-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UBpqFSLmgq5DHC9PIMzlCCG+U5UAXchSiLms3aqVtpqrlYCDVK028nB/vBq4foLJ cW/nojH6jRPetY14R99MBQ== 0000950134-97-004821.txt : 19970623 0000950134-97-004821.hdr.sgml : 19970623 ACCESSION NUMBER: 0000950134-97-004821 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970620 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL FAMILY ENTERTAINMENT INC CENTRAL INDEX KEY: 0000884506 STANDARD INDUSTRIAL CLASSIFICATION: TELEVISION BROADCASTING STATIONS [4833] IRS NUMBER: 541522360 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-42373 FILM NUMBER: 97627574 BUSINESS ADDRESS: STREET 1: 2877 GUARDIAN LANE CITY: VIRGINIA BEACH STATE: VA ZIP: 23452 BUSINESS PHONE: 8044596000 MAIL ADDRESS: STREET 1: 2877 GUARDIAN LANE CITY: VIRGINIA BEACH STATE: VA ZIP: 23452 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TELE COMMUNICATIONS INC /CO/ CENTRAL INDEX KEY: 0000925692 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 841260157 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 5619 DTC PARKWAY CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3032675500 MAIL ADDRESS: STREET 1: 5619 DTC PARKWAY CITY: ENGLEWOOD STATE: CO ZIP: 90111 FORMER COMPANY: FORMER CONFORMED NAME: TCI LIBERTY HOLDING CO DATE OF NAME CHANGE: 19940620 SC 13D/A 1 AMENDMENT #2 TO SC 13D 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Schedule 13D Under the Securities Exchange Act of 1934 (Amendment No. 2)* INTERNATIONAL FAMILY ENTERTAINMENT, INC. ------------------------------------------ (Name of Issuer) Class B Common Stock, $.01 par value ------------------------------------- (Title of Class of Securities) 45950M106 ----------------- (CUSIP Number) Stephen M. Brett, Esq., Executive Vice President and General Counsel, Tele-Communications, Inc. Terrace Tower II, 5619 DTC Parkway, Englewood, CO 80111, (303-267-5500) ----------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) JUNE 11, 1997 --------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b) (3) or (4), check the following box: [ ]. NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *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). Exhibit Index is on Page 13 2 - --------------------------------------------------------------------------------------------------------------- (1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons TELE-COMMUNICATIONS, INC. - --------------------------------------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member of a Group (a) [ ] (b) [ ] - --------------------------------------------------------------------------------------------------------------- (3) SEC Use Only - --------------------------------------------------------------------------------------------------------------- (4) Source of Funds AF,OO - --------------------------------------------------------------------------------------------------------------- (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] - --------------------------------------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - --------------------------------------------------------------------------------------------------------------- Number of (7) Sole Voting Power 9,676,232 Shares of Class B Stock* Shares Bene- ficially ------------------------------------------------------------------------------------- Owned by (8) Shared Voting Power 0 Shares Each Report- ------------------------------------------------------------------------------------- (9) Sole Dispositive Power 9,676,232 Shares of Class B Stock* ing Person ------------------------------------------------------------------------------------- With (10) Shared Dispositive Power 0 Shares - --------------------------------------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 9,676,232 Shares of Class B Stock* - --------------------------------------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - --------------------------------------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 22.8% - --------------------------------------------------------------------------------------------------------------- (14) Type of Reporting Person HC, CO
__________________________________ * Includes 7,088,732 shares of Class B Stock TCI would acquire upon conversion of 7,088,732 shares of Class C Common Stock and 2,587,500 shares of Class B Common Stock TCI would acquire upon conversion of $23,000,000 principal amount of 6% Convertible Secured Notes due 2004. 2 3 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (Amendment No. 2) Statement of TELE-COMMUNICATIONS, INC. Pursuant to Section 13(d) of the Securities Exchange Act of 1934 in respect of INTERNATIONAL FAMILY ENTERTAINMENT, INC. (Commission File No. 1-11121) ITEM 1. Security and Issuer Tele-Communications, Inc., a Delaware corporation ("TCI"), hereby amends and supplements its Statement on Schedule 13D (the "Statement") with respect to the Class B Common Stock, $.01 par value (the "Class B Stock"), of International Family Entertainment, Inc., a Delaware corporation ("IFE"). TCI is the beneficial owner of certain IFE securities convertible into shares of Class B Stock and has entered into an agreement to exchange such IFE securities for a newly issued class of preferred stock of Fox Kids Worldwide, Inc., a Delaware corporation ("Fox Kids"). (See Items 3, 4 and 7). In addition, pursuant to Rule 13d-2(c) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), this Amendment No. 2 also restates the Statement and the previously filed amendment