<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)/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 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
</TABLE>
(Name, address and telephone number of person
authorized to receive notices and communications)
August 1, 1997
--------------------
(Date of event which Requires
Filing of this Statement)
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 16 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 25,263,659
Owned by ----------------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting -0-
Person with ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
25,263,659
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,263,659
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.9%
- --------------------------------------------------------------------------------
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 25,263,659
Owned by ---------------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting -0-
Person with ---------------------------------------------------
10 SHARED DISPOSITIVE POWER
25,263,659
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,263,659
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.9%
- -------------------------------------------------------------------------------
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 25,263,659
Owned by -------------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting -0-
Person with -------------------------------------------------
10 SHARED DISPOSITIVE POWER
25,263,659
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,263,659
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.9%
- -------------------------------------------------------------------------------
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
Number of -0-
Shares --------------------------------------
Beneficially 8 SHARED VOTING POWER
Owned by 25,263,659
Each --------------------------------------
Reporting 9 SOLE DISPOSITIVE POWER
Person with -0-
--------------------------------------
10 SHARED DISPOSITIVE POWER
25,263,659
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,263,659
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.9%
- -------------------------------------------------------------------------------
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
-0-
Number of ---------------------------------------------------
Shares 8 SHARED VOTING POWER
Beneficially 25,263,659
Owned by ---------------------------------------------------
Each 9 SOLE DISPOSITIVE POWER
Reporting -0-
Person with ---------------------------------------------------
10 SHARED DISPOSITIVE POWER
25,263,659
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,263,659
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.9%
- -------------------------------------------------------------------------------
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 25,263,659
Shares -------------------------------------
Beneficially 8 SHARED VOTING POWER
Owned by -0-
Each -------------------------------------
Reporting 9 SOLE DISPOSITIVE POWER
Person with 25,263,659
-------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,263,659
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.9%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
-7-
<PAGE>
This statement (the "Amendment") amends and supplements the statement on
Schedule 13D filed with the Securities and Exchange Commission (the
"Commission"), dated June 11, 1997, 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"). 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:
FKWW has established, pursuant to a credit agreement dated as of August 1,
1997 (the "Senior Loan Agreement"), a $602,000,000 seven-year Secured Reducing
Revolving Credit Facility (the "Tranche A Revolving Credit"), a $400,000,000
seven-year Secured Reducing Revolving Credit Facility (the "Tranche B Revolving
Credit") and a $298,000,000 nine-year Secured Term Loan Facility with Citicorp
USA, Inc. acting as the administrative agent for a syndicate of financial
institutions providing the facility. The Tranche A Revolving Credit Facility
was fully drawn down in connection with the acquisition of Common Stock of IFE
pursuant to the Stock Purchase Agreements.
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 July 31,
1997, by and among FBC, FKWW and Citicorp USA, Inc., as administrative agent
under the Senior Loan Agreement.
-8-
<PAGE>
FKWW has agreed to enter into a Subordinated Note Agreement 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 will be the lender under the NAHI Note Agreement and the principal
amount of the NAHI Note Agreement will be an amount not to exceed $300,000,000.
The NAHI Note Agreement will be entered into on a date no later than the date of
the consummation of the merger of Fox Kids Merger Corporation with and into IFE.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
------------------------------------------------------------------------
SECURITIES OF THE ISSUER.
------------------------
Item 6 is hereby amended and supplemented by the addition of the
following information:
The purchase of an aggregate of 15,587,427 shares of Common Stock by
FKWW pursuant to the CBN Purchase Agreement, the Regent Purchase Agreement and
the Robertson Purchase Agreement (including the purchase of Class B Common Stock
received by M.G. Robertson and Tim Robertson upon exercise of their options) was
consummated on August 1, 1997. The total amount paid by FKWW to purchase Common
Stock pursuant to such agreements was $545,559,945.
In addition, Liberty IFE, Inc. ("LIFE") contributed to FKWW shares of
Class C Common Stock and Convertible Notes of IFE convertible into shares of
Class C Common Stock, which in turn are convertible into an aggregate of
9,676,232 shares of Class B Common Stock in exchange for a new series of
preferred stock of FKWW with an initial liquidation preference of $345,000,000.
Pursuant to the First Amendment to the Contribution and Exchange
Agreement, dated as of August 1, 1997, by and among Liberty Media Corporation,
LIFE and FKWW, the terms of (i) the new series of preferred stock of FKWW to be
issued in exchange for the Class C Common Stock owned by LIFE and (ii) the new
series of preferred stock of News Publishing Australia Limited ("NPAL") for
which the preferred stock of FKWW will be exchangeable upon the happening of
certain events, were amended. The terms of each such series were amended to
provide for cumulative dividends at a rate of 9% per annum, default interest
rate of 11.5%, mandatory redemption on August 1, 2027, redemption at the option
of the issuer at any time after August 1, 2007, and redemption at the option of
the holder for the thirty-day periods commencing on August 2, 2017 and 2022.
News Corporation, together with NPAL, has entered into a Funding Agreement
supporting the obligations of FKWW and NPAL under the preferred stock issuable
to LIFE pursuant to the Contribution and Exchange Agreement.
-9-
<PAGE>
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
---------------------------------
Document Exhibit No.
-------- ----------
Credit Agreement, dated as of August 1, 1997 1
Subordinated Note Agreement, dated as of July 31, 1997 2
Letter Agreement for NAHI Note Agreement, dated 3
August 1, 1997
First Amendment to the Contribution and Exchange 4
Agreement, dated as of August 1, 1997
-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: August 6, 1997
THE NEWS CORPORATION LIMITED
BY: /s/ ARTHUR M. SISKIND
------------------------------------
NAME: ARTHUR M. SISKIND
TITLE: DIRECTOR
-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: August 6, 1997
/s/ K. RUPERT MURDOCH
---------------------------------
K. RUPERT MURDOCH
-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: August 6, 1997
TWENTIETH HOLDINGS CORPORATION
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: August 6, 1997
FOX TELEVISION STATIONS, INC.
BY: /s/ JAY ITZKOWITZ
--------------------------------
NAME: JAY ITZKOWITZ
TITLE: SENIOR VICE PRESIDENT
AND SECRETARY
-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: August 6, 1997
/s/ HAIM SABAN
---------------------------------
HAIM SABAN
-15-
<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: August 6, 1997
FOX KIDS WORLDWIDE, INC.
BY: /S/ HAIM SABAN
----------------------
NAME: HAIM SABAN
TITLE: CHIEF EXECUTIVE OFFICER
-16-
<PAGE>
EXHIBIT 1
EXECUTION COPY
--------------
================================================================================
$1,250,000,000
CREDIT AGREEMENT
Dated as of August 1, 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
PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms 3
SECTION 1.02. Computation of Time Periods 49
SECTION 1.03. Accounting Terms 49
SECTION 1.04. Currency Equivalents Generally 49
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances 50
SECTION 2.02. Making the Advances 51
SECTION 2.03. Repayment of Advances 53
SECTION 2.04. Termination or Reduction of the Commitments 53
SECTION 2.05. Prepayments 56
SECTION 2.06. Interest on Advances 57
SECTION 2.07. Fees 59
SECTION 2.08. Conversion of Advances 59
SECTION 2.09. Increased Costs, Etc. 61
SECTION 2.10. Payments and Computations 63
SECTION 2.11. Taxes 66
SECTION 2.12. Sharing of Payments, Etc. 69
SECTION 2.13. Defaulting Lenders 70
SECTION 2.14. Use of Proceeds 72
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the
Initial Revolving Credit A Borrowing 72
SECTION 3.02. Conditions Precedent to the Initial
Revolving Credit B Borrowing or
Term Borrowing 81
SECTION 3.03. Conditions Precedent to Each Borrowing,
Issuance and Renewal 91
SECTION 3.04. Determinations Under Sections 3.01 and 3.02 91
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties 91
ARTICLE V
COVENANTS OF THE BORROWERS
SECTION 5.01. Affirmative Covenants 103
SECTION 5.02. Negative Covenants 112
SECTION 5.03. Reporting Requirements134
SECTION 5.04. Financial Covenants 140
SECTION 5.05. Covenant of Fox Kids 143
ARTICLE VI
BORROWERS GUARANTEE
SECTION 6.01. Borrowers Guarantee 144
SECTION 6.02. Guarantee Absolute 145
SECTION 6.03. Waivers and Acknowledgments 146
SECTION 6.04. Subrogation 147
SECTION 6.05. Continuing Guarantee; Assignments 148
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default 148
ARTICLE VIII
THE AGENTS
SECTION 8.01. Authorization and Action 152
SECTION 8.02. Administrative Agent's Reliance, Etc. 153
SECTION 8.03. Citicorp USA and Affiliates 153
SECTION 8.04. Lender Credit Decision 154
SECTION 8.05. Indemnification 154
SECTION 8.06. Successor Administrative Agent 155
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. 155
SECTION 9.02. Notices, Etc. 157
SECTION 9.03. No Waiver; Remedies. 158
SECTION 9.04. Indemnification 158
SECTION 9.05. Costs and Expenses 161
SECTION 9.06. Right of Setoff 162
SECTION 9.07. Binding Effect 163
1
<PAGE>
SECTION 9.08. Assignments and Participations 163
SECTION 9.09. Confidentiality 167
SECTION 9.10. Execution in Counterparts 167
SECTION 9.11. Governing Law; Jurisdiction, Etc. 167
SECTION 9.12. WAIVER OF JURY TRIAL 169
2
<PAGE>
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. Pledge Agreement
Exhibit D-3 Form of Netherlands 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 Squadron, Ellenoff, Plesent & Sheinfeld,
LLP
Exhibit H-2 Form of Tax Opinion of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP
Exhibit H-3 Form of Opinion of Troop Meisinger Steuber & Pasich, LLP
Exhibit H-4 Form of Opinion of Finnegan, Henderson, Farabow, Garrett &
Dunner L.L.P.
Exhibit I Form of Intercompany Note
SCHEDULES
---------
Schedule I Commitments and Lending Offices
Schedule 3.01(h)(xxiii) Schedule of Local/Foreign Counsel for Phase I
Loan Parties
Schedule 4.01(b) Subsidiaries
Schedule 4.01(d) Governmental Authorizations
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) Product
Schedule 5.02(a) Existing Liens
Schedule 5.02(j) Existing Dividends and Payment Restrictions
3
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of August 1, 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) Merger Corporation was organized by Fox Kids in order to acquire
control of International Family Entertainment, Inc., a Delaware corporation
("IFE").
(2) Fox Kids has agreed to acquire (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, that are owned by, and the shares of IFE Class B Common
Stock owned 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 (as amended, supplemented or otherwise modified from time to
time on or prior to the Phase I Closing Date (as hereinafter defined) in
accordance with the terms thereof, to the extent permitted under the terms of
the Loan Documents (as hereinafter defined), the "ROBERTSON PURCHASE AGREEMENT")
by and among the Robertson Sellers and Fox Kids. Fox Kids has also agreed to
acquire (the "CBN ACQUISITION") all of the shares of IFE Class B Common Stock
owned by The Christian Broadcasting Network, Inc., a Virginia corporation
("CBN"), pursuant to that certain Stock Purchase Agreement dated as of June 11,
1997 (as amended,
1
<PAGE>
2
supplemented or otherwise modified from time to time on or prior to the Phase I
Closing Date in accordance with the terms thereof, to the extent permitted under
the terms of the Loan Documents, the "CBN PURCHASE AGREEMENT") by and between
CBN and Fox Kids. Fox Kids has also agreed to acquire (the "REGENT
ACQUISITION") all of the shares of IFE Class B Common Stock owned by Regent
University, a Virginia corporation ("REGENT"), pursuant to that certain Stock
Purchase Agreement dated as of June 11, 1997 (as amended, supplemented or
otherwise modified from time to time on or prior to the Phase I Closing Date in
accordance with the terms thereof, to the extent permitted under the terms of
the Loan Documents, 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.
(3) Liberty IFE, Inc., a Colorado corporation ("LIBERTY IFE"), has
agreed to contribute (the "LIBERTY IFE CONTRIBUTION") to Fox Kids all of the
shares of Class C Common Stock, par value $0.01 per share, of IFE owned by it,
and the 6% Convertible Secured Notes due 2004 of IFE owing 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, supplemented or otherwise modified from
time to time on or prior to the Phase I Closing Date in accordance with the
terms thereof, to the extent permitted under the Loan Documents, 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".
(4) Pursuant to the Agreement and Plan of Merger dated as of June 11,
1997 (as amended, supplemented or otherwise modified from time to time on or
prior to the Phase I Closing Date in accordance with the terms thereof, to the
extent permitted under the terms of the Loan Documents, the "MERGER AGREEMENT"),
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 hold
of record 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
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.
(5) Concurrently with the Liberty IFE Contribution, FCN Holding and
Saban will be restructured and reorganized (the "REORGANIZATION") into Fox Kids
such that Fox Kids will own all of the businesses and operations of FCN Holding,
Saban and their respective Subsidiaries. More specifically, (a) Fox
Broadcasting Company, a Delaware corporation ("FBC"), will contribute all of its
<PAGE>
3
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) in
an aggregate principal amount of $54,573,000, (b) Fox Broadcasting Sub, Inc., a
Delaware corporation ("FBC SUB"), will contribute 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."), will contribute 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 (the "CLASS A COMMON STOCK"), of Fox Kids and (d) Haim
Saban and the other existing stockholders of Saban will contribute 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 will be direct wholly owned
Subsidiaries of Fox Kids, and Fox Kids LLC will be an indirect wholly owned
Subsidiary of Fox Kids.
(6) The Borrowers have requested that the Lenders agree to lend to
them from time to time up to $1,250,000,000 at any time outstanding 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 agree
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 Facilities and for other general
corporate purposes not otherwise prohibited under the terms of the Loan
Documents, (b) immediately upon the consummation of the Merger, the Lenders
agree 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 agree 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. The Lenders have indicated their willingness to
agree 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:
<PAGE>
4
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
(3) to this Agreement.
ACQUISITIONS ADVANCE" has the meaning specified in Section
2.01(a).
"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 and the TNCL Group 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
<PAGE>
5
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 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:
================================================================================
REVOLVING
REVOLVING CREDIT TERM
CREDIT FACILITIES TERM FACILITY
FACILITIES EURODOLLAR FACILITY EURODOLLAR
BASE RATE RATE BASE RATE RATE
PERFORMANCE LEVEL ADVANCES ADVANCES ADVANCES ADVANCES
===============================================================================
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%
<PAGE>
6
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%
=========================================================================
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:
================================================================================
Performance Level Commitment Fee
I 0.200%
II 0.250%
III 0.250%
IV 0.250%
<PAGE>
7
V 0.250%
VI 0.250%
VII 0.250%
VIII 0.375%
IX 0.500%
===============================================================================
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 Citibank at its
office at 399 Park Avenue, New York, NY 10043, Account No. 4073-5597, (b)
with respect to FCN Holding, the account of FCN Holding maintained thereby
with Citibank at its office at 399 Park Avenue, New York, NY 10043, Account
No. 4076-5626, (c) with respect to Merger Corporation or the Surviving
Corporation, the account of Merger Corporation (and, upon consummation of
the Merger, the Surviving Corporation) agreed to prior to the Phase II
Closing Date between Merger Corporation and the Administrative Agent and
(d) with respect to Saban, the account of Saban maintained thereby with
Citibank at its office at 399 Park Avenue, New York, NY 10043, Account No.
4073-5618, 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.
"APPROVED COMPLETION GUARANTEE" means, with respect to any of the
items of Product, a guarantee in support of the completion of such 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 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
<PAGE>
8
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 AGREEMENT" 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
<PAGE>
9
quotations for such rates received by Citibank from three New York
certificate of deposit dealers of recognized standing selected by
Citibank, by (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
7(a) of the Security Agreement.
"BLOCKED ACCOUNTS" has the meaning specified in Section 1(e)(iv)
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
<PAGE>
10
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 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
<PAGE>
11
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
(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 (2) to
this Agreement.
"CBN ACQUISITION" has the meaning specified in Preliminary
Statement (2) to this Agreement.
"CBN PURCHASE AGREEMENT" has the meaning specified in Preliminary
Statement (2) to this Agreement.
"CBN PURCHASE AGREEMENT GUARANTY" means the Guaranty dated as of
June 11, 1997 made by TNCL in favor of CBN, as such guaranty may be
amended, supplemented or otherwise modified from time to time on or prior
to the Phase I Closing Date in accordance with the terms thereof, but to
the extent permitted under the terms of the Loan Documents.
"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
<PAGE>
12
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 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
<PAGE>
13
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.
"COLLATERAL DOCUMENTS" means, collectively, the Security
Agreement, the Foreign Subsidiary Pledge Agreements, the Foreign Subsidiary
Security Agreements, the Pledge Agreements, the Mortgages, the IP Collateral
Assignments--Short Form, the Cash Collateral Account Letters, the Blocked
Account Letters and 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
<PAGE>
14
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 (4)
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 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 TNCL
Group 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 to the holders of the Series A Preferred Stock 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
<PAGE>
15
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 on or prior to the Phase I Closing Date 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 on or prior to the Phase I Closing Date in accordance with the terms
thereof, but to the extent permitted under the terms of the Loan Documents.
"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, (c) any obligation
<PAGE>
16
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 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 (3) 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
<PAGE>
17
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.
"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).
"DISBURSEMENT ACCOUNT LETTERS" has the meaning specified in
Section 7(b) of the Security Agreement.
"DISBURSEMENT ACCOUNTS" has the meaning specified in Section 1(e)
of the Security Agreement.
<PAGE>
18
"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 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,
<PAGE>
19
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 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 Excluded Fox Kids Equity
Interests) at any time.
<PAGE>
20
"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;
(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.
<PAGE>
21
"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 reference to which
the interest rate on Eurodollar Rate Advances is determined) having a term
equal to such Interest Period.
<PAGE>
22
"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, plus
(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 paid in cash by the Subsidiaries of Fox Kids 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
<PAGE>
23
(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.
"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
June 11, 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 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) as of the Phase I Closing Date; 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 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, 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
<PAGE>
24
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
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 or notes of
Fox Kids due August 1, 2007 in an aggregate principal amount not to exceed
$104,573,000 issued pursuant to the FBC Subordinated Notes Documents, and
including any notes issued in replacement or substitution therefor.
"FBC SUBORDINATED NOTES DOCUMENTS" means the Subordinated Note
Agreement dated as of July 31, 1997 by and among FBC, Fox Kids and the
Administrative Agent, on behalf of the Secured Parties, the FBC
Subordinated Note 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
agreements, instruments or other documents 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
<PAGE>
25
or any successor thereto.
"FCN HOLDING" has the meaning specified in the recital of parties
to this Agreement.
"FCN HOLDING/SABAN SURVIVING INDEBTEDNESS" has the meaning
specified in Section 3.01(f).
"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.
"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) 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 paid in cash by Fox Kids and
its Subsidiaries 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.
"FLEXTECH COMMON STOCK" means the 5,792,008 shares of convertible
redeemable
<PAGE>
26
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(h)(ix)(D).
"FOREIGN SUBSIDIARY SECURITY AGREEMENT" has the meaning specified
in Section 3.02(j)(xi).
"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 OPTIONHOLDERS" means, collectively, Stan Golden, Shuki
Levi, Margaret Loesch and Mel Woods and any permitted transferees thereof.
"FRENCH PLEDGE AGREEMENT" has the meaning specified in Section
3.01(h)(ix)(D).
"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 Indebtedness (if and to the extent such Indebtedness
would otherwise be included in such term on any date of determination) of
such Person incurred under Contingent Obligations of such Person 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 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.
