal amount of Three Hundred Forty Five Million Five Hundred Thirteen
Thousand Eight Hundred Sixty Four Dollars and Thirty One Cents ($345,513,864.31)
(the "Principal Amount"), which shall be funded in full on the Closing Date.
Lender shall not have any responsibility as to the use of any of the proceeds of
the Loan. The Loan shall be evidenced by the Note in favor of Lender in the
form of Exhibit A annexed hereto.
2.2 Repayment of the Loan. The Principal Amount shall be repaid on
---------------------
September 30, 2007 (the "Maturity Date").
ARTICLE 3. INTEREST, FEES, PREPAYMENTS AND REPAYMENT
-----------------------------------------
3.1 Interest.
--------
(A) Interest ("Interest") shall accrue from and after the Closing
Date, on the Principal Amount, at the rate of eleven and 56/100 percent (11.56%)
per annum, compounded quarterly, on the basis of a three hundred sixty-five
(365)/three hundred sixty-six (366) day year.
(B) At the option of Borrower, and subject to the subordination
provisions set forth in Article 8 hereof, Borrower may on any Interest Payment
Date elect to (i) pay any portion or all of the accrued and unpaid interest on
the principal amount or (ii) elect to defer such payment until the Maturity Date
as provided in Section 3.1(C).
4
<PAGE>
(C) If, on any Interest Payment Date, Borrower elects to defer the
payment of interest until the Maturity Date as provided in Section 3.1(B) or is
not permitted to pay interest as a result of the subordination provisions set
forth in Article 8 hereof, an amount equal to the Interest which accrued on the
Principal Amount from the immediately preceding Interest Payment Date (or in the
case of the first Interest Payment Date, which accrued from the Closing Date)
through such Interest Payment Date shall be added automatically to the Principal
Amount and become a part thereof (such amount of Interest being referred to as
"Deferred Interest").
3.2 Optional Prepayment.
-------------------
(A) After the Senior Obligations have been paid in full, or at any
earlier time to the extent otherwise expressly permitted under the Senior Loan
Agreement, Borrower may prepay the Loan, in whole or in part, at any time, upon
at least five (5) Business Days' prior written notice to Lender. Any partial
prepayment of the Principal Amount shall be in the amount of Five Hundred
Thousand Dollars ($500,000) or in integral multiples of Five Hundred Thousand
Dollars ($500,000). Any prepayment of the Principal Amount on a Prepayment Date
pursuant to this Section 3.2 shall be accompanied by payment of the amount of:
(i) all Obligations (other than principal and Interest) due and
payable on the Prepayment Date; and
(ii) all Interest accrued (and not yet paid and added to the
Principal Amount as Deferred Interest) on the Principal Amount being prepaid
from the Closing Date through the Prepayment Date.
(B) The prepayment of the Loan pursuant to this Section 3.2 shall be
without premium or penalty.
3.3 Payments. The Obligations shall be payable as set forth in this
--------
Section 3.3.
(A) The Principal Amount shall be due and payable as provided in
Sections 2.2, 3.2 or 7.1 hereof, as applicable.
(B) Interest accrued on the Principal Amount shall be due and payable
in arrears on the earliest of (i) each successive Interest Payment Date, (ii)
the occurrence of an Event of Default in consequence of which Lender elects to
accelerate the maturity and payment of the Obligations, (iii) the Prepayment
Date (but only with respect to the amount of principal being prepaid at such
date) or (iv) the Maturity Date. Notwithstanding the foregoing, Borrower may
elect not to pay Interest on any Interest Payment Date and defer such payment as
provided in Section 3.1(C) above.
(C) Except as may be otherwise provided in Section 3.2 hereof, costs,
fees, expenses and any Obligations payable pursuant to this Agreement other than
Principal Amount and Interest shall be due and payable by Borrower to Lender or
to any other Person designated by Lender in writing (i) on demand, or (ii)
whether or not any demand has been made, upon (a) the occurrence of an Event of
Default in consequence of which Lender elects to accelerate the maturity and
payment of the Obligations or (b) the Maturity Date.
5
<PAGE>
3.4 Payment Procedures. Each payment payable by Borrower to Lender under
------------------
this Agreement, the Note or any of the other Loan Documents shall be made
directly to Lender, not later than 11:00 a.m., on the due date of each such
payment, by wire transfer of immediately available federal funds in United
States Dollars. If any sum would, but for the provisions of this Section 3.4,
the Note or any of the other Loan Documents, become due and payable to Lender on
any day which is not a Business Day, then such sum shall become due and payable
on the Business Day next succeeding the day on which such sum would otherwise
have become due and payable hereunder or thereunder.
