UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
INTERNATIONAL FAMILY ENTERTAINMENT, INC.
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(Name of Issuer)
Class B Common Stock, par value $0.01 per share
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(Title of Class of Securities)
45950M 10 6
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(CUSIP Number)
Timothy B. Robertson, 2877 Guardian Lane, Virginia Beach, Virginia 23452
(757) 459-6020
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
June 11, 1997
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(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.
* 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 ("Act") 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>
SCHEDULE 13D
CUSIP No. 45950M 10 6 Page 2 of 6 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Timothy B. Robertson (###-##-####)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /_/
(b) /_/
3 SEC USE ONLY
4 SOURCE OF FUNDS
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
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES 2,725,606
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 2,733,587
WITH
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,733,587
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES /x/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.9%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
This Amendment No. 1 amends and supplements the Schedule 13D previously filed
by the Reporting Person (the "Schedule 13D").
Item 1. Security and Issuer
This statement relates to the Class B Common Stock, par value $0.01
per share (the "Class B Common Stock"), of International Family
Entertainment, Inc., a Delaware corporation (the "Company"), which has its
principal executive offices at 2877 Guardian Lane, Virginia Beach, Virginia
23452.
Item 2. Identity and Background
This statement is being filed by Timothy B. Robertson, a United
States citizen, whose principal occupation is President, Chief Executive
Officer and Director of the Company. The business address of Timothy B.
Robertson is 2877 Guardian Lane, Virginia Beach, Virginia 23452.
Item 3. Source and Amount of Funds or Other Consideration
On April 29, 1992, Timothy B. Robertson used personal funds to
acquire an additional 500 shares of Class B Common Stock to be held by each
of his five children (the "Children"), for an aggregate of 2,500 shares. The
shares were acquired at the price of $15 1/8 per share in an open market
purchase. Since the filing of the Schedule 13D, Timothy B. Robertson has
transferred 21,875 shares of Class B Common Stock as gifts to the Children
under the Virginia Uniform Transfers to Minors Act, of which shares he
retains beneficial ownership as custodian. Timothy B. Robertson has disposed
of 19,890 shares of Class B Common Stock as gifts to various charities and
2,125 shares of Class B Common Stock in sales to various entities. Timothy
B. Robertson is also the beneficial owner of 7,981 shares of Class B Common
Stock purchased through the Company's 401(k) plan since 1992 (the "401K
Shares"). In June, 1995, the Company granted Timothy B. Robertson options to
purchase up to 500,000 shares of Class B Common Stock, subject to vesting.
In September, 1995, Timothy B. Robertson transferred 30,000 shares of Class B
Common Stock and 37,500 shares of Class A Common Stock, par value $0.01 per
share (the "Class A Common Stock"), of the Company (which is convertible into
Class B Common Stock on a one-for-one basis), to the Timothy and Lisa
Robertston Children's Trust (the "TR Family Trust"). In December, 1996,
Timothy B. Robertson transferred 8,000 shares of Class B Common Stock to the
Timothy B. Robertson Charitable Trust (together with the TR Family Trust, the
"Trusts"). As trustee of the Trusts, Timothy B. Robertson has voting and
investment power with respect to, and thus beneficial ownership of, the
shares owned by such Trusts. In December, 1996, and in February, 1997,
Timothy B. Robertson transferred 6,400 and 5,100 shares of Class B Common
Stock, respectively, to the TR Family Trust. In January, 1996, the Company
effected a five-for-four stock split resulting in Timothy B. Robertson having
beneficial ownership of 1,875,000 shares of Class A Common Stock and 858,587
shares of Class B Common Stock, including 125,000 shares of Class B Common
Stock subject to presently exercisable options.
<PAGE>
Item 4. Purpose of the Transaction
Pursuant to a Stock Purchase Agreement (the "Stock Purchase
Agreement") (Exhibit 1 hereto), dated as of June 11, 1997, by and among Fox
Kids Worldwide, Inc., a Delaware corporation (the "Purchaser"), M.G. "Pat"
Robertson, individually and as trustee of the certain trusts, Lisa and
Timothy B. Robertson, as joint tenants, and Timothy B. Robertson,
individually, as trustee of each of the Trusts, and as custodian to and for
the Children, Timothy B. Robertson has agreed, subject to the terms and
conditions thereof, to sell 725,606 shares of Class B Common Stock and
1,875,000 shares of Class A Common Stock (in the form of Class B Common
Stock) to the Purchaser for a cash price of $35 per share. In addition,
pursuant to the Stock Purchase Agreement and subject to the terms and
conditions thereof, following the sale of such shares, Timothy B. Robertson
has agreed to exercise all options held by him to acquire 625,000 shares of
Class B Common Stock and to immediately sell such shares to the Purchaser for
a cash price of $35 per share.
The Purchaser, Fox Kids Merger Corporation, a Delaware corporation
and wholly-owned subsidiary of the Purchaser ("FKW Sub"), and the Company
have entered into a certain Agreement and Plan of Merger (the "Merger
Agreement") (Exhibit 2 hereto), providing for the merger (the "Merger") of
FKW Sub into the Company, which shall be the surviving corporation, in which
holders of the Company's common stock will receive cash consideration of $35
per share. Timothy B. Robertson, individually, as trustee of each of the
Trusts and as custodian to and for each of the Children, has delivered to the
Company a written consent approving the Merger Agreement and the Merger with
respect to the above-described shares of Class A Common Stock and Class B
Common Stock.
Item 5. Interest in Securities of the Issuer
(a) As described in Item 3, Timothy B. Robertson is the beneficial
owner of 2,733,587 shares of Class B Common Stock, including
1,875,000 shares which would result from the conversion of Class A
Common Stock to Class B Common Stock and 125,000 shares subject to
presently exercisable options, representing 7.9% of the Class B
Common Stock outstanding, as adjusted for conversion of such Class
A Common Stock and the exercise of such options.
(b) Timothy B. Robertson has the sole power to vote and to dispose of
the shares of Class B Common Stock described in Item 5(a) above,
except that he does not have voting power with respect to the 7,981
401(k) Shares.
(c) Except for the transactions described in Item 4 above, Timothy B.
Robertson has not effected any transactions in the Class B Common
Stock during the past sixty (60) days.
(d) Other than the Trusts, the Children and Lisa Robertson (as joint
tenant with respect to 21,875 shares), no other person has the
right to receive or the power to direct the receipt of dividends
<PAGE>
from or the proceeds from the sale of, the shares of Common Stock
described in Item 5(a) as beneficially owned by Timothy B.
Robertson.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understanding or Relationships With
Respect to Securities of the Issuer
See Item 4 above.
In connection with the transactions contemplated by the Stock
Purchase Agreement, M.G. "Pat" Robertson, individually and as trustee of the
Robertson Charitable Remainder Unitrust (the "Charitable Remainder Trust"),
Timothy B. Robertson, individually and as trustee of the TR Family Trust, the
Christian Broadcasting Network, a Virginia corporation ("CBN"), Liberty IFE,
Inc., a Delaware Corporation ("LIFE"), and the Company have entered a certain
Termination Agreement (the "Termination Agreement") (Exhibit 3 hereto)
terminating, subject to the terms and conditions thereof, the Amended and
Restated Shareholder Agreement, dated as of September 1, 1995 (as amended,
the "Shareholder Agreement"). The Shareholder Agreement was previously filed
as Exhibit 2(c) to the Company's Current Report on Form 8-K, dated December
15, 1995, and was substantially the same as the Stockholder Agreement which
it amended and restated and which is described more fully in the Schedule
13D. In addition, LIFE and CBN, pursuant to a certain Waiver (the "Waiver")
(Exhibit 4 hereto), have agreed, subject to the terms and conditions thereof,
to waive certain rights of first refusal, co-sale and other rights which they
had under the Shareholder Agreement with respect to the transactions
contemplated by the Stock Purchase Agreement and the Merger Agreement.
Item 7. Material to be Filed as Exhibits
1. Stock Purchase Agreement, dated as of June 11, 1997, by and among Timothy
B. Robertson, individually, as trustee of each of the Trusts and as
custodian to and for each of the Children, and certain other
shareholders.
2. Agreement and Plan of Merger, dated as of June 11, 1997, by and among the
Purchaser, FKW Sub and the Company.
3. Termination Agreement, dated as of June 11, 1997, by and among M.G "Pat"
Robertson, individually and as trustee of the Charitable Remainder
Trust, Timothy B. Robertson, individually and as trustee of the TR
Family Trust, CBN, LIFE and the Company.
4. Waiver, dated June 11, 1997, by each of LIFE and CBN.
<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: June 12, 1997
/s/ Timothy B. Robertson
-----------------------------------
Timothy B. Robertson
Exhibit 1
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of June
11, 1997, is entered into by and between Fox Kids Worldwide, Inc., a
Delaware corporation (the "Purchaser"), on the one hand, and M.G. "Pat"
Robertson, individually and as trustee of each of the Robertson Charitable
Remainder Unitrust, u/t/a dated January 22, 1990 (the "PR Charitable Trust"),
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 (the
Gordon P. Robertson Irrevocable Trust, the Elizabeth F. Robinson Irrevocable
Trust and the Ann R. Lablanc Irrevocable Trust, together, the "Irrevocable
Trusts"), Lisa N. Robertson and Timothy B. Robertson ("Tim Robertson"), as
joint tenants, and Tim Robertson, individually, as trustee of each of the
Timothy and Lisa Robertson Children's Trust, u/t/a dated September 18, 1995
(the "TR Family Trust") and the Timothy B. Robertson Charitable Trust, u/t/a
dated December 30, 1996 (the "TR Charitable Trust"), 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 (Pat Robertson, the PR Charitable Trust, the
Irrevocable Trusts, Lisa N. Robertson, Tim Robertson, the TR Family Trust and
the TR Charitable Trust, collectively, the "Sellers", and each individually,
a "Seller") on the following terms and conditions:
R E C I T A L S
WHEREAS, as of the date hereof, the PR Charitable Trust beneficially
owns 3,125,000 shares of Class A Common Stock, par value $0.01 per share, of
International Family Entertainment, Inc. (the "Company") (the "Class A
Stock") (as used herein, the term "Control Stock" shall refer to the shares
of Class A Stock of the Company or the shares of Class B Common Stock, par
value $0.01 per share, of the Company (the "Class B Stock") into which the
Class A Stock shall have converted, if the conversion of the Class A Stock
into shares of Class B Stock shall have occurred prior to or upon the
Closing, it being understood that pursuant to the Company's Amended and
Restated Certificate of Incorporation (the "Charter") the Class A Stock will
so convert upon the Closing, and as used herein, the term "Company Stock"
shall refer to the total shares of Class A Stock and Class B Stock combined);
WHEREAS, as of the date hereof, Tim Robertson beneficially owns
1,837,500 shares of Control Stock and the TR Family Trust beneficially owns
37,500 shares of Control Stock;
WHEREAS, as of the date hereof, the Sellers beneficially own an
aggregate of 1,231,981 shares of Class B Stock (excluding options to acquire
shares of Class B Stock and excluding shares ("401(k) Shares") held under the
Company's 401(k) plan) (the Control Stock and the Class B Stock owned by the
Sellers (other than the 401(k) Shares, which shall not be subject to this
Agreement), together, the "Shares");
WHEREAS, the Purchaser desires to purchase the Shares from the
Sellers and the Sellers desire to sell the Shares to the Purchaser, all on
the terms and subject to the conditions contained herein;
<PAGE>
WHEREAS, concurrently herewith, the Purchaser, Fox Kids Merger
Corporation, a Delaware corporation ("FKW Sub"), and the Company are entering
into that certain Agreement and Plan of Merger (as the same may be amended
from time to time in accordance with its terms, the "Merger Agreement"),
providing for the merger of FKW Sub into the Company (the "Merger"), which
shall be the surviving corporation, pursuant to which each share of Company
Stock and Non Voting Class C Common Stock, par value $0.01 per share, of the
Company (the "Class C Stock", and together with all of the Class B Stock, the
Class C Stock and any other shares of any other class of common stock of the
Company, the "Common Stock") which is issued and outstanding immediately
prior to the effective time (the "Effective Time") of the Merger (other than
shares held by the Company, the Purchaser or FKW Sub, or any direct or
indirect subsidiary of the Company, the Purchaser or FKW Sub) shall be
canceled and extinguished and be converted into and become a right to receive
a cash payment equal to $35.00 per share (subject to adjustment), without
interest (except that any Dissenting Shares (as defined in the Merger
Agreement) shall be converted into and become a right to receive the payment
provided for under the Delaware General Corporation Law);
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, the Purchaser has required that the Sellers enter into this
Agreement and as a condition to their willingness to enter into this
Agreement, the Sellers have required that the Purchaser and FKW Sub enter
into the Merger Agreement;
WHEREAS, the Purchaser, Liberty Media Corporation, a Delaware
corporation ("Liberty"), and Liberty IFE, Inc., a Colorado corporation
("LIFE"), have entered into that certain Contribution and Exchange Agreement,
dated as of the date hereof (as the same may be amended from time to time in
accordance with its terms, the "Contribution Agreement"), pursuant to which
LIFE has agreed, on the terms and subject to the conditions therein, to
contribute its shares of Class C Stock and its $23 million principal amount
of 6% Convertible Secured Notes due 2004 of the Company (the "Convertible
Notes"), to the Purchaser in exchange for shares of a newly issued class of
preferred stock of the Purchaser;
WHEREAS, in connection with the execution of the Contribution
Agreement, LIFE has waived all rights of first refusal, co-sale and other
rights which it has with respect to the sale of Shares contemplated hereby
under that certain Amended and Restated Shareholder Agreement, dated as of
September 1, 1995, by and among the Company, Pat Robertson, the PR Charitable
Trust, Tim Robertson, the TR Family Trust, LIFE and The Christian
Broadcasting Network, Inc., a Virginia corporation ("CBN") (the "Shareholder
Agreement");
WHEREAS, in connection with sale of the Shares to the Purchaser
hereunder, the Company, Pat Robertson, the PR Charitable Trust, Tim
Robertson, the TR Family Trust, LIFE and CBN have entered into that certain
Termination Agreement, dated as of even date herewith (the "Termination
Agreement"), terminating the Shareholder Agreement, on the terms and
conditions set forth therein;
WHEREAS, in connection with the Contribution Agreement, Satellite
Services, Inc., a Delaware corporation and an affiliate of Liberty, has
entered into an amendment to its Affiliation Agreement with the Company (the
"Amended Affiliation Agreement");
<PAGE>
WHEREAS, concurrently herewith, the Purchaser and CBN are entering
into that certain Stock Purchase Agreement with respect to the purchase by
the Purchaser of the shares of Class B Stock owned by CBN (as the same may be
amended from time to time in accordance with its terms, the "CBN Stock
Purchase Agreement");
WHEREAS, in connection with the execution of the CBN Purchase
Agreement, CBN is waiving all rights of co-sale and other rights which it has
with respect to the sale of Shares contemplated hereby under the Shareholder
Agreement;
WHEREAS, concurrently herewith, the Purchaser and Regent University,
a Virginia corporation ("Regent") are entering into that certain Stock
Purchase Agreement with respect to the purchase by the Purchaser of the
shares of Class B Stock owned by Regent (as the same may be amended from time
to time in accordance with its terms, the "Regent Stock Purchase Agreement");
WHEREAS, concurrently herewith, the Purchaser and Pat Robertson have
entered into a letter agreement providing for certain services to be rendered
by Pat Robertson to the Company (the "PR Agreement"); and
WHEREAS, as a condition to their willingness to enter into this
Agreement, the Sellers have required that, in connection with the
transactions to be effected pursuant to this Agreement, The News Corporation
Limited, a corporation organized and existing under the laws of South
Australia, Australia (the "Guarantor") guarantee the obligations of the
Purchaser to the Sellers hereunder and the Guarantor has given a guaranty
(the "Guaranty") in accordance with such determination.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration given to each party hereto, the receipt of which
is hereby acknowledged, the parties agree as follows.
1. Purchase and Sale of the Shares. On the terms and subject
to the conditions set forth in this Agreement, the Sellers agree to sell and
deliver the Shares to the Purchaser, free and clear of any mortgage, pledge,
lien, security interest or other encumbrance (each, a "Lien") or Restriction
created by or binding upon the Sellers or the Shares, and the Purchaser
agrees to purchase and acquire the Shares from the Sellers. For purposes of
this Agreement, "Restriction" means, when used with respect to any specified
security, any stockholders or other trust agreement, option, warrant, escrow,
proxy, buy-sell agreement, power of attorney or other contract, agreement or
arrangement which (i) grants to any Person the right to sell or otherwise
dispose of such specified security or any interest therein, or (ii) restricts
the transfer of, or the exercise of any rights or the enjoyment of any
benefits arising by reason of, the ownership of such specified security. For
purposes of this Agreement, "Person" means any individual, corporation,
general or limited partnership, limited liability company, trust, joint
venture, association or unincorporated entity of any kind.
2. Purchase Price. The Shares shall be purchased by the
Purchaser from the Sellers thereof for a purchase price (the "Purchase
Price") equal to $35.00 per share. Notwithstanding the foregoing, the
Purchase Price shall be increased to an amount which equals (if greater than
the Purchase Price provided for herein) the per share amount actually paid,
directly or indirectly, by the Purchaser or any of its Affiliates, with
<PAGE>
respect to the purchase of, or agreement to purchase, Company Stock, or
securities convertible into Company Stock, which purchase is effected or
agreement is entered into after the date hereof and through the earlier to
occur of (a) the Effective Time (as defined in the Merger Agreement) or (b)
the termination of the Merger Agreement, (x) in the Merger, (y) from (i)
LIFE, (ii) CBN, (iii) Regent, (iv) any holder or "group" (within the meaning
of Rule 13d-5(b)(1) under the Exchange Act) that owns, or has the right to
dispose of, or to direct the disposition of, 2-1/2% or more of any class of
common stock of the Company, or (v) any of the Affiliates of the entities
referred to in clauses (i), (ii), (iii), or (iv) above, or (z) in any
transaction, or series of related or unrelated transactions (excluding for
purposes of this clause (z), any transaction referred to in clauses (y)(i),
(ii), (iii) or (v)), after the date hereof and through the Effective Time,
involving, in the aggregate, 5% or more of the outstanding shares of any
class of common stock of the Company. For these purposes, it is acknowledged
and agreed that (x) the $3.5 million to be paid to LIFE under the
Contribution Agreement with respect to forfeited interest income on the
Convertible Notes, and (y) amounts to be paid with respect to any "tax gross
up" with respect to the Exchange Rights under the Contribution Agreement,
shall not constitute an amount paid, directly or indirectly, with respect to
the purchase of Company Stock. Further, the Purchase Price shall not be
adjusted as a result of the provisions of the preceding sentence with respect
to any purchase effected under any of the Contribution Agreement, the Merger
Agreement, the CBN Agreement or the Regent Agreement unless the applicable
agreement has been amended after the date hereof so as to increase the
consideration to be paid by the Purchaser or any of its Affiliates, directly
or indirectly, with respect to the Company Stock or securities convertible
into Company Stock. The Purchaser shall promptly provide notice to the
Sellers of any agreement or amendment to an existing agreement entered into
by the Purchaser or any of its Affiliates with the Company, CBN or Regent, or
any amendment to an Other Transaction Agreement (as defined herein) to which
LIFE or any of its Affiliates is a party, from and after the date hereof and
through the Closing Date. If the Purchase Price is adjusted pursuant to the
foregoing, following the closing under such other agreement (or the Effective
Time, if applicable), the Purchaser shall promptly pay to the Sellers the
amount of any increase in the Purchase Price resulting from such agreement.