<PAGE>
27
"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(h)(ix)(C).
"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
Authority.
"GUARANTEE" has the meaning specified in Section 3.01(h)(xi).
"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 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.
<PAGE>
28
"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 (1) to
this Agreement.
"IFE CLASS A COMMON STOCK" has the meaning specified in
Preliminary Statement (2) to this Agreement.
"IFE CLASS B COMMON STOCK" has the meaning specified in
Preliminary Statement (2) to this Agreement.
"IFE SURVIVING INDEBTEDNESS" has the meaning specified in Section
3.02(e).
"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;
(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
<PAGE>
29
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 any Obligation arising solely as a result of the
declaration of a dividend (or similar distribution) on any such Equity
Interest of such Person);
(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).
<PAGE>
30
"INFORMATION MEMORANDUM" means the information memorandum dated
July 1997 used by the Arranger in connection with the syndication of the
Commitments.
"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 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) 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
<PAGE>
31
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
Lender will be providing funding for such Borrowing with such Interest
Period (the failure of any Lender to so respond by such time being
deemed for all purposes of this Agreement as an objection by such
Lender to the requested duration of such Interest Period); provided
that if any of the 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
<PAGE>
32
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.
"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 16 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
(3) to this Agreement.
"LIBERTY IFE CONTRIBUTION" has the meaning specified in
Preliminary Statement (3) to this Agreement.
"LIBERTY MEDIA" has the meaning specified in Preliminary
Statement (3) to this Agreement.
"LICENSED RIGHTS" has the meaning specified in Section
5.02(a)(ii)(M).
"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
<PAGE>
33
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 and the
Collateral Documents, (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 and the Collateral Documents, (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, 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, the Phase I Loan Parties, the
Phase II Loan Parties, each of the other Subsidiaries of Fox Kids that is
required to execute and deliver 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.
"LYNNHAVEN" means Lynnhaven Acquisition Corp., a Virginia
corporation and a direct wholly owned Subsidiary of the Surviving
Corporation.
"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
<PAGE>
34
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 nonpayment Obligations of any of the
Subsidiaries of Fox Kids (other than any of the other Borrowers)).
"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 I Closing Date, the Fiscal Quarters that
have been completed since the Phase I Closing Date; provided, however, that
any calculation of Consolidated EBITDA and Consolidated Interest Expense
for the first Measurement Period ending after September 30, 1997 shall be
multiplied by four, any calculation of Consolidated EBITDA and Consolidated
Interest Expense and 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 for the third
Measurement Period ending after September 30, 1997 shall be multiplied by
1.33.
"MERGER" has the meaning specified in Preliminary Statement (4)
to this Agreement.
"MERGER AGREEMENT" has the meaning specified in Preliminary
Statement (4) 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 I 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.
"MORTGAGE POLICY" has the meaning specified in Section
3.02(j)(xii)(B).
"MORTGAGES" has the meaning specified in Section 3.02(j)(xii).
"MULTIEMPLOYER PLAN" means a multiemployer plan (as defined in
Section 4001(a)(3) of
<PAGE>
35
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, collectively, (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, (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 or notes of
Fox Kids due no earlier than the tenth anniversary of the Phase II Closing
Date and issued in an aggregate principal amount not to exceed $343,000,000
pursuant to the NAHI Subordinated Notes Documents, which subordinated note
or notes shall be in the same form as the FBC Subordinated Notes, and
including any notes issued in replacement or substitution therefor.
"NAHI SUBORDINATED NOTES DOCUMENTS" the Subordinated Note
Agreement to be entered into on or prior to the Phase II Closing Date 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 agreements, instruments or other documents shall
be in the same form as the FBC Subordinated Notes Documents and 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
<PAGE>
36
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;
(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, and any accrued and unpaid
interest on, any Indebtedness (other than the Advances and any
intercompany Indebtedness) 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 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
<PAGE>
37
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 such Person 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 PLEDGE AGREEMENT" has the meaning specified in
Section 3.01(h)(ix)(B).
"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.
"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
<PAGE>
38
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).
"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, 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 or exploitation of
such item of Product.
"PATENTS" has the meaning specified in Section 1(j) of the
Security Agreement.
"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
<PAGE>
39
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 to 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 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
<PAGE>
40
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 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 either 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.
"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 that is the subject of such
Permitted Film Financing and is 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
<PAGE>
41
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;
(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
that (a) has 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, or any extension, refinancing or
<PAGE>
42
replacement thereof, and the termination of all commitments to extend
credit under any of the foregoing, (b) has no voting rights, and is not
convertible into any of the Voting Interests in Fox Kids, unless such
Permitted Preferred Stock is issued solely to one or more of the Equity
Investors and (c) has no other conditions, covenants or events of default.
"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 the date on which the initial
Revolving Credit A Borrowing occurs following satisfaction of all of the
conditions precedent set forth in Sections 3.01 and 3.03.
"PHASE I LOAN PARTIES" means, collectively, each of the Equity
Investors, each of the Borrowers and each of the Restricted Subsidiaries on
the Phase I Closing Date.
"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 3.02 and 3.03.
"PHASE II LOAN PARTIES" means, collectively, each of the
Subsidiaries of IFE that constitutes a Restricted Subsidiary on the Phase
II Closing Date and each of the other Foreign Subsidiaries that is intended
to constitute a Restricted Subsidiary on the Phase II Closing Date pursuant
to clause (b) of the definition of "Restricted Subsidiary" set forth in
this Section 1.01.
"PLAN" means a Single Employer Plan and/or a Multiple Employer
Plan, as the context may require.
"PLEDGE AGREEMENTS" has the meaning specified in Section
3.01(h)(x).
"PLEDGE AGREEMENT SUPPLEMENT" has the meaning specified in
Section 11(b) of the Pledge Agreements.
"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.
"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,
<PAGE>
43
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 (other than Fox Kids) 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.
"PRODUCT LABORATORY" means any film laboratory or video
duplication facility in any
<PAGE>
44
jurisdiction where any Preprint Materials, physical elements or properties
relating to any item of Product owned or controlled by any of the Borrowers
(other than Fox Kids) or any of the Restricted Subsidiaries are located.
"PRODUCT LABORATORY ACCESS LETTER" means a letter agreement, in
substantially the form of Exhibit C to the Security Agreement or otherwise
in form and substance reasonably satisfactory to the Administrative Agent,
among a Product Laboratory, the Borrower (other than Fox Kids) or the
Restricted Subsidiary for which such Product Laboratory has any Preprint
Materials, physical elements or properties relating to any item of Product
and the Administrative Agent, which letter agreement, among other things,
grants the Administrative Agent the right of access to such item of Product
and subordinates any Lien of such Product Laboratory on such item of
Product 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 (other
than Fox Kids) or any of their respective Subsidiaries in the ordinary
course of business to acquire, produce, exhibit, exploit, license or
distribute television films or other programming.
"PROGRAMMING RIGHTS" means the rights to distribute, exhibit 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 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, 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;
(b) 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
<PAGE>
45
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
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;
(c) 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
(d) 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 (2) to this Agreement.
"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 hereunder 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 hereunder 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
hereunder 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 (2)
to this Agreement.
"REGENT ACQUISITION" has the meaning specified in Preliminary
Statement (2) to this Agreement.
"REGENT PURCHASE AGREEMENT" has the meaning specified in
Preliminary Statement (2) to this
<PAGE>
46
Agreement.
"REGENT PURCHASE AGREEMENT GUARANTY" means the Guaranty dated as
of June 11, 1997 made by TNCL in favor of Regent, as such guaranty may be
amended, supplemented or otherwise modified from time to time on or prior
to the Phase I Closing Date in accordance with the terms thereof, but to
the extent permitted under the terms of the Loan Documents.
"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 Agreement dated as of June
11, 1997 among Fox Kids, Saban, FBC, FBC Sub, Allen & Co., Haim Saban and
certain stockholders of Saban prior to the Reorganization, as such
agreement may be amended, supplemented or otherwise modified from time to
time on or prior to the Phase I Closing Date in accordance with the terms
thereof, but to the extent permitted under the terms of the Loan Documents.
"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.
"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
<PAGE>
47
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, 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 (a) at any time and from time to
time prior to the Phase II Closing Date, any of the wholly owned Domestic
Subsidiaries and (b) at any time and from time to time on and after the
Phase II Closing Date, any of the wholly owned Domestic Subsidiaries and,
unless the Lenders consent to the exclusion of any of the wholly owned
Foreign Subsidiaries from this definition and the Obligations of the
Restricted Subsidiaries under or in respect of the Loan Documents (such
consent not to be unreasonably withheld and to take into consideration any
restrictions under the applicable Requirements of Law of the jurisdiction
in which each such wholly owned Foreign Subsidiary is organized), any such
wholly owned Foreign Subsidiary (other than any Foreign Corporation or any
Subsidiary of a Foreign Corporation); provided, however, that,
notwithstanding the foregoing provisions of this definition, Fox Kids LLC
shall constitute a Restricted Subsidiary at all times on and after the date
of this Agreement; and provided further, 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 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.
<PAGE>
48
"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
<PAGE>
49
Credit B Borrowing, as the context may require.
"REVOLVING CREDIT FACILITIES" means the Revolving Credit A
Facility or the Revolving Credit B Facility, as the context may require.
"RIGHT IN PRODUCT" means (a) any right, whether arising under
written contracts or otherwise, to sell, produce, distribute,
subdistribute, exhibit, lease, sublease, license, sublicense or otherwise
exploit Product, including rights under so-called "pick up" arrangements
and other contracts and agreements relating to the acquisition 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 (2) to this Agreement.
"ROBERTSON PURCHASE AGREEMENT" has the meaning specified in
Preliminary Statement (2) 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, as such
guaranty may be amended, supplemented or otherwise modified from time to
time on or prior to the Phase I Closing Date in accordance with the terms
thereof, but to the extent permitted under the terms of the Loan Documents.
"ROBERTSON SELLERS" has the meaning specified in Preliminary
Statement (2) 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.
<PAGE>
50
"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(h)(viii).
"SECURITY AGREEMENT SUPPLEMENT" has the meaning specified in
Section 23(b) of the Security Agreement.
"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 (3) 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
<PAGE>
51
(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.
"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 amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof, but
<PAGE>
52
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; provided, however, that,
notwithstanding any of the other provisions of this Agreement, neither IFE
nor any of its Subsidiaries shall, unless otherwise expressly stated
herein, be considered a Subsidiary of Fox Kids or any of its Subsidiaries
at any time prior to the Phase II Closing Date (although IFE and/or one or
more of its Subsidiaries, as applicable, shall constitute a "Subsidiary" or
"Subsidiaries" for all purposes of Section 3.02 and the defined terms used
therein).
"SUBSTITUTE RATE" has the meaning specified in Section 2.09(e).
"SURVIVING CORPORATION" has the meaning specified in Preliminary
Statement (4) to this Agreement.
"SURVIVING INDEBTEDNESS" means, collectively, the FCN
Holding/Saban Surviving Indebtedness and the IFE Surviving Indebtedness.
"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
<PAGE>
53
"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 between CBN
and Regent, as such agreement may be amended, supplemented or otherwise
modified from time to time on or prior to the Phase I Closing Date in
accordance with the terms thereof, but to the extent permitted under the
terms of the Loan Documents.
"TERMINATION TO SHAREHOLDER AGREEMENT" means the Termination to
Shareholder Agreement dated as of June 11, 1997 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, as such agreement may be
amended, supplemented or otherwise modified from time to time on or prior
to the Phase I Closing Date in accordance with the terms thereof, but to
the extent permitted under the terms of the Loan Documents.
"TNCL" means The News Corporation Limited, a corporation
organized and existing under the laws of South Australia, Australia.
"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
<PAGE>
54
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 and the NAHI Subordinated Notes.
"TNCL GROUP SUBORDINATED NOTES DOCUMENTS" means, collectively,
the FBC Subordinated Notes Documents and the NAHI Subordinated Notes
Documents.
"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 each series of Series A Preferred Stock and the other Equity Interests
in Fox Kids in connection with the Acquisitions, the Merger and the
Reorganization, (c) the issuance of the TNCL Group Subordinated Notes 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 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. PLEDGE AGREEMENT" has the meaning specified in Section
3.01(h)(ix)(A).
"UNUSED REVOLVING CREDIT A COMMITMENT" means, with respect to any
of the Revolving
<PAGE>
55
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 (other than any of the other Borrowers) that does
not constitute a Restricted Subsidiary at such time; provided, however,
that none of the Special Purpose Vehicles shall constitute an Unrestricted
Subsidiary.
"VIRGINIA MORTGAGE" has the meaning specified in Section
3.02(j)(xii).
"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 Shareholders 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, as such waiver may be
amended, supplemented or otherwise modified from time to time on or prior
to the Phase I Closing Date in accordance with the terms thereof, but to
the extent permitted under the terms of the Loan Documents.
"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
<PAGE>
56
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 dated 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 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
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.
------------ -------------------------------
Each of the Revolving Credit A Lenders severally agrees, on the terms and
conditions hereinafter set forth, to make (i) advances (each, an "ACQUISITIONS
ADVANCE") in U.S. dollars to Fox Kids, Saban and/or FCN Holding on any Business
Day during the period from the date of this Agreement until the Phase II Closing
Date and (ii) 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 Phase II Closing Date 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
<PAGE>
57
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); provided that
each of the Revolving Credit A Borrowings made by an Appropriate Borrower on the
Phase I Closing Date may be made in the aggregate amount required by such
Appropriate Borrower on such date to finance the Acquisitions, to repay certain
Indebtedness of Saban outstanding on such date or to pay fees and expenses
incurred in connection with the consummation of the Acquisitions, the
Reorganization or the Facilities (adjusted to the next highest dollar). 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 (other than Merger Corporation) 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 I Closing Date
and, then, only to the extent necessary to finance the Acquisitions and to pay
fees and expenses incurred in connection with the consummation of the
Acquisition and the Facilities.
(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 Phase
II Closing Date 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 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) on or after the Phase II Closing Date, 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.
<PAGE>
58
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.
(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, (A) at any time and from time to
time prior to the Phase II Closing Date, the Acquisitions Advances may not be
outstanding as part of more than
<PAGE>
59
eight separate Revolving Credit A Borrowings and (B) at any time and from time
to time following the Phase II Closing Date, 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.
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
<PAGE>
60
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
<PAGE>
61
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 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)):
DATE AMOUNT
- -------------------- ------------
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
<PAGE>
62
December 30, 2003 75,000,000
March 30, 2004 75,000,000
June 29, 2004 75,000,000
September 29, 2004 75,000,000
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:
(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, 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)(D), (i)(E) or (ii) of Section 5.02(g) or, to the extent the
aggregate amount of gross proceeds from all issuances and sales of the
Permitted Preferred Stock under subclause (i)(F) of Section 5.02(g) and all
Indebtedness of the Borrowers and their 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 (i)(F) of Section 5.02(g)); and
<PAGE>
63
(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)), 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)) 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) (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 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
<PAGE>
64
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, 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. The Appropriate Borrowers shall, on each Business Day,
---------
prepay:
(i) an aggregate principal amount of the Term Advances comprising
part of the same Term Borrowings equal to the amount by which (A) the
aggregate principal amount of all Term Advances outstanding on such
Business Day exceeds (B) 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;
(ii) an aggregate principal amount of the Revolving Credit A
Advances comprising
<PAGE>
65
part of the same Revolving Credit A Borrowings equal to the amount by which
(A) the aggregate principal amount of all Revolving Credit A Advances
outstanding on such Business Day exceeds (B) 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
(iii) 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 (A) the aggregate principal amount of all Revolving
Credit B Advances outstanding on such Business Day exceeds (B) 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.
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 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).
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
<PAGE>
66
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
<PAGE>
67
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
(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 on the Phase I Closing Date,
thereafter 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.
<PAGE>
68
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:
(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 Appropriate Lender 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
<PAGE>
69
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 (i)(A) or (i)(B) of this Section 2.09(a), becomes effective or is
issued or made after 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 (A) Taxes or Other Taxes (as to which Section
2.11 shall govern) and (B) 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,
<PAGE>
70
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 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,
<PAGE>
71
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 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
<PAGE>
72
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 such time 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 under the
Notes in respect of the interest assigned thereby to the Lender assignee
thereunder, 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.
<PAGE>
73
(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 under 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
<PAGE>
74
25 of the Security Agreement, Section 14 of the Pledge Agreements, Section
12 of the Guarantee or the applicable section of the Mortgages or 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;
(iii) third, to the payment of all of the amounts owing
to the Administrative Agent and the Lenders under Sections 2.09 and 2.11
that are due and payable 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 payable under Section 2.06(b) 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 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 payable under Section 2.06(a) 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 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
<PAGE>
75
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 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
<PAGE>
76
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 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
<PAGE>
77
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 only shall be considered excluded from Taxes 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.
(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
<PAGE>
78
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
------------------------
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 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
<PAGE>
79
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
------------------
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 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
<PAGE>
80
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
<PAGE>
81
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 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 amount 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
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 (a) the Acquisitions
---------------
Advances shall be available on and from time to time after the Phase I Closing
Date to the Phase II Closing Date and (i) Fox Kids hereby agrees that it shall
use such proceeds solely to finance the Acquisitions and to pay
<PAGE>
82
certain fees and expenses incurred in connection with the consummation of the
Acquisitions and the Facilities and (ii) each of FCN Holding and Saban hereby
agrees that it shall use such proceeds solely to refinance certain Indebtedness
of Saban outstanding on the Phase I Closing Date, to pay certain fees and
expenses incurred in connection with the consummation of the Reorganization and
the Facilities and for other general corporate purposes not otherwise prohibited
under the terms of the Loan Documents, (b) the Revolving Credit A Advances shall
be available on and from time to time after the Phase II Closing Date and each
of the Borrowers hereby agrees that it shall use such proceeds for general
corporate purposes not otherwise prohibited under the terms of the Loan
Documents, (c) the Revolving Credit B Advances shall be available on and from
time to time after the Phase II Closing Date and (i) Fox Kids hereby agrees that
it shall use such proceeds solely to finance in part the Merger and to pay
certain fees and expenses incurred in connection with the consummation of the
Transactions and (ii) 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 (d)
the Term Advances shall be available on the Phase II Closing Date, and Fox Kids
hereby agrees that it shall use such 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 A
------------------------------------------------------
Borrowing. The obligation of each of the Revolving Credit A Lenders to make an
- ---------
Acquisitions Advance on the occasion of the initial Revolving Credit A Borrowing
is subject to the satisfaction of the following conditions precedent prior to or
concurrently with the initial Revolving Credit A 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 (including, without limitation, the Series A Preferred Stock)
and of each agreement or instrument relating to such structure or
capitalization).
(b) The Lenders shall have received copies of all of the
Transaction Documents at least three Business Days prior to the Phase I
Closing Date and shall not, in their reasonable judgment, have objected to
any of the terms or conditions thereof; all of the Transaction Documents
shall be in full force and effect in the form so received by the Lenders;
Liberty IFE shall have contributed to Fox Kids all of the debt securities
of, and Equity Interests in, IFE
<PAGE>
83
owned or otherwise held by it in exchange for shares of the Series A
Preferred Stock; and all of the Acquisitions and the Reorganization shall
have been consummated or shall be consummated concurrently with the initial
Revolving Credit A Borrowing in accordance with the terms of the applicable
Transaction Documents (without any waiver or amendment of any term or
condition in any such Transaction Document 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, other than
the Governmental Authorizations, and the consents, approvals,
authorizations, notices, filings and other actions described on Part B of
Schedule 4.01(d) hereto, 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.