3.5 Taxes.
-----
(A) Gross-up and Other Taxes. All payments made by the Borrower
------------------------
hereunder, and under the Note or any other Loan Document shall be made without
setoff, counterclaim, deduction or other defense. All such payments shall be
made free and clear of and without deduction for any present or future income,
franchise, sales, use, excise, stamp or other Taxes, levies, imposts,
deductions, charges, fees, withholdings, restrictions or conditions of any
nature now or hereafter imposed, levied, collected, withheld or assessed by any
jurisdiction (whether pursuant to United States Federal, state, local or foreign
law) or by any political subdivision or taxing authority thereof or therein, and
all interest, penalties or similar liabilities, excluding taxes on the net
income of, and branch profit taxes of, any Lender imposed by the jurisdiction in
which such Lender is organized or any political subdivision thereof or taxing
authority thereof or any jurisdiction in which such Person's principal office or
relevant lending office is located or any political subdivision thereof or
taxing authority thereof (other than any such Taxes with respect to additional
net income arising from the receipt of payments under this Section 3.5) (such
non-excluded taxes being hereinafter collectively referred to as "Non-Excluded
Taxes"). If the Borrower shall be required by law to deduct or to withhold any
Non-Excluded Taxes from or in respect of any amount payable hereunder, (i) the
amount so payable shall be increased to the extent necessary so that after
making all required deductions and withholdings (including Taxes on amounts
payable to Lender pursuant to this sentence) Lender receives an amount equal to
the sum it would have received had no such deductions or withholdings been made,
(ii) the Borrower shall make such deductions or withholdings, and (iii) the
Borrower shall pay the full amount deducted or withheld to the relevant taxation
authority in accordance with applicable law. Whenever any Non-Excluded Taxes
are payable by the Borrower, as promptly as possible thereafter, the Borrower
shall send Lender an official receipt (or, if an official receipt is not
available, such other documentation as shall be reasonably satisfactory to
Lender) showing payment. In addition, the Borrower shall pay any present or
future stamp, documentary, excise, property or similar Taxes, charges or levies
that arise from any payment made under the Loan Documents by Borrower or from
the execution, delivery, performance, release, discharge, amendment,
enforcement, attempted enforcement or registration of, or otherwise with respect
to, this Agreement, any other Loan Document or any transaction contemplated by
this Agreement or any other Loan Document as any and all of the foregoing relate
to Borrower (hereinafter referred to as "Other Taxes").
(B) Tax Indemnity. Borrower shall indemnify Lender for the full
-------------
amount of Non-Excluded Taxes and Other Taxes, including, without limitation, any
Non-Excluded Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this Section 3.5 (such Taxes being hereinafter referred to as "Gross-Up
Taxes") with respect to which Borrower has made a deduction from any payment
required to be made to Lender or which are paid by Lender in respect of either
6
<PAGE>
the Loan Documents or payments made by Borrower under the Loan Documents (as the
case may be) and any liability (including penalties, additions to tax, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Non-Excluded Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty (30) days from the date Lender makes
written demand therefor.
(C) Survival of Obligations. Without prejudice to the survival of
-----------------------
any other agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this Section 3.5 shall survive the payment in full by
Borrower of all principal and Interest hereunder, until six (6) months after the
expiration of the applicable statute of limitation with respect to any Gross-Up
Taxes, Non-Excluded Taxes and Other Taxes.
(D) Filings by Lender. (i) Borrower shall use reasonable efforts in
-----------------
good faith to file (or update the filing of) any certificate or document
provided or requested by Lender or take any reasonable action requested by
Lender if the filing of such certificate or document or the taking of such
action would avoid the need for, reduce the amount of, or assist in the recovery
of any payment of Taxes, or avoid the circumstances giving rise to the need for
such payment, and (ii) in the event Borrower fails to exercise the reasonable
efforts in good faith described in Section 3.5(D)(i) above, the Taxes arising
from such failure shall be considered Non-Excluded Taxes and Borrower shall
indemnify Lender in accordance with Section 3.5(B).
3.6 Application of Payments and Collections. Borrower irrevocably waives
---------------------------------------
the right to direct the application of any and all payments and collections at
any time or times hereafter received by Lender from or on behalf of Borrower,
and Borrower does hereby irrevocably agree that Lender shall have the continuing
exclusive right to apply and reapply any and all such payments and collections
received at any time or times hereafter by Lender or any Person designated by
Lender against the Obligations, in such manner as Lender may deem advisable
consistent with the terms of this Agreement, notwithstanding any entry by Lender
upon any of its books and records. Notwithstanding the foregoing provisions of
this Section 3.6, unless otherwise specified by Lender, any payment or
collection in respect of any of the Obligations (other than quarterly payments
of Interest pursuant to Section 3.1 hereof) shall be applied by Lender (a)
first, to the payment of all Obligations (if any) other than the principal and
Interest due and payable at such time, (b) next, to the payment of all Interest
which shall then be due and payable on the Principal Amount and (c) next, to the
payment of the outstanding Principal Amount.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Lender to enter into this Agreement and to make advances
hereunder, Borrower represents and warrants to Lender, on the Closing Date,
that:
4.1 Organization, Good Standing, Etc. Borrower (i) is a corporation, duly
---------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and (ii) has all requisite corporate power and authority to conduct
its business as now conducted and to make the borrowings hereunder and to
consummate the transactions contemplated by the Loan Documents to which it is a
party.
7
<PAGE>
4.2 Authorization, Etc. The execution, delivery and performance by
-------------------
Borrower of each of the Loan Documents to which it is a party (i) have been duly
authorized by all necessary corporate action on the part of Borrower, (ii) do
not and will not contravene the charter and by-laws of Borrower, or any
applicable law or any contractual restriction binding on or otherwise affecting
it or any of its properties, except where such conflict would not have a
material adverse effect on the business, condition (financial or otherwise)
operations or assets of the Borrower and its Subsidiaries taken as a whole (a
"Material Adverse Effect"), (iii) do not and will not result in the violation,
breach of, conflict with, accelerate the due date of any payments under, or
(without the giving of notice or the passage of time or both) entitle any party
to terminate or call a default under any contract to which the Borrower or any
of its Subsidiaries is a party, or to which any of their respective assets are
subject or otherwise bound which would not have a Material Adverse Effect, and
(iv) do not and will not result in or require the creation of any Lien, upon or
with respect to any of its properties.
4.3 Governmental Approvals. No authorization or approval or other action
----------------------
by, and no notice to or filing with, any governmental authority or other
regulatory body is required in connection with the due execution, delivery and
performance by each of Borrower or any Subsidiary of each of the Loan Documents
to which it is a party.