For purposes of this Agreement, "Affiliate" means, when used with reference
to a specified Person, any Person that directly or indirectly through one or
more intermediaries controls or is controlled by, or is under common control
with, such specified Person and, in the case of an individual, such Person's
spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and
daughters-in-law, and brothers- and sisters-in-law. For the purposes of this
definition, "control" (including the terms controlled by and under common
control with), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise. For the purposes of this
Agreement, the Purchaser shall be deemed to be an Affiliate of Fox, Inc., a
Delaware corporation, and of Saban Entertainment, Inc., a Delaware
corporation, but shall not be deemed to be an Affiliate of any of the
Sellers, the Company, LIFE, CBN, Regent nor any of their respective
Affiliates.
3. The Closing. The closing (the "Closing") of the purchase
and sale of the Shares shall take place on the third business day following
satisfaction or waiver of each and every one of the conditions set forth in
Section 6 and 7 hereof, or such other date and time as the parties shall
<PAGE>
otherwise agree to. The date of the Closing is referred to herein as the
"Closing Date." At the Closing, each Seller shall deliver to the Purchaser
certificates representing the Shares (accompanied by signature guarantees in
customary form) against delivery by the Purchaser of payment of the Purchase
Price therefor, allocated among the Sellers based on their respective
percentage ownerships of the Shares, by wire transfer or by immediately
available funds, to such accounts as Seller may specify.
4. Representations and Warranties. Each Seller, severally with
respect to itself and the Shares which it has agreed to sell pursuant to this
Agreement, makes the following representations and warranties as of the date
hereof. The representations and warranties contain exceptions set forth in a
written disclosure letter (the "Sellers Disclosure Letter") delivered to the
Purchaser concurrently with the execution hereof, which is numbered to
correspond to the various Sections of this Agreement and which also sets
forth certain other information called for by this Agreement.
4.1 Formation, Validity, Powers and Actions of Trusts.
If a trust, (i) such Seller is a trust duly and validly formed and validly
existing under the laws of the Commonwealth of Virginia, with adequate trust
power and authority to own its properties and carry on its actions as
currently conducted; (ii) Pat Robertson, as trustee of each of the PR
Charitable Trust and the Irrevocable Trusts, has all requisite power and
authority to enter into, execute and deliver this Agreement on behalf of such
trusts and to consummate on behalf of such trusts the transactions
contemplated hereby; and (iii) Tim Robertson, as trustee of each of the TR
Family Trust and the TR Charitable Trust, has all requisite power and
authority to enter into, execute and deliver this Agreement on behalf of such
trusts and to consummate on behalf of such trusts the transactions
contemplated hereby.
4.2 Execution, Delivery and Performance. This Agreement
constitutes the valid and binding obligations of such Seller, including the
trusts, and is enforceable in accordance with its terms, except as
enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally.
4.3 No Consents. Other than filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the filing of Forms 4 and Schedules 13D under the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(the "Exchange Act"), no consent, authorization, order or approval of, or
filing with or registration with, any governmental authority, commission,
board or other regulatory body of the United States or any state or political
subdivision thereof (each, a "Governmental Entity"), is required to be made
or obtained by the Sellers for or in connection with the sale by the Sellers
of the Shares to the Purchaser as contemplated hereby.
4.4 Title. Each Seller has, and at the Closing will
have, good and valid title to the Shares it is selling pursuant to this
Agreement, free and clear of any Liens or Restrictions (other than those
restrictions set forth in the Shareholder Agreement or in the Charter) and
(subject to such restrictions) it has the full legal right, power and
authority to sell, assign, transfer and deliver such Shares to the Purchaser
and to make the representations, warranties, covenants and agreements made by
such Seller herein; upon the delivery of and payment for such Shares as
<PAGE>
contemplated hereby the Purchaser will acquire good and valid title thereto,
free and clear of all Liens or Restrictions created by or binding upon such
Seller. Each Seller has sole voting power, and sole power of disposition,
with respect to all of its respective Shares (other than those Restrictions
set forth in the Shareholder Agreement or in the Charter) subject to
applicable federal and state securities laws, on such Seller's rights of
disposition pertaining thereto. The Shares, in the amounts set forth in the
recitals to this Agreement, constitute all equity or debt securities issued
by the Company held by the Sellers (other than the 401(k) Shares) and none of
the Sellers has any right, title or interest in or to any other equity or
debt securities of the Company or any option or right to acquire such equity
or debt securities (other than the 401(k) Shares), other than those options
(the "Subject Options") to acquire shares of Class B Stock under the
International Family Entertainment, Inc. Stock Incentive Plan which are
described in the Sellers Disclosure Letter and other than under the
Shareholder Agreement.
4.5 No Conflicts. The execution, delivery and
performance by the Sellers of this Agreement will not violate any other
agreement to which any of the Sellers is a party, including, without
limitation, any voting agreement, stockholders agreement or voting trust, or
otherwise contravene, conflict with or result in a violation of, any federal,
state, local, municipal, foreign, international, multi-national or other
administrative order, constitution, law, ordinance, regulation, statute or
treaty, or give any individual, corporation, partnership, governmental
authority or regulatory body or any other person the right to prevent the
consummation of the sale of the Shares contemplated hereby.
4.6 No Broker. The Sellers have not employed any
investment banker, broker, finder, consultant or intermediary in connection
with the transactions contemplated by this Agreement which would be entitled
to any investment banking, brokerage, finder's or similar fee or commission
in connection with this Agreement or the transactions contemplated hereby.
5. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Sellers as follows:
5.1 Organization, Standing and Corporate Power of the
Purchaser. The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, with adequate
corporate power and authority to own its properties and carry on its business
as presently conducted. The Purchaser has the corporate power and authority
to enter into, execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
5.2 Organization, Standing and Corporate Power of the
Guarantor. The Guarantor is a corporation organized and existing under the
laws of South Australia, Australia, with adequate corporate power and
authority to own its properties and carry on its business as presently
conducted. The Guarantor has the corporate power and authority to enter
into, execute and deliver the Guaranty and to guarantee the obligations of
the Purchaser hereunder pursuant to such Guaranty.
5.3 Execution, Delivery and Performance by the
Purchaser. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of the Purchaser, and the Purchaser has
<PAGE>
taken all other actions required by law, its Certificate of Incorporation and
its Bylaws in order to consummate the transactions contemplated by this
Agreement. This Agreement constitutes the valid and binding obligations of
the Purchaser and is enforceable in accordance with its terms, except as
enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally.
5.4 Execution, Delivery and Performance by the
Guarantor. The execution, delivery and performance of the Guaranty and the
consummation of the transactions thereby have been duly authorized by the
Board of Directors of the Guarantor, and the Guarantor has taken all other
actions required by law and its organizational documents in order to
consummate the transactions contemplated by the Guaranty. The Guaranty
constitutes the valid and binding obligations of the Guarantor and is
enforceable in accordance with its terms, except as enforceability may be
subject to or limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights generally.
5.5 Consents. Other than filings required under the HSR
Act and the filing of a Form 4 and Schedule 13D under the Exchange Act, no
consent, authorization, order or approval of, or filing with or registration
with, any Governmental Entity is required to be made or obtained by the
Purchaser for the purchase by the Purchaser of the Shares from the Sellers as
contemplated hereby or by the Guarantor for the execution, delivery and
performance of the Guaranty..
5.6 No Conflicts. The execution, delivery and
performance by the Purchaser of this Agreement or by the Guarantor of the
Guaranty will not violate any other agreement to which the Purchaser or the
Guarantor is a party, or otherwise contravene, conflict with or result in a
violation of, any federal, state, local, municipal, foreign, international,
multi-national or other administrative order, constitution, law, ordinance,
regulation, statute or treaty, or give any individual, corporation,
partnership, governmental authority or regulatory body or any other person
the right to prevent the consummation of the sale of the Shares contemplated
hereby or the enforcement by any of the Sellers of the Guaranty.
5.7 Purchase For Investment. The Purchaser is acquiring
the Shares for its own account, for investment purposes only, and not with a
view to or for the resale or distribution thereof, in whole or in part. The
Purchaser acknowledges and represents: (i) that it is aware that the Shares
are not registered under the Securities Act and are subject to the
restrictions thereof, including pursuant to Rule 144 promulgated thereunder;
(ii) that no federal or state agency has passed upon the Shares or made any
finding or determination as to the fairness of the Purchaser's investment in
the Shares; (iii) that there are risks of loss associated with the
Purchaser's purchase of the Shares; (iv) that the investment in the Shares is
an illiquid investment and the Purchaser may bear the risk of its investment
for an indefinite period of time; and (v) that it is a sophisticated
investor, able to evaluate the risks and merits of its investment and to bear
such financial risk.
5.8 Nature of Control Stock. The Purchaser understands
that, at the time of transfer of the Control Stock to the Purchaser as
contemplated hereby, such Control Stock will consist (or, by operation of the
<PAGE>
Charter, be automatically converted into and deemed to consist) solely of
Class B Stock of the Company.
5.9 No Broker. The Purchaser has not employed any
investment banker, broker, finder, consultant or intermediary in connection
with the transactions contemplated by this Agreement which would be entitled
to any investment banking, brokerage, finder's or similar fee or commission
in connection with this Agreement or the transactions contemplated hereby.
5.10 Transaction Agreements. This Agreement, the Merger
Agreement, the Other Transaction Agreements (as defined herein), and the
other agreements listed in the recitals above, are the only agreements
existing as of the date hereof between the Purchaser, on the one hand, and
the respective counterparties to such agreements and any Affiliates of such
parties, on the other hand, with respect to the acquisition of Class A Stock,
Class B Stock, Class C Stock or Convertible Notes of the Company.
6. Conditions to Obligations of the Purchaser. Unless waived
(it being agreed that no such waiver shall be given or effective prior to the
tender by the Purchaser of the Purchase Price and the consummation of the
Closing), in whole or in part, in writing by the Purchaser, the obligations
of the Purchaser to purchase the Shares and to perform any and all of its
post-closing obligations shall be subject to the satisfaction at or prior to
the Closing Date of each of the following conditions:
6.1 Accuracy of Representations and Warranties. All
representations and warranties of the Sellers contained herein shall be true
and correct in all material respects on and as of the Closing Date, with the
same force and effect as though made on and as of the Closing Date, except
for changes permitted or contemplated by this Agreement.
6.2 Performance of Agreements. The Sellers shall have
performed in all material respects all obligations and agreements contained
in this Agreement to be performed or complied with by them prior to or at the
Closing Date.
6.3 The Shares. The Sellers shall be prepared to
deliver certificates for all the Shares to the Purchaser upon the Closing.
6.4 Merger Agreement Conditions. All conditions set
forth in Sections 7.1, 7.2 and 7.3 of the Merger Agreement to the
consummation of the Merger (other than the preparation and mailing of the
Information Statement (as defined in the Merger Agreement) and the expiration
of the 20 calendar day waiting period with respect thereto) not waived by the
applicable party shall have been satisfied as of the Closing Date.
6.5 Company Certificate. The Purchaser shall have
received a certificate executed by the Company in the form of Exhibit A
attached to the Merger Agreement.
6.6 No Injunctions. None of the parties hereto shall be
subject to any order or injunction of a court of competent jurisdiction which
prohibits the consummation of the sale of the Shares to the Purchaser
contemplated by this Agreement. In the event any such order or injunction
shall have been issued, each party agrees to use its reasonable efforts to
have any such injunction lifted.
<PAGE>
6.7 No Adverse Enactments. There shall not have been
any statute, rule, regulation or order promulgated, enacted or issued by any
Government Entity or court of competent jurisdiction which would make the
consummation of the sale of the Shares hereunder or the Merger illegal.
6.8 Banking Moratorium. There shall not have occurred
and be continuing any declaration of any banking moratorium or suspension of
payments by banks in the United States or any general limitation on the
extension of credit by lending institutions in the United States.
6.9 Consummation of Other Transactions. All conditions
to the consummation of the transactions (the "Other Transactions") to be
effected pursuant to the Contribution Agreement, the CBN Stock Purchase
Agreement and the Regent Stock Purchase Agreement (collectively, the "Other
Transaction Agreements") shall have been satisfied or waived by the
applicable party, and the parties to such Other Transaction Agreements shall
have consummated such Other Transactions simultaneously with or prior to the
sale of the Shares to the Purchaser as contemplated hereby.
6.10 Amended Affiliation Agreement. The Amended
Affiliation Agreement, in the form of Exhibit "A" hereto, shall be in full
force and effect.
6.11 Hart-Scott-Rodino Notification. The waiting period
(and any extension thereof) under the HSR Act applicable to (i) the purchase
of the Shares pursuant to this Agreement and the consummation of the Other
Transactions, (ii) the conversion by the Purchaser of the Class C Stock and
the Convertible Notes acquired pursuant to the Contribution Agreement into
shares of Class B Stock of the Company, and (iii) the Merger shall have
expired or have been terminated.
6.12 Opinion of Counsel. The Purchaser shall have
received an opinion of counsel to the Sellers from a counsel reasonably
acceptable to Purchaser covering the matters referred to in Section 4.1
hereof.
6.13 Acquisition Agreements. Immediately following the
consummation of this transaction and the Other Transactions (and after giving
effect to the conversion of the Class C Stock and the Convertible Notes into
Class B Stock), the Purchaser and its Subsidiaries will own a majority of the
voting common stock of the Company then entitled to vote in the election of
the Company's directors.
7. Conditions to Obligations of Sellers. Unless waived, in
whole or in part, in writing by the Sellers, the obligations of the Sellers
to sell the Shares as contemplated by this Agreement shall be subject to the
fulfillment prior to or on the Closing Date of each of the following condi-
tions:
7.1 Accuracy of Representations and Warranties. All
representations and warranties of the Purchaser contained herein shall be
true and correct in all material respects on and as of the Closing Date, with
the same effect as though made on and as of the Closing Date, except for
changes permitted or contemplated by this Agreement.
7.2 Performance of Agreements. The Purchaser shall have
performed in all material respects all obligations and agreements contained
<PAGE>
in this Agreement to be performed or complied with by it prior to or at the
Closing Date.
7.3 No Adverse Enactments. There shall not have been
any statute, rule, regulation or order promulgated, enacted or issued by any
Government Entity or court of competent jurisdiction which would make the
consummation of the sale of the Shares hereunder or the Merger illegal.
7.4 No Injunctions. None of the parties hereto shall be
subject to any order or injunction of a court of competent jurisdiction which
prohibits the consummation of the sale of the Shares to the Purchaser
contemplated by this Agreement. In the event any such order or injunction
shall have been issued, each party agrees to use its reasonable efforts to
have any such injunction lifted.
7.5 Hart-Scott-Rodino Notification. The waiting period
(and any extension thereof) under the HSR Act applicable to the consummation
of the purchase of the Shares pursuant to this Agreement shall have expired
or have been terminated.
7.6 Purchase Price. The Purchaser shall be prepared to
deliver the aggregate Purchase Price for all the Shares to the Sellers in the
amounts and manner contemplated hereby upon the Closing.
7.7 The PR Agreement. The Purchaser shall have executed
the PR Agreement and shall have delivered the PR Agreement to Pat Robertson.
7.8 Consummation of Other Transactions. All conditions
to the consummation of the Other Transactions to be effected pursuant to the
Other Transaction Agreements shall have been satisfied or waived by the
applicable party, and the parties to such Other Transaction Agreements shall
have consummated such Other Transactions simultaneously with or prior to the
sale of the Shares to the Purchaser as contemplated hereby.
8. Covenants of the Purchaser. The Purchaser hereby covenants
and agrees as follows:
8.1 Filings and Other Actions. As promptly as
practicable after the execution of this Agreement, but in any event within 5
business days, the Purchaser shall file notification reports under the HSR
Act and shall request early termination of the waiting period under the HSR
Act and use their commercially reasonable efforts to obtain clearance or
authorization under the HSR Act of the Merger and the purchase of the Shares
contemplated by this Agreement and the Other Transactions at the earliest
practicable time. The Purchaser agrees to cooperate fully with the Sellers
to promptly effectuate the filing of any notification required under the HSR
Act.
8.2 Reasonable Efforts. Subject to the terms and
conditions of this Agreement, the Other Transaction Agreements and the Merger
Agreement, the Purchaser agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, the Other Transaction Agreements
and the Merger Agreement. The Purchaser hereby agrees, while this Agreement
is in effect, and except as contemplated hereby, not to intentionally and
knowingly take any action with the intention and knowledge that such action
<PAGE>
would make any of its representations or warranties contained herein untrue
or incorrect in any material respect or have the effect of preventing or
disabling it from performing its obligations under this Agreement. The
Purchaser shall not enter into, permit or give any consent to any amendment,
supplement or other modification of, or give any consent or waiver or
otherwise take any action (including agreeing to a delayed closing date)
under, any of the Other Transaction Agreements (or any of the agreements
related thereto) (collectively, a "Modification") which could reasonably be
expected to delay the Closing hereunder, or terminate any of the Other
Transaction Agreements (or any of the agreements related thereto), without
the prior written consent of the Sellers of the Control Stock.
Notwithstanding the foregoing, the Purchaser may (without the consent of the
Sellers of the Control Stock) effect any Modification to the Other
Transaction Agreements (or any of the agreements related thereto) which it
determines in good faith to be reasonably necessary to effect the
transactions contemplated thereby, provided it uses its reasonable good faith
efforts to cause the closing thereunder to occur as soon as practicable and
provided further that such Modification will not delay the Closing hereunder
beyond November 30, 1997.
9. Covenants of the Sellers. The Sellers, jointly and
severally, hereby covenant and agree as follows:
9.1 Cooperation in Filing Notification under Hart-Scott-
Rodino. The Sellers agree to cooperate fully with the Purchaser to promptly
effectuate the filing of any notification required under the HSR Act.
9.2 Additional Shares. The Sellers agree that (other
than purchases under the Company's 401(k) plan), they will not purchase
additional shares of Common Stock of the Company whether in open market
purchases, privately negotiated purchases or by the exercise or conversion of
options or convertible securities held by them between the date of this
Agreement and the Closing Date. If ownership of any additional shares of
Common Stock of the Company is acquired or transferred to any Seller (other
than under the Company's 401(k) plan), such Seller hereby agrees, while this
Agreement is in effect, to promptly notify each other party to this Agreement
of the number of additional shares of Common Stock of the Company acquired by
it, if any, after the date hereof, and hereby agrees to sell any such
additional shares of Common Stock of the Company acquired by it after the
date hereof through the Closing Date to the Purchaser pursuant to the terms
of this Agreement, with a provision for additional payment for such shares by
the Purchaser to such Seller at the Purchase Price.