(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 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 and its Subsidiaries in
existence on the Phase I Closing Date, other than the Indebtedness of Fox Kids
or any such Subsidiary described on Schedule 4.01(kk) hereto (the "FCN
HOLDING/SABAN SURVIVING INDEBTEDNESS"), shall have been prepaid, redeemed or
defeased in full or otherwise satisfied and extinguished, and all commitments
therefor shall have been terminated; Fox Kids shall have issued one or more FBC
Subordinated Notes to FBC in an aggregate principal amount of at least
$104,573,000 as consideration for the contribution of FBC of all of its member
interests in Fox Kids LLC and in satisfaction in full of all outstanding
Indebtedness of Fox Kids LLC to FBC on the Phase I Closing Date; and all of the
FCN Holding/Saban Surviving
<PAGE>
84
Indebtedness and all of the FBC Subordinated Notes Documents shall be on terms
and conditions reasonably satisfactory to the Lenders.
(g) 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.
(h) The Administrative Agent shall have received on or before the
Phase I 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 Revolving Credit A 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.
(ii) Certified copies of the resolutions of the board of
directors (or persons performing similar functions) of each of the
Phase I Loan Parties (other than Haim Saban) 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 Phase I Loan Party and the other
transactions contemplated by any of the foregoing, and of all
documents evidencing necessary Governmental Authorizations, or other
necessary 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 Phase I Loan
Party or any of the other transactions contemplated by any of the
foregoing.
(iii) A copy of all of the Constitutive Documents of
each of the Phase I Loan Parties (other than Haim Saban) 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) 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.
(iv) A copy of a certificate of the Secretary of State (or
equivalent Governmental Authority) of the jurisdiction of organization
of each of the Phase I Loan Parties (other than Haim Saban) and, if
and to the extent requested by the Lenders, each
<PAGE>
85
of their respective Subsidiaries, listing the certificate or articles
of incorporation (or similar Constitutive Document) of such Phase I
Loan Party 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) Copies of certificates of the Secretary of State (or the
equivalent Governmental Authority) of each jurisdiction in which any
of the Phase I Loan Parties (other than Haim Saban) or, if and to the
extent requested by the Lenders, 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 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.
(vi) A certificate of each of the Phase I Loan Parties
(other than Haim Saban), signed on behalf of such Phase I Loan Party
by its President or a Vice President and its Secretary or an Assistant
Secretary (or the persons performing similar functions), dated the
Phase I Closing Date (the statements made in which certificate shall
be true on and as of the Phase I Closing Date), certifying as to:
(A) the absence of any amendments to the certificate or
articles of incorporation (or similar Constitutive Document) of
such Phase I Loan Party 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(h), or any steps
taken by the board of directors (or persons performing similar
functions) or the shareholders, partners, members or equivalent
persons of such Phase I Loan Party to effect or authorize any
further amendment, supplement or other modification thereto;
(B) the accuracy and completeness of the bylaws (or
similar
<PAGE>
86
Constitutive Documents) of such Phase I Loan Party as in effect
on the date on which the resolutions of the board of directors
(or persons performing similar functions) of such Phase I Loan
Party referred to in clause (ii) of this Section 3.01(h) were
adopted and on the Phase I Closing Date (a copy of which shall be
attached to such certificate);
(C) the due organization and good standing of such
Phase I Loan Party as a Person organized under the laws of the
jurisdiction of its organization, and the absence of any
proceeding (either pending or contemplated) for the dissolution,
liquidation or other termination of the existence of such Phase I
Loan Party or any of its Subsidiaries;
(D) the absence of any change in the jurisdiction of
organization of such Phase I Loan Party and, except as part of
the Transaction, (i) any merger, consolidation or other similar
transaction directly or indirectly involving such Phase I Loan
Party or (ii) any issuance or sale of any Equity Interests in
such Phase I Loan Party, in each case since December 31, 1996;
(E) the legal and beneficial ownership by such Phase I
Loan Party of all of the Collateral in which it 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) the accuracy in all material respects of the
representations and warranties made by such Phase I 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 I Closing Date, before and after
giving effect to the initial Revolving Credit A Borrowing and to
the application of proceeds therefrom; and
(G) the absence of any event occurring and continuing,
or resulting from the initial Revolving Credit A Borrowing, or
the application of proceeds therefrom, that would constitute a
Default.
(vii) A certificate of the Secretary or an Assistant
Secretary (or a person performing similar functions) of each of the
Phase I Loan Parties (other than Haim Saban) certifying the names and
true signatures of the officers of such Phase I Loan Party authorized
to sign each of the Loan Documents and the Transaction Documents to
which it is or is to be a party and the other agreements, instruments
and documents to be delivered hereunder and thereunder.
<PAGE>
87
(viii) A 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 Phase I Loan Parties (other than the Equity
Investors), together with:
(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, listing all of the
effective financing statements filed in the jurisdictions
referred to in subclause (viii)(D) or (viii)(E) of this Section
3.01(h) that name any of the Phase I Loan Parties (other than the
Equity Investors) 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 Phase I Loan Parties described in the
Security Agreement 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
<PAGE>
88
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 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 Phase I Loan Party;
(F) IP Collateral Assignments--Short Form, covering all
of the Copyrights, Patents, if any, and Trademarks of each of the
applicable Phase I Loan Parties, duly executed by the applicable
Phase I Loan Party;
(G) copies of the Assigned Agreements referred to in
the Security Agreement, in each case (to the extent required
under the terms of the Security Agreement) together with (1) to
the extent required under the terms of the Security Agreement, a
consent to the assignment thereof to the Administrative Agent, on
behalf of the Secured Parties, in form and substance reasonably
satisfactory to the Lenders and duly executed by each of the
parties to such Assigned Agreement other than any of the Phase I
Loan Parties party to such Assigned Agreement and (2) if
reasonably requested by the Lenders, notice from the applicable
Phase I Loan Party to each of the other parties to such Assigned
Agreement, in form and substance reasonably satisfactory to the
Lenders and duly executed by the applicable Phase I Loan Party,
of the assignment of such Assigned Agreement and the rights and
interest of such Phase I Loan Party thereunder to the
Administrative Agent, on behalf of the Secured Parties;
(H) each of the Cash Collateral Account Letters, the
Blocked Account Letters and the Disbursement Account Letters
referred to therein, duly executed by the applicable Phase I Loan
Party and the bank referred to therein;
(I) a Product Laboratory Access Letter for each of the
Product Laboratories referred to on Schedule 4.01(oo) hereto; and
(J) 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
<PAGE>
89
Agent may reasonably deem desirable in order to perfect and
protect the liens and security interests created under the
Security Agreement have been taken or will be taken in accordance
with the terms of the Loan Documents.
(ix) (A) A memorandum of deposit of shares, in substantially
the form of Exhibit D-2 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. PLEDGE AGREEMENT"), duly executed
by Saban, (B) a pledge agreement of shares, 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 "NETHERLANDS PLEDGE AGREEMENT"), duly executed by
Fox Kids Europe Holdings, Inc. and Fox Kids Networks--Europe, Inc.,
(C) a pledge agreement, in form and substance reasonably satisfactory
to the Lenders (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,
and (D) a deed of pledge of shares, in form and substance reasonably
satisfactory to the Lenders (as amended, supplemented or otherwise
modified hereafter from time to time in accordance with the terms
thereof and Section 9.01, the "FRENCH PLEDGE AGREEMENT" and, together
with the U.K. Pledge Agreement, the Netherlands Pledge Agreement and
the German Pledge Agreement and each of the other pledge agreements
executed and delivered by any of the Phase II Loan Parties pursuant to
Section 3.02(j)(x), as amended, supplemented or otherwise modified
hereafter from time to time in accordance with the terms thereof and
Section 9.01, the "FOREIGN SUBSIDIARY PLEDGE AGREEMENTS"), duly
executed by Saban, 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 referred to in this clause (ix)), not
otherwise executed, delivered or taken pursuant to clause (viii) of
this Section 3.01(h) 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 referred to in this clause (ix).
(x) One or more pledge agreements, in each case in
substantially the form of Exhibit E hereto (together with each Pledge
Agreement Supplement delivered pursuant to Section 11(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:
(A) certificates representing the Initial Pledged Interests
referred to therein, accompanied by undated stock powers or other
appropriate powers, duly executed in blank;
<PAGE>
90
(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
(x)(D) of this Section 3.01(h) 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
(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.
(xi) A 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 Restricted Subsidiaries.
(xii) Certificates of each of the Borrowers, in
substantially the form of Exhibit G hereto, duly executed by the
respective chief financial officers thereof, 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
Acquisitions, the Reorganization, the Facilities and the other
transactions contemplated thereby.
(xiii) Certified copies of each of the Transaction
Documents, duly executed
<PAGE>
91
by each of the parties thereto, together with all agreements,
instruments and other documents delivered in connection therewith.
(xiv) Certified copies of all of the agreements,
instruments and other documents evidencing or setting forth the terms
and conditions of the FCN Holding/Saban Surviving Indebtedness that is
outstanding or has commitments for the extension of credit on the
Phase I 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 Phase I Loan Parties (other than the Equity Investors) 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 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, (D) 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 (E) forecasts prepared by management of Fox Kids, in form and
substance reasonably satisfactory to the Lenders, of balance sheets,
income statements and cash flow statements on an annual basis for each
Fiscal Year from the Fiscal Year in which the Phase I Closing Date
occurs through the scheduled Termination Date.
(xvii) Evidence of all of the insurance of the
Borrowers and their Subsidiaries required to be maintained thereby
under Section 5.01(d) and, in the case of each of the Borrowers and
each of the Restricted 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 Revolving Credit A Borrowing to be made on the Phase I
Closing Date.
(xix) A Federal Reserve Form U-1 provided for in
Regulation U of the Board
<PAGE>
92
of Governors of the Federal Reserve System, duly executed by a
Responsible Officer of Fox Kids, the statements made in which shall be
such as to permit the Transaction and the other transactions
contemplated by this Agreement in accordance with such Regulation U.
(xx) A favorable opinion of Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, counsel for the Phase I Loan Parties, in substantially
the form of Exhibit H-1 hereto, and addressing such other matters as
any Lender through the Administrative Agent may reasonably request.
(xxi) A favorable tax opinion of Squadron, Ellenoff,
Plesent & Sheinfeld, LLP, counsel for the Phase I Loan Parties, in
substantially the form of Exhibit H-2 hereto.
(xxii) A favorable opinion of Troop Meisinger Steuber
& Pasich, LLP, special counsel for Saban and its Subsidiaries, in
substantially the form of Exhibit H-3 hereto, and addressing such
other matters as any Lender through the Administrative Agent may
reasonably request.
(xxiii) A favorable opinion of each of the local and
foreign counsel set forth on Schedule 3.01(h)(xxiii) hereto, in form
and substance reasonably satisfactory to the Lenders.
(xxiv) A favorable opinion of Finnegan, Henderson,
Farabow, Garrett & Dunner, LLP, intellectual property counsel for the
Lenders, in substantially the form of Exhibit H-4 hereto, and
addressing such other matters as any Lender through the Administrative
Agent may reasonably request.
(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 the Initial Revolving Credit B
------------------------------------------------------
Borrowing or Term Borrowing. The obligation of each of the 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
<PAGE>
93
structure and capitalization of IFE and each of the Phase II Loan Parties
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 IFE, each such Phase II Loan Party 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 Lenders prior to the Phase I 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) 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.
(e) All of the Indebtedness of IFE and its Subsidiaries in
existence on the Phase II Closing Date, other than the Indebtedness of IFE
or any such Subsidiary described on Schedule 4.01(kk) hereto (as amended,
supplemented or otherwise modified pursuant to Section 3.02(f), the "IFE
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 IFE
Surviving Indebtedness and all of the NAHI Subordinated Notes Documents
shall continue to be on terms and conditions reasonably satisfactory to the
<PAGE>
94
Lenders.
(f) All of the amendments, supplements and other modifications to
the Schedules to this Agreement and the other Loan Documents shall be in
form and substance reasonably satisfactory to the Lenders.
(g) No development, event or circumstance relating to or
affecting IFE or any of its Subsidiaries or any of their respective
property, assets or businesses, no existing Obligation of IFE or any of its
Subsidiaries, and no action taken or omitted to be taken by IFE or any of
its Subsidiaries would, assuming that all of the terms, covenants and
agreements of the Loan Parties and their respective Subsidiaries under and
in respect of the Loan Documents are in effect with respect to IFE and its
Subsidiaries and after giving pro forma effect to the initial Revolving
Credit B Borrowing and/or initial Term Borrowing, constitute or result in a
Default. 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 the Phase I Closing Date that, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(h) Fox Kids shall have received at least $343,000,000 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.
(i) 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.
(j) 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 of the Surviving
Corporation, payable to the order of the Revolving Credit A Lenders,
and the Revolving Credit B Notes and the Term Notes of each of the
Appropriate Borrowers, payable to the order of the Revolving Credit B
Lenders and the Term Lenders, respectively.
(ii) Certified copies of the resolutions of the board of
directors (or persons performing similar functions) of IFE and each of
the Phase II Loan Parties approving
<PAGE>
95
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 IFE or such Phase II Loan Party and
the other transactions contemplated by any of the foregoing, and of
all documents evidencing necessary Governmental Authorizations, and
other necessary 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
IFE or such Phase II Loan Party or any of the other transactions
contemplated by any of the foregoing.
(iii) (A) A copy of all of the Constitutive Documents of IFE
and each of the Phase II Loan Parties 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 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 IFE and each of the Phase II Loan Parties and, if and to the extent
requested by the Lenders, each of their respective Subsidiaries,
listing the certificate or articles of incorporation (or similar
Constitutive Document) of IFE, such Phase II Loan Party 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) Copies of certificates of the Secretary of State (or the
equivalent Governmental Authority) of each jurisdiction in which IFE
or any of the Phase II Loan Parties or, if and to the extent requested
by the Lenders, 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 II Closing Date
<PAGE>
96
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 IFE and each of the Phase II
Loan Parties, signed on behalf of IFE or such Phase II Loan Party by
its President or a Vice President and its Secretary or an Assistant
Secretary (or the persons performing similar functions), dated the
Phase 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
IFE or such Phase II Loan Party since the date of the Secretary
of State's (or equivalent Governmental Authority's) certificate
referred to in subclause (iii)(A) of this Section 3.02(j), or any
steps taken by the board of directors (or persons performing
similar functions) or the shareholders, partners, members or
equivalent persons of such Phase II Loan Party 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 IFE or such Phase II Loan
Party as in effect on the date on which the resolutions of the
board of directors (or persons performing similar functions) of
IFE or such Phase II Loan Party referred to in clause (ii) of
this Section 3.02(j) 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 IFE or
such Phase II Loan Party as a Person organized under the laws of
the jurisdiction of its organization, and the absence of any
proceeding (either pending or contemplated) for the dissolution,
liquidation or other termination of the existence of IFE (except
as a result of the consummation of the Merger) or such Phase II
Loan Party or any of their respective Subsidiaries;
(D) the absence of any change in the jurisdiction of
organization of IFE or such Phase II Loan Party and, except as
part of the Transaction, (i) any merger, consolidation or other
similar transaction directly or indirectly
<PAGE>
97
involving IFE or such Phase II Loan Party or (ii) any issuance or
sale of any Equity Interests in IFE or such Phase II Loan Party,
in each case since December 31, 1996;
(E) the legal and beneficial ownership by IFE or such Phase II
Loan Party 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 Phase
II 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 the initial Revolving Credit B
Borrowing and/or the initial Term Borrowing 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 the initial Revolving
Credit B Borrowing and/or the initial Term Borrowing, or the
application of proceeds therefrom, that would constitute a
Default.
(viii) A certificate of the Secretary or an Assistant
Secretary (or a person performing similar functions) of each of the
Phase II Loan Parties certifying the names and true signatures of the
officers of such Phase II Loan Party authorized to sign each of the
Loan Documents and the Transaction 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) One or more Security Agreement Supplements, duly
executed by the Surviving Corporation and each of the Phase II Loan
Parties, together with:
(A) certificates representing the Pledged Interests
referred to therein, accompanied by undated stock powers or other
appropriate powers, duly executed in blank;
(B) instruments evidencing the Pledged Indebtedness referred
to therein, duly endorsed in blank;
<PAGE>
98
(C) (1) completed requests for information, dated
reasonably near 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
3.02(j) that name IFE or any of the Phase II Loan Parties 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 II Closing Date, that reflect any
existing Liens on the Copyrights, Patents or Trademarks of IFE or
any of the Phase II Loan Parties described in the Security
Agreement, as amended by the Security Agreement Supplements, on
record in the United States Copyright Office or the United States
Patent & 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, as amended by the Security Agreement
Supplements, 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 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, as amended by the
Security Agreement Supplements, covering the Collateral described
therein, in each case completed in a manner satisfactory to the
Lenders and duly executed by the Surviving Corporation or the
applicable Phase II Loan Party;
(F) IP Collateral Assignments--Short Form covering all
of the Copyrights, Patents, if any, and Trademarks of the
Surviving Corporation and each of the applicable Phase II Loan
Parties, duly executed by the Surviving Corporation and/or the
applicable Phase II Loan Party;
<PAGE>
99
(G) copies of the Assigned Agreements referred to in
the Security Agreement Supplements, in each case (to the extent
required under the terms of the Security Agreement) together with
(1) to the extent required under the terms of the Security
Agreement, a consent to the assignment thereof to the
Administrative Agent, on behalf of the Secured Parties, in form
and substance reasonably satisfactory to the Lenders and duly
executed by each of the parties to such Assigned Agreement other
than the Surviving Corporation and/or any of the Phase II Loan
Parties, as the case may be, party to such Assigned Agreement and
(2) if reasonably requested by the Lenders, notice from the
Surviving Corporation or the applicable Phase II Loan Party to
each of the other parties to such Assigned Agreement, in form and
substance reasonably satisfactory to the Lenders and duly
executed by the Surviving Corporation or the applicable Phase II
Loan Party, of the assignment of such Assigned Agreement and the
rights and interest of the Surviving Corporation or such Phase II
Loan Party, as the case may be, thereunder to the Administrative
Agent, on behalf of the Secured Parties;
(H) each of the Blocked Account Letters and the Disbursement Account
Letters referred to therein, duly executed by the Surviving Corporation or the
Phase II Loan Party, as the case may be, and the bank referred to therein;
(I) a Product Laboratory Access Letter for each of the
Product Laboratories referred to on Schedule 4.01(oo) hereto; and
(J) 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, as amended
by the Security Agreement Supplements) 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, as amended by the Security
Agreement Supplements, have been taken or will be taken in
accordance with the terms of the Loan Documents.
(x) A pledge agreement (or the equivalent document thereto),
in form and substance reasonably satisfactory to the Lender, governed
by the laws of each jurisdiction outside of the United States of
America in which it is necessary or in which the Administrative Agent
may reasonably deem it desirable to execute and deliver such pledge
agreement (or such equivalent document) in order to perfect and
protect the liens and security interests created under the Security
Agreement, as amended by the Security Agreement Supplements, in
certain Equity Interests in one or more of the Foreign
<PAGE>
100
Subsidiaries that comprise (or are intended to comprise) part of the
Collateral described in such Security Agreement Supplements, covering
such Equity Interests and any other Collateral related thereto, duly
executed by the Surviving Corporation or the applicable Phase II Loan
Party, 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 such pledge
agreements (or such equivalent documents) referred to in this clause
(x)), not otherwise executed, delivered or taken pursuant to clause
(ix) of this Section 3.02(j) 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 such
pledge agreements (or such equivalent documents) referred to in this
clause (x).