4.4 Enforceability of Loan Documents. This Agreement is, and each other
--------------------------------
Loan Document to which each of Borrower or any Subsidiary is a party, when
delivered hereunder, will be, legal, valid and binding obligations of Borrower
and each Subsidiary, as the case may be, enforceable against Borrower and each
Subsidiary in accordance with their respective terms, except to the extent that
the enforceability thereof may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
from time to time in effect affecting generally the enforcement of creditors'
rights and remedies and by general principles of equity.
ARTICLE 5. COVENANTS AND CONTINUING AGREEMENTS
-----------------------------------
So long as any amount owing in respect of the Obligations (whether or not
due) shall remain unpaid, Borrower covenants that, unless otherwise consented to
by Lender in writing, it shall:
5.1 Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries
--------------------------
to comply, with all applicable laws, rules, regulations and orders, except where
such failure to comply would not, either in any case or in the aggregate,
reasonably be likely to result in a Material Adverse Effect.
5.2 Preservation of Existence, Etc. Maintain and preserve, and cause each
-------------------------------
of its Subsidiaries to maintain and preserve, its existence, rights and
privileges, and become or remain duly qualified and in good standing in each
jurisdiction in which the character of the properties owned or leased by them or
in which the transaction of their business makes such qualification necessary,
except (i) where the failure to maintain and preserve the existence, rights and
privileges of Borrower or its Subsidiaries would not, either in any single case
or in the aggregate, reasonably be likely to result in a Material Adverse
Effect, or (ii) where such failure to qualify would not, either in any case or
in the aggregate, reasonably be likely to result in a Material Adverse Effect.
8
<PAGE>
5.3 Keeping of Records and Books of Account. Keep, and cause each of its
---------------------------------------
Subsidiaries to keep, adequate records and books of account, with complete
entries made in accordance with GAAP.
5.4 Further Assurances. Shall, and shall cause each Subsidiary to, do,
------------------
execute, acknowledge and deliver, at the sole cost and expense of Borrower or
any such Subsidiary, all such further acts and assurances as Lender may
reasonably require from time to time in order to better assure and confirm unto
Lender the rights now or hereafter intended to be granted to it under this
Agreement, any Loan Document or any other instrument under which Borrower or any
of its Subsidiaries may be or may hereafter become bound for carrying out the
intention or facilitating the performance of the terms of the Agreement.
5.5 Characterization of Note. Lender and Borrower shall at all times
------------------------
characterize the Note as "indebtedness" rather than "stock" for all purposes
whatsoever and will not take any position or action to the contrary thereto
unless required by law. Neither Lender nor Borrower will disclose treatment of
the Note in a manner inconsistent with the characterization of the Note as
"indebtedness" within the meaning of the Code Section 385(c) in any return,
information statement or other filing with the Internal Revenue Service.
ARTICLE 6. CONDITIONS PRECEDENT
--------------------
As a condition precedent to Lender making the Loan hereunder, the following
conditions, as the case may be, shall be fulfilled in a manner reasonably
satisfactory to Lender:
6.1 Delivery of Documents. Lender shall have received the following
---------------------
documents on or prior to the Closing Date:
(A) the Note, duly executed and delivered by Borrower, and any other
instruments, documents or certificates executed by Borrower or any of its
Subsidiaries in respect of the transactions contemplated by this Agreement or
which are reasonably requested by Lender;
(B) evidence that Borrower and its Subsidiaries are in full
compliance with all of their respective representations, warranties, covenants
and agreements set forth in the Senior Loan Documents, that neither Borrower nor
its Subsidiaries are in breach of, or default under, any of the Senior Loan
Documents and that the Senior Loan Documents are in full force and effect in
accordance with their respective terms; and
(C) such other documents, instruments and agreements as Lender shall
reasonably request in connection with the foregoing matters.
6.2 Additional Conditions Precedent. The following conditions shall be
-------------------------------
satisfied on the Closing Date, in the sole discretion, reasonably exercised, of
Lender:
(A) no action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement, the other Loan Documents, any Senior Loan Documents or the
consummation of
9
<PAGE>
the transactions contemplated hereby or thereby or which, in Lender's sole
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement or any of the other Loan Documents; and
(B) all legal matters in connection with the transactions
contemplated by the Loan Documents shall be reasonably satisfactory to Lender
and its counsel in their sole discretion.
ARTICLE 7. EVENTS OF DEFAULT: RIGHTS AND REMEDIES ON DEFAULT
-------------------------------------------------
7.1 Events of Default. The existence of any one or more of the following
-----------------
events shall constitute an Event of Default:
(A) Borrower shall fail to pay any (i) principal when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise)
under the Loan Documents and such failure shall continue unremedied for fifteen
(15) days or (ii) any Interest, any fee, indemnity or other amounts due or other
Obligations under any Loan Document when due (unless deferred pursuant to
Section 3.1(C) hereof) and such failure shall continue unremedied for thirty
(30) days;
(B) any representation or warranty made by Borrower or any officer of
Borrower under or in connection with any Loan Document shall have been or shall
be incorrect in any material respect when made;
(C) Borrower shall fail to perform or observe any of its Obligations
under any Loan Document, including but not limited to any covenant contained in
Article 5 hereof (other than occurrences referred to or embodied in other
provisions of this Section 7.1), and such failure shall continue unremedied for
a period of thirty (30) days after the earlier of (i) Borrower's receipt of
notice from Lender or (ii) actual knowledge of such breach by Borrower;
(D) Borrower or any Subsidiary (i) shall institute any proceeding or
voluntary case seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for such party or for any substantial part
of its property, (ii) shall be generally not paying its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally,
(iii) shall make a general assignment for the benefit of creditors or (iv) shall
take any action to authorize or effect any of the actions set forth above in
this subsection (D);
(E) any proceeding shall be instituted against Borrower or any
Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official for
Borrower or any Subsidiary or for any substantial part of its property, and
either such proceeding shall remain undismissed or unstayed for a period of
seventy (70) days or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against it or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property) shall occur; and
10
<PAGE>
(F) any material provision of any Loan Document shall at any time for
any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Borrower, or a proceeding shall be commenced by
Borrower or any governmental authority or other regulatory body having
jurisdiction over Borrower, seeking to establish the invalidity or
unenforceability thereof, or Borrower shall deny in writing that Borrower has
any material liability or obligation purported to be created under any Loan
Document;
then, and in any such event, and except as otherwise provided in the
subordination provisions set forth in Article 8 hereof, Lender may by written
notice to Borrower, (i) declare the Loan, all Interest thereon and all other
amounts payable under this Agreement to be forthwith due and payable, whereupon
the Loan, all such Interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by Borrower; provided, however,
that upon the occurrence and during the continuance of any Event of Default
described in Section 7.1 (C) or (D), the Loan, all such Interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are expressly waived
by Borrower, and (ii) exercise any and all of its other rights under applicable
law, hereunder and under the other Loan Documents.