9.3 Reasonable Efforts. Subject to the terms and
conditions of this Agreement, the Sellers each agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective the transactions provided for by this Agreement. The Sellers each
hereby agrees, while this Agreement is in effect, and except as contemplated
hereby, not to intentionally and knowingly take any action with the intention
and knowledge that such action would make any of its representations or
warranties contained herein untrue or incorrect in any material respect or
have the effect of preventing or disabling it from performing its obligations
under this Agreement. Notwithstanding anything to the contrary contained
herein, this Section 9.3 shall not obligate, and shall not be interpreted to
obligate, any of the holders of the Control Stock to take any action to the
<PAGE>
extent such obligation would result in a change in beneficial ownership of
any of the Control Stock prior to the Closing.
10. Post-Closing Covenants; Termination.
10.1 Further Instruments, Termination. The Sellers and
the Purchaser agree to execute such further documents or instruments and to
take such other actions as are necessary to transfer the Shares to the
Purchaser and to otherwise carry out the transactions provided for by this
Agreement. If the Closing Date shall not have occurred on or prior to
November 30, 1997, other than as a result of a material breach of this
Agreement by any party hereto, any party may terminate this Agreement without
liability. If the Closing Date shall not have occurred on or prior to such
date as a result of material breach of any representation, warranty, covenant
or obligation by the Sellers (or any of them), on the one hand, or the
Purchaser on the other, the non-breaching party shall have the right to
terminate this Agreement without liability. In addition, this Agreement may
be terminated by the Sellers if, after the date hereof and before the Closing
Date, the Guarantor attempts or purports to revoke or withdraw the Guaranty
or a court of competent jurisdiction finally determines that the Guaranty is
unenforceable or invalid.
10.2 Subject Options. Immediately following the Closing,
and from time to time thereafter, the Purchaser will lend to each of Pat
Robertson and Tim Robertson sufficient funds to permit each of them to
exercise all Subject Options which are then vested and exercisable or
subsequently vest and become exercisable. Upon receiving such funds, each of
Pat Robertson and Tim Robertson will immediately exercise such Subject
Options, and concurrent with his receipt of the shares of Class B Stock
receivable thereunder will sell and deliver such shares to the Purchaser for
a cash purchase price per share equal to the Purchase Price, less the amount
of the loan referred to in the immediately preceding sentence, which shall be
deemed repaid in full.
11. Survival of Representations and Warranties; Indemnity. Only
the representations and warranties of the Sellers contained in Section 4.4
hereto (with respect to title) shall survive the Closing and the consummation
of the transactions contemplated hereby. No party hereto shall have any
monetary or other liability or obligation to any other party hereto for
breach of any of such first party's representations or warranties contained
herein or in any certificate or other document delivered pursuant hereto, and
the sole consequence of any such breach shall be limited to the failure to
satisfy a condition to the Closing pursuant to Article 6 or 7 and the
termination right provided in Section 10, in each case to the extent
applicable according to such Section's express terms. With respect to a
breach of its representations and warranties contained in Section 4.4 hereto,
each Seller hereby covenants and agrees with the Purchaser that it shall
indemnify the Purchaser and its directors, officers, shareholders and
Affiliates, and each of their successors and assigns and hold them harmless
from, against and in respect of any and all costs, losses, claims,
liabilities, fines, penalties (including interest which may be imposed in
connection therewith and court costs and reasonable fees and disbursements of
counsel) incurred by any of them arising out of any material breach of, or
any material inaccuracy in, such representations and warranties; provided,
however, that the liability of each Seller to all such indemnified persons
shall in no event exceed the proceeds received by such Seller for the sale of
its Shares hereunder.
<PAGE>
12. Miscellaneous.
12.1 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Other than as set forth in the
immediately succeeding sentence, no party may assign any of its rights, or
delegate any of its duties or obligations, hereunder without the prior
written consent of the other party, and any such purported assignment or
delegation shall be void ab initio. Notwithstanding the foregoing, the
Purchaser, its Affiliates, and its successors and assigns, may assign their
rights and delegate their duties (i) to any successor entity resulting from
any liquidation, merger, consolidation, reorganization, or transfer of all or
substantially all of the assets or stock of the Purchaser, or (ii) to any
Affiliate of the Purchaser; provided, that in either case, any such assignee
shall expressly assume all of the obligations the Purchaser hereunder.
12.2 Notices. All notices, demands and other
communications (collectively, "Notices") given or made pursuant to this
Agreement shall be in writing and shall be deemed to have been duly given if
sent by registered or certified mail, return receipt requested, postage and
fees prepaid, by overnight service with a nationally recognized "next day"
delivery company such as Federal Express or United Parcel Service, by
facsimile transmission, or otherwise actually delivered to the following
addresses:
(a) If to the Purchaser:
Fox Kids Worldwide, Inc.
10960 Wilshire Boulevard
Los Angeles, California 90024
Attn: Mel Woods
Fax: 310-235-5552
with a copy to:
Fox, Inc.
10201 West Pico Boulevard
Los Angeles, California 90035
Attn: President
Fax: 310-369-1203
and a copy to:
The News Corporation Limited
c/o News America Publishing
Incorporated
1211 Avenue of the Americas
New York, New York 10036
Attn: Arthur M. Siskind, Esq.
Fax: 212-768-2029
and a copy to:
Troop Meisinger Steuber & Pasich,
LLP
10940 Wilshire Boulevard
Los Angeles, California 90024
Attn: C.N. Franklin Reddick, III,
Esq.
Fax: 310-443-8512
and a copy to:
Squadron, Ellenoff, Plesent &
Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Attn: Jeffrey W. Rubin, Esq.
Fax: 212-697-6686
(b) If to the Sellers:
c/o International Family
Entertainment, Inc.
2877 Guardian Lane
Virginia Beach, Virginia 23450
Attn: Tim Robertson
Fax: 757-459-6422
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: Robert E. Spatt, Esq.
Fax: 212-455-2502
Any Notice shall be deemed duly given when received by the addressee thereof.
Any of the parties to this Agreement may from time to time change its address
for receiving notices by giving written notice thereof in the manner set
forth above.
12.3 Amendment; Waiver. No provision of this Agreement
may be waived unless in writing signed by all of the parties to this
Agreement, and the waiver of any one provision of this Agreement shall not be
deemed to be a waiver of any other provision. This Agreement may be amended,
supplemented or otherwise modified only by a written agreement executed by
all of the parties to this Agreement.
12.4 Limitation on Liability. The liability of the
Sellers for any breach by the Sellers of this Agreement shall be limited to
the actual damages suffered by the Purchaser or any of its Affiliates under
this Agreement and the Sellers shall not be liable for any consequential or
other damages of the Purchaser or any of its Affiliates, including any
damages arising in connection with any Other Transaction Agreement or the
Merger Agreement.
12.5 Jurisdiction. The parties hereto irrevocably submit
to the non-exclusive jurisdiction of the state and federal courts located in
Delaware for the purposes of any suit, action or other proceeding arising out
of this Agreement (and agree not to commence any action, suit or proceeding
relating hereto except in such courts). Each party hereto hereby irrevocably
designates CT Corporation System (or, in the case of the Sellers, Young,
Conaway, Stargatt & Taylor, at 1100 North Market Street, 11th Floor,
<PAGE>
Wilmington, Delaware 19801, Attention: David McBride and Bruce Silverstein)
as its designee, appointee and agent to receive, for and on behalf of it,
service of process in such respective jurisdictions in any legal action or
proceeding with respect to this Agreement or any document related thereto.
It is understood that a copy of such process serviced on such agent will be
promptly forwarded by mail to it at its address set forth in Section 12.2
hereof, but the failure to receive such copy shall not affect in any way the
service of such process. Each of the parties hereto further irrevocably
consents to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at its said address, such service to
become effective upon confirmed delivery. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the state or federal courts located in Delaware, and
hereby further irrevocably and unconditionally waive and agree not to plead
or claim in any such action, suit or proceeding brought in any such court
that such action, suit or proceeding has been brought in an inconvenient
forum.
12.6 Dispute Resolution. Any dispute or claim arising
hereunder shall be settled by arbitration. Any party may commence
arbitration by sending a written notice of arbitration to the other party.
The notice will state the dispute with particularity. The arbitration
hearing shall be commenced thirty (30) days following the date of delivery of
notice of arbitration by one party to the other, by the American Arbitration
Association ("AAA") as arbitrator. The arbitration shall be conducted in New
York City, New York in accordance with the commercial arbitration rules
promulgated by AAA, and the Sellers, on the one hand, and the Purchaser, on
the other, shall retain the right to cross-examine the opposing party's
witnesses, either through legal counsel, expert witnesses or both. The
decision of the arbitrator shall be final, binding and conclusive on all
parties (without any right of appeal therefrom) and shall not be subject to
judicial review. As part of his decision, the arbitrator may allocate the
cost of arbitration, including fees of attorneys and experts, as he or she
deems fair and equitable in light of all relevant circumstances. Judgment on
the award rendered by the arbitrator may be entered in any court of competent
jurisdiction.
12.7 Governing Law. This Agreement shall be governed by
and construed both as to validity and performance and enforced in accordance
with the laws of the State of Delaware without giving effect to the choice of
law principles thereof.
12.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
12.9 Remedies Cumulative. Each of the various rights,
powers and remedies shall be deemed to be cumulative with, and in addition
to, all the rights, powers and remedies which either party may have hereunder
or under applicable law relating hereto or to the subject matter hereof, and
the exercise or partial exercise of any such right, power or remedy shall
constitute neither an exclusive election thereof nor a waiver of any other
such right, power or remedy.
<PAGE>
12.10 Headings. The section and subsection headings con-
tained in this Agreement are included for convenience only and form no part
of the agreement between the parties.
12.11 Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
or become prohibited or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
12.12 Expenses. Each party shall pay its own costs,
expenses, including without limitation, the fees and expenses of their
respective counsel and financial advisors.
12.13 Entire Agreement. This Agreement constitutes and
embodies the entire understanding and agreement of the parties hereto
relating to the subject matter hereof and there are no other agreements or
understandings, written or oral, in effect between the parties relating to
such subject matter except as expressly referred to herein.
12.14 Publicity. The initial press release relating to
this Agreement shall be a joint press release in the form attached hereto as
Exhibit "B", and the Purchaser and the Sellers shall use reasonable efforts
to agree upon the text of any other press release before issuing any such
press release or otherwise making public statements with respect to the
transactions contemplated hereby.
12.15 Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or
agreements contained in this Agreement will cause the other parties to
sustain damages for which they would not have an adequate remedy at law for
money damages, and therefore each of the parties hereto agrees that in the
event of any such breach the aggrieved party or parties shall be entitled to
the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief, without the posting of bond or other
security, in addition to any other remedy to which it or they may be
entitled, at law or in equity.
12.16 No Third Party Beneficiaries. This Agreement is not
intended to benefit, and shall not run to the benefit of or be enforceable
by, any other person or entity other than the parties hereto and their
permitted successors and assigns.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
FOX KIDS WORLDWIDE, INC.
By: /s/ Mel Woods
-------------------------------------
Its: President
-------------------------------------
M.G. "PAT" ROBERTSON
ROBERTSON CHARITABLE REMAINDER UNITRUST
GORDON P. ROBERTSON IRREVOCABLE TRUST
ELIZABETH F. ROBINSON IRREVOCABLE TRUST
ANN R. LABLANC IRREVOCABLE TRUST
By: /s/ M.G. "Pat" Robertson
--------------------------------------
M.G. "Pat" Robertson, individually and as
trustee
TIMOTHY B. ROBERTSON
THE TIMOTHY AND LISA ROBERTSON CHILDREN'S
TRUST
THE TIMOTHY B. ROBERTSON CHARITABLE TRUST
ABIGAIL H. ROBERTSON UTMA
LAURA N. ROBERTSON UTMA
ELIZABETH C. ROBERTSON UTMA
WILLIS H. ROBERTSON UTMA
CAROLINE S. ROBERTSON UTMA
By: /s/ Timothy B. Robertson
---------------------------------------
Timothy B. Robertson, individually, as
joint tenant with Lisa N. Robertson,
trustee and custodian
/s/ Lisa N. Robertson
-----------------------------------------
Lisa N. Robertson, as joint tenant with
Timothy B. Robertson
Exhibit 2
---------
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of June
11, 1997, is by and among FOX KIDS WORLDWIDE, INC., a Delaware corporation
("FKWW"), FOX KIDS MERGER CORPORATION, a Delaware corporation and wholly-
owned subsidiary of FKWW ("FKW Sub"), and INTERNATIONAL FAMILY ENTERTAINMENT,
INC., a Delaware corporation (the "Company").
RECITALS
WHEREAS, it is the intention of the parties that FKW Sub merge with and
into the Company, upon the terms and subject to the conditions set forth
herein (the "Merger"), with the Company surviving as a wholly owned
subsidiary of FKWW;
WHEREAS,
(a) M.G. "Pat" Robertson, individually and as trustee of each of
the Robertson Charitable Remainder Unitrust, u/t/a dated
January 22, 1990 (the "PR Charitable Trust"), 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 (the Gordon P. Robertson
Irrevocable Trust, the Elizabeth F. Robinson Irrevocable Trust
and the Ann R. Lablanc Irrevocable Trust, together, the
"Irrevocable Trusts"), Lisa N. Robertson and Timothy B.
Robertson ("Tim Robertson") as joint tenants, and Tim
Robertson, individually, as trustee of each of the Timothy and
Lisa Robertson Children's Trust, u/t/a dated September 18,
1995 (the "TR Family Trust") and the Timothy B. Robertson
Charitable Trust, u/t/a dated December 30, 1996 (the "TR
Charitable Trust"), 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 (Pat Robertson,
the PR Charitable Trust, the Irrevocable Trusts, Lisa N.
Robertson, Tim Robertson, the TR Family Trust and the TR
Charitable Trust being sometimes collectively referred to
herein as the "Robertson Sellers"), have agreed to sell to
FKWW, all of the outstanding shares of Class A Common Stock,
par value $0.01 per share, of the Company (the "Class A
Stock"), in the form of Class B Common Stock, par value $0.01
per share, of the Company (the "Class B Stock") issuable upon
conversion thereof, and the shares of Class B Stock owned by
them or issuable to them upon exercise of outstanding stock
options, pursuant to that certain Stock Purchase Agreement,
dated of even date herewith, by and among FKWW, on the one
hand, and each of the Robertson Sellers, on the other hand (as
amended from time to time in accordance with its terms, the
"Robertson Purchase Agreement");
(b) The Christian Broadcasting Network, Inc., a Virginia
corporation ("CBN"), has agreed to sell to FKWW, all of the
Class B Stock owned by it, pursuant to the terms of that
<PAGE>
certain Stock Purchase Agreement, dated of even date herewith,
by and between FKWW and CBN (as amended from time to time in
accordance with its terms, the "CBN Purchase Agreement");
(c) Regent University, a Virginia corporation ("Regent"), has
agreed to sell to FKWW all of the Class B Stock owned by it,
pursuant to the terms of that certain Stock Purchase
Agreement, dated of even date herewith, by and between FKWW
and Regent (as amended from time to time in accordance with
its terms, the "Regent Purchase Agreement," and, collectively
with the Robertson Purchase Agreement and the CBN Purchase
Agreement, the "Stock Purchase Agreements");
(d) Liberty IFE, Inc., a Colorado corporation ("LIFE"), has agreed
to contribute to FKWW all of the shares of Class C Common
Stock, par value $0.01 per share, of the Company (the "Class C
Stock," and together with the Class A Stock and the Class B
Stock, the "Company Stock"), and $23 million principal amount
of 6% Convertible Secured Notes due 2004 of the Company (the
"Convertible Notes"), in exchange for shares of Series A
Preferred Stock, par value $0.01 per share, of FKWW pursuant
to that certain Contribution and Exchange Agreement, dated of
even date herewith, by and among LIFE, Liberty Media
Corporation, a Delaware corporation, and FKWW (as amended from
time to time in accordance with its terms, the "Contribution
Agreement," and together with the Stock Purchase Agreements,
the "Other Transaction Agreements"); and
WHEREAS, the respective Boards of Directors of FKWW, FKW Sub and the
Company have each unanimously approved the Merger, in accordance with the
General Corporation Law of the State of Delaware (the "DGCL"), and the Board
of Directors of the Company has recommended the Merger to the Company's
stockholders;
WHEREAS, this Agreement and the Merger shall be approved by the
stockholders of the Company for purposes of the DGCL at such time as the
Company is in receipt of written consents approving this Agreement and the
Merger executed by the holders of that number of shares of Class A Stock and
Class B Stock (voting as a single class) representing the right to cast a
majority of the votes entitled to be cast at a meeting to consider the
Agreement and the Merger;
WHEREAS, immediately following execution of this Agreement by the
Company and concurrently with the execution of this Agreement by FKWW and FKW
Sub, the Robertson Sellers, CBN and Regent (which holders hold of record a
number of shares of Class A Stock and Class B Stock representing a majority
of the votes entitled to be cast at a meeting to consider the Agreement and
the Merger) are delivering their written consent (the "Consent") approving
this Agreement and the Merger (a copy of which is being provided to FKWW and
FKW Sub), which consent constitutes the only action necessary by stockholders
of the Company required in order to authorize this Agreement and the Merger
under the Company's Amended and Restated Certificate of Incorporation and the
DGCL; and
WHEREAS, The News Corporation Limited ("Guarantor") has guaranteed the
obligations of FKWW and FKW Sub under each of this Agreement and the Stock
Purchase Agreements by separate Guaranty Agreements (the Guaranty Agreement
<PAGE>
delivered in connection with this Agreement, being referred to herein as the
"Guaranty") delivered to the Company, the Robertson Sellers, CBN and Regent.
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties and covenants herein contained, and for other
good and valuable consideration the receipt and adequacy of which is hereby
acknowledged, FKWW, FKW Sub and the Company hereby agree as set forth below.
An index of defined terms used throughout this Agreement appears at Section
9.16 hereof.
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.3 hereof), in
accordance with this Agreement and the DGCL, FKW Sub shall be merged with and
into the Company, the separate existence of FKW Sub shall cease, and the
Company shall continue as the surviving corporation (the "Surviving
Corporation"). The Company and FKW Sub are sometimes referred to herein as
the "Constituent Corporations."
1.2 Effect of the Merger. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all of the properties, rights,
privileges, powers and franchises of the Company and FKW Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the
Company and FKW Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.3 Consummation of the Merger. On the later of (i) two business
days after the satisfaction or waiver of the conditions set forth in Article
VII hereof or (ii) the 20th calendar day after the Information Statement is
first sent or given to the Company's stockholders, the parties hereto shall
cause the Merger to be consummated by filing with the Secretary of State of
the State of Delaware a certificate of merger in such form as required by,
and executed in accordance with, the relevant provisions of the DGCL and take
all such further actions as may be required by law to make the Merger
effective (the "Merger Filing"). The Merger shall become effective at the
time of day on the date that the certificate of merger is filed with the
Secretary of State of the State of Delaware or such later time as may be
mutually agreed to by the parties hereto and specified in the Merger Filing
(the "Effective Time").