(xi) One or more security agreements, floating and fixed
debentures, mortgages or other equivalent documents thereto, in each
case in form and substance reasonably satisfactory to the Lenders (as
amended, supplemented or otherwise modified hereafter from time to
time in accordance with the terms thereof and Section 9.01, a "FOREIGN
SUBSIDIARY SECURITY AGREEMENT"), granting the Administrative Agent, on
behalf of the Secured Parties, 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 all
of the property and assets of each of the Foreign Subsidiaries that is
intended to constitute a Restricted Subsidiary on the Phase II Closing
Date pursuant to the terms of clause (b) of the definition of
"Restricted Subsidiary" set forth in Section 1.01, securing all of the
Obligations of such Foreign Subsidiary or the other applicable Loan
Parties, as appropriate, under or in respect of the Loan Documents,
duly executed by the applicable Foreign Subsidiaries, 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 the any of the Foreign Subsidiary Security 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 Security
Agreements.
(xii) A deed of trust, trust deed and/or mortgage,
in form and substance reasonably satisfactory to the Lenders, covering
the property of Lynnhaven located at 2877 Guardian Lane, Virginia
Beach, Virginia 23452 (the "VIRGINIA MORTGAGE" and together with each
other mortgage delivered pursuant to Section 5.01(q) or 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 "MORTGAGES"), duly executed by the Surviving Corporation,
together with:
<PAGE>
101
(A) evidence that (1) counterparts of the Virginia
Mortgage have been duly recorded on or prior to the Phase II
Closing Date in all of the filing or recording offices that may
be necessary or that the Administrative Agent may reasonably deem
desirable in order to create valid and subsisting first liens on
and security interests in the property and assets described in
the Virginia Mortgage in favor of the Administrative Agent, on
behalf of the Secured Parties, and (2) all of the filing and
recording taxes and fees related thereto have been paid in full;
(B) a fully paid American Land Title Association
Lender's Extended Coverage title insurance policy (the "MORTGAGE
POLICY") in form and substance, with endorsements and in amounts
reasonably acceptable to the Administrative Agent, issued,
coinsured and reinsured by title insurers reasonably acceptable
to the Administrative Agent, insuring that the Virginia Mortgage
creates a valid and subsisting first lien on and security
interest in the property and assets described therein, free and
clear of all defects (including, but not limited to, mechanics'
and materialmen's liens) and encumbrances, except for Permitted
Encumbrances, and providing for such other affirmative insurance
(including endorsements for future advances under the Loan
Documents and for mechanics' and materialmen's liens) and such
coinsurance and direct access reinsurance as may be necessary or
as the Administrative Agent may reasonably deem desirable;
(C) a survey, in form and substance reasonably
satisfactory to the Administrative Agent and dated no more than
30 days prior to the Phase II Closing Date, that certifies to the
Administrative Agent and the issuer of the Mortgage Policy for
the Virginia Mortgage in a manner reasonably satisfactory to the
Administrative Agent by a land surveyor duly registered and
licensed in the State of Virginia and reasonably acceptable to
the Administrative Agent, showing all buildings and other
improvements, any off-site improvements, the location of any
easements, parking spaces, rights of way, building setback lines
and other dimensional regulations and the absence of
encroachments (either by such improvements or on to such
property) and other defects other than encroachments and other
defects reasonably acceptable to the Administrative Agent;
(D) an appraisal of each of the properties described in
the Virginia Mortgage complying with the requirements of the
Federal Financial Institutions Reform, Recovery and Enforcement
Act of 1989;
<PAGE>
102
(E) a title report prepared by one or more nationally
recognized title insurance companies with respect to each of the
properties covered by the Virginia Mortgage, reflecting that such
properties are free and clear of all defects (including, but not
limited to, mechanics' and materialmen's liens) and encumbrances,
except for Permitted Encumbrances;
(F) such consents and agreements of lessors and other
third parties, and such estoppel letters and other confirmations,
as may be necessary or as the Administrative Agent may reasonably
deem desirable; and
(G) evidence that all of the other actions that may be
necessary or that the Administrative Agent may reasonably deem
desirable in order to create, or to perfect and protect, the
valid and subsisting first lien on and security interest in the
property and assets created under the Virginia Mortgage have been
taken or will be taken in accordance with the Loan Documents.
(xiii) An environmental assessment report, in form
and substance reasonably satisfactory to the Lenders, from an
environmental consulting firm reasonably acceptable to the
Administrative Agent, as to any hazards, costs or liabilities under
Environmental Laws to which the Surviving Corporation or any of its
Subsidiaries may be subject, the amount and nature of which and Fox
Kids' and the Surviving Corporation's plans with respect to which
shall be reasonably acceptable to the Lenders, together with evidence,
in form and substance reasonably satisfactory to the Lenders, that all
applicable Environmental Laws in connection with the Merger shall have
been complied with.
(xiv) One or more Guarantee Supplements, duly executed by
each of the Phase II Loan Parties.
(xv) Certificates of Fox Kids and the Surviving
Corporation, in substantially the form of Exhibit G hereto, duly
executed by the respective chief financial officers thereof, attesting
to the Solvency of Fox Kids and its Subsidiaries, taken as a whole,
and the Surviving Corporation and its Subsidiaries, taken as a whole,
respectively, immediately before and immediately after giving pro
forma effect to the Transaction and the other transactions
contemplated thereby.
<PAGE>
103
(xvi) Certified copies of all of the agreements,
instruments and other documents evidencing or setting forth the terms
and conditions of the IFE 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.
(xvii) Certified copies of each of the employment and
other compensation agreements with each senior executive officer of IFE or any
of the Phase II Loan Parties that are not being terminated and satisfied in full
on the Phase II Closing Date.
(xviii) Certified copies of (A) 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, and (B) the unaudited consolidated
financial statements of IFE and its Subsidiaries for the most recently
completed fiscal quarter of IFE prior to the Phase II Closing Date,
together with a certificate of a Responsible Officer of IFE with
respect thereto.
(xix) Evidence of all of the insurance of the
Surviving Corporation and its Subsidiaries required to be maintained
thereby under Section 5.01(d) and, in the case of the Surviving
Corporation and each of the Phase II Loan Parties, naming the
Administrative Agent, on behalf of the Secured Parties, as an
additional insured and/or loss payee thereunder.
(xx) A duly completed and executed Notice of Borrowing for
each Revolving Credit B Borrowing and the Term Borrowing, if
applicable, to be made on the Phase II Closing Date.
(xxi) A Federal Reserve Form U-1 provided for in
Regulation U of the Board of Governors of the Federal Reserve System,
duly executed by a Responsible Officer of Fox Kids, the statements
made in which shall be such as to permit the Transaction and the other
transactions contemplated by this Agreement in accordance with such
Regulation U.
(xxii) A favorable opinion of Louis A. Isakoff, Esq.,
General Counsel of IFE, in form and substance reasonably satisfactory
to the Lenders.
<PAGE>
104
(xxiii) A favorable opinion of counsel for the
Surviving Corporation and the Phase II Loan Parties reasonably
acceptable to the Lenders, in form and substance reasonably
satisfactory to the Lenders.
(xxiv) A favorable opinion of local and foreign
counsel reasonably satisfactory to the Lenders in each jurisdiction in
which counsel is reasonably required by the Lenders, in form and
substance reasonably satisfactory to the Lenders.
(xxv) A favorable opinion of Finnegan, Henderson, Farabow,
Garrett & Dunner, L.L.P., intellectual property counsel for the
Lenders, in form and substance reasonably satisfactory to the Lenders.
(xxvi) A favorable opinion of Shearman & Sterling, counsel
for the Agents, in form and substance satisfactory to the Agents.
SECTION 3.03. Conditions Precedent to Each Borrowing, Issuance and
----------------------------------------------------
Renewal. 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 I
Closing Date and 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, solely on and with respect to any Borrowing made or requested to
be made prior to the Phase II Closing Date, for the representations and
warranties contained in Section 4.01(h) and the second sentence of Section
4.01(q)), 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 3.04. Determinations Under Sections 3.01 and 3.02. For
-------------------------------------------
purposes of determining compliance with the conditions specified in Section 3.01
or 3.02, each of the Lenders shall be deemed to have consented to, approved or
accepted or to be satisfied with each document or other
<PAGE>
105
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 I Closing Date in the case
of Section 3.01 or prior to the Phase II Closing Date in the case of Section
3.02, specifying its objection thereto and, if such Lender has a Commitment on
such 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 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 each of the Loan Parties (other
<PAGE>
106
than the Equity Investors), showing, as of the date of this Agreement and
as of the Phase II Closing Date, 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
(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
<PAGE>
107
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 have received any
notice relating to or threatening the revocation, termination,
cancellation, denial, impairment or modification of any such Governmental
Authorization, or are 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, (A)
described on Part A of Schedule 4.01(d) hereto have been or will have been
duly obtained, taken, given or made on or prior to the Phase I Closing and
are, or on the Phase I 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, and (B) described on Part B of 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 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 (1) the Acquisitions, the Reorganization and the Facilities and the
other transactions contemplated hereby or thereby to occur on or prior to
the Phase I Closing Date have or will have expired prior to the Phase I
Closing Date and (2) each aspect of the Transaction and the other
transactions contemplated hereby and thereby have or will have
<PAGE>
108
expired on or prior to the Phase II Closing Date, in the case of each of
subclauses (1) and (2) of this Section 4.01(d), without any action having
been taken by any competent authority restraining, preventing or imposing
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
<PAGE>
109
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 most recently
completed consolidated balance sheet of IFE and its Subsidiaries prior to
the Phase II Closing Date 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 the most recently completed fiscal quarter of IFE prior to the
Phase II Closing Date 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 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 Consolidated pro forma 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 Consolidated pro forma financial
condition of Fox Kids and its Subsidiaries as at such date and the
Consolidated pro forma 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 Consolidated forecasted balance sheets, statements of
operation and cash flow statements of Fox Kids and its Subsidiaries
delivered to the Lenders pursuant to Section 3.01(h)(xvi)(E) 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
<PAGE>
110
Borrowers' reasonable estimate 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 shall have 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 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 not misleading, in light of the circumstances in which any such
statements were made.
(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 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.
<PAGE>
111
(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 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, 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"
<PAGE>
112
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 is, individually and together with its
Subsidiaries, Solvent.
(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, 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
<PAGE>
113
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 and as of the Phase II
Closing Date, 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 Equity Investors is a member of the "controlled
group of corporations" (as defined in Treasury Regulations 1.414(b) and
1.414(c)) 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 either of the foregoing cases, 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
<PAGE>
114
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 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
<PAGE>
115
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 of (i) as of the date of this Agreement, each Open Year of
each of the Phase I Loan Parties and each of their respective Subsidiaries
and (ii) as of the Phase II Closing Date, each Open Year of each of the
Loan Parties and each of their respective Subsidiaries. There are no
adjustments to (A) 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 and (B) 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.
(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
<PAGE>
116
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, exploitation or disposition and/or to collect or otherwise
receive (or have credited to its account) any receivables from such
distribution, exhibition, exploitation or disposition of any item of
Product.
(kk) Set forth on Schedule 4.01(kk) hereto is a complete and
accurate list (i) as of the date of this Agreement, of all of the FCN
Holding/Saban Surviving Indebtedness, showing, as of such date, each of the
Phase I 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 and (ii) as of the Phase II Closing Date, 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 (i) as of the date of this Agreement, of all of
the real property owned by any of the Phase I 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 and
(ii) as of the Phase II Closing Date 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)
<PAGE>
117
and each of their respective Subsidiaries has good, marketable and
insurable fee simple title to such real property, 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 (i) as of the date of this
Agreement, of all of the leases of real property under which any of the
Phase I 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 and
(ii) as of the Phase II Closing Date 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 lease
referred to in the immediately preceding sentence is, to the best knowledge
of each of the Borrowers, the legal, valid and binding 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 (i) as of the date of this Agreement, of all of the
Investments (other than Cash Equivalents and cash maintained in the
Collateral Accounts) held by any of the Phase I 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 and (ii) as of the Phase II Closing Date, of all of the Investments
(other than Cash Equivalents and cash maintained in the Collateral
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 (i) as of the date of this Agreement, 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 Phase I
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, and (ii)
as of the Phase II Closing Date and as of the date of any amendment or
supplement to Schedule 4.01(nn) hereto (whether pursuant to Section 5.03(f)
or 5.03(r) 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 (i) as of the date of this Agreement, of all of the Product Laboratories
employed or engaged by any of the Phase I
<PAGE>
118
Loan Parties (other than the Equity Investors), showing, as of such date, the
name and address thereof, the items of Product with Preprint Materials deposited
or to be deposited therewith and the expiration date of the applicable Phase I
Loan Party's employment or engagement thereof, and (ii) as of the Phase II
Closing Date and as of the date of any amendment or supplement to Schedule
4.01(oo) hereto (whether pursuant to Section 5.03(f) or otherwise), of all of
the Product Laboratories employed or engaged by any of the Loan Parties (other
than the Equity Investors), showing, as of such date, the name and address
thereof, the items of Product with Preprint Materials deposited or to be
deposited therewith and the expiration date of the applicable Loan Party's
employment or engagement thereof.
(pp) Set forth on Schedule 4.01(pp) hereto is a complete and
accurate list (i) as of the date of this Agreement, of all of the items of
Product (including, without limitation, all of the Special Assets) of each
of the Phase I 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 Collateral), showing, as of such date, the
nature and title thereof and, to the extent applicable, the license period
therefor and (ii) as of the Phase II Closing Date 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
Collateral), showing, as of such date, the nature and title thereof and, to
the extent applicable, the license period therefor.
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
<PAGE>
119
execution, delivery, recordation, filing or performance by any of the
Borrowers or any of their respective Subsidiaries of any of the Loan
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 (1) prior to the Phase II Closing Date, for the
Governmental Authorizations, and the consents, approvals, authorizations,
notices, filings and other actions, described on Part B of Schedule 4.01(d)
hereto as being required to be duly obtained, taken, given or made on or
prior to the Phase II Closing and (2) 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 from time to
time, 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 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 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
<PAGE>
120
(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), (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), (iii) in such amounts
and with such deductibles, (iv) covering such casualties and contingencies
and (v) 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.
(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
<PAGE>
121
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 requisite partners or members pursuant to its Constitutive Documents,
as applicable) 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 property subject to (or to be subject to)
any of the Mortgages following:
(i) the acquisition or proposed acquisition of such real
property interest (whether fee or leasehold);
<PAGE>
122
(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
properties of any of the Borrowers or any of their respective Subsidiaries
subject to the Mortgages and 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 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 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 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 Borrowers or any of their
respective Subsidiaries 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
<PAGE>
123
the foregoing provisions of this Section 5.01(j), cause each of its
Subsidiaries to do so.
(k) Performance of Transaction Documents. (i) Perform and
------------------------------------
observe all of the terms and provisions of each of the Transaction
Documents to be performed or observed by it, maintain each such Transaction
Document in full force and effect and enforce each such Transaction
Document in accordance with its terms, in each case except to such extent
as, either individually or in the aggregate, could not 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 Transaction Document
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 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 Acquisitions, the Reorganization
and 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 the Borrowers and their respective
Subsidiaries to one or more employees thereof, in each case to the
extent otherwise permitted under Section 5.02(f); and
<PAGE>
124
(vi) the declaration and payment of dividends and the making
of distributions, and the issuance of Equity Interests in Fox Kids or
any of its Subsidiaries, to the extent otherwise expressly permitted
under Section 5.02(g)(i)(A), 5.02(g)(i)(B), 5.02(g)(i)(E), 5.02(g)(ii)
or 5.02(g)(iii).
(m) Cash Collateral Accounts. (i) Maintain each of the Cash
------------------------
Collateral Accounts with Citibank and maintain, and cause each of the
Restricted Subsidiaries to maintain, each of its Blocked Accounts and its
Disbursement Accounts with Citibank or one or more other banks selected by
one of the Borrowers or the Restricted Subsidiaries and reasonably
acceptable to the Administrative Agent that have accepted the assignment of
such accounts to the Administrative Agent pursuant to the terms of the
Security Agreement and the respective Blocked Account Letters and
Disbursement Letters referred to therein; (ii) 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 one of the Cash Collateral Accounts, 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 13(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 the applicable Cash Collateral Account
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
(iii) 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 among
Fox Kids and the Lenders and in effect on the Phase I Closing Date are
acceptable to the Lenders.
(n) Product Laboratories. (i) Instruct, and cause each of the
--------------------
Restricted Subsidiaries to instruct, all of the Product Laboratories in
which any of the Preprint Materials of or pertaining to any item of Product
are deposited by or on behalf of any of the Borrowers or any of the
Restricted Subsidiaries, in each case pursuant to a Product Laboratory
Access Letter with such Product Laboratory, to allow, at any time and from
time to time 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 Administrative
Agent or its designee access to all such Preprint Materials to the extent
necessary to permit the Administrative Agent or any such designee, at its
sole election, to exhibit, exploit, distribute or dispose of, or to
complete the exhibition, exploitation, distribution or disposition of, any
items of Product, 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, with respect to the Preprint Materials that it
intends to so deposit, (A) a
<PAGE>
125
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 and identifies in reasonable detail the items of
Product with Preprint Materials that are to be deposited therewith and the
expiration date of such Borrower's or such Restricted Subsidiary's
employment or engagement thereof and (B) a Product Laboratory Access
Letter, duly executed by the Borrower or the Restricted Subsidiary that
intends to so deposit such Preprint Materials and by such Product
Laboratory or such other film laboratory or video duplication facility, for
acceptance by the Administrative Agent.
(o) Financing Statements, Search Reports, Etc. (i) As promptly
-----------------------------------------
as practicable after the Phase I Closing Date, furnish to the
Administrative Agent:
(A) acknowledgment copies or stamped receipt copies of all of
the termination statements or the equivalent thereof referred to in
Section 3.01(h)(viii)(D) and of all of the financing statements or the
equivalent thereof referred to in Sections 3.01(h)(viii)(E) and
3.01(h)(x)(D);
(B) completed requests for information listing the financing
statements referred to in subclause (i)(A) of this Section 5.01(o) and
all of the other effective 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; and
(C) evidence of the completion of all recordings and other
filings of all of the IP Collateral Assignments--Short Form referred
to in Section 3.01(h)(viii)(F); and
(ii) 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 termination statements or the equivalent thereof referred to in
Section 3.02(j)(ix)(D) and of all of the financing statements or the
equivalent thereof referred to in Section 3.02(j)(ix)(E);
(B) completed requests for information listing the financing
statements referred to in subclause (ii)(A) of this Section 5.01(o)
and all of the other effective financing statements filed in the
jurisdictions referred to in subclause (ii)(A) of this Section 5.01(o)
that name the Surviving Corporation or any of the Phase II Loan
Parties as debtor or transferor, together with copies of such other
financing statements;
(C) evidence of the completion of all recordings and other
filings of the IP Collateral Assignments--Short Form referred to in
Section 3.02(j)(ix)(F); and
<PAGE>
126
(D) evidence that counterparts of the Virginia Mortgage have
been duly recorded in all filing or recording offices required
pursuant to Section 3.02(j)(xii)(A), and that all of the filing and
recording taxes and fees related thereto have been paid in full.