7.2 Remedies Cumulative; No Waiver. All covenants, conditions,
------------------------------
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or thereto or contained in any other agreement between Lender and Borrower,
heretofore, concurrently, or hereafter entered into, shall be deemed cumulative
to, and not in derogation or substitution of, any of the terms, covenants,
conditions, or agreements of Borrower herein contained. The failure or delay of
Lender to exercise or enforce any rights, powers, or remedies hereunder or under
any of the aforesaid agreements or other documents shall not operate as a waiver
of such rights, powers and remedies, but all such rights, powers, and remedies
shall continue in full force and effect until the outstanding Principal Amount,
all Interest and all other Obligations owing or to become owing from Borrower to
Lender shall have been fully satisfied, and all rights, powers, and remedies
herein provided for are cumulative and none are exclusive.
ARTICLE 8. SUBORDINATION
-------------
8.1 In the event of any dissolution, winding up, liquidation, arrangement,
reorganization, adjustment, protection, relief or composition of Borrower or its
debts, whether voluntary or involuntary, in any bankruptcy, insolvency,
arrangement, reorganization, receivership, relief or other similar action or
proceeding under the United States Federal Bankruptcy Code or any other federal
or state bankruptcy or insolvency laws or any similar Requirements of Law (as
such term is defined in the Senior Loan Agreement) of any other jurisdiction
covering the protection of creditors' rights or the relief of debtors
(collectively, the "Insolvency Laws") or upon an assignment for the benefit of
creditors or any other marshalling of the property, assets and liabilities of
Borrower or otherwise (each, an "Insolvency Proceeding"), the Senior Agent, for
the ratable benefit of the Senior Lenders, shall be entitled to receive payment
in full of all of the Senior Obligations before Lender is entitled to receive
any payment or distribution of any kind or character on account of all or any of
the Obligations, and, to that end, any payment or distribution of any kind or
character (whether in cash, property or securities) that otherwise would be
payable or deliverable upon or with respect to the Obligations in any such
Insolvency Proceeding (including, without limitation, any payment that may
11
<PAGE>
be payable by reason of any other Indebtedness of Borrower being subordinated to
payment of the Obligations) shall be paid or delivered forthwith directly to the
Senior Agent, for the account of the Senior Lenders, in the same form as so
received (with any necessary endorsement or assignment) for application (in the
case of cash) to, or to be held as collateral (in the case of noncash property
or securities) for, the payment or prepayment of the Senior Obligations until
all of the Senior Obligations shall have been paid in full.
8.2 So long as the Senior Obligations shall not have been paid in full,
Lender shall not (a) ask, demand, sue for, take or receive from Borrower (except
as otherwise expressly permitted under the Senior Loan Agreement), directly or
indirectly, in cash or other property or by setoff or in any manner (including,
without limitation, from or by way of collateral), payment of all or any of the
Obligations or (b) commence, or join with any creditor other than the Senior
Agent in commencing, or directly or indirectly cause Borrower to commence, or
assist Borrower in commencing, any Insolvency Proceeding. If Lender, in
contravention hereof, shall commence, prosecute or participate in any Insolvency
Proceeding, then the Senior Agent may intervene and interpose as a defense or
plea the terms of the Note in its own name or in the name of Lender.
8.3 Until such time as all of the Senior Obligations have been paid in
full, if any Insolvency Proceeding is commenced by or against the Payor:
(A) the Senior Agent is hereby irrevocably authorized and empowered
(in its own name or in the name of Lender or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution otherwise payable to Lender in respect of the Note and give
acquittance therefor, and to file claims and proofs of claim and take such other
action (including, without limitation, voting the Obligations or enforcing any
security interest or other lien securing payment of the Obligations) as it may
deem necessary or advisable for the exercise or enforcement of any of the rights
or interests of the Senior Agent or any of the other Senior Lenders under the
Note; and
(B) Lender shall duly and promptly take such action as the Senior
Agent may reasonably request (i) to collect the Obligations for the account of
the Senior Agent, for the ratable benefit of the Senior Lenders, and to file
appropriate claims or proofs of claim in respect of the Obligations, (ii) to
execute and deliver to the Senior Agent such powers of attorney, assignments or
other instruments as the Senior Agent may reasonably request in order to enable
the Senior Agent to enforce any and all claims with respect to, and any security
interests and other liens securing payment of, the Obligations and (iii) to
collect and receive any and all payments or distributions that may be payable or
deliverable upon or with respect to the Obligations.