1.4 Certificate of Incorporation and Bylaws. The Amended and
Restated Certificate of Incorporation of the Company in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation. The By-Laws of FKW Sub in effect immediately prior to
the Effective Time shall be the By-Laws of the Surviving Corporation.
1.5 Directors and Officers. The directors of the Company
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, and the officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their successors are duly elected and
qualified.
<PAGE>
1.6 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of FKW Sub, the Company, the
Surviving Corporation or the holder of any outstanding share of the Class A
Stock, Class B Stock or Class C Stock (each, a "Share" and collectively, the
"Shares"):
(a) Each Share which is issued and outstanding immediately
prior to the Effective Time (other than Shares held by FKWW, FKW Sub or the
Company or by any Subsidiary of FKWW, FKW Sub or the Company) shall be
canceled and extinguished and be converted into and become a right to receive
(i) in the case of all such Shares other than Dissenting Shares, a cash
payment equal to $35.00 per Share (subject to adjustment as provided for in
Section 1.6(d) below), without interest (the "Merger Consideration"), and
(ii) in the case of Dissenting Shares, the consideration set forth in Section
1.7 hereof;
(b) Each Share which is issued and outstanding immediately
prior to the Effective Time and held by FKWW, FKW Sub, or the Company or by
any Subsidiary of FKWW, FKW Sub, or the Company shall be canceled and
extinguished and no consideration shall be paid therefor;
(c) Each share of capital stock of FKW Sub, par value $0.001
per share, outstanding immediately prior to the Effective Time shall be
converted into and become one share of Class B Common Stock, par value $0.001
per share, of the Surviving Corporation; and
(d) The Merger Consideration shall be increased to an amount
which equals (if greater than the Merger Consideration provided for herein)
the per share amount actually paid, directly or indirectly, by FKWW or any of
its Affiliates, with respect to the purchase of, or agreement to purchase,
Company Stock, or securities convertible into Company Stock, which purchase
is effected or agreement is entered into after the date hereof and through
the Effective Time (x) from (i) any of the Robertson Sellers, (ii) LIFE,
(iii) CBN, (iv) Regent, (v) any holder or "group" (within the meaning of Rule
13d-5(b)(1) under the Exchange Act) that owns, or has the right to dispose
of, or to direct the disposition of, 2-1/2% or more of any class of common
stock of the Company, (vi) any of the Affiliates of the entities referred to
in clauses (i), (ii), (iii), (iv) or (v) above, or (y) in any transaction, or
series of related or unrelated transactions (excluding for purposes of this
clause (y), any transaction referred to in clauses (x)(i), (ii), (iii), (iv)
and (vi)), after the date hereof and through the Effective Time, involving,
in the aggregate, 5% or more of the outstanding shares of any class of common
stock of the Company. For these purposes, it is acknowledged and agreed that
(x) the $3.5 million to be paid to LIFE under the Contribution Agreement with
respect to forfeited interest income on the Convertible Notes, and (y)
amounts to be paid with respect to any "tax gross up" with respect to the
Exchange Rights under the Contribution Agreement, shall not constitute an
amount paid, directly or indirectly, with respect to the purchase of Company
Stock. Further, the Merger Consideration shall not be adjusted as a result
of the provisions of the preceding sentence with respect to any purchase
effected under any of the Contribution Agreement, the Robertson Purchase
Agreement, CBN Purchase Agreement or the Regent Purchase Agreement unless the
applicable agreement has been amended after the date hereof so as to increase
the consideration to be paid by FKWW or any of its Affiliates, directly or
indirectly, with respect to the Company Stock or securities convertible into
Company Stock. FKWW shall promptly provide notice to the Company of any
agreement or amendment to an existing agreement entered into by FKWW or any
<PAGE>
of its Affiliates with a Robertson Seller, CBN or Regent, or any amendment to
an Other Transaction Agreement to which LIFE or any of its Affiliates is a
party, from and after the date hereof and through the Effective Time.
1.7 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, Shares which are issued and outstanding immediately prior to the
Effective Time and which are held by stockholders who have not voted such
Shares in favor of the Merger or consented thereto in writing, who shall have
delivered a written demand for appraisal of such Shares in the manner
provided in the DGCL and who, as of the Effective Time, shall not have
effectively withdrawn or lost such right to appraisal ("Dissenting Shares")
shall not be converted into or represent a right to receive the Merger
Consideration pursuant to Section 1.6 hereof, but the holders thereof shall
be entitled only to such rights as are granted by Section 262 of the DGCL.
Each holder of Dissenting Shares who becomes entitled to payment for such
Shares pursuant to Section 262 of the DGCL shall receive payment therefor
from the Surviving Corporation in accordance with the DGCL; provided,
however, that (i) if any such holder of Dissenting Shares shall have failed
to establish his entitlement to appraisal rights as provided in Section 262
of the DGCL, or (ii) if any such holder of Dissenting Shares shall have
effectively withdrawn his demand for appraisal of such Shares or lost his
right to appraisal and payment of his Shares under Section 262 of the DGCL,
or (iii) if neither any holder of Dissenting Shares nor the Surviving
Corporation shall have filed a petition demanding a determination of the
value of all Dissenting Shares within the time provided in Section 262 of the
DGCL, such holder or holders (as the case may be) shall forfeit the right to
appraisal of such Shares, and each such Share shall thereupon be deemed to
have been converted, as of the Effective Time, into and represent the right
to receive payment from the Surviving Corporation of the Merger
Consideration, without interest thereon, as provided in Section 1.6 hereof.
(b) Prior to the Effective Time, the Company shall give FKW
Sub (i) prompt notice of any written demands for appraisal, withdrawals of
demands for appraisal and any petitions served pursuant to Section 262 of the
DGCL received by the Company, and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
Section 262 of the DGCL. The Company shall not, except with the prior
written consent of FKW Sub, voluntarily make any payment with respect to any
demands for appraisal or offers to settle or settle any such demands.
1.8 Stock Options and Other Plans.
(a) Prior to the Effective Time, the Board of Directors of
the Company (or, if appropriate, any committee thereof) shall adopt
appropriate resolutions and use its reasonable good faith efforts to take
all other actions necessary to provide for the cancellation, effective at the
Effective Time, subject to the payment provided for in the next sentence
being made, of all the outstanding stock options, warrants or rights to
purchase Shares heretofore granted (collectively, the "Options") under any
outstanding stock option plan or pursuant to any outstanding warrant
agreement or any other outstanding plan, program or arrangement of the
Company providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any Subsidiary of the Company
(collectively, the "Stock Plans") such that, immediately prior to the
Effective Time, (i) each Option, whether or not then vested or exercisable,
<PAGE>
shall no longer be exercisable for the purchase of Shares, but shall entitle
each holder thereof, in cancellation and settlement therefor, to payments in
cash (subject to any applicable withholding taxes, the "Cash Payment"), at
the Effective Time, equal to the product of (x) the total number of Shares
subject to such Option, whether or not then vested or exercisable, and (y)
the excess of the Merger Consideration over the exercise price per Share
subject to such Option, each such Cash Payment to be paid to each holder of
an outstanding Option at the Effective Time; provided, however, that with
respect to any Person subject to Section 16 of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (the "Exchange
Act"), any such amount shall be paid, without interest, as soon as
practicable after the first date payment can be made without liability to
such Person under Section 16(b) of the Exchange Act, and (ii) each Share
previously issued in the form of grants of restricted stock or grants of
contingent shares shall fully vest in accordance with their respective terms.
Any then outstanding stock appreciation rights or limited stock appreciation
rights shall be canceled immediately prior to the Effective Time without any
payment therefor. The Company will use its reasonable good faith efforts to
ensure that, at the Effective Time, neither the Company nor any of its
Subsidiaries is or will be bound by any Options or Stock Plans which would
entitle any Person to acquire or hold any capital stock of the Surviving
Corporation or any of its Subsidiaries or to receive any payment in respect
thereof other than as set forth in this Agreement or the MTM Stock Plan,
providing for the issuance to employees of MTM Entertainment, Inc., a
Delaware corporation ("MTM"), a wholly owned Subsidiary of the Company, of
shares of common stock of MTM, all as, and other than as, disclosed in the
Company Disclosure Letter, including using its reasonable good faith efforts
to obtain all necessary consents and releases to ensure that after the
Effective Time, the only rights of the holders of Options will be to receive
the Cash Payment in cancellation and settlement thereof. Notwithstanding any
other provision of this Section 1.8 to the contrary, the Cash Payment may be
withheld with respect to any Option until necessary consents and releases are
obtained.
(b) All provisions in any Stock Plan providing for the future
issuance or grant of any capital stock of the Company or any interest in
respect of any capital stock of the Company shall terminate or be amended as
of the Effective Time to provide no continuing rights to acquire or be issued
or granted any capital stock or any interest in any capital stock (including,
but not limited to Options) of the Company or the Surviving Corporation
(other than in respect of capital stock or interests in capital stock
(including, but not limited to, Options) granted prior to the Effective Time,
which are governed by the provisions of Section 1.8(a) above).
1.9 Exchange of Certificates.
(a) From and after the Effective Time, a bank or trust
company to be designated by FKW Sub and reasonably acceptable to the Company
(the "Exchange Agent") shall act as exchange agent in effecting the exchange
of the Merger Consideration for certificates representing Shares entitled to
payment pursuant to Section 1.6 (the "Certificates"). At or prior to the
Effective Time, FKW Sub shall deposit with the Exchange Agent the amount
necessary to enable the Exchange Agent to exchange the Merger Consideration
for Certificates received by the Exchange Agent.
(b) Promptly after the Effective Time, the Exchange Agent
shall mail to each record holder of Certificates a letter of transmittal
<PAGE>
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and instructions for use in surrendering
Certificates and receiving the Merger Consideration therefor. Upon the
surrender of each Certificate, together with such letter of transmittal duly
executed and completed in accordance with the instructions thereto, the
holder of such Certificate shall be entitled to receive in exchange therefor
an amount equal to the Merger Consideration multiplied by the number of
Shares represented by such Certificate, and such Certificate shall be
canceled. Until so surrendered and exchanged, each such Certificate shall
represent solely the right to receive an amount equal to the Merger
Consideration multiplied by the number of Shares represented by such
Certificate. No interest shall be paid or accrue on the Merger Consideration
payable upon the surrender of the Certificates. If any Merger Consideration
is to be paid to a Person other than the Person in whose name the Certificate
surrendered in exchange therefor is registered, such Certificate shall be
accompanied by all documents required to evidence and effect such transfer,
and it shall be a condition to such exchange that the Person requesting such
exchange shall pay to the Exchange Agent any transfer or other taxes required
by reason of the payment of such Merger Consideration to a Person other than
the registered holder of the Certificate surrendered, or such Person shall
establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a holder of Shares for
any Merger Consideration delivered to a public official pursuant to
applicable abandoned property, escheat and similar laws.
(c) Promptly following the date which is 180 days after the
Effective Time, the Exchange Agent's duties shall terminate, and any funds
deposited with the Exchange Agent that remain unclaimed by holders of
Certificates shall be paid to the Surviving Corporation upon demand.
Thereafter, each holder of a Certificate may surrender such Certificate to
the Surviving Corporation along with the applicable letter of transmittal and
(subject to applicable abandoned property, escheat and similar laws) receive
in exchange therefor an amount equal to the Merger Consideration multiplied
by the number of Shares represented by such Certificate, without any interest
thereon, but shall have no greater rights against the Surviving Corporation
than may be accorded to general creditors of the Surviving Corporation.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any Shares. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent, they shall be canceled and exchanged for
the applicable Merger Consideration, as provided in this Article I, subject
to applicable law in the case of Dissenting Shares.
1.10 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any reasonable and lawful further action is
necessary or desirable to carry out the purposes of this Agreement and to
vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of either of the
Constituent Corporations, the officers and directors of such corporations are
fully authorized in the name of their corporation or otherwise to take, and
shall take, all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FKWW
As an inducement to the Company to enter into this Agreement, FKWW
hereby makes the following representations and warranties:
2.1 Organization, Etc. of FKWW. FKWW is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own and
operate its properties and assets and to carry on its business as now
conducted. FKWW is duly qualified and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
businesses conducted by it makes such qualification necessary and where the
failure to be so qualified would be reasonably expected to have a material
adverse effect on the business, results of operations or financial condition
of FKWW and its Subsidiaries taken as a whole. FKWW has obtained from
appropriate governmental regulatory authorities, domestic or foreign (each a
"Governmental Entity") all approvals, permits and licenses necessary for the
conduct of its business and operations as currently conducted, which
approvals, permits and licenses are valid and in full force and effect,
except where the failure to have obtained such approvals, permits or licenses
or the failure of such approvals, permits or licenses to be valid and in
full force and effect would not be reasonably expected to have a material
adverse effect on the business, results of operations or financial condition
of FKWW and its Subsidiaries taken as a whole. Other than FKW Sub, FKWW has
no Subsidiaries. As used in this Agreement, "Subsidiary" of a specified
Person means (i) any corporation of which equity securities possessing a
majority of the ordinary voting power in electing the board of directors are,
at the time as of which such determination is being made, owned or controlled
by such specified Person either directly or indirectly or in combination with
one or more Subsidiaries of such specified Person, or (ii) any Person (other
than a corporation) in which such specified Person either directly or
indirectly through or in combination with one or more Subsidiaries, at the
time as of which such determination is being made, (x) is a general partner,
or (y) owns or controls more than a 50% ownership interest and has the right
to elect a majority of the members of the governing authority of such
specified Person.
2.2 Organization, Etc. of the Guarantor. The Guarantor is a
corporation organized and existing under the laws of South Australia,
Australia, with adequate corporate power and authority to own its properties
and carry on its business as presently conducted. The Guarantor has the
corporate power and authority to enter into, execute and deliver the Guaranty
and to guarantee the obligations of FKWW hereunder pursuant to such Guaranty.
2.3 Authorization. This Agreement and the consummation of the
transactions contemplated hereby have been unanimously approved by the Board
of Directors of FKWW and have been duly authorized by all other necessary
corporate action on the part of FKWW. This Agreement has been duly executed
and delivered by a duly authorized officer of FKWW and (assuming the same to
be valid and binding obligations of the other parties hereto) constitutes the
valid and binding agreement of FKWW, enforceable against FKWW in accordance
with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
application which may affect the enforcement of creditors' rights generally
and by general equitable principles. FKWW has delivered to the Company true
and correct copies of resolutions adopted by the Board of Directors of FKWW
approving this Agreement.
2.4 Execution, Delivery and Performance by the Guarantor. The
execution, delivery and performance of the Guaranty and the consummation of
the transactions contemplated thereby have been duly authorized by the Board
of Directors of the Guarantor, and the Guarantor has taken all other actions
required by law and its organizational documents in order to consummate the
transactions contemplated by the Guaranty. The Guaranty constitutes the
valid and binding obligations of the Guarantor and is enforceable in
accordance with its terms, except as enforceability may be subject to or
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally.
2.5 No Consents. The execution and delivery of this Agreement by
FKWW or by the Guarantor of the Guaranty, do not, and the performance of
FKWW's obligations under this Agreement and the Guarantor of its obligations
under the Guaranty, and the consummation of the transactions contemplated
hereby or thereby by FKWW and the Guarantor, respectively, will not require
any consent, approval, authorization or permit of, or filing with or
notification to any Governmental Entity, except (i) for (A) applicable
requirements of the Exchange Act, the Securities Act of 1933, as amended and
the rules and regulations thereunder (the "Securities Act"), and state
securities or "blue sky" laws or state anti-takeover laws ("Blue Sky Laws"),
(B) the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended and the rules and regulations
thereunder (the "HSR Act"), and (C) the Merger Filing, and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, (x) would not, individually or in the
aggregate, reasonably be expected to prevent consummation of the Merger, or
otherwise prevent FKWW or the Guarantor from performing their respective
obligations under this Agreement or the Guaranty in any material respect, and
(y) would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the business, results of operations or
financial condition of FKWW and its Subsidiaries taken as a whole.
2.6 Brokers and Finders. FKWW has not employed any investment
banker, broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission payable
after the date hereof in connection with this Agreement or the Merger.
2.7 Compliance with Other Instruments, Etc. As of the date
hereof, FKWW is not in violation of any term of (a) its charter, by-laws or
other organizational documents, (b) any material agreement or instrument
including any such related to Indebtedness, (c) any applicable law,
ordinance, rule or regulation of any Governmental Entity, or (d) any
applicable order, judgement or decree of any court, arbitrator or
Governmental Entity, the consequences of which violation, whether
individually or in the aggregate, would be reasonably expected to have a
material adverse effect on (i) the business, results of operations or
financial condition of FKWW or (ii) the ability of FKWW to perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by FKWW will not result in any violation of or conflict with,
constitute a default under, or require any consent under any term of the
charter, bylaws or other organizational document of FKWW or any such
agreement, instrument, law, ordinance, rule, regulation, order, judgement or
decree or result in the creation of (or impose any obligation on FKWW to
create) any Lien upon any of the properties or assets of FKWW pursuant to any
such term, except where such violation, conflict or default, or the failure
to obtain such consent, individually or in the aggregate, would not be
reasonably expected to have a material adverse effect on (i) the business,
results of operations or financial condition of FKWW and its Subsidiaries
taken as a whole or (ii) the ability of FKWW to perform its obligations under
this Agreement. For purposes of this Agreement, "Lien" means any mortgage.
pledge, lien, security interest or other encumbrance of any kind or nature.
2.8 Litigation. As of the date hereof, there are no actions,
suits, investigations or proceedings (adjudicatory or rulemaking) pending or,
to the knowledge of FKWW, threatened against FKWW or any of its respective
properties in any court or before any arbitrator of any kind or before or by
any Governmental Entity, except actions, suits, investigations or proceedings
which, in the aggregate, would not be reasonably expected to have a material
adverse effect on the ability of FKWW to perform its obligations under this
Agreement.
2.9 Information True and Correct. None of the information
supplied or to be supplied by FKWW for inclusion in the Information Statement
will, at the date the definitive Information Statement is first sent or given
to the stockholders of the Company, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. No representation
is made by FKWW with respect to any information supplied by the Company or
any of its Affiliates for inclusion in the Information Statement.