(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, 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 unto 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
<PAGE>
127
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)
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, surveys and title,
engineering, soils and other reports satisfying the criteria set forth
in Section 3.02(j)(xii)(C) or 3.02(j)(xii)(E), as the case may be, for
each item of real property which is to be subject to a mortgage
pursuant to subclause (C) of this Section 5.01(q), Mortgage Policies
for each such item of real property and environmental site assessment
reports satisfying the criteria set forth in Section 3.02(j)(xiii);
(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
<PAGE>
128
(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 obtaining 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) 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 or, solely
in the case of the Surviving Corporation and its Subsidiaries, on the
Phase II Closing Date and described on Schedule 5.02(a) hereto;
<PAGE>
129
(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 (other than any of the other Borrowers) or any of their
respective Subsidiaries, or becomes a Subsidiary of any of the
Borrowers, in accordance
<PAGE>
130
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 the property and assets subject to such lease and such deposit or
such letter of credit, 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 and 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, distribution or disposition of the related
items of Product by any of the Borrowers or any of their respective
Subsidiaries or by
<PAGE>
131
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 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 all or any 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 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 each case, the "LICENSED RIGHTS") 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 Licensed Rights in such item of Product 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 Licensed Rights with respect
to such Lien; 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) 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
<PAGE>
132
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,
(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 Series A
Preferred Stock, and the shares of Series A Preferred 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 (A) such Indebtedness has a final
maturity date at least one year after the scheduled Termination
Date, (B) 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, (C) such
Indebtedness shall not be guaranteed or otherwise supported by
any of the other Loan Parties or any of their respective
Subsidiaries, (D) 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
<PAGE>
133
Documents and (E) 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) that is incurred at any time and from time
to time after the Phase II Closing Date 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), $5,000,000 at any time outstanding,
(C) Capitalized Leases entered into at any time and from time
to time after the Phase II Closing Date the Indebtedness in
respect of which, when aggregated with the principal amount of
all Indebtedness incurred under subclause (iii)(B) of this
Section 5.02(b), does not exceed $5,000,000 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
<PAGE>
134
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 such items 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 the
Borrowers and 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 is merged into or consolidated with any of the
Subsidiaries of Fox Kids (other than any of the other Borrowers),
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), (1) if the Investment Grade Performance Test is not
satisfied on the date on which any such Indebtedness is incurred,
$5,000,000 at any time outstanding and (2) if the Investment
Grade Performance Test is satisfied on the date on which any such
Indebtedness is incurred, $25,000,000 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,
<PAGE>
135
(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, when aggregated with all of
the Indebtedness incurred under subclause (iii)(H) of this
Section 5.02(b) and including the total liquidation preference of
all the outstanding shares of Permitted Preferred Stock issued
pursuant to Section 5.02(g)(i)(F), (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 final maturity date
or mandatory 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) 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 a promissory note in substantially the form of
Exhibit I hereto and shall be pledged under the terms of the
Collateral Documents to the Administrative Agent, on behalf of
the Secured Parties,
<PAGE>
136
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 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 (A) 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, (B) the direct and contingent obligors therefor
shall not be changed as a result of or in connection with such
extension, refunding, replacement or refinancing, (C) such
extended, refunding or refinancing Indebtedness shall not mature
prior to the earlier of (1) the stated maturity date or mandatory
redemption date of such extended, refunding or refinancing
Indebtedness and (2) one year after the scheduled Termination
Date, (D) 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, (E) 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 (F) 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
<PAGE>
137
Capitalized Leases) 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 for 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);
(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 with
which such Subsidiary is merging or consolidating 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 provided further that the Person with which such Subsidiary is
merging or consolidating 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
<PAGE>
138
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.
(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)
<PAGE>
139
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 Subsidiary 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 at any time; 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);
(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 Phase II Closing Date at any time and from time
to time prior to March 31, 1998; provided that:
(A) the gross proceeds received from any such sale, transfer
or other disposition shall be at least equal to the product of
(1) 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 (2) the number of
shares of Flextech Common Stock that are being sold, transferred
or otherwise disposed of on such date;
(B) all of the consideration received from any such sale,
transfer or other disposition shall be in cash;
<PAGE>
140
(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 accrued interest on the TNCL Group 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
(but not less than all) of their Equity Interests in, or all (but not
less than all) of 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;
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 90% 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; 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
<PAGE>
141
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 at any time; 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;
(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 or,
solely in the case of the Surviving Corporation and its Subsidiaries,
on the Phase II Closing Date 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 that
constitute Indebtedness incurred under Section 5.02(b)(ii) at such
time; provided that all such interest rate Hedge Agreements shall be
nonspeculative
<PAGE>
142
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 and (D) 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 sum of the
aggregate principal amount of all such loans and advances outstanding
on the date of this Agreement and (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 (other than Fox Kids) and
their Subsidiaries not otherwise permitted under this Section 5.02(f)
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), (A) if the Investment Grade Performance
Test is not satisfied on the date on which any such Investment is
made, $5,000,000 at any time outstanding and (B) if the Investment
Grade Performance Test is satisfied on the date on which any such
Investment is made, $25,000,000 at any time outstanding, provided
that, with respect to any such Investment made pursuant to this
<PAGE>
143
clause (ix):
(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
Restricted 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);
(4) 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); and
(5) (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 thereto prior to making such
Investment.
(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
<PAGE>
144
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:
(i) Fox Kids may:
(A) issue the shares of Series A Preferred Stock required to
consummate the Liberty IFE Contribution,
(B) 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,
(C) 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)(C) shall be paid to the holders of the Series A
Preferred Stock within 30 days of the date of declaration
thereof,
(D) 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 to the Administrative Agent, on
behalf of the Secured Parties, promptly following the issuance
thereof,
(E) 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,
<PAGE>
145
(F) issue and sell shares of the Permitted Preferred Stock to
the extent that the Indebtedness arising from such issuance and
sale is permitted to be incurred pursuant to Section
5.02(b)(iii)(I),
(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 stockholders, and
purchase, redeem, retire, defease or otherwise acquire for cash
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 accrued 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
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 under Section 5.02(b)(i)(C);
<PAGE>
146
(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 its outstanding
Equity Interests, in each case to the extent otherwise expressly
permitted under subclause (i)(C) or (i)(G) of this Section 5.02(g) and
(5) to pay accrued 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 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 accrued interest on the TNCL Group
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); and
(v) 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:
<PAGE>
147
(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.
(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 accrued
interest on the TNCL Group 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
<PAGE>
148
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 accrued 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 Kids, in
form and substance reasonably satisfactory to the 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);
(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 or,
solely in the case of the Surviving Corporation and its Subsidiaries,
on the Phase II Closing Date, (B) any
<PAGE>
149
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, 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 or,
solely in the case of the Surviving Corporation and its Subsidiaries,
on the Phase II Closing Date and
<PAGE>
150
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 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,
<PAGE>
151
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, 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 a Foreign Corporation, 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 Foreign Corporation 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 a Foreign Corporation,
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 66% of the Equity Interests in such
New Subsidiary entitled to vote (within the meaning of Treasury
Regulation 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 such New Subsidiary 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
<PAGE>
152
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 the owners of all 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 each such Person, 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 only Fox Kids and its direct Subsidiaries
at any time shall be the 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 no longer 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, (i) its Constitutive Documents, except in the
case of the bylaws (or other similar organizational documents) of Fox Kids
or any such Subsidiary, where such amendment, 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 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 GAAP or by
applicable Requirements of Law or (ii) its Fiscal Year.
(o) Amendments, Etc. of Transaction Documents. Cancel or
-----------------------------------------
terminate any Transaction Document or consent to or accept any cancellation
or termination thereof, amend,
<PAGE>
153
modify or change in any manner any term or condition of any Transaction
Document or give any consent, waiver or approval thereunder, waive any
default under or any breach of any term or condition of any Transaction
Document, agree in any manner to any other amendment, modification or
change of any term or condition of any Transaction Document, or take any
other action in connection with any Transaction Document 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 I Closing
Date without the prior written consent of all of the Lenders and (ii) any
Section 14.1 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 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 and cash flows,
the corresponding figures for the corresponding period in the immediately
preceding Fiscal Year,
<PAGE>
154
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 sheets 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 and 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 GAAP.
(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 and
(in the case of any such financial statements delivered to the Lenders
pursuant to Section 5.03(c)(ii)) consolidating financial statements
delivered with such certificate fairly present the Consolidated and
(in the case of any such financial statements delivered to the Lenders
pursuant to Section
<PAGE>
155
5.03(c)(ii)) consolidating 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 and (in the case of any
such financial statements delivered to the Lenders pursuant to Section
5.03(c)(ii)) consolidating 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) 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 and
(in the case of any such financial statements delivered to the Lenders
pursuant to Section 5.03(c)(ii)) consolidating 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;
(iii) 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;
(iv) 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
(v) 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 GAAP 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 of, or compliance with, Section 5.02(g)(i)(G),
5.02(h)(i)(G) or 5.04, conforming such financial statements to GAAP.
(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(h)(xvi)(E) 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 3.01(h)(xxii), 3.02(j)(xxiii), 4.01(b), 4.01(d), 4.01(x),
4.01(ee),
<PAGE>
156
4.01(ff), 4.01(gg), 4.01(kk), 4.01(mm), 5.02(a) and 5.02(j) hereto, (ii)
Schedules I, II, VII, VIII and IX 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 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 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
<PAGE>
157
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.
(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) 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
<PAGE>
158
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.
(n) 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
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 Material
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 such Loan Party's or
such Subsidiary's response thereto.
(o) 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 and co-insurance
<PAGE>
159
requirements and expiration dates thereof and containing such additional
information as any of the Lenders, through the Administrative Agent, may
reasonably request.
(p) Product Laboratories. Promptly and in any event at least 30
--------------------
days prior to depositing any Preprint Materials of, or pertaining to, any
item of Product with any Product Laboratory or any other film laboratory
and video duplication facility that is not party to a Product Laboratory
Access Letter at such time which already covers such Preprint Materials,
notice of the name and address of such Product Laboratory or such other
film laboratory and video duplication facility and a copy of the Product
Laboratory Access Letter executed and delivered thereby and by the
applicable Borrower or Restricted Subsidiary.
(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 twelve-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:
MEASUREMENT PERIOD
ENDING IN RATIO
-------------------- ------
December 1997 7.95:1
March 1998 7.95:1
June 1998 7.95:1
September 1998 7.95:1
December 1998 7.50:1
<PAGE>
160
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
(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:
MEASUREMENT PERIOD
ENDING IN RATIO
-------------------- ------
December 1997 1.10:1
March 1998 1.10:1
June 1998 1.10:1
September 1998 1.05:1
December 1998 1.05:1
March 1999 1.05:1
June 1999 1.05:1
September 1999 and 1.10:1
thereafter
<PAGE>
161
(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:
MEASUREMENT PERIOD
ENDING IN RATIO
-------------------- ------
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
(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:
<PAGE>
162
FISCAL QUARTER
ENDING IN AMOUNT
-------------------- ------------
December 1997 $350,000,000
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 350,000,000
thereafter
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 Equity Interests in each of the other
Borrowers;
(ii) the performance of its Obligations under each of the Loan
Documents and the
<PAGE>
163
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.
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
<PAGE>
164
Borrower that are relevant under such laws, 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 Subsidiaries under the Guarantee and, in the case of
Subsidiaries of Fox Kids, 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 maximum extent permitted by
applicable law, such amounts to each Subsidiary 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.
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;
<PAGE>
165
(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
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
<PAGE>
166
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 by nonjudicial sale, and such Borrower hereby waives any defense to
the recovery by the Administrative Agent 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
<PAGE>
167
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
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
<PAGE>
168
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 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(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, 8 or 11(c) or
any of Sections 12 through 17 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 15 consecutive 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 at the time of such failure, 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 at the time of such other event or condition, and
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
<PAGE>
169
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 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
(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 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 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, 3.02, 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
<PAGE>
170
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, 3.02, 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 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) the Surviving Corporation and its Subsidiaries shall be
unable to transmit programming for more than ten consecutive days as a
result of the loss of all of its transponders and the inability of the
Surviving Corporation or such Subsidiary to arrange for the use of suitable
substitute transponders; or
(n) (i) NPAL, together with its consolidated subsidiaries, shall
own less than 50%
<PAGE>
171
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 their Fair Market Value, 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 any notice of any
kind, all of which are hereby expressly waived by each of the Borrowers.
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
<PAGE>
172
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 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
<PAGE>
173
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 and its 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 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
<PAGE>
174
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 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
<PAGE>
175
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 financing statements, or amendments thereto, such
amendments or supplements to the Mortgages, 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 financing statements, or amendments thereto, such amendments or supplements
to the Mortgages, 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
3.02 or, in the case of the initial Borrowing under any of the
Facilities, Section 3.03;
(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;
(iv) release all or substantially all of the Collateral in
any transaction or any series of related transactions;
<PAGE>
176
(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 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), of 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
(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
<PAGE>
177
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, or 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 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 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.
<PAGE>
178
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.
(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
<PAGE>
179
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 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
<PAGE>
180
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 their 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
their 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 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 agree 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.
<PAGE>
181
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 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
<PAGE>
182
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 demanded by Fox Kids (following (i) a demand by such Lender
for the payment of additional 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
<PAGE>
183
Facilities as of the date of such proposed amendment, waiver or consent
or the date of 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 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);
(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
<PAGE>
184
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 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 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;
<PAGE>
185
(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 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;
<PAGE>
186
(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 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
<PAGE>
187
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.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
188
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
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS, ANY DOCUMENTS DELIVERED PURSUANT TO THE LOAN 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
Name:
Title:
FCN HOLDING, INC. CORPORATION
By
Name:
Title:
SABAN ENTERTAINMENT, INC.
By
Name:
Title:
THE ADMINISTRATIVE AGENT
CITICORP USA, INC.
By
Name:
Title:
THE ARRANGER
CITICORP SECURITIES, INC.
By
Name:
Title:
THE INITIAL LENDERS
CITICORP USA, INC.
By
Name:
Title:
<PAGE>
EXHIBIT 2
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 31st day of July, 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 (as hereinafter defined).
WHEREAS, Lender has agreed to loan to Borrower, and Borrower has agreed to
borrow from Lender, $104,573,000, 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 - July 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 or notes 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 One Hundred Four Million Five Hundred Seventy Three Thousand
Dollars ($104,573,000) (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 August
---------------------
1, 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 80/100 percent (11.80%)
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 Notes 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 and 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, for the account of the
Senior Lenders, 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 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 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 Lender
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 and assets 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, 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
agreement under which any of the Senior Obligations is outstanding;
(B) sell, exchange, release, not perfect and otherwise deal with any
property or assets 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:
Fox Broadcasting Company
10201 West Pico Boulevard
Los Angeles, CA 90035
Attention: Chase Carey
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:
Citcorp 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:
-------------------------------
Name:
-------------------------
Title:
------------------------
Lender: FOX BROADCASTING COMPANY
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Senior Agent: CITICORP USA, INC.
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
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 JULY 31, 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
$104,573,000 July 31, 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 Fox Broadcasting Company, a
Delaware corporation (the "Lender"), having an office at c/o Fox Broadcasting
Company, 10201 West Pico Boulevard, Los Angeles, CA 90035, or registered
assigns, in lawful money of the United States, by wire transfer in immediately
available federal funds, the principal amount of One Hundred Four Million Five
Hundred Seventy Three Thousand Dollars ($104,573,000), loaned by Lender to
Borrower pursuant to the Subordinated Note Agreement dated July 31, 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
22
<PAGE>
(including, without limitation, the Loan Documents), are hereby made a part of
this Note and are 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:_______________________________________________
Name:
Title:
23
<PAGE>
Schedule A
----------
Payments Unpaid Name of
--------------------- Principal Person
Current Balance of Making
Date Amount Principal Interest Note Notation
- ---- ------ --------- -------- ----------- --------
<PAGE>
EXHIBIT 3
Fox Kids Worldwide, Inc.
10960 Wilshire Boulevard
Los Angeles, CA 90024
August 1, 1997
News America Holdings Incorporated
1211 Avenue of the Americas
New York, NY 10036
Citicorp USA, Inc.
399 Park Avenue
New York, NY 10043
Ladies and Gentlemen:
Reference is hereby made to the Subordinated Note Agreement, dated as
of July 31, 1997 (the "FBC Note Agreement"), by and among Fox Broadcasting
Company (as Lender), Fox Kids Worldwide, Inc. (as Borrower) and Citicorp USA,
Inc., as administrative agent under the Senior Loan Agreement (as such term is
defined in the FBC Note Agreement). A copy of the FBC Note Agreement is annexed
hereto as Exhibit A.
This letter confirms our agreement to enter into a Subordinated Note
Agreement (the "NAHI Note Agreement"), upon substantially the same terms and
conditions as the FBC Note Agreement, except for the following: (i) News
America Holdings Incorporated will be the lender under the NAHI Note Agreement,
(ii) the interest rate under the NAHI Note Agreement will be a rate that,
together with the rate set forth in the FBC Note Agreement, results in a blended
rate of 11.70% per annum and (iii) the principal amount of the NAHI Note
Agreement will be an amount not to exceed $300,000,000. The NAHI Note Agreement
will be entered into on a date no later than the date of the consummation of the
merger of Fox Kids Merger Corporation with and into International Family
Entertainment, Inc.
<PAGE>
Please signify your agreement with the foregoing by signing a copy of
this letter in the space indicated below.
Very truly yours,
FOX KIDS WORLDWIDE, INC.
By:
---------------------------
Name:
Title:
ACCEPTED AND AGREED TO
AS OF THE DATE ABOVE:
NEWS AMERICA HOLDINGS INCORPORATED
By:
---------------------------
Name:
Title:
CITICORP USA, INC.
By:
---------------------------
Name:
Title:
<PAGE>
EXHIBIT 4
FIRST AMENDMENT TO THE CONTRIBUTION AND EXCHANGE AGREEMENT
FIRST AMENDMENT (the "Amendment"), dated as of August 1, 1997, by and among
Liberty Media Corporation, Liberty IFE, Inc. and Fox Kids Worldwide, Inc.
RECITALS
WHEREAS, the parties hereto are parties to that certain Contribution and
Exchange Agreement, dated as of June 11, 1997 (the "Agreement"); and
WHEREAS, the parties hereto desire to make certain amendments to the
Agreement as hereinafter described;
NOW, THEREFORE, for good and valuable consideration, receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. All capitalized terms used herein which are defined in the Agreement
and not otherwise defined herein shall have the meanings set forth in the
Agreement.
2. The Agreement is hereby amended by revising Exhibit E (NPAL Certificate
of Amendment) in its entirety to read as set forth in Exhibit E attached hereto.
3. The Agreement is hereby amended by revising Exhibit F (Fox Kids
Certificate of Designations) in its entirety to read as set forth in Exhibit F
attached hereto.
4. Except as hereby amended, the Agreement shall be and continue in full
force and effect and is in all other respects ratified and confirmed.
<PAGE>
5. This Amendment shall be governed by, and construed in accordance with,
the laws of the State of New York, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law.
6. This Amendment may be executed by the parties hereto in separate
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first set forth above.
LIBERTY MEDIA CORPORATION
By:
----------------------
Name:
Title:
LIBERTY IFE, INC.
By:
----------------------
Name:
Title:
FOX KIDS WORLDWIDE, INC.
By:
----------------------
Name:
Title:
<PAGE>
EXHIBIT 4(E)
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
NEWS PUBLISHING AUSTRALIA LIMITED
NEWS PUBLISHING AUSTRALIA LIMITED, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"):
DOES HEREBY CERTIFY:
FIRST: The Certificate of Incorporation of the Corporation is hereby
amended by striking out Article "FOURTH" thereof and by substituting in lieu of
said Article the following new Article "FOURTH":
"FOURTH: The aggregate number of shares of stock which the
------
Corporation shall have the authority to issue is 502,500 shares of which
2,500 shares shall be designated Common Stock, par value $500.00 per share,
and 500,000 shares shall be designated Preferred Stock, par value $.001 per
share. The designations, voting powers, preferences and relative,
participating, optional and other special rights of the Preferred Stock,
and the qualifications, limitations and restrictions thereof, are as
follows:
1. Fractional Shares; Par Value. The Preferred Stock is issuable solely
in whole shares that shall entitle the holder thereof to exercise the
voting rights, to participate in the distributions and to have the benefit
of all other rights of holders of the Preferred Stock as set forth herein.