8.4 All payments or distributions upon or with respect to the Obligations
that are received by Lender contrary to the provisions of this Article 8 shall
be received in trust for the benefit of the Senior Agent, shall be segregated
from other property or funds of Lender and shall be paid or delivered forthwith
directly to the Senior Agent, for the account of the Senior Lenders, in the same
form as so received (with any necessary endorsement or assignment) to be applied
(in the case of cash) to, or held as collateral (in the case of noncash property
or securities) for, the payment or prepayment of the Senior Obligations until
all of the Senior Obligations shall have been paid in full.
12
<PAGE>
8.5 To the extent that Borrower or any of its Subsidiaries or any other
guarantor of or provider of collateral for the Senior Obligations shall make any
payment on the Senior Obligations that is subsequently invalidated, declared to
be fraudulent or preferential or set aside or is required to be repaid to a
trustee, receiver or any other party under any applicable Insolvency Law or
equitable cause (any such payment being a "Voided Payment"), then to the extent
of such Voided Payment, that portion of the Senior Obligations that had been
previously satisfied by such Voided Payment shall be reinstated and continue in
full force and effect as if such Voided Payment had never been made. To the
extent that Lender shall have received any payments subsequent to the date of
the initial receipt of such Voided Payment by the Senior Agent or any of the
Senior Lenders and such payments have not been invalidated, declared to be
fraudulent or preferential or set aside or required to be repaid to a trustee,
receiver, or any other party under any applicable Insolvency Law or equitable
cause, Lender shall be obligated and hereby agrees that any such payment so made
or received shall be deemed to have been received in trust for the benefit of
the Senior Agent, and Lender hereby agrees to pay to the Senior Agent, upon
demand, the full amount so received by Lender during such period of time to the
extent necessary to fully restore to the Senior Lenders the amount of such
Voided Payment, which amount shall be applied as set forth in Section 8.4.
8.6 The Senior Agent is hereby authorized to demand specific performance
of the subordination provisions of this Article 8, whether or not Borrower shall
have complied with any of the provisions hereof applicable to it, at any time
when Lender shall have failed to comply with any of the subordination provisions
of this Article 8. Lender hereby irrevocably waives any defense based on the
adequacy of a remedy at law, which might be asserted as a bar to such remedy of
specific performance.
8.7 Lender will not:
(A) (i) cancel or otherwise discharge any of the Obligations (except
upon payment in full of the Senior Obligations), (ii) convert or exchange any of
the Obligations into or for any other Indebtedness, (iii) convert or exchange
any of the Obligations into or for any equity interest in the Borrower or
otherwise unless such equity interest in pledged to the Senior Agent, on behalf
of the Senior Lenders, under the applicable Senior Loan Documents immediately
following such conversion or exchange or (iv) subordinate any of the Obligations
to any Indebtedness of Borrower other than the Senior Obligations;
(B) sell, assign, pledge, encumber or otherwise dispose of any of the
Obligations; or
(C) permit the terms of any of the Obligations to be amended, waived,
supplemented or otherwise modified in such a manner as could have an adverse
effect upon the rights or interests of the Senior Agent or any of the other
Senior Lenders under this Agreement or any of the Loan Documents.
8.8 No payment or distribution to the Senior Agent or any of the other
Senior Lenders pursuant to the provisions of this Agreement or the Note shall
entitle Lender to exercise any rights of subrogation in respect thereof, nor
shall Lender have any right of reimbursement, restitution, exoneration,
contribution or indemnification whatsoever from any property or assets of
Borrower or any of the other guarantors, sureties or providers of collateral
security for the Senior Obligations,
13
<PAGE>
or any right to participate in any claim or remedy of the Senior Agent or any of
the Senior Lenders against Borrower, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law (including, without
limitation, the right to take or receive from Borrower, directly or indirectly,
in cash or other property or by setoff or in any other manner, payment or
security on account of such claim, remedy or right), until all of the Senior
Obligations shall have been paid in full.
8.9 The holders of the Senior Obligations may, at any time and from time
to time, without any consent of or notice to Lender or any other holder of the
Obligations and without impairing or releasing the obligations of Lender
hereunder:
(A) change the manner, place or terms of payment of, or change or
extend the time of payment of, or renew payment or change or extend the time or
payment of, or renew or alter, the Senior Obligations (including any change in
the rate of interest thereon), or amend, supplement or otherwise modify in any
manner any instrument, agreement or other document under which any of the Senior
Obligations is outstanding;
(B) sell, exchange, release, not perfect and otherwise deal with any
of the property or assets of any Person at any time pledged, assigned or
mortgaged to secure the Senior Obligations;
(C) release any Person liable in any manner under or in respect of
the Senior Obligations;
(D) exercise or refrain from exercising any rights against Borrower
any other Person; and
(E) apply to the Senior Obligations any sums from time to time
received by or on behalf of the Senior Agent or any of the Senior Lenders.
8.10 Each of the Borrower and Lender will further mark their respective
books of account in such a manner as shall be effective to give proper notice of
the effect of the subordination provisions of this Article 8. Each of Borrower
and Lender will, at its sole expense and at any time and from time to time,
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or that the Senior Agent may reasonably
deem desirable and may request, in order to protect any right or interest
granted or purported to be granted under the subordination provisions of this
Article 8 or to enable the Senior Agent or any of the Senior Lenders to exercise
and enforce its rights and remedies hereunder.
8.11 The subordination provisions of this Article 8 are and are intended
solely for the purpose of defining the relative rights of the Senior Lenders, on
the one hand, and Lender, on the other hand. Such provisions are for the
benefit of the Senior Lenders and shall inure to the benefit of, and shall be
enforceable by, the Senior Agent, on behalf of itself and the Senior Lenders,
directly against Lender, and no Senior Lender shall be prejudiced in its right
to enforce subordination of any of the Obligations by any act or failure to act
by Borrower or any Person in custody of its property or assets.