2.10 Transaction Agreements. This Agreement, the Other Transaction
Agreements and the other agreements listed in the recitals above, are the
only agreements existing as of the date hereof between FKWW, on the one hand,
and the respective counterparties to such agreements and any Affiliates of
such parties, on the other hand, with respect to the acquisition of Class A
Stock, Class B Stock, Class C Stock or Convertible Notes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FKW SUB
As an inducement to the Company to enter into this Agreement, FKW
Sub hereby makes the following representations and warranties:
3.1 Organization, Etc. FKW Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own and operate its
properties and assets and to carry on its business as now conducted. FKW Sub
is duly qualified and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the businesses
conducted by it makes such qualification necessary and where the failure to
be so qualified would be reasonably expected to have a material adverse
effect on the business, results of operations or financial condition of FKW
Sub and its Subsidiaries taken as a whole. FKW Sub has obtained from the
appropriate Government Entities all approvals, permits and licenses
necessary for the conduct of its business and operations as currently
conducted, which approvals, permits and licenses are valid and in full force
and effect, except where the failure to have obtained such approvals, permits
or licenses or the failure of such approvals, permits or licenses to be
valid and in full force and effect would not be reasonably expected to have a
material adverse effect on the business, results of operations or financial
<PAGE>
condition of FKW Sub and its Subsidiaries taken as a whole. At the date of
this Agreement, FKW Sub has no Subsidiaries.
3.2 Authorization. This Agreement and the consummation of the
transactions contemplated hereby have been unanimously approved by the Board
of Directors of FKW Sub and have been duly authorized by all other necessary
corporate action on the part of FKW Sub. This Agreement has been duly
executed and delivered by a duly authorized officer of FKW Sub and (assuming
the same to be valid and binding obligations of the other parties hereto)
constitutes the valid and binding agreement of FKW Sub, enforceable against
FKW Sub in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application which may affect the enforcement of creditors' rights
generally and by general equitable principles.
3.3 No Consents. The execution and delivery of this Agreement by
FKW Sub do not, and the performance of its obligations under this Agreement
and the consummation of the transactions contemplated hereby by FKW Sub will
not, require any consent, approval, authorization or permit of, or filing
with or notification to any Governmental Entity, except (i) for (A)
applicable requirements of the Exchange Act, the Securities Act, and the Blue
Sky Laws, (B) the pre-merger notification requirements of the HSR Act, and
(C) the Merger Filing, and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, (x) would not, individually or in the aggregate, be reasonably
expected to prevent consummation of the Merger, or otherwise prevent FKW Sub
from performing its obligations under this Agreement in any material respect,
and (y) would not, individually or in the aggregate, be reasonably expected
to have a material adverse effect on the business, results of operations or
financial condition of FKWW and its Subsidiaries taken as a whole.
3.4 Brokers and Finders. FKW Sub has not employed any investment
banker, broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission payable
after the date hereof in connection with the Merger.
3.5 Compliance with Other Instruments, Etc. As of the date
hereof, FKW Sub is not in violation of any term of (a) its charter, by-laws
or other organizational documents, (b) any material agreement or instrument
including any such related to Indebtedness, (c) any applicable law,
ordinance, rule or regulation of any Governmental Entity, or (d) any
applicable order, judgement or decree of any court, arbitrator or
Governmental Entity, the consequences of which violation, whether
individually or in the aggregate, would be reasonably expected to have a
material adverse effect on (i) the business, results of operations or
financial condition of FKWW and its Subsidiaries taken as a whole, or (ii)
the ability of FKW Sub to perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement by FKW Sub will not
result in any violation of or conflict with, constitute a default under, or
require any consent under any term of the charter, bylaws or other
organizational document of FKW Sub or any such agreement, instrument, law,
ordinance, rule, regulation, order, judgement or decree or result in the
creation of (or impose any obligation on FKW Sub to create) any Lien upon any
of the properties or assets of FKW Sub pursuant to any such term, except
where such violation, conflict or default, or the failure to obtain such
consent, individually or in the aggregate, would not be reasonably expected
<PAGE>
to have a material adverse effect on (i) the business, results of operations
or financial condition of FKWW and its Subsidiaries taken as a whole, or (ii)
the ability of FKW Sub to perform its obligations under this Agreement.
3.6 Litigation. As of the date hereof, there are no actions,
suits, investigations or proceedings (adjudicatory or rulemaking) pending or,
to the knowledge of FKW Sub, threatened against FKW Sub or any of its
respective properties in any court or before any arbitrator of any kind or
before or by any Governmental Entity, except actions, suits, investigations
or proceedings which, in the aggregate, would not be reasonably expected to
have a material adverse effect on the ability of FKW Sub to perform its
obligations under this Agreement.
3.7 Information True and Correct. None of the information supplied
or to be supplied by FKW Sub for inclusion in the Information Statement will,
at the date the definitive Information Statement is first sent or given to
the stockholders of the Company, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. No representation
is made by FKW Sub with respect to any information supplied by the Company or
any of its Affiliates for inclusion in the Information Statement.
3.8 Fraudulent Transfer Laws. Assuming the Company is not
Insolvent immediately prior to the Effective Time, and further assuming the
representations and warranties of the Company contained in this Agreement are
true and accurate in all material respects immediately prior to the Effective
Time, the Surviving Corporation will not be Insolvent immediately after the
Effective Time (taking into account changes in assets and liabilities of the
Surviving Corporation as a result of the Merger). For purposes hereof, an
entity will be deemed to be Insolvent if (i) such entity's financial
condition is such that either the sum of its debts is greater than the fair
value of its assets or the fair saleable value of its assets is less than the
amount required to pay its probable liability on existing debts as they
mature, (ii) such entity has unreasonably small capital with which to engage
in its business or (iii) such entity has incurred liabilities beyond its
ability to pay as they become due.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to FKWW and FKW Sub to enter into this Agreement,
the Company hereby makes the following representations and warranties.
Whether or not specifically referred to therein, such representations and
warranties contain exceptions set forth in a written disclosure letter (the
"Company Disclosure Letter") delivered to FKWW and FKW Sub concurrently with
the execution hereof, which is numbered to correspond to the various sections
of this Agreement and which also sets forth certain other information called
for by this Agreement.
4.1 Organization, Etc., of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own and operate its properties and assets and to carry on its
business as now conducted. The Company is duly qualified and in good
standing in each jurisdiction in which the property owned, leased or operated
<PAGE>
by it or the nature of the businesses conducted by it makes such
qualification necessary and where the failure to be so qualified would be
reasonably expected to have a material adverse effect on the business,
results of operations or financial condition of the Company and its
Subsidiaries taken as a whole. As of the date hereof, the Company has
obtained from the appropriate Government Entities all approvals, permits and
licenses necessary for the conduct of its business and operations as
currently conducted, which approvals, permits and licenses are, as of the
date hereof, valid and in full force and effect, except where the failure to
have obtained such approvals, permits or licenses or the failure of such
approvals, permits or licenses to be valid and in full force and effect
would not be reasonably expected to have a material adverse effect on the
business, results of operations or financial condition of the Company and its
Subsidiaries taken as a whole.
4.2 Operations of Subsidiaries. Each Subsidiary of the Company
(a) is a corporation or other legal entity duly organized, validly existing
and (if applicable) in good standing under the laws of the jurisdiction of
its organization and has the requisite corporate or other organizational
power and authority to own its properties and assets and conduct its business
and operations as currently conducted, except where the failure to be duly
organized, validly existing and in good standing would not be reasonably
expected to have a material adverse effect on the business, results of
operations or financial condition of the Company and its Subsidiaries taken
as a whole, (b) is duly qualified and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified or in good standing would not reasonably be
expected to have a material adverse effect on the business, results of
operations or financial condition of the Company and its Subsidiaries taken
as a whole, and (c) has, as of the date hereof, obtained from the appropriate
Government Entities all approvals, permits and licenses necessary for the
conduct of its business and operations, as currently conducted, which
approvals, permits and licenses are, as of the date hereof, valid and remain
in full force and effect, except where the failure to have obtained such
approvals, permits and licenses or the failure of such approvals, permits or
licenses to be valid and in full force and effect would not be reasonably
expected to have a material adverse effect on the business, results of
operations or financial condition of the Company and its Subsidiaries taken
as a whole. The Company Disclosure Letter sets forth a true and correct
list of each Subsidiary of the Company as of the date hereof. All of the
outstanding capital stock of each such Subsidiary is owned entirely by the
Company or by a Subsidiary of the Company, as the case may be, as of the date
hereof, free and clear of all Liens and Restrictions, except for such
restrictions on transfer as are imposed by state and federal securities laws
and except for Liens and Restriction as will not reasonably be expected to
have a material adverse effect on the business, results of operations or
financial condition of the Company and its Subsidiaries taken as a whole.
For purposes of this Agreement, "Restriction," means, when used with respect
to any specified security, any shareholders or other trust agreement, option,
warrant, escrow, proxy, buy-sell agreement, power of attorney or other
contract, agreement or arrangement which (i) grants to any Person the right
to purchase or otherwise acquire, or obligates any Person to sell or
otherwise dispose of, such specified security or any interest therein, or
(ii) restricts the transfer of, or the exercise of any rights or the
enjoyment of any benefits arising by reason of, the ownership of such
specified security. All such shares of capital stock have been duly
<PAGE>
authorized and validly issued and are fully paid and nonassessable. There
are no agreements, understandings or undertakings governing the rights and
duties of the Company or any Subsidiary of the Company as a stockholder of
any Subsidiary (other than a Subsidiary wholly owned by the Company or by a
direct or indirect wholly owned Subsidiary of the Company) under which the
Company or any Subsidiary is or may become obligated, directly or indirectly,
to acquire or dispose of any equity interest in, make any capital
contribution or extend credit to, or act as guarantor, surety or indemnitor
for any liability of any Subsidiary (other than a Subsidiary wholly owned by
the Company or by a direct or indirect wholly owned Subsidiary of the
Company). Other than Subsidiaries of the Company, the Company has no interest
in any corporation, joint venture, limited liability company, limited
liability partnership, or other business enterprise of any nature, other than
investments in marketable securities acquired in the ordinary course of
business.
4.3 Authorization. This Agreement and the consummation of the
transactions contemplated hereby have been approved by the Board of Directors
of the Company and upon execution of the Consent, this Agreement and the
Merger shall have been duly authorized by all other necessary corporate
action on the part of the Company, including any required stockholder action.
This Agreement, upon execution and delivery thereof, will be duly executed
and delivered by a duly authorized officer of the Company and (assuming the
same to be valid and binding obligations of the other parties hereto) this
Agreement constitutes the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws of general application which may affect the
enforcement of creditors' rights generally and by general equitable
principles. The Company has delivered to FKWW and FKW Sub true and correct
copies of resolutions adopted by the Board of Directors.
4.4 Fairness Opinion; Approval by Board of Directors. On or prior
to the date hereof, the Board of Directors of the Company (i) approved the
terms of this Agreement and the Merger, (ii) determined that the Merger is
fair to and in the best interests of the holders of the Shares (other than
FKWW, FKW Sub, the Company, and their respective Affiliates), and (iii) has
recommended this Agreement and the Merger to the Company's stockholders. The
Board of Directors of the Company has received an oral opinion, as of the
date hereof, of (x) Bear, Stearns & Co. Inc. to the effect that the
consideration to be received by the holders of the Shares (other than FKWW,
FKW Sub, the Company, and their respective Affiliates) pursuant to this
Agreement is fair to such holders from a financial point of view, and (y)
Goldman Sachs & Co. to the effect that the consideration to be received by
the holders of the Shares (other than FKWW, FKW Sub, the Company and their
respective Affiliates) pursuant to this Agreement is fair to such holders.
At the date hereof, such opinions (which, when confirmed in writing, will be
provided to FKWW and FKW Sub) have not been withdrawn, revoked or modified.
It is agreed and understood that such opinions are for the use of the Board
of Directors of the Company in considering this Agreement and the Merger and
may not be relied upon by FKWW or FKW Sub. Based on such opinions, and such
other factors as it deemed relevant, the Board of Directors of the Company
has taken all of the actions set forth in clauses (i) and (ii) above and has
directed that this Agreement be submitted to the stockholders of the Company
for their approval.
4.5 Capital Stock.
(a) The authorized capital stock of the Company consists of
(i) 10,000,000 shares of Class A Stock, of which 5,000,000 shares are
outstanding as of the date hereof, (ii) 100,000,000 shares of Class B Stock,
of which 32,781,795 shares are outstanding as of the date hereof, (iii)
20,000,000 shares of Class C Stock, of which 7,088,732 shares are outstanding
as of the date hereof, and (iv) 400,000 shares of 10% Convertible Cumulative
Preferred Stock, par value $0.001 per share, of which none are issued and
outstanding as of the date hereof. All outstanding Shares are duly
authorized, validly issued, fully paid and nonassessable.
(b) As of the date hereof, there are (i) no options,
warrants, calls, subscriptions, convertible securities or other rights
(including preemptive rights), agreements, understandings, arrangements or
commitments of any character obligating the Company now or at any time in the
future to issue or sell any of its capital stock or other equity interests in
the Company or any of its Subsidiaries, (ii) there are no obligations,
contingent or otherwise, of the Company or any of its Subsidiaries, to
repurchase, redeem or otherwise acquire any shares of capital stock or other
equity interests of the Company or any of its Subsidiaries, (iii) there are
no outstanding bonds, debentures, notes or other obligations of the Company
or any of its Subsidiaries, the holders of which have the right to vote (or
which are convertible into or exercisable for securities having the right to
vote) with the holders of the Class A Stock and the Class B Stock on any
matter, (iv) there are no obligations, contingent or otherwise, guaranteeing
the value of any of the Shares or the capital stock of any of its
Subsidiaries either now or at any time in the future, and (v) there are no
voting trusts, proxies or other agreements or understandings to which the
Company is a party or is bound with respect to the voting of any capital
stock or other equity interests of the Company or any of its Subsidiaries.
None of the Shares or any other equity interest of the Company or any other
securities convertible into or exchangeable for Shares or any other equity
interests of the Company, or options to acquire Shares or securities
convertible into Shares or equity interests of the Company are held by any of
the Company's Subsidiaries.
4.6 Consents. The execution and delivery of this Agreement by the
Company do not, and the performance of its obligations under this Agreement
and the consummation of the Merger by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to any Governmental Entity, except (i) for (A) applicable requirements of the
Exchange Act, the Securities Act, and the Blue Sky Laws, (B) the pre-merger
notification requirements of the HSR Act, and (C) the Merger Filing, and (ii)
where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, (x) would not,
individually or in the aggregate, be reasonably expected to prevent the
consummation of the Merger, or otherwise prevent the Company from performing
its obligations under this Agreement in any material respect, and (y) with
respect to any such requirement in effect on the date hereof, would not,
individually or in the aggregate, be reasonably expected to have a material
adverse effect on the business, results of operations or financial condition
of the Company and its Subsidiaries taken as a whole.
4.7 SEC Reports and Financial Statements. Since January 1, 1994
up to and including the date hereof, the Company has filed with the SEC all
forms, reports, schedules, registration statements, proxy statements and
other documents (collectively, "Company SEC Reports") required to be filed by
the Company with the Securities and Exchange Commission (the "SEC") under the
<PAGE>
Securities Act, Exchange Act, and the rules and regulations thereunder. As
of their respective dates, or in the case of registration statements, as of
their respective effective dates, all of the Company SEC Reports, including
all exhibits and schedules thereto and all documents incorporated by
reference therein, (i) complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act applicable
thereto, and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except for such statements, if any, as have
been modified or superseded by subsequent filings prior to the date hereof.
The consolidated financial statements of the Company and its Subsidiaries
included in such reports complied as of the respective dates thereof as to
form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto,
were prepared in accordance with United States generally accepted accounting
principles ("GAAP") as in effect on their respective dates applied on a
consistent basis throughout the periods involved (except as may be indicated
in the notes thereto or, in the case of the unaudited interim financial
statements, as permitted by Form 10-Q of the SEC) and fairly presented
(subject, in the case of the unaudited interim financial statements, to
normal, year-end audit adjustments) the consolidated financial position of
the Company and its Subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended. Since
December 31, 1996, and up to and including the date hereof, neither the
Company nor any of its Subsidiaries has incurred any liabilities or
obligations (whether absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise and whether due or to become due) of any nature,
which would be required by GAAP, as of the date hereof, to be set forth on a
consolidated balance sheet of the Company and its Subsidiaries or in the
notes thereto except liabilities, obligations or contingencies (a) which are
disclosed, reflected or reserved for on the unaudited balance sheets of the
Company and its Subsidiaries as of March 31, 1997 (including the notes
thereto) or in this Agreement or the Company Disclosure Letter or (b) which
(i) were incurred in the ordinary course of business after December 31, 1996,
and consistent with past practices, or (ii) are disclosed or reflected or
reserved for in the Company SEC Reports filed after December 31, 1996, or
(iii) would not reasonably be expected to, individually or in the aggregate,
have a material adverse effect on the business, results of operations or
financial condition of the Company and its Subsidiaries taken as a whole, or
(c) which were incurred as a result of actions taken or refrained from being
taken (i) in furtherance of the transactions contemplated by this Agreement,
or (ii) at the request of FKWW and FKW Sub. Since December 31, 1996, there
has been no change in any of the significant accounting (including tax
accounting) policies, practices or procedures of the Company or any of its
Subsidiaries except as required by GAAP or applicable law.
4.8 Absence of Certain Changes or Events. Since December 31, 1996
and up to and including the date hereof, except as disclosed in the Company
Disclosure Letter or the Company SEC Reports, (A) the Company has not
declared or paid any dividend or made any distribution on or with respect to
its capital stock; redeemed, purchased or otherwise acquired any of its
capital stock; granted any options, warrants or other rights to purchase
shares of, or any other securities which may be convertible into or
exchangeable for, its capital stock; or issued any shares of its capital
stock; (B) there has been no increase in the compensation or benefits
(including but not limited to any bonus, severance or option plan, program,
<PAGE>
arrangements or understanding) payable or to become payable to any officer or
director of the Company or any of the 25 most highly compensated (based on
cash compensation paid in or with respect to services rendered in calendar
1996) employees of the Company and its Subsidiaries (including officers and
directors of the Company, as applicable) (collectively, including officers
and directors of the Company, "Highly Compensated Persons"), other than
increases in the ordinary course of business and consistent with past
practice; (C) there has been no pledge, disposition, encumbrance,
hypothecation, sale or other transfer of any material portion of the
properties or assets of the Company and its Subsidiaries taken as a whole
(whether tangible or intangible), except in the ordinary course of business
and consistent with past practice; and (D) there has been no agreement
binding upon the Company or any of its Subsidiaries to do any of the
foregoing. Since December 31, 1996 and up to and including the date of this
Agreement, other than as disclosed in the Company Disclosure Letter or the
Company SEC Reports or as contemplated by this Agreement, the Company and
each of its Subsidiaries have conducted their respective businesses in the
ordinary course and there has been no change in the condition (financial or
otherwise), business, properties, assets or liabilities of the Company and
its Subsidiaries taken as a whole, except such failures to so conduct their
businesses and such changes, which, when considered as a whole, have not had
a material adverse effect on the business, results of operations or financial
condition of the Company and its Subsidiaries taken as a whole.
4.9 Service Mark. The Company and its Subsidiaries own or have
adequate rights, including the underlying intellectual property rights, with
respect to the mark, "The Family Channel," in the United States.
4.10 DGCL Section 203. The Company is not subject to the
provisions of Section 203 of the DGCL.