The par value of each share of Preferred Stock shall be $.001.
2. Definitions. As used herein, the following terms shall have the
respective meanings given thereto in the Sections indicated below:
<PAGE>
Defined in
Defined Term Section
------------ -------------
"Actual ADS Price" 8
"ADS's" 8
"Applicable Discount" 8
"Appraised Excess Amount" 7(a)
"Appraised Fair Market Values" 7(a)
"Appraised NPAL FMV" 7(a)
"Appraised TNCL U.S. FMV" 7(a)
"Board of Directors" 3(a)
"Business Day" 3(b)
"Compliance Information" 7(a)
"Discounted ADS Price" 8
"Dispute Notice " 7(a)
"Dividend Payment Date" 3(b)
"Event of Default" 8
"Exchange Agreement" 13
"Exchange Date" 13
"FKW" 3(b)
"FKW Preferred Stock" 3(b)
"Funding Agreement" 7(b)
"Junior Stock" 4
"Liquidation" 4
"Liquidation Price" 4
"Minimum Asset Balance" 7(a)
"Missed Redemption Date" 8(a)
"Notifying Holders" 7(a)
"NPAL Affiliate 7(c)
"NPAL Consolidated Group 7(a)
"NYSE" 8
"TNCL" 7(a)
"TNCL Consolidated Group" 7(a)
"TNCL Preferred Stock" 8
3. Dividends Rights.
(a) Holders of the outstanding shares of Preferred Stock shall be
entitled to receive, if, as and when declared by the Board of Directors of
the Corporation (the "Board of Directors"), cumulative dividends as set
forth in this Article FOURTH. Dividends shall be payable in cash on the
shares of Preferred Stock out of funds legally available therefor at a rate
per annum equal to 9.0% (subject to adjustment as provided below) of the
Liquidation Price, payable quarterly in arrears. If any quarterly dividend
is not declared and paid in full on a Dividend Payment Date (i) such
accrued and unpaid dividends will be added cumulatively to the Liquidation
Price and remain a part thereof until such dividends (together with all
other dividends accrued on such cumulated dividends) are declared and
2
<PAGE>
paid in full and, (ii) the dividend rate will increase to a rate per annum
equal to 11.5% of the Liquidation Price and continue at such rate until all
dividends that have been added cumulatively to and remain part of the
Liquidation Price (together with all other dividends accrued on such
cumulated dividends) are declared and paid in full. Notwithstanding the
foregoing, if a full quarterly dividend payment has not been declared and
paid on a Dividend Payment Date and immediately prior to such date the
dividend rate per annum is equal to 9.0% of the Liquidation Price (i.e.,
(i) no Events of Default were continuing as of such time and (ii) no
dividends had been added cumulatively to and remain part of the Liquidation
Price), then if such quarterly dividend, and all dividends accrued thereon
at the rate per annum of 9.0%, are declared and paid in full by no later
than the tenth day following the original Dividend Payment Date (or, if
such tenth day is not a Business Day, the immediately succeeding Business
Day), the dividend rate shall not, solely as a result of such failure to
pay dividends on the original Dividend Payment Date, increase to a rate per
annum equal to 11.5% of the Liquidation Price; provided, however, that if
such unpaid dividend and the dividends accrued thereon are not declared and
paid as aforesaid in full by such tenth day (or, if such tenth day is not a
Business Day, the immediately succeeding Business Day), then such accrued
and unpaid dividends shall be added cumulatively to the Liquidation Price
and the dividend rate shall increase to a rate of 11.5% per annum of the
Liquidation Price, in each case effective as of the original Dividend
Payment Date, and such increased dividend rate shall continue in effect
until all dividends that have been added to and remain a part of the
Liquidation Price (and all other dividends accrued on such cumulated
dividends) have been paid in full and no Events of Default shall have
occurred and be continuing.
(b) Accrued dividends on each share of Preferred Stock shall be
payable quarterly in arrears on the last day of each March, June, September
and December, or the immediately succeeding Business Day if such last day
is not a Business Day (each such payment date being hereinafter referred to
as a "Dividend Payment Date"), commencing on the first Dividend Payment
Date after the original issuance of the share of Preferred Stock. Each
such dividend shall be paid to the holders of record of shares of Preferred
Stock as they appear on the stock register of the Corporation on the record
date for payment of such dividend, which record date shall be a date, not
more than 45 days or less than 15 days preceding the payment date for such
dividend, as shall be fixed by the Board of Directors. Dividends on the
shares of Preferred Stock shall accrue as set forth herein on a daily basis
whether or not there are funds legally available for payment of such
dividends and whether or not such dividends are declared. In addition,
each share of Preferred Stock which is issued in exchange for a share of
Series A Preferred Stock, par value $.001 per share (the "FKW Preferred
Stock"), of Fox Kids Worldwide, Inc., a Delaware corporation ("FKW"),
shall, on the date of issuance, have accrued thereon an amount of dividends
equal to the amount of any accrued and unpaid dividends on such share of
FKW Preferred Stock as of the date of such issuance which had not been
added to the liquidation price of such FKW Preferred Stock. Dividends shall
be computed on the basis of a 365-day or 366-day year, as the case may be.
"Business Day" shall mean any day other than a Saturday, Sunday, or day on
which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
3
<PAGE>
(c) When dividends are not paid in full upon the shares of the
Preferred Stock, all dividends declared upon shares of the Preferred Stock
shall be declared pro rata so that the amount of dividends declared per
share on the shares of the Preferred Stock shall be the same for each share
of Preferred Stock.
(d) Accrued and unpaid dividends for any past quarterly dividend
period or periods that have been added to the Liquidation Price (including,
without limitation, those dividends referred to in clause (b) of the second
sentence of Section 4 below), together with all accrued and unpaid
dividends thereon, may be declared and paid at any time, without reference
to any Dividend Payment Date, to holders of record of the shares of
Preferred Stock on a date not more than 45 days or less than 15 days
preceding the payment date thereof as shall be fixed by the Board of
Directors. Any such accrued and unpaid dividends that have been added to
the Liquidation Price but are subsequently paid shall be subtracted from
the Liquidation Price upon the date of such payment.
4. Liquidation Preference. Upon any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary (a "Liquidation"),
the holders of shares of Preferred Stock shall be entitled to receive from
assets available for distribution to stockholders, before any payment or
distribution is made to holders of any class of capital stock of the
Corporation ranking junior to the Preferred Stock as to dividend rights,
rights of redemption or rights on Liquidation (the "Junior Stock"), an
amount in cash per share equal to the Liquidation Price of a share of
Preferred Stock as of the date of payment. As used in this Article FOURTH,
the "Liquidation Price" of any share of Preferred Stock as of any date will
be the sum of (a) $1,000, plus (b) an amount equal to all accrued and
unpaid dividends cumulatively added to and comprising part of the
liquidation price of any share of FKW Preferred Stock exchanged for such
share of Preferred Stock as of the date of issuance of such share of
Preferred Stock, plus (c) an amount equal to all unpaid dividends on such
share that have accrued and been added to the Liquidation Price and remain
a part thereof as of such date pursuant to Section 3(a) above, plus (d) for
purposes of determining the amount payable upon Liquidation or on any
redemption of such share (but not for purposes of calculating dividends),
an amount equal to all unpaid dividends accrued on the sum of the amounts
specified in clauses (a), (b) and (c) that have not been added to the
Liquidation Price during the period from the immediately preceding Dividend
Payment Date (or, if there has been no Dividend Payment Date, that are
accrued on the Preferred Stock as of the date of original issuance of such
Preferred Stock) to and including the date in question. If, upon
Liquidation, the amounts payable with respect to the liquidation preference
of the Preferred Stock are not paid in full, the holders of Preferred Stock
will share pro rata in the amounts payable and other property distributable
with respect to such Liquidation so that the per share amounts to which
holders of Preferred Stock are entitled will in all cases be the same.
After payment in full of the Liquidation Price per share of Preferred
Stock, the holders of such shares in their capacity as such shall not be
entitled to any further right or claim to any remaining assets of the
Corporation. The Corporation shall mail written notice of any Liquidation
to each record holder of Preferred Stock not less than 30 days prior to the
date on which such Liquidation shall occur or become effective; provided,
however, that in the case of any involuntary liquidation such notice shall
be given as soon as practicable. Neither a
4
<PAGE>
consolidation or merger of the Corporation with or into another
corporation, nor a merger of any other corporation with or into the
Corporation, nor the sale, transfer or lease of all or any part of the
Corporation's property, assets or business (other than in connection with a
winding up of its business) will be considered a Liquidation for purposes
of this Article FOURTH.
5. Redemption.
(a) On August 1, 2027, the Corporation shall redeem, out of funds
legally available therefor, all then outstanding shares of Preferred Stock,
if any, at a redemption price equal to the Liquidation Price thereof as of
the date of redemption, payable in cash.
(b) Each holder of Preferred Stock shall have the right, at such
holder's option and exercisable during the 30-day period commencing upon
August 2 of each of the years 2017 and 2022, to require redemption by the
Corporation of such holder's shares of Preferred Stock, in whole or in
part, at a redemption price (subject to adjustment as provided in Section 8
below) equal to the Liquidation Price per share thereof as of the date of
redemption of such shares, payable in cash. Holders may exercise such
right by giving written notice of such exercise during such 30-day period,
stating the number of shares of Preferred Stock to be redeemed, to the
Corporation at its principal office at c/o News America Publishing
Incorporated, 1211 Avenue of the Americas, New York, New York 10036,
Attention: Arthur M. Siskind, Esq., Senior Executive Vice President and
Group General Counsel of The News Corporation Limited, or such other
address as the Corporation shall designate by written notice to the holders
of the Preferred Stock. The Corporation shall redeem, out of funds legally
available therefor, the shares of Preferred Stock so requested to be
redeemed within twenty (20) Business Days following the expiration of such
30-day period. If the funds of the Corporation legally available for
redemption of shares of Preferred Stock are insufficient to redeem the
total number of shares required to be redeemed pursuant to this Section
5(b), those funds which are legally available for redemption of such shares
of Preferred Stock will be used to redeem, at the Liquidation Price per
share, the maximum possible number of such shares of Preferred Stock
ratably among the holders who have given timely notice of exercise of their
right to have shares of Preferred Stock redeemed under this Section 5(b).
At any time thereafter when additional funds of the Corporation are legally
available and not so restricted for such purpose, such funds will
immediately be used to redeem the shares of Preferred Stock the Corporation
failed to redeem, at the Liquidation Price per share as of the date of
actual redemption, until the balance of such shares of Preferred Stock are
redeemed.
(c) At any time after August 1, 2007, the Corporation, by resolution
of the Board of Directors, may redeem all, but not less than all, of the
shares of Preferred Stock at a redemption price (subject to adjustment as
provided in Section 8 below) equal to the Liquidation Price thereof as of
the date of redemption of such shares, payable in cash.
(d) Written notice of any redemption pursuant to Section 5(a) or 5(c)
shall be given by the Corporation to each record holder of the shares of
the Preferred Stock to be redeemed, not more than 60 nor less than 30 days
prior to such redemption date, to the
5
<PAGE>
respective addresses of such holders as the same shall appear on the stock
transfer records of the Corporation. Each notice shall state: (i) the
redemption date; (ii) the redemption price; (iii) the place or places where
certificates for such shares are to be surrendered for payment of the
redemption price; and (iv) that dividends on the shares to be redeemed will
cease to accrue on such redemption date unless the applicable redemption
price is not paid in full on such date. Failure to give such notice, or any
defect in such notice, to any holder of shares of Preferred Stock shall not
affect the validity of the proceedings for the redemption of any shares of
Preferred Stock, except as to the holders to whom the Corporation has
failed to give said notice as set forth above.
(e) If the notice of redemption with respect to shares of Preferred
Stock to be redeemed pursuant to this Section 5 shall have been timely
given as provided above in Section 5(b) or 5(d), and if on or before the
applicable date of redemption the Corporation shall have deposited with a
redemption agent for the Preferred Stock (or, if there is no redemption
agent, shall have set apart so as to be available for such purpose and only
such purpose) cash sufficient to pay in full the aggregate redemption price
for such shares of Preferred Stock on such date of redemption, then,
effective as of the close of business on such date of redemption, such
shares of Preferred Stock shall no longer be deemed outstanding,
notwithstanding that any certificate therefor shall not have been
surrendered for cancellation, dividends with respect to the shares so
called for redemption shall cease to accrue on such date of redemption and
all rights with respect to the shares so called for redemption shall
forthwith after such date cease and terminate, except the right of such
holders, upon the surrender of certificates evidencing the shares of
Preferred Stock so redeemed, to receive the cash in payment of the
redemption price therefor.
6. Ranking. The Preferred Stock will rank senior as to dividend rights,
rights of redemption and rights on Liquidation to all other classes and
series of capital stock of the Corporation authorized on the date of
issuance of the Preferred Stock. So long as any shares of Preferred Stock
are outstanding, the Corporation will not issue any shares of any class or
series of capital stock ranking senior to or pari passu with the Preferred
Stock as to dividend rights, rights of redemption or rights on Liquidation.
7. Certain Covenants.
(a) (i) For so long as any shares of Preferred Stock remain
outstanding, either (x) the Corporation, together with its
consolidated subsidiaries (collectively with the Corporation, the
"NPAL Consolidated Group"), shall own not less than 50% of the
fair market value of the total assets of The News Corporation
Limited, an Australian corporation (together with any successor
by merger) ("TNCL"), together with its consolidated subsidiaries
(the "TNCL Consolidated Group"), located in the United States as
of the date hereof and the proceeds of any disposition of any
such assets subsequent to August 1, 1997 or (y) the total assets
of the Corporation, its consolidated subsidiaries and its
investments accounted for by the equity method (collectively, the
"NPAL Group"), as determined on the basis of their fair market
value, shall at all times exceed the Liabilities of the NPAL
6
<PAGE>
Group by not less than US$2.5 billion (the "Minimum Asset
Balance"). Notwithstanding the foregoing and for so long as any
shares of FKW Preferred Stock or NPAL Preferred Stock are
outstanding, if at any time after August 1, 1997 TNCL shall own,
directly or indirectly, less than 50% of each outstanding class
or series of capital stock of the Corporation (other than the
Preferred Stock), or less than 50% of the voting power of all
outstanding shares of capital stock of the Corporation (other
than the Preferred Stock), then from and after such time NPAL
shall maintain not less than the Minimum Asset Balance.
(ii) The Board of Directors of the Corporation (or an authorized
committee thereof consisting of not less than two (2) directors)
shall determine in good faith, not less often than annually,
whether the covenant set forth in Section 7(a)(i) hereof is being
complied with by the Corporation. For the purposes of this
covenant, (i) the term "fair market value" of an asset (other
than cash) means the price at which a willing seller would sell,
and a willing buyer would buy, such asset in an arm's length
auction transaction, having full knowledge of the facts
(including any liabilities relating to such assets) and (ii) the
term "Liabilities" means, with respect to the Corporation and the
NPAL Group, all obligations for money borrowed, all obligations
evidenced by bonds, debentures or similar instruments, all
obligations upon which interest payments are customarily paid,
all obligations issued or assumed as the deferred purchase price
of property or services, all liabilities of others secured by any
lien or security interest on property owned or acquired by the
Corporation or the NPAL Group, all obligations required to be
accounted for as capital leases under Australian generally
accepted accounting principles, all guarantees (solely to the
extent that such guarantees would be required to be quantified
and set forth on a balance sheet of the relevant entity prepared
in accordance with Australian generally accepted accounting
principles), and the liquidation preference of all mandatorily
redeemable preferred stock of the Corporation and any of the
other entities in the NPAL Group. If at any time, but not more
often than once in any 12-month period, the holders of a
majority of the issued and outstanding shares of Preferred Stock
(the "Notifying Holders") notify the Corporation that they
dispute that the Corporation is in compliance with the covenant
set forth in Section 7(a)(i) hereof (a "Dispute Notice"), then
the Corporation shall provide to the Notifying Holders such
information ("Compliance Information") as the Corporation may, in
its sole discretion, deem sufficient to evidence the
Corporation's compliance with such covenant. If the Notifying
Holders do not withdraw their Dispute Notice within 10 Business
Days after giving such notice, then the Corporation shall
promptly (but in any event within 10 Business Days after the
expiration of such 10 Business Day period) appoint a nationally-
recognized investment bank designated by the Corporation, subject
to the consent of the Notifying Holders, which shall not be
unreasonably withheld; provided, however, that Merrill Lynch &
Co.
7
<PAGE>
and its affiliates shall in any event be an acceptable investment
bank for this purpose. The investment bank shall then determine,
at the election of the Corporation, either or both of (x) the
fair market value of the United States assets of the TNCL
Consolidated Group (the "Appraised TNCL U.S. FMV") and the fair
market value of the assets of the NPAL Consolidated Group (the
"Appraised NPAL FMV" and, together with the Appraised TNCL U.S.
FMV, the "Appraised Fair Market Values") and/or (y) the total
fair market value of the assets minus the Liabilities of the NPAL
Group (the "Appraised Excess Amount"). The Corporation shall, and
shall use its best efforts to cause TNCL to, cooperate with all
reasonable requests made by the investment bank for information
that is materially relevant to its determination; provided,
however, that the investment bank shall be required to execute a
confidentiality agreement in a customary form acceptable to the
Corporation and TNCL with respect to any such information. The
Corporation shall use reasonable efforts to cause its designated
investment bank to deliver its report setting forth the Appraised
Fair Market Values and/or the Appraised Excess Amount, as the
case may be, to the Notifying Holders and the Corporation within
thirty days of its selection.
(iii) Each determination of the Appraised Fair Market Values
and/or the Appraised Excess Amount, as the case may be, in
accordance with the appraisal procedures set forth in Section
7(a)(ii) hereof shall be final, binding and conclusive on the
holders of the Preferred Stock and the Corporation. The fees and
expenses of the investment bank in connection with any valuation
performed pursuant to Section 7(a)(ii) shall be paid by the
Corporation; provided, however, that if it can be reasonably
determined from the Compliance Information that the Corporation
is in compliance with the covenant set forth in Section 7(a)(i),
then the Notifying Holders shall be responsible, on a pro rata
basis, for such fees and expenses.
(b) For so long as any shares of Preferred Stock remain outstanding,
the Funding Agreement, dated as of June 11, 1997, among the Corporation,
TNCL and FKW (the "Funding Agreement") shall continue in full force and
effect and the Corporation shall not (i) fail to enforce all of its rights
under the Funding Agreement, (ii) waive, amend or modify or agree to waive,
amend or modify any provisions of the Funding Agreement, (iii) assign or
delegate, or permit TNCL to assign or delegate, any of its obligations or
duties under the Funding Agreement to any other person or entity or (iv)
assign or agree to assign, or permit FKW to assign or agree to assign, any
of its rights under the Funding Agreement to any other person or entity, in
each case without the prior approval of the holders of not less 66 2/3% of
the issued and outstanding shares of Preferred Stock.