14
<PAGE>
8.12 Nothing contained in this Article 8 is intended to or shall impair, as
between the Borrower and Lender, the obligations of Borrower to Lender.
8.13 For all purposes of this Agreement, the Senior Obligations shall not
be deemed to have been paid in full until the latest of (i) payment in full in
cash of the aggregate principal amount of all outstanding Advances (as such term
is defined in the Senior Loan Agreement), all accrued and unpaid interest
thereon, all fees and expenses owing to the Senior Agent or any of the Senior
Lenders in connection therewith and all other amounts comprising part of the
Senior Obligations, (ii) the expiration or termination of all of the Bank Hedge
Agreements (as such term is defined in the Senior Loan Agreement) and (iii) the
Termination Date (as such term is defined in the Senior Loan Agreement).
ARTICLE 9. MISCELLANEOUS
-------------
9.1 Indemnification. In addition to all of Borrower's other
---------------
Obligations under this Agreement, Borrower agrees to defend, protect, indemnify
and hold harmless Lender and all of its officers, directors, employees,
attorneys, consultants and agents (collectively called the "Indemnities") from
and against any and all losses, damages, liabilities, obligations, penalties,
fees, reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees, costs and expenses) incurred by such Indemnities, whether prior
to or from and after the Closing Date, whether direct, indirect or
consequential, as a result of or arising from or relating to or in connection
with any of the following: (i) the negotiation, preparation, execution or
performance or enforcement of this Agreement or of any document executed in
connection with the transactions contemplated by this Agreement; (ii) the
furnishing of funds to Borrower under this Agreement; (iii) any document
executed in connection with the transactions contemplated by this Agreement or
(iv) any claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto (collectively, the
"Indemnified Matters"); provided, however, that Borrower shall not have any
obligation to any Indemnitee hereunder for any Indemnified Matter caused by or
resulting from the gross negligence or willful misconduct of such Indemnitee, as
determined by a final judgment of a court of competent jurisdiction. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section 9.1 may be unenforceable because it is violative of any law or
public policy, Borrower shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all Indemnified Matters incurred by the Indemnities. The
foregoing indemnity shall survive the repayment of the Obligations.
9.2 Amendments, Etc. No amendment or waiver of any provision of this
----------------
Agreement or the other Loan Documents, and no consent to any departure therefrom
by Borrower, shall in any event be effective unless the same shall be in writing
and signed by Borrower and Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by Lender, (i) reduce the principal of, or interest on, the
Loan or Obligations, (ii) postpone any date fixed for any payment of principal
of, or interest or fees on, the Loan or the amount of any other Obligations,
(iii) change the percentage of the aggregate unpaid principal amount of the
Note, which shall be required for Lender to take any action hereunder or (iv)
amend, modify or waive this Section 9.2; and provided further that no such
amendment or waiver or consent to any departure therefrom of Article 8 or any
other provision that could adversely affect the rights
15
<PAGE>
and interests of the Senior Agent or any of the Senior Lenders (under or in
respect of the Loan Documents or any of the Senior Loan Documents) in any manner
shall be effective without the written consent of the Senior Agent.
9.3 Expenses; Attorneys' Fees. Borrower agrees to pay or cause to be
-------------------------
paid, on demand, and to save Lender harmless against liability for the payment
of, all reasonable out-of-pocket expenses, including but not limited to
reasonable fees and expenses of counsel for Lender, periodic field audits, from
time to time arising from or relating to (other than when arising from the gross
negligence or willful misconduct of Lender, as the case may be): (i) any
amendments, waivers or consents to this Agreement or the other Loan Documents
requested by Borrower whether or not such documents become effective or are
given; (ii) upon the occurrence and during the continuance of any Event of
Default, the preservation and protection of any of Lender's rights under this
Agreement or the other Loan Documents; (iii) the defense of any claim or action
asserted or brought against Lender by any Person that arises from this
Agreement, any other Loan Document, Lender's claims against Borrower, or any and
all matters in connection therewith; (iv) the commencement (other than by
Lender, except upon the occurrence and during the continuance of any Event of
Default) or defense of, or intervention in, any court proceeding arising from or
related to this Agreement or any other Loan Document; (v) upon the occurrence
and during the continuance of any Event of Default, the filing of a petition,
complaint, answer, motion or other pleading by Lender, or the taking of any
action in connection with this Agreement or any other Loan Document; (vi) upon
the occurrence and during the continuance of any Event of Default, any attempt
to collect from Borrower; and (vii) the receipt of any advice with respect to
any of the foregoing.
9.4 Indulgences Not Waivers. The failure, at any time or times hereafter,
-----------------------
to require strict performance by Borrower of any provision of this Agreement
shall not waive, affect or diminish any right of Lender thereafter to demand
strict compliance and performance therewith. Any suspension or waiver of an
Event of Default under this Agreement or any of the other Loan Documents shall
not suspend, waive or affect any other Event of Default under this Agreement or
any of the other Loan Documents, whether the same is prior or subsequent thereto
and whether of the same or of a different type. None of the undertakings,
agreements, warranties, covenants and representations of Borrower contained in
this Agreement or any of the other Loan Documents and no Event of Default under
this Agreement or any of the other Loan Documents shall be deemed to have been
suspended or waived by Lender, unless such suspension or waiver is by an
instrument in writing specifying such suspension or waiver and is signed by a
duly authorized representative of Lender and directed to Borrower.
9.5 Severability. Wherever possible, each provision of this Agreement or
------------
any other Loan Document shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement or any
other Loan Document shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of such agreement.