4.11 Material Contracts and Commitments. None of M.G. "Pat"
Robertson, Timothy B. Robertson, Anthony D. Thomopoulos, Richard L.
Sirvaitis, K.J. "Gus" Lucas, Stephen D. Lentz, or Louis A. Isakoff
(collectively, the "Responsible Officers") has, as of the date hereof, Actual
Knowledge that the Company or any other party to any of the Company's
contracts or agreements is in breach of any of their respective obligations
under such contracts or agreements other than breaches which, individually or
in the aggregate, would not reasonably be expected to have a material adverse
affect on the business, results of operations or financial condition of the
Company and its Subsidiaries taken as a whole.
4.12 Agreements with Related Parties. Other than as set forth in
the Company SEC Reports or the Company Disclosure Letter, as of the date
hereof, none of Pat Robertson, Tim Robertson, the officers and directors of
the Company, LIFE, CBN, Regent or their respective Affiliates (except
Affiliates controlled by the Company) (collectively, "Related Parties") is a
party to any agreement with the Company or any of its Subsidiaries providing
for the payment of an amount or amounts in excess of $250,000 in the
aggregate, or has any interest in any property (real, personal or mixed,
tangible or intangible) used in or pertaining to the business of the Company
or any of its Subsidiaries which is material to the Company and its
Subsidiaries taken as a whole, except this Agreement (the "Related Party
Agreements"). No Person shall be deemed to have any agreement or interest
referred to in this Section 4.12 solely because such Person holds an equity
interest in a Person (who is not an Affiliate of such Person) which is party
to such agreement or has such interest. None of the Related Party
<PAGE>
Agreements, in the form previously delivered to FKWW, has been modified or
amended in any material respect through the date hereof except as
contemplated by this Agreement, the Stock Purchase Agreements or the
Contribution Agreement.
4.13 Affiliation Agreements. The Company Disclosure Letter
includes a true and complete list as of the date hereof of the contracts
between the Company and the top 25 cable carriers relating to carriage of The
Family Channel (determined by reference to subscriber count as of the most
recent practicable dates) (the "Affiliation Agreements"). At the date
hereof, to the Actual Knowledge of the Responsible Officers, the Company has
not received any notice (written or oral) that any such cable carrier (a) has
canceled or terminated, or has a specific intention to cancel or terminate,
any Affiliation Agreement, which cancellations or terminations would involve,
in the aggregate, the loss of more than 1,000,000 subscribers, or (b) has a
specific intention to effect a planned reduction in the number of subscribers
covered by such Affiliation Agreement other than reductions which would not
reasonably be expected to have a material adverse effect on the business,
results of operations or financial condition of the Company and its
Subsidiaries taken as a whole.
4.14 Brokers and Finders. Except for the fees and expenses payable
to Goldman, Sachs & Co. and Bear, Stearns & Co. Inc., which fees shall be
paid by the Surviving Corporation, the Company has not employed any
investment banker, broker, finder, consultant or intermediary in connection
with the transactions contemplated by this Agreement which would be entitled
to any investment banking, brokerage, finder's or similar fee or commission
payable after the date hereof in connection with this Agreement or the Merger
contemplated hereby.
4.15 Information Statement. None of the information supplied or to
be supplied by the Company for inclusion in the definitive Information
Statement to be filed with the SEC relating to the Merger as required by the
Exchange Act (the "Information Statement"), will, at the date such
Information Statement is first sent or given to stockholders of the Company,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Information Statement will, when first sent or given to
stockholders of the Company, comply as to form in all material respects with
the requirements of the Exchange Act. No representation is made by Company
with respect to any information supplied by FKWW or FKW Sub expressly for
inclusion in the Information Statement.
ARTICLE V
CONDUCT OF BUSINESS
5.1 Conduct of Business of the Company. Prior to the earlier of
the Effective Time of the Merger or the termination of this Agreement
pursuant to its terms, unless FKWW and FKW Sub shall otherwise consent in
writing or unless otherwise set forth in the Company Disclosure Letter:
(i) except as otherwise contemplated by this Agreement, the
Company shall, and shall cause its Subsidiaries to, carry on their
respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
<PAGE>
(ii) except as required or permitted by this Agreement and
except as required by any existing agreement of the Company or any of
its Subsidiaries or in order to comply with the legal requirements of
the jurisdiction of incorporation of any Subsidiary, the Company shall
not and shall not propose to, nor shall it permit any of its
Subsidiaries to or propose to (A) sell or pledge or agree to sell or
pledge any capital stock owned by it (or any of its Subsidiaries) in any
of its Subsidiaries, (B) amend its Certificate of Incorporation or By-
Laws, (C) split, combine, reclassify or amend the terms of its
outstanding capital stock or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of, or in substitution
for, shares of capital stock of the Company, or declare, set aside or
make any dividend or other distribution payable in cash, stock or
property, or (D) directly or indirectly redeem, purchase or otherwise
acquire or agree to redeem, purchase or otherwise acquire any shares of
the capital stock of the Company or any options or rights to purchase
any shares of capital stock except as required by this Agreement;
(iii) except as required by any existing agreement of the
Company or any Subsidiary or in order to comply with the legal
requirements of the jurisdiction of incorporation of any Subsidiary, the
Company shall not, nor shall it permit any of its Subsidiaries to,
except as required by this Agreement, authorize, issue, deliver, pledge,
encumber or sell or agree to authorize, issue, deliver, pledge, encumber
or sell any additional shares of, or rights of any kind to acquire any
shares of, its capital stock of any class, or any option, rights or
warrants to acquire, or securities convertible into, shares of capital
stock;
(iv) except as otherwise contemplated by this Agreement, the
Company shall not, and shall cause its Subsidiaries not to: (A) adopt
any material employee benefit plan or (B) amend any material employee
benefit plan in a manner that significantly increases the benefits
thereunder or (C) adopt, extend or amend any employment agreement
(including any severance agreement) for senior management employees of
the Company or (D) make any increase in the compensation of any Highly
Compensated Person, whether now or hereafter payable, other than in the
ordinary course of business consistent with past practice (except that
no such increase shall be effected pursuant to any option, stock
purchase, or other plan, arrangement, contract or commitment providing
for the issuance of capital stock of the Company or any option or other
right to acquire capital stock of the Company), or (E) hire any new
employee of the Company or any Subsidiary at a cash compensation
(including salary and anticipated bonus) in excess of $100,000 per annum
other than any replacement for a departing employee pursuant to
substantially equivalent compensation arrangements, which replacements
shall be made, if at all, only after consulting with FKWW;
(v) the Company shall not and shall cause its Subsidiaries to
not, take or agree to take any action with the intent and knowledge that
such action would cause a breach of any of the representations or
warranties of the Company contained in this Agreement in any material
respect or prevent the Company from performing or cause the Company not
to perform any of its covenants hereunder in any material respect;
<PAGE>
(vi) the Company shall not submit any matters to the
stockholders of the Company for a vote prior to the Effective Date other
than the Merger;
(vii) the Company shall not, and shall cause its
Subsidiaries to not, sell, pledge, dispose of, encumber or hypothecate
any material portion of the assets of the Company and its Subsidiaries
taken as a whole, except in the ordinary course of business and
consistent with past practice;
(viii) the Company shall not, and shall cause its
Subsidiaries to not, acquire (by merger, consolidation or acquisition of
stock or assets) any corporation, partnership or any other business
organization or division thereof, or any material interest therein other
than marketable securities purchased in the ordinary course of business
consistent with past practice;
(ix) the Company shall not, and shall cause its Subsidiaries
to not, incur any liability in respect of (i) borrowed money, (ii)
capitalized lease obligations, (iii) the deferred purchase price of
property or services (other than trade payables in the ordinary course
of business), (iv) reimbursement obligations in respect of letters of
credit and (v) guarantees of any of the foregoing incurred by any Person
other than the Company and its direct or indirect wholly owned
Subsidiaries (collectively, "Indebtedness") except (x) to the extent of
such liabilities as of the date hereof, including any replacements,
refinancings or renewals thereof on terms not materially more onerous to
the Company, or (y) under revolving credit facilities existing on the
date hereof or (z) other obligations which do not exceed $1 million
individually or in the aggregate;
(x) the Company shall not, and shall cause its Subsidiaries
to not, authorize any capital expenditures or the purchase of any fixed
assets other than (i) expenditures or purchases which are included in
the capital budget of the Company previously delivered by the Company to
FKWW and FKW Sub or, if not included in such capital budget, do not
exceed $10 million individually or in the aggregate, or (ii)
expenditures necessary to continue to operate the technical facility of
the Company following the occurrence of any emergency in order to
continue to telecast the Family Channel (subject in the case of (ii)
above, to the receipt of approval of FKWW, which approval shall not be
unreasonably withheld and shall be deemed given, if not previously given
or reasonably withheld, upon the expiration of 24 hours following
confirmed, actual delivery of notice, however delivered, to any of Chase
Carey, Jay Itzkowitz, Larry Jacobson, Haim Saban, Margaret Loesch or Mel
Woods, which notice identifies the emergency, provides an estimate of
the expenditures to be incurred and expressly refers to the requirement
that notice of approval or the withholding of approval be delivered to
the Company within 24 hours. The provisions of Section 9.2 hereof
expressly do not apply to this Section 5.1(x);
(xi) the Company shall not, and shall cause its Subsidiaries
to not, authorize any expenditure for television or motion picture
productions or programming other than expenditures or purchases which
are included in the programming budget of the Company previously
delivered by the Company to FKWW and FKW Sub or, if not included in such
<PAGE>
capital budget, do not exceed $10 million individually or in the
aggregate;
(xii) the Company shall not, and shall cause its
Subsidiaries to not, enter into any transaction or incur or make any
payment to any Related Party of the Company except for goods or services
provided in the ordinary course of business consistent with past
practice and except for payments incurred or made or other transactions
effected pursuant to any agreements existing on the date hereof;
(xiii) the Company shall not, and shall cause its
Subsidiaries to not, take any action to change any of the significant
accounting (including tax accounting) policies, practices or procedures
of the Company or any of its Subsidiaries other than as required in
order to comply with GAAP or applicable law;
(xiv) the Company shall not, and shall cause its
Subsidiaries to not, enter into any agreement with any Person other than
FKWW or FKW Sub granting such other Person the right to program any
block of time on The Family Channel other than arrangements which (i)
terminate on or prior to September 1, 1998, or (ii) which are terminable
by the Company on not more than 30 days notice without any payment with
respect thereto other than reimbursement of any advance payments;
(xv) the Company shall not, and shall cause its Subsidiaries
to not, to launch a new cable channel without first consulting with
FKWW;
(xvi) the Company shall not and shall cause its Subsidiaries
to not, cancel, revoke or fail to renew any of the Affiliation
Agreements or take any action with the intent and knowledge that such
action would cause a material breach or violation of any Affiliation
Agreement; and
(xvii) the Company shall not, and shall cause its
Subsidiaries to not enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing subsections.
5.2 Conduct of Business of FKW Sub. Prior to the earlier of the
Effective Time of the Merger or the termination of this Agreement pursuant to
its terms, FKW Sub shall not engage in any activities of any nature except as
provided in or contemplated by this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of Information Statement. The Company shall, as
promptly as practicable, prepare and file a preliminary Information Statement
with the SEC and shall use its reasonable good faith efforts to respond to
any comments of the SEC and to cause the Information Statement to be mailed
to the Company's stockholders at the earliest practicable time. Each of the
parties hereto shall supply such information reasonably requested by the
Company (or in the case of the Company, as is necessary) in its possession
for inclusion in the Information Statement. The Company will notify FKWW and
FKW Sub promptly of the receipt of any comments from the SEC or its staff and
of any request by the SEC or its staff for amendments or supplements to the
Information Statement or for additional information and will supply FKWW and
<PAGE>
FKW Sub with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Information Statement or the Merger.
6.2 Filings and Other Actions. As promptly as practicable after
the execution of this Agreement, but in any event within 5 business days,
FKWW, FKW Sub and the Company shall file notification reports under the HSR
Act and shall request early termination of the waiting period under the HSR
Act and use their reasonable good faith efforts to obtain clearance or
authorization under the HSR Act of the Merger and the other transactions
contemplated by this Agreement at the earliest practicable time.
6.3 Fees and Expenses. Except as set forth in Section 9.11,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses.
6.4 Further Assurances.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use all reasonable good faith efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, and
to cooperate with each other in connection with the foregoing, including, but
not limited to, using reasonable good faith efforts (a) to obtain all
necessary waivers, consents and approvals from other parties to material loan
agreements, leases and other contracts; (b) to obtain all necessary consents,
approvals and authorizations as are required to be obtained under any
federal, state or foreign law or regulation; (c) to defend all lawsuits or
other legal proceedings challenging this Agreement or the transactions
contemplated hereby; (d) to lift or rescind any injunction or restraining
order or other order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby; (e) to effect all necessary
filings with respect to the transactions contemplated hereby, including, but
not limited to, filings under the HSR Act and submissions of information
requested by Government Entities; and (f) to fulfill all conditions to this
Agreement. Notwithstanding the foregoing, nothing contained herein shall
require any party to waive any of the conditions to the Merger or other
transactions contemplated by this Agreement.
(b) FKWW and FKW Sub hereby agree, while this Agreement is in
effect, and except as contemplated hereby, not to take any action with the
intention and knowledge that such action would make any of their
representations or warranties contained herein untrue or incorrect in any
material respect or have the effect of preventing or disabling them from
performing their obligations under this Agreement. FKWW and FKW Sub shall
not enter into, permit or give any consent to, any amendment, supplement or
other modification of, or give any consent or waiver or otherwise take any
action (including agreeing to a delayed closing date) under, any of the Other
Transaction Agreements (or any of the agreements related thereto)
(collectively, a "Modification") which could reasonably be expected to delay
the Effective Time, and shall not in any event waive, amend, modify or
terminate the condition set forth in Section 8.6 of the Contribution
Agreement, or terminate any of the Other Transaction Agreements (or any of
the agreements related thereto), without the prior written consent of the
Company (subject to Section 6.8, if applicable). Notwithstanding the
<PAGE>
foregoing, FKWW and FKW Sub may effect any Modification to the Other
Transaction Agreements (or any of the agreements related thereto) which they
determine in good faith to be reasonably necessary to effect the transactions
contemplated thereby, provided they use their reasonable good faith efforts
to cause the closing thereunder to occur as soon as practicable and provided
further that such Modification will not delay the Effective Time beyond
November 30, 1997.
6.5 Notification of Certain Matters. The Company shall use
reasonable good faith efforts to promptly give written notice to FKWW and FKW
Sub, and FKWW and FKW Sub shall use reasonable good faith efforts to promptly
give written notice to the Company, upon becoming aware of the occurrence or,
to its knowledge, impending or threatened occurrence, of any event which
would cause or constitute a breach of any of its representations, warranties
or covenants contained or referenced in this Agreement and use its reasonable
good faith efforts to prevent or promptly remedy the same.
6.6 Access and Information. From the date hereof to the Effective
Time, the Company shall, and shall cause its Subsidiaries and its and their
respective officers, directors, employees and agents to, afford the officers,
employees and agents of FKWW and FKW Sub and their respective affiliates
reasonable access during normal business hours (or at such other times as
FKWW or FKW Sub and the Company may mutually agree) to its properties, books,
contracts, commitments and records and shall furnish FKWW and FKW Sub and
their respective affiliates all financial, operating and other data and
information as FKWW or FKW Sub or any of their respective affiliates, through
their respective officers, employees or agents, may reasonably request. All
information disclosed pursuant to this Section 6.6, shall be subject to those
certain Confidentiality Agreements entered into by and between FKWW and the
Company as of May 2, 1996, December 17, 1996, and December 31, 1996 (the
"Confidentiality Agreements").
6.7 Acquisition Proposals. Prior to the Effective Time, the
Company agrees (a) that neither it nor any of its Subsidiaries shall
authorize or permit any of its officers, directors, employees, agents and
representatives (including, without limitation, any investment banker,
attorney or accountant retained by it or any of its Subsidiaries) to
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to a
merger, acquisition, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or any equity
securities of, the Company or any of its Subsidiaries (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal") or engage
in any negotiations concerning, or provide any confidential information or
data to, or have any discussions with, any Person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement
an Acquisition Proposal; (b) that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing and will
take the necessary steps to inform the individuals or entities referred to
above of the obligations undertaken in this Section 6.7; and (c) that it will
notify FKWW and FKW Sub immediately if any such inquiries or proposals are
received by, any such information is received from, or any such negotiations
or discussions are sought to be initiated or continued with, it; provided,
however, that nothing contained in this Section 6.7 shall prohibit the Board
of Directors of the Company from (i) furnishing information to or entering
<PAGE>
into discussions or negotiations with, any Person or entity that makes an
unsolicited bona fide proposal to acquire the Company pursuant to a merger,
consolidation, share exchange, purchase of a substantial portion of the
assets, business combination or other similar transaction, if, and only to
the extent that (A) the Board of Directors determines in good faith, based as
to legal matters on advice of outside legal counsel, that the failure to take
such action would involve a substantial risk of breach of fiduciary duty to
the Company's shareholders imposed by applicable law, (B) prior to furnishing
such information to, or entering into discussions or negotiations with, such
Person or entity, the Company provides notice to FKWW and FKW Sub to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such Person or entity, and (C) subject to any
confidentiality agreement with such Person or entity (which the Company
executed after determining in good faith, based as to legal matters on advice
of outside counsel, that the failure to take such action would involve a
substantial risk of breach of the Board of Directors' fiduciary duty to
stockholders imposed by applicable law), the Company keeps FKWW and FKW Sub
informed of the status (not the terms) of any such discussions or
negotiations; and (ii) to the extent applicable, complying with Rule 14d-9
and 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal. Nothing in this Section 6.7 shall (x) permit any party to
terminate this Agreement (except as specifically provided in Section 8.1
hereof), (y) permit any party to enter into any agreement with respect to an
Acquisition Proposal during the term of this Agreement (it being agreed that
during the term of this Agreement, no party shall enter into any agreement
with any Person that provides for, or in any way facilitates, an Acquisition
Proposal (other than a confidentiality agreement in customary form)), or
(z) affect any other obligation of any party under this Agreement.