(c) For so long as any shares of Preferred Stock are outstanding, no
dividend, whether in cash or property (other than a stock dividend paid in
shares of the same class or series of Junior Stock), shall be paid or
declared, nor shall any other distribution be made, on any Junior Stock,
nor shall any shares of Junior Stock be purchased, redeemed,
8
<PAGE>
or otherwise acquired for value by the Corporation or any person or entity
which, directly or indirectly, is controlled by the Corporation (a "NPAL
Affiliate"), unless (i) the holders of the Preferred Stock shall have been
paid all accrued dividends for all quarterly dividend periods ending on or
before the date on which any such dividend on Junior Stock, or such
purchase, redemption or other acquisition of such Junior Stock, is to
occur, (ii) no dividends shall have been cumulatively added to the
Liquidation Price or, if so added, such dividends, together with all
dividends accrued thereon, shall have been declared and paid and (iii) no
Events of Default shall have occurred and be continuing.
(d) For so long as Liberty or a Liberty Affiliate is an owner of
record of shares of Preferred Stock, the Corporation shall furnish to
Liberty, on each December 31, a certificate of a responsible officer of the
Corporation stating that during the preceding 12-month period ending on the
immediately preceding June 30 (or if no such certificate under this Section
7(d) or Section 6 of the Funding Agreement has been previously delivered,
during the period from the date hereof to June 30, 1998), the Corporation
has observed all of the covenants in this Section 7, and that such officer
has obtained no knowledge of any Event of Default except as specified in
such certificate. The Corporation shall, upon becoming aware of the
occurrence of any Event of Default, promptly notify the holders of the
Preferred Stock of such Event of Default and of their rights under Section
8. The Corporation shall also provide to Liberty any and all compliance
certificates that the Corporation receives from TNCL under the terms of the
Funding Agreement, promptly after the Corporation receives such
certificates.
8. Events of Default and Remedies. In addition to any other remedies the
holders of Preferred Stock may have, if any of the following events shall
occur:
(a) the Corporation shall fail to redeem any shares of Preferred Stock
required to be so redeemed under Section 5(a), (b) or (c) at the applicable
redemption price (whether or not there are funds legally available
therefor) and on the date fixed, or by the last day, if any, of the period
within which the Corporation is required to fix a date, for redemption (a
"Missed Redemption Date"); or
(b) the Corporation shall be in breach of any of the covenants set
forth under Section 7(a)(i), (a)(ii) or (a)(iii) (solely in any material
respect with respect to Section 7(a)(ii) and (a) (iii)), (b), (c) or (d)
hereof and such breach shall not have been cured within thirty (30) days of
the Corporation's first having actual knowledge of such breach (including
by notice from a holder of Preferred Stock); or
(c) if any issued and outstanding shares of FKW Preferred Stock are
owned or held other than by the Corporation, an Event of Default (as such
term is defined in the Certificate of Designations for the FKW Preferred
Stock) under the terms of the FKW Preferred Stock shall have occurred and
be continuing;
then, upon the occurrence of any of the events set forth in
clauses (a), (b) or (c) above (each, an "Event of Default") and at all
times thereafter until such time as such Event of Default has been cured in
full and no other Event of Default remains
9
<PAGE>
uncured, (i) the dividend rate applicable to the Preferred Stock shall
increase to a rate per annum equal to 11.5% of the Liquidation Price (if
not already at such dividend rate pursuant to Section 3 hereof) effective
upon (A) the Missed Redemption Date, (B) the expiration of the 30-day
period described in clause (b) above if the breach(es) of the covenant(s)
specified in clause (b) have not then been cured within such period or (C)
the occurrence of an Event of Default under the terms of the FKW Preferred
Stock, as the case may be, (ii) in the case of an Event of Default referred
to in clauses (b) or (c) above, each holder of Preferred Stock shall have
the right, at such holder's option, to require the redemption by the
Corporation, in whole or in part, of such holder's shares of Preferred
Stock (in accordance with the procedures set forth in Section 5(b) hereof),
(iii) if a holder exercises its right of redemption pursuant to the
immediately preceding clause (ii) or in the case of an Event of Default
under clause (a) above where the Corporation shall have failed to cure such
Event of Default within ten (10) days after the original date fixed for
redemption (or the last day, if any, of the period within which the
Corporation is required to fix a date for redemption), the redemption price
for the shares of Preferred Stock to be redeemed shall be (or shall be
increased to) the amount determined by dividing the Liquidation Price as of
the date of such redemption by the Discounted ADS Price and multiplying the
resulting quotient by the Actual ADS Price and (iv) the holders of a
majority of the outstanding shares of Preferred Stock shall have the right
to cause the Corporation to enforce the Corporation's rights under the
Funding Agreement and to direct the time, method and place of conducting
any remedy available to the Corporation thereunder. In the event the
Corporation breaches any of the provisions of Section 7(c) of this Article
FOURTH, or if any of the provisions of Section 7(c) of the Certificate of
Designations of the FKW Preferred Stock or Section 4 of the Funding
Agreement shall be breached, such breach shall be deemed cured at such time
as all accrued and unpaid dividends, if any, on the Preferred Stock that
has been cumulatively added to the Liquidation Price, together with all
other dividends accrued and unpaid on the Preferred Stock, shall have been
declared and paid in full to the holders of the Preferred Stock. For
greater certainty, if a holder of Preferred Stock exercises its right of
redemption pursuant to clause (ii) above, then the redemption price, as
adjusted pursuant to this Section 8, shall be payable by the Corporation
irrespective of any subsequent cure of the Event of Default(s) that
resulted in such right of redemption under clause (ii) above.
As used above, "Actual ADS Price" means the average for the ten (10)
trading days preceding the date of redemption of shares of Preferred Stock of
(i) the closing sale price, regular way, of the American Depositary Receipts
representing Preferred Limited Voting Ordinary Shares, par value A$.50 per share
("TNCL Preferred Stock"), of TNCL ("ADSs") on the New York Stock Exchange, Inc.
--------------------
(the "NYSE") or on the principal exchange on which such ADSs are traded, (ii) if
the primary trading market for the ADSs is not the NYSE or another exchange, the
last sale price of the ADSs on the Nasdaq National Market or (iii) if the ADSs
are not traded on the NYSE, another exchange or the Nasdaq National Market, then
the average of the bid and asked prices for the ADSs as furnished by any NYSE
member firm selected from time to time by the Board of Directors for such
purpose. "Discounted ADS Price" means the product of the Applicable Discount
times the lower of (x) the Actual ADS Price and (y) US$14.537 (the average of
the closing prices on the NYSE of the ADSs for the ten (10) trading days
preceding June 11, 1997), in either case appropriately adjusted to take into
account any stock dividend on
10
<PAGE>
the ADSs, or any subdivision, split, combination or reclassification of the ADSs
or the TNCL Preferred Stock or any change to the number of shares of TNCL
Preferred Stock underlying each ADS since June 11, 1997. If the TNCL Preferred
Stock is not outstanding during the period required for determining the "Actual
ADS Price," then "ADS" shall refer to the ordinary or preferred shares of TNCL
with the greatest liquidity in the public market.
"Applicable Discount" means the following percentages for the 365-366
day period preceding August 1 of each year indicated below:
Percentage Year
- ---------- -----
60% 1998
63% 1999
66% 2000
69% 2001
72% 2002
75% 2003
81.25% 2004
87.50% 2005
93.75% 2006
100% 2007 and
any year thereafter
9. Voting Rights. Subject to Section 10 below, the holders of Preferred
Stock shall, except as otherwise required by law, vote together with the
holders of common stock of the Corporation as one class on any matter
brought to the stockholders of the Corporation for a vote. In connection
with such rights to vote, each holder of Preferred Stock will have a
0.000181928 vote for each share of Preferred Stock held as of the
applicable record date.
10. Amendment. For so long as any shares of Preferred Stock remain
outstanding, the affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of Preferred Stock (excluding for these purposes any
shares held by the Corporation or any NPAL Affiliate), voting separately as
a class, shall be necessary before the Corporation may amend, modify or
eliminate the Certificate of Incorporation of the Corporation (including
any amendment, modification or elimination by means of a merger) in a
manner that would adversely affect the powers, preferences or rights of the
holders of the shares of Preferred Stock then outstanding. In the event of
a proposed merger or share exchange involving the Corporation (in which the
Corporation is not the surviving corporation) at a time when
11
<PAGE>
there are any outstanding shares of Preferred Stock, the Corporation, prior
to any such merger or share exchange, shall make appropriate provisions so
that the surviving corporation shall issue to the holders of the Preferred
Stock a series of preferred stock of such surviving corporation with
substantially identical designations, voting powers, preferences and
relative participating, optional and special rights as those contained in
this Article FOURTH.
11. Preemptive Rights. The holders of the Preferred Stock will not have
any preemptive right to subscribe for or purchase any shares of stock or
any other securities which may be issued by this Corporation.
12. Conversion. The Preferred Stock shall not be convertible into any
other capital stock or instrument of the Corporation.
13. Limited Issuance. Shares of Preferred Stock shall only be issued in
exchange, on a one-for-one basis, for shares of FKW Preferred Stock. Such
exchange shall be effected in accordance with the terms of that certain
Exchange Agreement, dated June 11, 1997 (as the same may be amended in
accordance with its terms, the "Exchange Agreement"), among the
Corporation, Liberty Media Corporation, a Delaware corporation, and Liberty
IFE, Inc., a Delaware corporation, which was entered into for the benefit
of all holders from time to time of shares of FKW Preferred Stock. The
Corporation, upon written request by a record holder of shares of Preferred
Stock to the Corporation at its principal executive offices, shall provide
to such holder, at the Corporation's expense, a copy of the Exchange
Agreement.
14. Exclusion of Other Rights. Except as may otherwise be required by
law, the shares of Preferred Stock shall not have any designations,
preferences, limitations or relative rights, other than those specifically
set forth in this Article FOURTH (as this Article FOURTH may, subject to
Section 10, be amended from time to time).
15. Status of Acquired Shares. Shares of Preferred Stock redeemed by the
Corporation pursuant to Section 5 or otherwise acquired by the Corporation
will be restored to the status of authorized but unissued shares of
preferred stock, without designation as to class.
16. Legending of Preferred Stock. Each certificate representing shares of
Preferred Stock shall bear a legend in substantially the form set forth
below:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR UNLESS THE
TRANSACTION
12
<PAGE>
IS EXEMPT FROM OR NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT."
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND
CONDITIONS OF THE PREFERRED STOCK SET FORTH IN ARTICLE FOURTH OF THE
CERTIFICATE OF INCORPORATION OF THE COMPANY, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME, A COPY OF WHICH CERTIFICATE OF
INCORPORATION IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE
COMPANY."
17. Notices. Any notice, request, consent, demand, election or other
communication shall be deemed to have been duly given if personally
delivered or sent by registered or certified mail, return receipt
requested, by Federal Express, Express Mail or similar overnight delivery
service or by facsimile transmission confirmed by letter, and will be
deemed given, unless earlier received, (a) if sent by certified or
registered mail, return receipt requested, five (5) calendar days after
being deposited in the United States mail, postage prepaid; (b) if sent by
overnight delivery service for next business day delivery, the next
business day after being entrusted to such service, with delivery charges
prepaid or charged to the sender's account; (c) if sent by facsimile
transmission, on the date sent; provided confirmatory notice is sent by any
other method specified in clause (a), (b), or (d); and (d) if delivered by
hand, on the date of delivery.
18. Severability of Provisions. Whenever possible, each provision hereof
shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating or
otherwise adversely affecting the remaining provisions hereof.
19. Headings. The headings of the various sections and subsections hereof
are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
20. Definition of "Outstanding." Shares of Preferred Stock that are owned
by the Corporation as treasury shares or by any NPAL Affiliate or any
company controlling, or under common control with, the Corporation shall
not be deemed outstanding for purposes of this Article FOURTH."
SECOND: In accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware, the Certificate of Amendment has been
duly adopted and approved by all of the directors and all of the stockholders of
the Corporation by duly executed unanimous written consents.
13
<PAGE>
IN WITNESS WHEREOF, News Publishing Australia Limited has caused this
Certificate of Amendment to be duly executed on the 30th day of July, 1997.
NEWS PUBLISHING AUSTRALIA LIMITED
By:
------------------------------
Paula M. Wardynski
Vice President
14
<PAGE>
EXHIBIT 4(F)
CERTIFICATE OF DESIGNATIONS
OF THE SERIES A PREFERRED STOCK
(PAR VALUE $.001 PER SHARE)
OF
FOX KIDS WORLDWIDE, INC.
------------------------------------------------
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
------------------------------------------------
FOX KIDS WORLDWIDE, INC., a corporation organized under the laws of the
State of Delaware (the "Corporation"), certifies that, pursuant to the authority
contained in its Certificate of Incorporation (the "Certificate of
Incorporation"), and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, its Board of Directors (the
"Board of Directors") has adopted the following resolution:
RESOLVED, that a series of the class of authorized Preferred Stock, par
value $.001 per share, of the Corporation be hereby created, and that 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 are as follows:
1. Designation and Amount; Fractional Shares; Par Value. There shall be a
series of Preferred Stock of the Corporation designated as the "Series A
Preferred Stock" (the "Preferred Stock") and the number of shares constituting
such series shall be 500,000. The Preferred Stock is issuable solely in whole
shares that shall entitle the holder thereof to exercise the voting rights, to
participate in the distributions and to have the benefit of all other rights of
holders of the Preferred Stock as set forth herein and in the Certificate of
Incorporation. The par value of each share of Preferred Stock shall be $.001.
2. Definitions. As used herein, the following terms shall have the respective
meanings given thereto in the Sections indicated below:
<PAGE>
Defined in
Defined Term Section
------------ ----------
"Actual ADS Price" 8
"ADS's" 8
"Applicable Discount" 8
"Board of Directors" Introduction
"Business Day" 3(b)
"Certificate of Incorporation" Introduction
"Corporation" Introduction
"Discounted ADS Price" 8
"Dividend Payment Date" 3(b)
"Event of Default" 8
"FKW Affiliate" 7(c)
"Funding Agreement" 7(b)
"Junior Stock" 4
"Liberty" 7(a)
"Liberty Affiliate" 7(a)
"Liquidation" 4
"Liquidation Price" 4
"Missed Redemption Date" 8(a)
"NPAL" 7(b)
"NPAL Preferred Stock" 8(c)
"NYSE" 8
"Preferred Stock" 1
"Taxable Transaction 7(a)
"TNCL" 7(b)
"TNCL Preferred Stock" 8
3. Dividends Rights.
(a) Holders of the outstanding shares of Preferred Stock shall be entitled
to receive, if, as and when declared by the Board of Directors, cumulative
dividends as set forth in this Certificate of Designations. Dividends shall be
payable in cash on the shares of Preferred Stock out of funds legally available
therefor at a rate per annum equal to 9.0% (subject to adjustment as provided
below) of the Liquidation Price, payable quarterly in arrears. If any quarterly
dividend is not declared and paid in full on a Dividend Payment Date (i) such
accrued and unpaid dividends will be added cumulatively to the Liquidation Price
and remain a part thereof until such accrued dividends (together with all other
dividends accrued on such cumulated dividends) are declared and paid in full
and, (ii) the dividend rate will increase to a rate per annum equal to 11.5% of
the Liquidation Price and continue at such rate until all dividends that have
been added cumulatively to and remain part of the Liquidation Price (together
with all other dividends accrued on such cumulated dividends) are declared and
paid in full. Notwithstanding the foregoing, if a full quarterly dividend
payment has not been declared and paid on a Dividend Payment Date and
immediately prior to such date the dividend rate per annum is equal to 9.0% of
the Liquidation Price (i.e., (i) no Events of Default were continuing as of such
time and (ii) no dividends had been added cumulatively to and remain part of
2
<PAGE>
the Liquidation Price), then if such quarterly dividend, and all dividends
accrued thereon at the rate per annum of 9.0%, are declared and paid in full by
no later than the tenth day following the original Dividend Payment Date (or, if
such tenth day is not a Business Day, the immediately succeeding Business Day),
the dividend rate shall not, solely as a result of such failure to pay dividends
on the original Dividend Payment Date, increase to a rate per annum equal to
11.5% of the Liquidation Price; provided, however, that if such unpaid dividend
and the dividends accrued thereon are not declared and paid as aforesaid in full
by such tenth day (or, if such tenth day is not a Business Day, the immediately
succeeding Business Day), then such accrued and unpaid dividends shall be added
cumulatively to the Liquidation Price and the dividend rate shall increase to a
rate of 11.5% per annum of the Liquidation Price, in each case effective as of
the original Dividend Payment Date, and such increased dividend rate shall
continue in effect until all dividends that have been added to and remain a part
of the Liquidation Price (and all other dividends accrued on such cumulative
dividends) have been paid in full and no Events of Default shall have occurred
and be continuing.
(b) Accrued dividends on the Preferred Stock shall be payable quarterly in
arrears on the last day of each March, June, September and December, or the
immediately succeeding Business Day if such last day is not a Business Day (each
such payment date being hereinafter referred to as a "Dividend Payment Date"),
commencing on September 30, 1997. Each such dividend shall be paid to the
holders of record of shares of Preferred Stock as they appear on the stock
register of the Corporation on the record date for payment of such dividend,
which record date shall be a date, not more than 45 days or less than 15 days
preceding the payment date for such dividend, as shall be fixed by the Board of
Directors. Dividends on the shares of Preferred Stock shall accrue as set forth
herein, commencing on the date of original issuance of the Preferred Stock, on a
daily basis whether or not there are funds legally available for payment of such
dividends and whether or not such dividends are declared. Dividends shall be
computed on the basis of a 365-day or 366-day year, as the case may be.
"Business Day" shall mean any day other than a Saturday, Sunday, or day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
(c) When dividends are not paid in full upon the shares of the Preferred
Stock, all dividends declared upon shares of the Preferred Stock shall be
declared pro rata so that the amount of dividends declared per share on the
shares of the Preferred Stock shall be the same for each share of Preferred
Stock.
(d) Accrued and unpaid dividends for any past quarterly dividend period or
periods that have been added to the Liquidation Price, together with all accrued
and unpaid dividends thereon, may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on a date not more
than 45 days or less than 15 days preceding the payment date thereof as shall be
fixed by the Board of Directors. Any such accrued and unpaid dividends that
have been added to the Liquidation Price but are subsequently paid shall be
subtracted from the Liquidation Price upon the date of such payment.
4. Liquidation Preference. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary (a "Liquidation"), the holders
of shares of Preferred Stock shall be entitled to receive from assets available
for distribution to stockholders, before any payment or distribution is made to
holders of any class of capital stock of the Corporation ranking junior to the
3
<PAGE>
Preferred Stock as to dividend rights, rights of redemption or rights on
Liquidation (the "Junior Stock"), an amount in cash per share equal to the
Liquidation Price of a share of Preferred Stock as of the date of payment. As
used in this Certificate of Designations, the "Liquidation Price" of any share
of Preferred Stock as of any date will be the sum of (a) $1,000, plus (b) an
amount equal to all unpaid dividends on such share that have accrued and been
added to the Liquidation Price and remain a part thereof as of such date
pursuant to Section 3(a) above, plus (c) for purposes of determining the amount
payable upon Liquidation or on any redemption of such share (but not for
purposes of calculating dividends), an amount equal to all unpaid dividends
accrued on the sum of the amounts specified in clauses (a) and (b) that have not
been added to the Liquidation Price during the period from the immediately
preceding Dividend Payment Date (or, if there has been no Dividend Payment
Date, from the date of original issuance of the Preferred Stock) to and
including the date in question. If, upon Liquidation, the amounts payable with
respect to the liquidation preference of the Preferred Stock are not paid in
full, the holders of Preferred Stock will share pro rata in the amounts payable
and other property distributable with respect to such Liquidation so that the
per share amounts to which holders of Preferred Stock are entitled will in all
cases be the same. After payment in full of the Liquidation Price per share of
Preferred Stock, the holders of such shares in their capacity as such shall not
be entitled to any further right or claim to any remaining assets of the
Corporation. The Corporation shall mail written notice of any Liquidation to
each record holder of Preferred Stock not less than 30 days prior to the date on
which such Liquidation shall occur or become effective; provided, however, that
in the case of any involuntary liquidation such notice shall be given as soon as
practicable. Neither a consolidation or merger of the Corporation with or into
another corporation, nor a merger of any other corporation with or into the
Corporation, nor the sale, transfer or lease of all or any part of the
Corporation's property, assets or business (other than in connection with a
winding up of its business) will be considered a Liquidation for purposes of
this Certificate of Designations.