9.6 Cumulative Effect; Conflict of Terms. The provisions of the other
------------------------------------
Loan Documents are hereby made cumulative with the provisions of this Agreement.
Except as specifically otherwise provided in this Agreement or in any of the
other Loan Documents by specific reference to the applicable provision of this
Agreement, if any provision contained in this Agreement is in direct
16
<PAGE>
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
9.7 Execution in Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
9.8 Notices. Except as otherwise provided herein, all notices, requests
-------
and demands to or upon a party hereto to be effective shall be in writing, shall
be sent by certified or registered mail, return receipt requested), or by
telecopier or delivered by hand or by a recognized overnight courier service
and, unless otherwise expressly provided herein, shall be deemed to have been
validly served, given or delivered when delivered against receipt or, in the
case of telecopy notice, when sent, or, in the case of telex, when the
appropriate answerback received, addressed as follows:
(A) If to Lender:
News America Holdings Incorporated
1211 Avenue of the Americas
New York, NY 10036
Attention: Arthur M. Siskind, Esq.
With a copy to:
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, NY 10176
Attention: Jeffrey W. Rubin, Esq.
(B) If to Borrower, at:
Fox Kids Worldwide, Inc.
10960 Wilshire Boulevard
Los Angeles, CA 90024
Attention: Mel Woods
With a copy to:
Troop Meisinger Steuber & Pasich, LLP
10940 Wilshire Boulevard
Los Angeles, CA 90024
Attention: C.N. Franklin Reddick, III, Esq.
17
<PAGE>
(C) If to Senior Agent, at:
Citicorp USA, Inc.
399 Park Avenue
New York, NY 10043
Attention: Andrew Sriubas, Vice President
With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Attention: William Hirschberg, Esq.
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 9.8.
9.9 Demand. Nothing in this Agreement shall affect or abrogate the demand
------
nature of any portion of the Obligations expressly made payable on demand by
this Agreement or by any instrument evidencing same, and the occurrence of an
Event of Default shall not be a prerequisite for requiring payment of such
Obligations, except as provided for in this Agreement.
9.10 Entire Agreement; Headings. This Agreement, and the other Loan
--------------------------
Documents, together with all other instruments, agreements and certificates
executed by the parties in connection therewith or with reference thereto,
embody the entire understanding and agreement between the parties hereto and
thereto with respect to the subject matter hereof and thereof and supersede all
prior agreements, understandings and inducements, whether express or implied,
oral or written. Section headings herein are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
9.11 Governing Law; Consent To Forum. This Agreement, the Note and the
-------------------------------
other Loan Documents shall be governed by, and construed in accordance with, the
law of the State of New York applicable to contracts made and to be performed in
the State of New York without regard to conflicts of law principles. Any legal
action or proceeding with respect to this Agreement or any other Loan Document
may be brought in the courts of the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, Borrower hereby irrevocably accepts in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts.
Borrower further irrevocably consents to the service of process out of any of
the aforementioned courts and in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, at its address
for notices contained in Section 9.8, such service to become effective ten (10)
days after such mailing. Nothing herein shall affect the right of Lender to
service of process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Borrower in any other jurisdiction.
9.12 Right of Set-Off. Upon the occurrence and during the continuance of
----------------
any Event of Default, Lender may, and is hereby authorized to, at any time and
from time to time, without notice to Borrower (any such notice being expressly
waived by Borrower) and to the fullest extent
18
<PAGE>
permitted by law, and subject to the rights of the Senior Agent and the Senior
Lenders hereunder, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Lender to or for the credit or the account of
Borrower against any and all obligations of Borrower now or hereafter existing
under any Loan Document to the extent such obligations have become due. Lender
agrees to notify Borrower promptly after any such set-off and application made
by such Bank; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of Lender under this
Section 9.12 are in addition to the other rights and remedies (including,
without limitation, other rights of set-off) which Lender may have.
9.13 No Party Deemed Drafter. Borrower and Lender agree that no party
-----------------------
hereto shall be deemed to be the drafter of this Agreement, and Borrower and
Lender, further agree that, in the event this Agreement is ever construed by a
court of law, such court shall not construe this Agreement or any provision of
this Agreement against any party hereto as the drafter of this Agreement.
9.14 Reinstatement; Certain Payments. If claim is ever made upon Lender
-------------------------------
for repayment or recovery of any amount or amounts received by Lender in payment
or on account of any of the Obligations under this Agreement, Lender shall give
prompt notice of such claim to Borrower, and if Lender repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over Lender or any of its property or
(ii) any good faith settlement or compromise of any such claim effected by
Lender with any such claimant, then and in such event, Borrower agrees that (a)
any such judgment, decree, order, settlement or compromise shall be binding upon
Borrower notwithstanding the cancellation of the Note or other instrument
evidencing the Obligations under this Agreement or the other Loan Documents or
the termination of this Agreement or the other Loan Documents and (b) it shall
be and remain liable to Lender hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by
Lender.
9.15 Assignment. Lender may assign to one or more Persons all or a portion
----------
of its rights and obligations under this Agreement; provided, however, that,
without the prior written consent of Borrower, Lender may not assign its rights
and obligations under this Agreement to any Person who is not (a) an individual
who is a citizen or resident of the United States, (b) a corporation,
partnership or other entity created or organized in or under the laws of the
United States, any State or any political subdivision thereof, (c) an estate the
income of which is subject to United States Federal income taxation regardless
of its source or (d) a trust whose administration is subject to the primary
supervision of a United States court and which has one or more United States
fiduciaries who have the authority to control all substantial decisions of such
trust.