6.8 Board of Directors. In the event FKWW and the other parties
thereto consummate the purchase of the Company Stock from the Robertson
Sellers pursuant to the Robertson Purchase Agreement prior to the Closing of
the Merger, FKWW shall, from and after such closing, be entitled to
designate, at its option, upon notice to the Company, up to that number of
directors, rounded to the nearest whole number, of the Company's Board of
Directors, subject to compliance with Section 14(f) of the Exchange Act, as
will make the percentage of the Company's directors designated by FKWW equal
to the aggregate voting power of the Shares of Company Stock held by FKWW or
any of its Subsidiaries (after giving effect to the conversion of the Class A
Stock to Class B Stock and the conversion of any Class C Stock and any
Convertible Notes then held by FKWW or its Subsidiaries into Class B Stock);
provided, however, that the Company shall not be obligated and need not
appoint any designee or designees to the Board of Directors of the Company
who, in the Board's good faith judgment, are not fit to be Directors of the
Company; and provided, further, that in the event that FKWW designees are
elected to the Board of Directors of the Company, such Board of Directors
shall have, until the Effective Time, at least two directors who are Class B
Directors on the date of this Agreement (the "Continuing Directors"), and
provided, further that, in such event, if the number of Continuing Directors
shall be reduced below two for any reason whatsoever, the remaining
Continuing Directors shall be permitted to designate an individual to fill
such vacancy who would be an "independent director" under the rules of the
New York Stock Exchange (such designee to be deemed to be a Continuing
Director for purposes of this Agreement) or, if no Continuing Directors then
remain, the other directors shall designate two individuals to fill such
vacancies who shall not be officers, directors, employees or Affiliates of
FKWW or any of its Affiliates and shall otherwise be "independent directors"
<PAGE>
under the rules of the New York Stock Exchange (each designee to be deemed to
be a Continuing Director for purposes of this Agreement). To the fullest
extent permitted by applicable law, the Company shall take all actions
requested by FKWW which are reasonably necessary to effect the election of
any such designee or designees, including the inclusion in the Information
Statement, or a separate mailing, of the information required by Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and the
making of such mailing as part of the Information Statement or otherwise, as
requested by FKWW (provided that FKWW shall have provided to the Company on a
timely basis all information required to be included with respect to FKWW
designees). In connection with the foregoing, the Company will promptly
either increase the size of the Company's Board of Directors and/or obtain
the resignation of such number of its current directors as is necessary to
enable FKWW designees to be elected or appointed to the Company's Board of
Directors as provided above. Following the election or appointment of FKWW's
designees pursuant to this Section 6.8 and prior to the Effective Time, any
amendment, or waiver of any term or condition, of this Agreement or the
Amended and Restated Certificate of Incorporation or Restated By-Laws of the
Company, any termination of this Agreement by the Company, any extension by
the Company of the time for the performance of any of the obligations or
other acts of FKWW or FKW Sub or waiver or assertion of any of the Company's
rights hereunder, or any other consents or actions by the Board of Directors
with respect to this Agreement or the Guaranty, will require, and will
require only, the concurrence of a majority of the Continuing Directors,
except to the extent that applicable law requires that such action be acted
upon by the full Board of Directors, in which case such action will require
the concurrence of a majority of the Directors, which majority shall include
each of the Continuing Directors, and no other action by the Company shall be
required for purposes of this Agreement. After the date of this Agreement,
until the earlier of (i) the Effective Time, and (ii) the termination of this
Agreement, FKWW will not exercise any rights it may have as a stockholder of
the Company to effect a change in the composition of the Board of Directors
of the Company, except as provided for in this Section 6.8.
6.9 Indemnification and Insurance. FKWW shall cause all rights to
indemnification or exculpation now existing in favor of the past and present
directors or officers of the Company as provided in the Company's Amended and
Restated Certificate of Incorporation or Restated By-Laws with respect to
claims arising from service as officers or directors prior to the Effective
Time to survive the merger and continue in full force and effect for a period
of not less than six years from the Effective Time (or with respect to claims
arising from service as officers or directors prior to the Effective Time
which have not been resolved prior to such sixth anniversary, until the time
such matters are finally resolved). FKWW shall cause the Surviving
Corporation to maintain in effect for not less than six years from the
Effective Time the current policies of the directors' and officers' liability
insurance maintained by the Company as of the date hereof (provided that the
Surviving Corporation may substitute therefor policies of at least the same
amount of coverage (covering known or unknown claims as of the Effective
Time) containing terms and conditions which are not less advantageous),
copies of which has been previously made available to FKWW, with respect to
matters occurring prior to the Effective Time, to the extent available;
provided, however, that the Surviving Corporation shall not be required to
maintain such insurance to the extent the annual premium therefor exceeds
200% of the annual premiums currently paid by the Company in respect of the
current policy or policies (the "Maximum Amount") but in such case shall
purchase as much comparable coverage as available for the Maximum Amount.
<PAGE>
6.10 Officer's Certificate. The Company, at the request of FKWW,
shall deliver a certificate to FKWW executed by an executive officer of the
Company in the form and with respect to the matters referred to in the
attached Exhibit A, dated as of the date of the closing of the purchase of
the Control Stock (as defined in the Robertson Purchase Agreement) by FKWW
pursuant to terms of the Robertson Purchase Agreement, or, alternatively,
inform FKWW that it is unable to give such certificate because of the
inaccuracy of any of the matters referred to therein.
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment or waiver at or prior to the Effective Time of the
following conditions:
(a) no temporary or permanent order, injunction or decree
shall be entered or enforced by or before any court, arbitrator or
Governmental Entity that would prohibit the consummation of the Merger;
(b) there shall not have occurred and be continuing any
declaration of any banking moratorium or suspension of payments by banks in
the United States or any general limitation on the extension of credit by
lending institutions in the United States;
(c) all required waiting periods under the HSR Act applicable
to the transactions contemplated hereunder shall have expired or terminated;
(d) the Company shall have obtained all consents and
approvals of Governmental Entities which are legally required to be obtained
by the Company prior to consummation of the Merger, which if not obtained
would have a material adverse effect on the business, results of operations
or financial condition of the Company and its Subsidiaries taken as a whole;
and
(e) there shall not have been any statute, rule, regulation
or order promulgated, enacted, issued or deemed applicable to the Merger by
any Governmental Entity or court of competent jurisdiction which would make
the consummation of the Merger illegal;
provided, however, that upon the closing of the purchase of the Control Stock
pursuant to the Robertson Purchase Agreement, the conditions in subparagraphs
(c) and (d) of this Section 7.1 above shall, to the extent then applicable,
no longer be applicable.
7.2 Additional Conditions to the Company's Obligation to Effect
the Merger. The obligation of the Company to effect the Merger is also
subject to the satisfaction or waiver at or prior to the Effective Time of
the following conditions: (a) the representations and warranties of FKWW and
FKW Sub contained in this Agreement shall be true and correct in all material
respects on and as of the Effective Time as though made on and as of such
time (except for those made as of a specified date (including "as of the date
hereof") which shall be true and correct as of such date), and (b) FKWW and
FKW Sub shall have performed in all material respects their respective
obligations hereunder required to be performed on or before the Effective
<PAGE>
Time; provided, however, upon the closing of the purchase of the Control
Stock pursuant to the terms of the Robertson Purchase Agreement, the
conditions set forth in clause (a) of this Section 7.2 shall no longer be
applicable.
7.3 Additional Conditions to FKW Sub's Obligation to Effect the
Merger. The obligation of FKW Sub to effect the Merger is also subject to
the satisfaction or waiver at or prior to the Effective Time of the following
conditions: (a) the representations and warranties of the Company contained
in this Agreement shall be true and correct in all material respects on and
as of the Effective Time as though made on and as of such time (except for
those made as of a specified date (including "as of the date hereof"), which
shall be true and correct as of such date), except (i) for changes in
circumstances expressly permitted or contemplated by this Agreement or (ii)
where the failure would not be reasonably expected to have a material adverse
effect on the business, results of operations or financial condition of the
Company and its Subsidiaries taken as a whole, (b) the Company shall have
performed in all material respects its obligations hereunder required to be
performed on or before the Effective Time, and (c) except as set forth in the
Company Disclosure Letter or as expressly provided for herein, (x)
immediately prior to the Effective Time, the representation and warranty
contained in Section 4.5 (a) hereof shall be true and correct (other than
such changes resulting from the exercise of Options or the conversions of
convertible securities which are outstanding as of the date hereof and
disclosed in the Company Disclosure Letter), and (y) immediately following
the Effective Time, other than as provided for in the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is or will be bound
by any options, warrants, rights or agreements which would entitle any
Person, other than FKWW or its Subsidiaries, to own any capital stock of the
Surviving Corporation or to receive any payment in respect thereof; provided,
however, upon the closing of the purchase of the Control Stock pursuant to
the provisions of the Robertson Purchase Agreement, the conditions set forth
in clauses (a) and (b) of this Section 7.3 shall no longer be applicable.
ARTICLE VIII
TERMINATION, AMENDMENT, WAIVER AND LIABILITY
8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether prior to or after approval of the Merger
by the stockholders of the Company:
(a) by mutual written consent of FKW Sub, FKWW and the
Company, or
(b) by FKW Sub or FKWW, if the Effective Time shall not have
occurred on or prior to November 30, 1997, due to a failure of any of the
conditions to the obligations of FKW Sub to effect the Merger, to the extent
then applicable, set forth in Sections 7.1 or 7.3, or
(c) by the Company, if the Effective Time shall not have
occurred on or prior to November 30, 1997, due to a failure of any of the
conditions to the obligations of the Company to effect the Merger, to the
extent then applicable, set forth in Sections 7.1 or 7.2, or
<PAGE>
(d) by the Company, if after the date hereof and before the
Effective Time, the Guarantor attempts or purports to revoke or withdraw the
Guaranty or a court of competent jurisdiction finally determines that the
Guaranty is unenforceable or invalid;
provided that any action by the Company shall be subject to Section 6.8 if
then applicable; and provided, further, that the November 30, 1997 date shall
be extended for (i) any period that a party is subject to a non-final order,
injunction or decree prohibiting consummation of the Merger and (ii) the
continuation of any event set forth in Section 7.1(b).
8.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 8.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of the
Company or FKW Sub or FKWW or any of their Affiliates except as set forth in
Sections 6.3 and 9.11 (with respect to fees and expenses) or Section 6.6
(with respect to confidentiality). In the event of a termination of this
Agreement as provided in Section 8.1, the parties will not be excused for any
liability owing the others for a prior breach of this Agreement, subject to
the provisions of Sections 8.5 and 9.3.
8.3 Amendment. This Agreement may not be amended except by action
of the Board of Directors of each of the parties hereto (and subject, in the
case of the Company, to Section 6.8), which Amendment is set forth in an
instrument in writing signed on behalf of each of the parties hereto. No
amendment following approval of the stockholders shall require the approval
of the stockholders unless specifically required by the DGCL.
8.4 Waiver. At any time prior to the Effective Time, whether
before or after the stockholder approval, any party hereto, by action taken
by its Board of Directors (and subject, in the case of the Company, to
Section 6.8), may (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto or (ii) subject to the
second sentence of Section 8.3, waive compliance with any of the agreements
of any other party or with any conditions to its own obligations. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of
such party by a duly authorized officer.
8.5 Limitation on Liability. The liability of the Company for any
breach by the Company of this Agreement shall be limited to the actual
damages suffered by FKWW and FKW Sub under this Agreement and the Company
shall not be liable for any consequential or other damages of FKWW or FKW
Sub, including any damages arising in connection with any Other Transaction
Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1 Publicity. The initial press release relating to this
Agreement shall be a joint press release in the form attached hereto as
Exhibit B, and FKWW and the Company shall, subject to their respective legal
obligations of public companies, use reasonable good faith efforts to agree
upon the text of any other press release before issuing any such press
release or otherwise making public statements with respect to the
transactions contemplated hereby and in making any filings with any federal
<PAGE>
or state governmental or regulatory agency or with any national securities
exchange with respect thereto.
9.2 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
mailed by certified or registered mail, return receipt requested and postage
prepaid, or transmitted by facsimile to the parties at the following
addresses or at such other addresses as shall be specified by the parties by
like notice:
(a) If to FKWW or FKW Sub:
Fox Kids Worldwide, Inc. or
Fox Kids Merger Corporation
10960 Wilshire Boulevard
Los Angeles, California 90024
Attn: Mel Woods
Fax: 310-235-5552
with a copy to :
Fox, Inc.
10201 West Pico Boulevard
Los Angeles, California 90035
Attn: President
Fax: 310-369-1203
and a copy to:
The News Corporation Limited
c/o News America Publishing Incorporated
1211 Avenue of the Americas
New York, New York 10036
Attn: Arthur M. Siskind, Esq.
Fax: 212-768-2029
and a copy to:
Troop Meisinger Steuber & Pasich, LLP
10940 Wilshire Boulevard
Los Angeles, California 90024
Attn: C.N. Franklin Reddick, III, Esq.
Fax: 310-443-8512
and a copy to:
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Attn: Jeffrey W. Rubin, Esq.
Fax: 212-697-6686
(b) If to the Company:
International Family Entertainment, Inc.
2877 Guardian Lane
Virginia Beach, Virginia 23450
Attn: Tim Robertson
Fax: 757-459-6422
with a copy to :
International Family Entertainment, Inc.
2877 Guardian Lane
Virginia Beach, Virginia 23450
Attn: Louis A. Isakoff, Esq.
Fax: 757-459-6422
and a copy to:
Latham & Watkins
53rd at Third, Suite 1000
885 Third Avenue
New York, New York 10022-4802
Attn: Erica H. Steinberger, Esq.
Fax: 212-751-4864
<PAGE>
and a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attn: James M. Dubin, Esq.
Fax: 212-757-3990
and shall for all purposes of this Agreement be treated as being effective or
having been given when delivered if delivered personally, or, if sent by mail
or facsimile, upon receipt.
9.3 Representations and Warranties. The respective
representations and warranties of the Company, FKWW and FKW Sub contained
herein shall expire with, and be terminated and extinguished at the Effective
Time. Neither the Company, FKWW nor FKW Sub shall be under any monetary or
other liability whatsoever with respect to any breach of a representation or
warranty contained herein or in or with respect to any certificate or other
document delivered pursuant hereto, and the sole consequence of any such
breach shall be limited to the failure to satisfy a condition set forth in
Section 7.2 or 7.3 hereof, as applicable, and the termination right provided
for in Section 8.1 hereof, in each case to the extent applicable according to
such Section's express terms.
9.4 Titles and Gender. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement. Whenever used herein, the singular
member includes the plural, the plural includes the singular, and the use of
either gender shall include both genders.
9.5 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided, however, that no party hereto
shall assign any of its rights, interests or obligations hereunder without
the prior written consent of the other parties.
<PAGE>
9.6 Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the
parties hereto or their respective successors and permitted assigns, and
other than as expressly provided for in Section 6.8 and 6.9 hereof, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
9.7 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall
constitute one and the same agreement.
9.8 Severability. Should any Section or any part of a Section of
this Agreement be rendered void, invalid or unenforceable by any court of law
for any reason, such invalidity or unenforceability shall not void or render
invalid or unenforceable any other Section or part of a Section of this
Agreement.
9.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED BOTH AS TO VALIDITY AND PERFORMANCE AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW
PRINCIPLES THEREOF.
9.10 No Adverse Construction. The rule that a contract is to be
construed against the party drafting the contract is hereby waived, and shall
have no applicability in construing this Agreement or any provisions hereof.
9.11 Costs and Attorneys' Fees. In the event that any action,
suit, or other proceeding is brought or instituted, to enforce or to seek
damages for breach of this Agreement, the prevailing party shall recover all
of such party's costs, and reasonable attorneys' fees incurred in each and
every such action, suit, or other proceeding, including any and all appeals
or petitions therefrom.
9.12 Entire Agreement. This Agreement, the attached Exhibits and
Company Disclosure Letter, the Confidentiality Agreements and the Guaranty
contain the entire understanding of the parties and there are no further or
other agreements or understandings, written or oral, in effect between the
parties relating to the subject matter hereof unless expressly referred to
herein.
9.13 Jurisdiction; Consent to Service of Process; No Jury Trial.
(a) Except as provided in the next paragraph, the parties hereto agree that
any dispute between or among them arising out of, connected with, related to,
or incidental to the relationship established among them pursuant to this
Agreement, and whether arising in contract, tort, equity, or otherwise, may
be resolved by state or federal courts located in Delaware. Each of the
parties hereto waives in any such dispute any objection that it may have to
such Delaware courts considering the dispute including, without limitation,
any objection to the laying of venue or based on the ground of forum non
conveniens.
(b) Each of the parties hereto agrees that the other parties
to this Agreement shall have the right, to the extent permitted by applicable
law, to proceed against it or its property in a court in any location
reasonably selected in good faith to enable such other parties to realize on
such property, or to enforce a judgment or other court order entered in favor
of any such other party. Each of the parties hereto waives any objection
<PAGE>
that it may have to the location of the court in which any other party to
this Agreement has commenced a proceeding described in this paragraph
including, without limitation, any objection to the laying of venue or based
on the ground of forum non conveniens.
(c) The parties hereto each waives any right to have a jury
participate in resolving any dispute whether sounding in contract, tort, or
otherwise arising out of, connected with, related to or incidental to the
relationship established between them pursuant to this Agreement. Instead,
any disputes resolved in court will be resolved in a bench trial without a
jury.
(d) Each party hereto hereby irrevocably designates CT
Corporation System as its designee, appointee and agent to receive, for and
on behalf of it, service of process in such respective jurisdictions in any
legal action or proceeding with respect to this Agreement or any document
related thereto. It is understood that a copy of such process serviced on
such agent will be promptly forwarded by mail to it at its address set forth
in Section 9.2 hereof, but the failure to receive such copy shall not affect
in any way the service of such process. Each of the parties hereto further
irrevocably consents to the service of process of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at its said address,
such service to become effective upon confirmed delivery.
(e) Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any other party in
any other jurisdiction.
9.14 Affiliate; Control, Controlled By and Under Common
Control With; Person; Actual Knowledge. For purposes of this Agreement:
(a) "Affiliate" shall mean, when used with reference to a
specified Person, any Person that directly or indirectly through one or more
intermediaries controls or is controlled by, or is under common control with,
such specified Person and, in the case of individuals, a Person's spouse,
parents, children, siblings, mothers and fathers in law, sons and daughters
in law, and brothers and sisters in law. For purposes of this definition,
control (including controlled by and under common control with), as used with
respect to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract
or otherwise. For purposes of this Agreement, (i) neither the Company nor
any of its Subsidiaries shall be deemed to be an Affiliate of FKWW, FKW Sub
or any of their respective Affiliates, (ii) each of the holders of the Class
A Stock, Liberty, CBN, Regent and their respective Affiliates shall be deemed
to be an Affiliate of the Company, and (iii) the Guarantor, Fox, Inc. and
Saban Entertainment, Inc., and their respective Affiliates, shall each be
deemed to be an Affiliate of FKWW and FKW Sub.
(b) "Person" means any individual, corporation, general or
limited partnership, limited liability company, limited liability
partnership, trust, joint venture, association or unincorporated entity of
any kind.
<PAGE>
(c) "Actual Knowledge" of a specified Person means the actual
knowledge of such Person without independent investigation or inquiry.
9.15 Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or
agreements contained in this Agreement will cause the other parties to
sustain damages for which they would not have an adequate remedy at law for
money damages, and therefore each of the parties hereto agrees that in the
event of any such breach the aggrieved party or parties shall, without the
posting of bond or other security, be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other
equitable relief, in addition to any other remedy to which it or they may be
entitled, at law or in equity.