5. Redemption.
(a) On August 1, 2027, the Corporation shall redeem, out of funds legally
available therefor, all then outstanding shares of Preferred Stock, if any, at a
redemption price equal to the Liquidation Price thereof as of the date of
redemption, payable in cash.
(b) Each holder of Preferred Stock shall have the right, at such holder's
option and exercisable during the 30-day period commencing upon August 2 of the
years 2017 and 2022, to require redemption by the Corporation of such holder's
shares of Preferred Stock, in whole or in part, at a redemption price (subject
to adjustment as provided in Section 8 below) equal to the Liquidation Price per
share thereof as of the date of redemption of such shares, payable in cash.
Holders may exercise such right by giving written notice of such exercise during
such 30-day period, stating the number of shares of Preferred Stock to be
redeemed, to the Corporation at its principal office at 10960 Wilshire
Boulevard, Los Angeles, CA, 90024, Attention: President, with a copy to c/o News
America Publishing Incorporated, 1211 Avenue of the Americas, New York, New York
10036, Attention: Arthur M. Siskind, Esq., Senior Executive Vice President and
Group General Counsel of The News Corporation Limited, or such other address as
the Corporation shall designate by written notice to the holders of the
Preferred Stock. The Corporation shall redeem, out of funds legally available
therefor, the shares of Preferred Stock so requested to be redeemed within
twenty (20) Business Days following the expiration of such 30-day period. If
the funds of the Corporation
4
<PAGE>
legally available for redemption of shares of Preferred Stock are insufficient
to redeem the total number of shares required to be redeemed pursuant to this
Section 5(b), those funds which are legally available for redemption of such
shares of Preferred Stock will be used to redeem, at the Liquidation Price per
share, the maximum possible number of such shares of Preferred Stock ratably
among the holders who have given timely notice of exercise of their right to
have shares of Preferred Stock redeemed under this Section 5(b). At any time
thereafter when additional funds of the Corporation are legally available and
not so restricted for such purpose, such funds will immediately be used to
redeem the shares of Preferred Stock the Corporation failed to redeem, at the
Liquidation Price per share as of the date of actual redemption, until the
balance of such shares of Preferred Stock are redeemed.
(c) At any time after August 1, 2007, the Corporation, by resolution of the
Board of Directors, may redeem all, but not less than all, of the shares of
Preferred Stock at a redemption price (subject to adjustment as provided in
Section 8 below) equal to the Liquidation Price thereof as of the date of
redemption, payable in cash.
(d) Written notice of any redemption pursuant to Section 5(a) or 5(c) shall
be given by the Corporation to each record holder of the shares of the Preferred
Stock to be redeemed, not more than 60 nor less than 30 days prior to such
redemption date, to the respective addresses of such holders as the same shall
appear on the stock transfer records of the Corporation. Each notice shall
state: (i) the redemption date; (ii) the redemption price; (iii) the place or
places where certificates for such shares are to be surrendered for payment of
the redemption price; and (iv) that dividends on the shares to be redeemed will
cease to accrue on such redemption date unless the applicable redemption price
is not paid in full on such date. Failure to give such notice, or any defect in
such notice, to any holder of shares of Preferred Stock shall not affect the
validity of the proceedings for the redemption of any shares of Preferred Stock,
except as to the holders to whom the Corporation has failed to give said notice
as set forth above.
(e) If the notice of redemption with respect to shares of Preferred Stock
to be redeemed pursuant to this Section 5 shall have been timely given as
provided above in Section 5(b) or 5(d), and if on or before the applicable date
of redemption the Corporation shall have deposited with a redemption agent for
the Preferred Stock (or, if there is no redemption agent, shall have set apart
so as to be available for such purpose and only such purpose) cash sufficient to
pay in full the aggregate redemption price for such shares of Preferred Stock on
such date of redemption, then effective as of the close of business on such
redemption, such shares of Preferred Stock shall no longer be deemed outstanding
notwithstanding that any certificate therefor shall not have been surrendered
for cancellation, dividends with respect to the shares so called for redemption
shall cease to accrue on such date of redemption and all rights with respect to
the shares so called for redemption shall forthwith after such date cease and
terminate, except the right of such holders, upon the surrender of certificates
evidencing the shares of Preferred Stock so redeemed, to receive the cash in
payment of the redemption price therefor.
6. Ranking. The Preferred Stock will rank senior as to dividend rights,
rights of redemption and rights on Liquidation to all other classes and series
of capital stock of the Corporation authorized on the date of issuance of the
Preferred Stock. So long as any shares of Preferred Stock are outstanding, the
Corporation will not issue any shares of any class or series of capital stock
ranking senior to or
5
<PAGE>
pari passu with the Preferred Stock as to dividend rights, rights of redemption
or rights on Liquidation .
7. Certain Covenants.
(a) Prior to the tenth anniversary of the date of original issuance of the
Preferred Stock, the Corporation will not, without the prior written approval of
Liberty Media Corporation, a Delaware corporation (or any successor thereto by
merger or by acquisition of all or substantially all of its assets) ("Liberty"),
consummate any transaction (including, but not limited to, a merger), transfer
any stock, securities or other assets or consummate any other action which, as
determined under Federal income tax rules, results in (x) the transaction by
which Liberty obtained the Preferred Stock becoming taxable, in whole or in
part, or (y) a taxable exchange, conversion or disposition (except any voluntary
disposition by Liberty or a Liberty Affiliate (as defined below)) of any shares
of Preferred Stock by Liberty or a Liberty Affiliate that owns of record
Preferred Stock (a "Taxable Transaction"). As used herein, a "Liberty
Affiliate" shall mean any entity which, directly or indirectly, controls, is
under common control with, or is controlled by Liberty. From and after such
tenth anniversary, the Corporation may effect a Taxable Transaction without the
prior written approval of Liberty, provided that prior to such Taxable
Transaction being effected the Corporation shall have redeemed all of the shares
of Preferred Stock then owned of record by Liberty or any Liberty Affiliate at
the Liquidation Price per share (as adjusted pursuant to Section 8, if
applicable) as of the date of redemption, payable in cash. This Section 7(a)
shall not apply to, and is not intended to benefit, any person other than
Liberty and any Liberty Affiliates that own of record Preferred Stock, and shall
not extend to any transferee of Liberty or any Liberty Affiliate (except for a
transferee which is Liberty or a Liberty Affiliate).
(b) For so long as any shares of Preferred Stock remain outstanding, the
Funding Agreement, dated as of June 11, 1997 (the "Funding Agreement"), among
the Corporation, The News Corporation Limited, an Australian corporation
("TNCL"), and News Publishing Australia Limited, a Delaware corporation
("NPAL"), shall continue in full force and effect and the Corporation shall not
(i) fail to enforce all of its rights under the Funding Agreement, (ii) waive,
amend or modify or agree to waive, amend or modify any provisions of the Funding
Agreement, (iii) assign or delegate, or permit TNCL or NPAL to assign or
delegate, any of its obligations or duties under the Funding Agreement to any
other person or entity or (iv) assign or agree to assign, or permit NPAL to
assign or agree to assign, any of its rights under the Funding Agreement to any
other person or entity, in each case without the prior approval of the holders
of not less 66 2/3% of the issued and outstanding shares of Preferred Stock.
(c) For so long as any shares of Preferred Stock are outstanding, no
dividend, whether in cash or property (other than a stock dividend paid in
shares of the same class or series of Junior Stock), shall be paid or declared,
nor shall any other distribution be made, on any Junior Stock, nor shall any
shares of Junior Stock be purchased, redeemed, or otherwise acquired for value
by the Corporation or any person or entity which, directly or indirectly, is
controlled by the Corporation (an "FKW Affiliate"), unless (i) the holders of
the Preferred Stock shall have been paid all accrued dividends for all quarterly
dividend periods ending on or before the date on which any such dividend on
Junior Stock, or such purchase, redemption or other acquisition of such Junior
Stock, is to occur, (ii) no dividends shall have been cumulatively added to the
Liquidation Price or, if so added, such
6
<PAGE>
dividends, together with all dividends accrued thereon, shall have been declared
and paid and (iii) no Events of Default shall have occurred and be continuing.
(d) For so long as Liberty or a Liberty Affiliate is an owner of record
of shares of Preferred Stock, the Corporation shall furnish to Liberty, on each
December 31, a certificate of a responsible officer of the Corporation stating
that during the preceding 12-month period ending on the immediately preceding
June 30 (or if no such certificate has previously been delivered, during the
period from the original issuance of the Preferred Stock to June 30, 1998), the
Corporation has observed all of the covenants in this Section 7, and that such
officer has obtained no knowledge of any Event of Default except as specified in
such certificate. The Corporation shall, upon becoming aware of the occurrence
of any Event of Default, promptly notify the holders of the Preferred Stock of
such Event of Default and of their rights under Section 8. The Corporation
shall also provide to Liberty any and all compliance certificates that the
Corporation receives from TNCL and NPAL under the terms of the Funding
Agreement, promptly after the Corporation receives such certificates.
8. Events of Default and Remedies. In addition to any other remedies the
holders of Preferred Stock may have, if any of the following events shall occur:
(a) the Corporation shall fail to redeem any shares of Preferred Stock
required to be so redeemed under Section 5(a), (b) or (c) at the applicable
redemption price (whether or not there are funds legally available therefor) and
on the date fixed, or by the last day of the period within which the Corporation
is to required to fix a date, for redemption (a "Missed Redemption Date"); or
(b) the Corporation shall be in breach of any of the covenants set forth
under Section 7(a), (b), (c) or (d) hereof and such breach shall not have been
cured within thirty (30) days of the Corporation's first having actual knowledge
of such breach (including by notice from a holder of Preferred Stock); or
(c) if any shares of Preferred Stock, par value $.001 per share, of NPAL
("NPAL Preferred Stock") are issued and outstanding, an Event of Default (as
such term is defined in Article FOURTH of the Certificate of Incorporation of
NPAL) under the terms of the NPAL Preferred Stock shall have occurred and be
continuing;
then, upon the occurrence of any of the events set forth in clauses
(a), (b) or (c) above (each, an "Event of Default") and at all times thereafter
until such time as such Event of Default has been cured in full and no other
Event of Default remains uncured, (i) the dividend rate applicable to the
Preferred Stock shall increase to a rate per annum equal to 11.5% of the
Liquidation Price (if not already at such dividend rate pursuant to Section 3
hereof) effective upon (A) the Missed Redemption Date, (B) the expiration of the
30-day period described in clause (b) above if the breached covenant(s)
specified in clause (b) have not then been cured within such period or (C) the
occurrence of an Event of Default under the terms of the NPAL Preferred Stock,
as the case may be, (ii) in the case of an Event of Default referred to in
clauses (b) or (c) above, each holder of Preferred Stock shall have the right,
at such holder's option, to require the redemption by the Corporation, in whole
or in part, of such holder's shares of Preferred Stock (in accordance with the
procedures set forth in Section 5 (b) hereof), (iii) if a holder exercises its
right of redemption pursuant to the immediately preceding clause (ii) or in the
case of an Event of Default under clause (a) above where the
7
<PAGE>
Corporation shall have failed to cure such Event of Default within ten (10) days
after the original date fixed for redemption (or the last day, if any, of the
period within which the Corporation is required to fix a date for redemption),
the redemption price for the shares of Preferred Stock to be redeemed shall be
(or shall be increased to) the amount determined by dividing the Liquidation
Price as of the date of such redemption by the Discounted ADS Price and
multiplying the resulting quotient by the Actual ADS Price and (iv) the holders
of a majority of the outstanding shares of Preferred Stock shall have the right
to cause the Corporation to enforce the Corporation's rights under the Funding
Agreement and to direct the time, method and place of conducting any remedy
available to the Corporation thereunder. In the event the Corporation breaches
any of the provisions of Section 7(c) of this Certificate of Designations, or if
any of the provisions of Section 7(c) of Article FOURTH of the Certificate of
Incorporation of NPAL or Section 4 of the Funding Agreement shall be breached,
such breach shall be deemed cured at such time as all accrued and unpaid
dividends, if any, on the Preferred Stock that has been cumulatively added to
the Liquidation Price, together with all other dividends accrued and unpaid on
the Preferred Stock, shall have been declared and paid in full to the holders of
the Preferred Stock. For greater certainty, if a holder of Preferred Stock
exercises its rights of redemption pursuant to clause (ii) above, then the
redemption price, as adjusted pursuant to this Section 8, shall be payable by
the Corporation irrespective of any subsequent cure of the Event of Default(s)
that resulted in such right of redemption under clause (ii) above.
As used above, "Actual ADS Price" means the average for the ten (10)
trading days preceding the date of redemption of shares of Preferred Stock of
(i) the closing sale price, regular way, of the American Depositary Receipts
representing Preferred Limited Voting Ordinary Shares, par value A$.50 per share
(the "TNCL Preferred Stock"), of TNCL ("ADSs") on the New York Stock Exchange,
Inc. (the "NYSE") or on the principal exchange on which such ADSs are traded,
(ii) if the primary trading market for the ADSs is not the NYSE or another
exchange, the last sale price of the ADSs on the Nasdaq National Market or (iii)
if the ADSs are not traded on the NYSE, another exchange or the Nasdaq National
Market, then the average of the bid and asked prices for the ADSs as furnished
by any NYSE member firm selected from time to time by the Board of Directors for
such purpose. "Discounted ADS Price" means the product of the Applicable
Discount times the lower of (x) the Actual ADS Price and (y) US$14.537 (the
average of the closing prices on the NYSE of the ADS's for the ten (10) trading
days preceding June 11, 1997), in each case appropriately adjusted to take into
account any stock dividend on the ADSs, or any subdivision, split, combination
or reclassification of the ADSs or the TNCL Preferred Stock or any change to the
number of shares of TNCL Preferred Stock underlying each ADS since June 11,
1997. If the TNCL Preferred Stock is not outstanding during the period required
for determining the "Actual ADS Price," then "ADS" shall refer to the ordinary
or preferred shares of TNCL with the greatest liquidity in the public market.
8
<PAGE>
"Applicable Discount" means the following percentages for the 365-366 day
period preceding August 1 of each year indicated below:
Percentage Year
- ---------- ----
60% 1998
63% 1999
66% 2000
69% 2001
72% 2002
75% 2003
81.25% 2004
87.50% 2005
93.75% 2006
100% 2007 and any year thereafter
9. Voting Rights. Other than as set forth in Section 10 below, the holders of
Preferred Stock shall not have any voting rights, except as otherwise required
by law.
10. Amendment. For so long as any shares of Preferred Stock remain
outstanding, the affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of Preferred Stock (excluding for these purposes any shares
held by the Corporation or any FKW Affiliate), voting separately as a class,
shall be necessary before the Corporation may (i) amend, alter or repeal any of
the provisions of this Certificate of Designations or (ii) amend, modify or
eliminate the Certificate of Incorporation of the Corporation (including any
amendment, modification or elimination by means of a merger) in a manner that
would adversely affect the powers, preferences or rights of the holders of the
shares of Preferred Stock then outstanding; provided, however, that the
Corporation may amend or modify the Certificate of Incorporation of the
Corporation without the vote of any holders of Preferred Stock in order to
satisfy its obligations under Section 2.1(c) of the Contribution and Exchange
Agreement, dated June 11, 1997, among Liberty Media Corporation, a Delaware
corporation, Liberty IFE, Inc., a Colorado corporation, and FKW, as such
agreement may be amended from time to time. In the event of a proposed merger
or share exchange involving the Corporation (in which the Corporation is not the
surviving corporation) at a time when there are any shares of Preferred Stock
outstanding, the Corporation, prior to any such merger or share exchange, shall
make appropriate provisions so that the surviving corporation shall issue to the
holders of the Preferred Stock a series of preferred stock of such surviving
corporation with substantially identical designations, voting powers,
preferences and relative participating, optional and special rights as those
contained herein.
9
<PAGE>
11. Preemptive Rights. The holders of the Preferred Stock will not have any
preemptive right to subscribe for or purchase any shares of stock or any other
securities which may be issued by this Corporation.
12. Conversion. The Preferred Stock shall not be convertible into any other
capital stock or instrument of the Corporation.
13. Exclusion of Other Rights. Except as may otherwise be required by law, the
shares of Preferred Stock shall not have any designations, preferences,
limitations or relative rights, other than those specifically set forth in this
Certificate of Designations (as such Certificate of Designations may, subject to
Section 10, be amended from time to time) and in the Certificate of
Incorporation of the Corporation.
14. Status of Acquired Shares. Shares of Preferred Stock redeemed by the
Corporation pursuant to Section 5 or otherwise acquired by the Corporation will
be restored to the status of authorized but unissued shares of preferred stock,
without designation as to class, and may thereafter be issued, but not as shares
of Series A Preferred Stock.
15. Legending of Preferred Stock. Each certificate representing shares of
Preferred Stock shall bear a legend in substantially the form set forth below:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
UNDER THE SECURITIES ACT OR UNLESS THE TRANSACTION IS EXEMPT FROM OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT."
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND
CONDITIONS OF THE CERTIFICATE OF DESIGNATIONS OF THE PREFERRED STOCK OF THE
COMPANY, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH
CERTIFICATE OF DESIGNATIONS IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF
THE COMPANY."
16. Notices. Any notice, request, consent, demand, election or other
communication shall be deemed to have been duly given if personally delivered or
sent by registered or certified mail, return receipt requested, by Federal
Express, Express Mail or similar overnight delivery service or by facsimile
transmission confirmed by letter, and will be deemed given, unless earlier
received, (a) if sent by certified or registered mail, return receipt requested,
five (5) calendar days after being deposited in the United States mail, postage
prepaid; (b) if sent by overnight delivery service for next business day
delivery, the next business day after being entrusted to such service, with
delivery charges prepaid or charged to the sender's account; (c) if sent by
facsimile transmission, on the date sent; provided
10
<PAGE>
confirmatory notice is sent by any other method specified in clause (a), (b), or
(d); and (d) if delivered by hand, on the date of delivery.
17. Severability of Provisions. Whenever possible, each provision hereof shall
be interpreted in a manner as to be effective and valid under applicable law,
but if any provision hereof is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating or otherwise adversely affecting
the remaining provisions hereof.
18. Headings. The headings of the various sections and subsections hereof are
for convenience of reference only and shall not affect the interpretation of any
of the provisions hereof.
19. Definition of "Outstanding." Shares of Preferred Stock that are owned by
the Corporation as treasury shares or by any FKW Affiliate or any company
controlling, or under common control with, the Corporation shall not be deemed
outstanding for purposes of this Certificate of Designations.
11
<PAGE>
IN WITNESS WHEREOF, Fox Kids Worldwide, Inc. has caused this Certificate of
Designations to be duly executed on the 30th day of July, 1997.
FOX KIDS WORLDWIDE, INC.
By: \s\ Jay Itzkowitz
---------------------
Name: Jay Itzkowitz
Title: Assistant Secretary
12