9.16 Confidentiality. Lender agrees to exercise all reasonable efforts to
---------------
keep any information delivered or made available by Borrower to it which has not
been publicly disclosed confidential from anyone other than persons employed or
retained by Lender who are or are expected to become engaged in evaluating,
approving, structuring or administering the Loan; provided, however, that
nothing herein shall prevent Lender from disclosing such information (i) to its
officers, directors, employees, agents, attorneys and accountants who have a
need to know such information in accordance with customary practices and who
receive such information having been made aware of the restrictions set forth in
this Section, (ii) upon the order of any court or administrative agency, (iii)
upon the request or demand of any regulatory agency or authority having
jurisdiction over
19
<PAGE>
Lender, (v) to the extent reasonably required in connection with any litigation
to which Lender, Borrower, or any Subsidiary or their respective affiliates may
be a party, (vi) to the extent reasonably required in connection with the
exercise of any remedy hereunder, (vii) to Lender's legal counsel and
independent auditors, and (viii) to any actual or proposed participant or
assignee of all or part of its rights hereunder which has agreed in writing to
be bound by the provisions of this Section 9.15.
20
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed on the day and
year specified at the beginning hereof.
Borrower: FOX KIDS WORLDWIDE, INC.
By: /s/ Jay Itzkowitz
-------------------------------
Name: Jay Itzkowitz
Title: Vice President and Assistant
Secretary
Lender: NEWS AMERICA HOLDINGS INCORPORATED
By: /s/ Jon L. Fisse
-------------------------------
Name: Jon L. Fisse
Title:
Senior Agent: CITICORP USA, INC.
By: /s/ Carolyn A. Kee
-------------------------------
Name: Carolyn A. Kee
Title: Attorney-in-fact
21
<PAGE>
Exhibit A - Form of Note
- ---------
THIS NOTE AND THE OBLIGATIONS EVIDENCED HEREBY ARE
SUBORDINATED IN THE MANNER AND TO THE EXTENT SET
FORTH IN THE SUBORDINATED NOTE AGREEMENT (THE "NOTE
AGREEMENT"), DATED AS OF AUGUST 29, 1997. EACH HOLDER
OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND
BY THE PROVISIONS OF THE NOTE AGREEMENT.
SUBORDINATED PROMISSORY NOTE
----------------------------
No. A-1
$345,513,864.31 August 29, 1997
FOR VALUE RECEIVED, the undersigned, Fox Kids Worldwide, Inc., a Delaware
corporation, having an office at 10960 Wilshire Boulevard, Los Angeles, CA 90024
("Borrower"), hereby promises to pay to the order of News America Holdings
Incorporated, a Delaware corporation (the "Lender"), having an office at 1211
Avenue of the Americas, New York, NY 10036, or registered assigns, in lawful
money of the United States, by wire transfer in immediately available federal
funds, the principal amount of Three Hundred Forty Five Million Five Hundred
Thirteen Thousand Eight Hundred Sixty Four Dollars and Thirty One Cents
($345,513,864.31), loaned by Lender to Borrower pursuant to the Subordinated
Note Agreement dated August 29, 1997, among Borrower, Lender and Citicorp USA,
Inc. (as amended and modified from time to time, the "Note Agreement"), together
with additions to such principal amount and interest thereon as set forth in the
Note Agreement, which interest shall accrue from and after the date hereof on
the outstanding principal amount of this Note, and such principal amount and
interest thereon shall be payable at such times as set forth in the Note
Agreement.
Lender is hereby authorized by Borrower to record on Schedule A to this
Note (or on a supplemental Schedule thereto) the amount of the Loan and the
amount of each payment or prepayment of principal thereof received by Lender, it
being understood, however, that failure to make any such notation shall not
affect the rights of Lender or the obligations of Borrower hereunder in respect
of this Note. At Lender's option, Lender may record such matters in their
internal records rather than recording such matters on such Schedule.
This Note is referred to in, and is issued pursuant to, the Note Agreement
and is entitled to all of the benefits of the Note Agreement and the Loan
Documents. All of the terms, covenants and conditions of the Note Agreement and
all other instruments evidencing the indebtedness hereunder (including, without
limitation, the Loan Documents), are hereby made a part of this Note and are
22
<PAGE>
deemed incorporated herein in full. The Note Agreement, among other things,
provides for the acceleration of the then outstanding indebtedness hereunder
during the existence of an Event of Default, upon the terms and conditions
specified therein. All capitalized terms used herein, unless otherwise
specifically defined in this Note, shall have the meanings ascribed to them in
the Note Agreement. The Loan and all of the Obligations shall be subordinate to
the Senior Obligations, in the manner and to the extent set forth in the Note
Agreement. Each transferee of this Note (or any Note or Notes issued in
exchange or substitution therefor), by acceptance of this Note (or any Note or
Notes issued in exchange or substitution therefor), agrees to such
subordination.
To the fullest extent permitted by applicable law, Borrower, for itself and
its legal representatives, successors and assigns, expressly waives presentment,
demand, protest, notice of dishonor, notice of nonpayment, notice of maturity,
notice of protest, presentment for the purpose of accelerating maturity and
diligence in collection, and consents that Lender may (with the consent of
Borrower) extend the time for payment or otherwise modify the terms of payment
of any part or the whole of the debt evidenced hereby.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York, without regard to conflicts of laws
principles.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of
the date first above written.
FOX KIDS WORLDWIDE, INC.
By: /s/ Jay Itzkowitz
----------------------------------
Name: /s/ Jay Itzkowitz
Title: Vice President and Attorney
General
23
<PAGE>
Schedule A
----------
<TABLE>
<CAPTION>
Payments Unpaid Name of
---------------------- Principal Person
Current Balance of Making
Date Amount Principal Interest Note Notation
- ---- ------ --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