9.16 Definitions. The following terms are defined on the page
numbers indicated below:
Definition Section
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
Actual Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.14
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.14
Affiliation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 4.13
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Cash Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
CBN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
CBN Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . Recitals
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9
Class A Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Class B Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Class C Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Company Disclosure Letter . . . . . . . . . . . . . . . . . . . . . Article IV
Company SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7
Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Confidentiality Agreements . . . . . . . . . . . . . . . . . . . . . . . 6.6
Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Constituent Corporations. . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Continuing Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
Contribution Agreement . . . . . . . . . . . . . . . . . . . . . . . Recitals
Convertible Notes . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9
FKW Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
FKWW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Highly Compensated Persons . . . . . . . . . . . . . . . . . . . . . . . 4.8
HSR ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Information Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15
Irrevocable Trusts . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
<PAGE>
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
LIFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Maximum Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Merger Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
MTM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Other Transaction Agreements . . . . . . . . . . . . . . . . . . . . Recitals
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.14
PR Charitable Trust . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Regent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Regent Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . Recitals
Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12
Related Party Agreements . . . . . . . . . . . . . . . . . . . . . . . . 4.12
Responsible Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11
Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Robertson Purchase Agreement . . . . . . . . . . . . . . . . . . . . Recitals
The Robertson Sellers . . . . . . . . . . . . . . . . . . . . . . . . Recitals
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Stock Purchase Agreements . . . . . . . . . . . . . . . . . . . . . . Recitals
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11
The Family Channel . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9
Tim Robertson . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
TR Charitable Trust . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
TR Family Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, FKWW, FKW Sub and the Company have caused this
Agreement to be executed as of the date first written above by their duly
authorized respective officers.
FOX KIDS WORLDWIDE, INC.
By: /s/ Mel Woods
--------------------------------------
Name: Mel Woods
Title: President
FOX KIDS MERGER CORPORATION
By: /s/ Mel Woods
--------------------------------------
Name: Mel Woods
Title: President
INTERNATIONAL FAMILY ENTERTAINMENT, INC.
By: /s/ M.G. Robertson
---------------------------------------
Name: M.G. Robertson
Title: Chairman of the Board
<PAGE>
EXHIBITS
Exhibit A --- Officer's Certificates
Exhibit B --- Press Release
Exhibit 3
---------
TERMINATION TO SHAREHOLDER AGREEMENT
This TERMINATION TO SHAREHOLDER AGREEMENT (this "Agreement"), dated as
of June 11, 1997, is made and entered into by and among M.G. "Pat" Robertson
("Pat Robertson"), individually and as trustee of the Robertson Charitable
Remainder Unitrust, u/t/a dated January 22, 1990 (the "PR Charitable Trust"),
Timothy B. Robertson ("Tim Robertson"), individually and as trustee of the
Timothy and Lisa Robertson Children's Trust, u/t/a dated September 18, 1995
(the "TR Family Trust"), The Christian Broadcasting Network, Inc., a Virginia
corporation ("CBN"), Liberty IFE, Inc., a Colorado corporation ("LIFE"), and
International Family Entertainment, a Delaware corporation (the "Company")
R E C I T A L S
WHEREAS, the parties have entered into that certain Amended and Restated
Shareholder Agreement, dated as of September 1, 1995, which provides, inter
alia, for the grant to LIFE of certain rights of first refusal with respect
to sales of Class A Common Stock, par value $0.01 per share, of the Company
(the "Class A Stock"), the grant to LIFE and CBN of certain go along rights,
the grant to LIFE of a put option, the grant to LIFE and CBN of certain
registration rights, the covenant by the Company to issue no additional
shares of Class A Stock, and the grant to Pat Robertson, Tim Robertson, the
PR Charitable Trust, LIFE and CBN of certain preemptive rights (the
"Shareholder Agreement");
WHEREAS, it is intended that Pat Robertson, individually and as trustee
of the PR Charitable Trust, and as trustee of 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 (the Gordon P. Robertson
Irrevocable Trust, the Elizabeth F. Robinson Irrevocable Trust and the Ann R.
Lablanc Irrevocable Trust, together, the "Irrevocable Trusts"), Lisa N.
Robertson and Tim Robertson, as joint tenants, Tim Robertson, individually,
and as trustee of each of the TR Family Trust and the Timothy B. Robertson
Charitable Trust, u/t/a dated December 30, 1996 (the "TR Charitable Trust"),
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 (Pat Robertson, the PR
Charitable Trust, the Irrevocable Trusts, Lisa N. Robertson, Tim Robertson,
the TR Family Trust and the TR Charitable Trust, collectively, the
"Robertsons"), and Fox Kids Worldwide, Inc., a Delaware corporation ("FKWW")
enter into that certain Stock Purchase Agreement, pursuant to which FKWW will
agree, on the terms and subject to the conditions therein, to purchase from
the Robertsons those shares of Class A Stock, in the form of Class B Common
Stock, par value $0.01 per share, of the Company (the "Class B Stock")
issuable upon the conversion thereof, and shares of Class B Stock owned by
the Robertsons (as amended from time to time in accordance with its terms,
the "Robertson Purchase Agreement");
WHEREAS, it is intended that CBN and FKWW enter into that certain Stock
Purchase Agreement, pursuant to which FKWW will agree, on the terms and
subject to the conditions therein, to purchase from CBN those shares of Class
<PAGE>
B Stock owned by CBN (as amended from time to time in accordance with its
terms, the "CBN Purchase Agreement");
WHEREAS, it is intended that Regent University, a Virginia corporation
("Regent") and FKWW enter into that certain Stock Purchase Agreement,
pursuant to which FKWW will agree, on the terms and subject to the conditions
therein, to purchase from Regent those shares of Class B Stock owned by
Regent (as amended from time to time in accordance with its terms, the
"Regent Purchase Agreement");
WHEREAS, it is intended that FKWW, Liberty Media Corporation, a Delaware
corporation, and LIFE enter into that certain Contribution and Exchange
Agreement (as amended from time to time in accordance with its terms, the
"Contribution Agreement"), pursuant to which LIFE will agree, on the terms
and subject to the conditions therein, to contribute its shares of Class C
Common Stock, par value $0.01 per share, of the Company and its $23 million
principal amount of 6% Convertible Secured Notes due 2004 of the Company (the
"Notes"), to FKWW (the "Contribution") in exchange for shares of Series A
Preferred Stock of FKWW;
WHEREAS, in connection with the execution of the Contribution Agreement,
LIFE and CBN have executed that certain Waiver, dated as of the date hereof
(the "Waiver"), which, subject to its terms and conditions, waives certain
rights under the Shareholder Agreement;
WHEREAS, as a condition to its willingness to enter into the Agreement
and Plan of Merger, dated as of the date hereof, by and among FKWW, Fox Kids
Merger Corporation, a Delaware corporation and wholly-owned subsidiary of
FKWW, and the Company (the "Merger Agreement"), the Robertson Purchase
Agreement, the CBN Purchase Agreement, the Regent Purchase Agreement and the
Contribution Agreement, FKWW has required that the parties agree to terminate
the Shareholder Agreement by entering into this Agreement; and
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration given to each party hereto, the receipt of which is
hereby acknowledged, the parties agree as follows.
1. Termination. Effective upon (but not prior to) the earlier of (i)
the closing of the Contribution under the Contribution Agreement and (ii) the
Effective Time of the Merger (as defined in the Merger Agreement), each and
every provision of the Shareholder Agreement shall be terminated in full and
from and after such date the Shareholder Agreement shall be void and of no
further force and effect, and the rights and obligations of the parties
thereunder shall terminate. If both the Robertson Purchase Agreement and the
Merger Agreement shall be terminated, this Agreement shall thereupon
terminate and be of no effect, unless the termination pursuant to this
provision has already become effective.
2. Miscellaneous.
2.1 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns. Other than as set forth in the immediately
succeeding sentence, no party may assign any of its rights, or delegate any
of its duties or obligation hereunder, under this Agreement without the prior
written consent of the other parties, and any such purported assignment or
delegation shall be void ab initio.
<PAGE>
2.2 Dispute Resolution. Any dispute or claim arising hereunder
shall be settled by arbitration. Any party may commence arbitration by
sending a written notice of arbitration to the other party. The notice will
state the dispute with particularity. The arbitration hearing shall be
commenced thirty (30) days following the date of delivery of notice of
arbitration by one party to the other, by the American Arbitration
Association ("AAA") as arbitrator. The arbitration shall be conducted in
Alexandria, Virginia in accordance with the commercial arbitration rules
promulgated by AAA, and each party shall retain the right to cross-examine
the opposing party's witnesses, either through legal counsel, expert
witnesses or both. The decision of the arbitrator shall be final, binding
and conclusive on all parties (without any right of appeal therefrom) and
shall not be subject to judicial review. As part of his decision, the
arbitrator may allocate the cost of arbitration, including fees of attorneys
and experts, as he or she deems fair and equitable in light of all relevant
circumstances. Judgment on the award rendered by the arbitrator may be
entered in any court of competent jurisdiction.
2.3 Governing Law. This Agreement shall be governed by and
construed both as to validity and performance and enforced in accordance with
the laws of the Commonwealth of Virginia without giving effect to the choice
of law principles thereof.
2.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
2.5 Headings. The section and subsection headings contained in
this Agreement are included for convenience only and form no part of the
agreement between the parties.
2.6 Amendments. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereto.
2.7 No Third Party Beneficiaries. This Agreement is not intended
to benefit, and shall not run to the benefit of or be enforceable by, any
other person or entity other than the Parties hereto and their permitted
successors and assigns.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
/s/ M.G. "Pat"
------------------------------------
M.G. "Pat" Robertson
THE ROBERTSON CHARITABLE
REMAINDER UNITRUST
/s/ M.G. "Pat" Robertson
-------------------------------------
By: M.G. "Pat" Robertson, as Trustee
/s/ Timothy B. Robertson
-------------------------------------
Timothy B. Robertson
THE TIMOTHY AND LISA ROBERTSON
CHILDREN'S TRUST
/s/ Timothy Robertson
--------------------------------------
By: Timothy Robertson, as Trustee
THE CHRISTIAN BROADCASTING
NETWORK, INC.
By: /s/ Michael D. Little
---------------------------------
Its: President
---------------------------------
LIBERTY IFE, INC.
By: /s/ David Koff
---------------------------------
Its: Vice President
---------------------------------
INTERNATIONAL FAMILY
ENTERTAINMENT, INC.
By: /s/ M.G. "Pat" Robertson
---------------------------------
Its: Chairman of the Board
---------------------------------
Exhibit 4
---------
WAIVER
WAIVER, dated as of June 11, 1997 (this "Waiver"),
by each of LIBERTY IFE, INC., a Colorado corporation ("LIFE"), and
THE CHRISTIAN BROADCASTING NETWORK, INC., a Virginia corporation ("CBN"), to
the Amended and Restated Shareholder Agreement, dated as of September 1, 1995
(as the same may be amended, supplemented or otherwise modified, the
"Shareholder Agreement"), among M.G. "Pat" Robertson ("Pat Robertson") and
Timothy B. Robertson ("Tim Robertson"), residents of Virginia, the Robertson
Charitable Remainder Unitrust (the "Charitable Trust"), the Timothy and Lisa
Robertson Children's Trust (the "TR Family Trust") (Tim Robertson, the
Charitable Trust and the TR Family Trust, collectively, the "Class A
Stockholders"), CBN, LIFE and International Family Entertainment, Inc., a
Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Fox Kids Worldwide, Inc., a
Delaware corporation (the "Purchaser"), the Class A Stockholders and certain
related parties have entered into a Stock Purchase Agreement, dated as of the
date hereof (as the same may be amended, supplemented or otherwise modified,
the "Stock Purchase Agreement"), which provides, inter alia, for the purchase
of shares of Class A Common Stock, par value $0.01 per share, of the Company
(the "Class A Stock") by the Purchaser from the Class A Stockholders (the
"Class A Stock Sale");
WHEREAS, concurrently herewith, the Purchaser, Liberty Media
Corporation, a Delaware corporation, and LIFE, which holds shares of Non
Voting Class C Stock ("Class C Stock"), par value $0.01 per share, of the
Company and 6% Convertible Secured Notes due 2004 (the "Notes") of the
Company, have entered into a Contribution and Exchange Agreement, dated as of
the date hereof (as the same may be amended, supplemented or otherwise
modified, the "Contribution Agreement"), which provides, inter alia, for a
contribution and exchange (the "Contribution and Exchange") in which LIFE is
to contribute its shares of Class C Stock and its $23 million principal
amount of the Notes to the Purchaser in exchange for shares of a newly issued
class of preferred stock of the Purchaser.
WHEREAS, concurrently herewith, the Purchaser and CBN have
entered into a Stock Purchase Agreement, dated as of the date hereof (as the
same may be amended, supplemented or otherwise modified, the "CBN Stock
Purchase Agreement"), which provides, inter alia, for the purchase of shares
of Class B Common Stock, par value $0.01 per share (the "CBN Stock"), of the
Company by the Purchaser from CBN (the "CBN Stock Sale").
WHEREAS, concurrently herewith, Pat Robertson, the Class A
Stockholders, and CBN, inter alia, have given written consents (the
"Consents") approving and adopting the Merger Agreement, dated as of the date
hereof (as the same may be amended, supplemented or otherwise modified, the
"Merger Agreement"), among the Purchaser, Fox Kids Merger Corporation, a
<PAGE>
Delaware company ("FKW Sub"), and the Company providing for the merger (the
"Merger") of FKW Sub into the Company, which shall be the surviving
corporation.
WHEREAS, in connection with the transactions contemplated by
the Class A Stock Purchase Agreement, the Class A Stockholders and the
Purchaser have requested, and have made it a condition to the execution of
the Stock Purchase Agreement, the Contribution Agreement and the CBN Stock
Purchase Agreement, that LIFE and CBN agree to waive certain provisions of
the Shareholder Agreement, and LIFE and CBN are agreeable to such request
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, and for other valuable consideration the receipt
of which is hereby acknowledged, each of LIFE and CBN hereby agrees as
follows:
1. Definitions. All terms defined in the Shareholder
Agreement shall have such defined meanings when used herein unless otherwise
defined herein.
2. Waiver. (a) Effective immediately upon the
execution of this Waiver, each of LIFE and CBN hereby waives any and all
rights it may have under the Shareholder Agreement with respect to the
negotiation and execution of the Stock Purchase Agreement and the Merger
Agreement, any discussions relating thereto or to the transactions
contemplated thereby, the giving of the Consents and any actions taken in
furtherance of any thereof (excluding the actual consummation of the Class A
Stock Sale or any other sale of Class A Stock by the Class A Stockholders to
the Purchaser or any of its affiliates), including without limitation any
claim that such actions may have constituted an "offer" within the meaning of
Section 1 of the Shareholder Agreement, any right to notice of the Stock
Purchase Agreement or the Class A Stock Sale, any right of First Refusal with
respect to the Stock Purchase Agreement or the Class A Stock Sale and any
right to sell Covered Securities to the Purchaser on the same terms and price
as that specified in the Stock Purchase Agreement; provided, however, that
the waiver in this Section 2(a) shall not be effective as to LIFE or CBN, as
the case may be, if the Purchaser or any of its Affiliates acquires any Class
A Stock from any of the Class A Stockholders, or if any of the Class A
Stockholders convert any of their Class A Stock into Class B Stock, prior to
the Purchaser's acquisition (including if by consummation of the Merger) of
any of the Class C Stock or the Notes, in the case of LIFE, or of any of the
CBN Stock, in the case of CBN. For the purposes of this Waiver, Affiliates
of the Purchaser shall be deemed to include, without limitation, each of
Saban Entertainment, Inc., News Publishing Australia Limited and The News
Corporation Limited, and each of their Affiliates.
(b) Notwithstanding and in addition to the provisions set
forth in Section 2(a) above, effective concurrently with, but not prior to,
acquisition (including if by consummation of the Merger) by the Purchaser of
any of the Class C Stock or the Notes from LIFE, LIFE hereby waives any and
all rights it may have under the Shareholder Agreement, including without
limitation the rights specified in the first sentence of Section 2(a) with
respect to the circumstances described therein as well as with respect to the
actual acquisition (and consequent conversion into Class B Stock) of the
Class A Stock (including if the acquisition and conversion of the Class A
<PAGE>
Stock is consummated simultaneously with the acquisition of any of the Class
C Stock or the Notes).
(c) Notwithstanding and in addition to the provisions set
forth in Section 2(a) above, effective concurrently with, but not prior to,
acquisition (including if by consummation of the Merger) by the Purchaser of
any of the CBN Stock, CBN hereby waives any and all rights it may have under
the Shareholder Agreement, including without limitation the rights specified
in the first sentence of Section 2(a) with respect to the circumstances
described therein as well as with respect to the actual acquisition (and
consequent conversion into Class B Stock) of the Class A Stock (including if
the acquisition and conversion of the Class A Stock is consummated
simultaneously with the acquisition of any of the CBN Stock).
(d) If both the Stock Purchase Agreement and the Merger
Agreement shall be terminated, the provisions of Sections 2(b) and 2(c) above
shall thereupon terminate and be of no effect, unless in either case the
waiver set forth therein has already become effective.
3. Limited Waiver. Except as expressly waived herein,
the Shareholder Agreement shall continue to be, and shall remain, in full
force and effect. Except as expressly set forth herein, this Waiver shall
not be deemed to be a waiver of, or consent to, or a modification or
amendment of, any term or condition of the Shareholder Agreement or to
prejudice any right or rights which LIFE or CBN may now have or may have in
the future under or in connection with the Shareholder Agreement or any of
the instruments or agreements referred to therein, including with respect to
any "offer", or proposed conversion, in respect of Class A Stock other than
pursuant to the actions specifically described in Section 2(a) hereof.
4. Third Party Beneficiaries. This Waiver is given in
favor of, is intended to benefit and shall be enforceable by (i) the Class A
Stockholders, (ii) the Purchaser and its Affiliates, (iii) the Company, (iv)
the other parties to the Shareholder Agreement and (iv) all of such persons'
successors and assigns.
5. Counterparts. This Waiver may be executed in one or
more counterparts, each of which shall be an original but all of which shall
constitute one and the same document.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Waiver to be
executed and delivered by its duly authorized officer as of the date first
above written.
LIBERTY IFE, INC.
By: /s/ David Koff
-----------------------------
Title: Vice President
THE CHRISTIAN BROADCASTING
NETWORK, INC.
By: /s/ John Kubiak
----------------------------
Title: Vice President
Acknowledged and Accepted as of
the date first above written:
M.G. "PAT" ROBERTSON
THE ROBERTSON CHARITABLE REMAINDER UNITRUST
By: /s/ M.G. "Pat" Robertson
-------------------------------------------------
M.G. "Pat" Robertson, individually and as trustee
TIMOTHY B. ROBERTSON
THE TIMOTHY AND LISA ROBERTSON CHILDREN'S TRUST
By: /s/ Timothy B. Robertson
-------------------------------------------------
Timothy B. Robertson, individually and as trustee
INTERNATIONAL FAMILY ENTERTAINMENT, INC.
By: /s/ M.G. Robertson
-------------------------------------------------
Title: Chairman of the Board
FOX KIDS WORLDWIDE, INC.
By: Mel Woods
-------------------------------------------------
Title: President