to the Statement. The principal executive offices of IFE are located at 2877 Guardian Lane, Virginia Beach, Virginia 23452. Unless otherwise indicated, capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Statement. Holders of Class B Stock are entitled to one vote per share on all matters submitted to a vote of stockholders, and holders of the Class A Common Stock of IFE, $.01 par value (the "Class A Stock") are entitled to ten votes per share on all matters submitted to a vote of stockholders. Both classes vote together as a single class on all matters, except that (i) so long as the outstanding Class A Stock has more than 40% of the total outstanding voting power of the common stock of IFE, the holders of Class A Stock, voting separately as a class, are entitled to elect a majority of the IFE's directors (currently three of five directors), with the remainder of the directors being elected by the holders of the Class B Stock, voting separately as a class, and (ii) the approval of a majority of each of the Class A Stock and the Class B Stock is required for certain extraordinary corporate actions. ITEM 2. Identity and Background This Amendment No. 2 is being filed by TCI, whose principal business address is 5619 DTC Parkway, Englewood, Colorado 80111. TCI, through its subsidiaries and affiliates, is principally engaged in the construction, acquisition, ownership, and operation of cable television systems and the provision of satellite-delivered video entertainment, information and home shopping programming services to various video distribution media, principally cable television systems. TCI also has investments in cable and telecommunications 3 4 operations and television programming in certain international markets as well as investments in companies and joint ventures involved in developing and providing programming for new television and telecommunications technologies. TCI is a Delaware corporation and was incorporated in 1994. TCI Communications, Inc. ("TCIC"), a majority owned subsidiary of TCI, and its predecessors have been engaged in the cable television business since the early 1950's. Prior to August 1994, TCI was named TCI/Liberty Holding Company and TCIC was named Tele-Communications, Inc. Schedule 1 attached to this Amendment No. 2 to the Statement contains the following information concerning each director, executive officer or controlling person of TCI: (i) name and residence or business address, (ii) principal occupation or employment; and (iii) the name, principal business and address of any corporation or other organization in which such employment is conducted. Schedule 1 is incorporated herein by reference and replaces the Schedule previously filed with the Statement. To the knowledge of TCI, each of the persons named on Schedule 1 (the "Schedule 1 Persons") is a United States citizen. During the last five years, neither TCI nor any of the Schedule 1 Persons (to the knowledge of TCI) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the last five years, neither TCI nor any of the Schedule 1 Persons (to the knowledge of TCI) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. August 1994 Business Combination On August 4, 1994, at Special Meetings of Stockholders of TCIC and Liberty Media Corporation ("LMC"), there was approved and adopted an Agreement and Plan of Merger, dated as of January 27, 1994, as amended, which provided for, among other things, the business combination of TCIC and LMC resulting in the companies becoming wholly owned subsidiaries of TCI (the "Business Combination"). The Business Combination became effective on August 4, 1994, upon certain filings with state authorities. Upon the effectiveness of the Business Combination, TCI became the beneficial owner of all the Class B Stock owned by LMC. The foregoing summary of the Business Combination is qualified in its entirety by reference to the complete terms, provisions and conditions thereof set forth in the Proxy Statement of LMC and TCIC and the Prospectus of TCI filed on June 23, 1994 (the "Proxy Statement/Prospectus") by such parties as part of a Registration Statement on Form S-4 (No. 33-54263). The Registration Statement and Proxy Statement/Prospectus are incorporated herein by reference and were so filed herewith as Exhibit A in the original Statement. ITEM 3. Source and Amount of Funds or Other Consideration TCI currently beneficially owns, indirectly through a subsidiary, a total of 9,676,232 shares of Class B Stock. Such beneficial ownership is comprised of (a) 7,088,732 shares of Class B Stock issuable upon conversion of 7,088,732 shares of IFE non-voting Class C Common Stock, $.01 par value (the "Class C Stock"); and (b) 2,587,500 shares of Class B Stock issuable upon conversion of $23,000,000 aggregate principal amount of IFE's 6% Convertible Secured Notes due 2004 (the "Notes"). TCI acquired the Class C Stock and the Notes as a result of previously reported transactions. The information set forth below describes the previously reported transactions and states the source and amount of the consideration used in the transactions. As described in Items 4 and 6 below, TCI is filing this Amendment No. 2 to the Statement because it has entered into a Contribution and Exchange Agreement, dated as of June 11, 1997 (the "Agreement"), through its subsidiary Liberty Media Corporation, a Delaware corporation ("LMC"), and 4 5 Liberty IFE, Inc., a Colorado corporation and a wholly owned subsidiary of LMC ("LIFE"), with Fox Kids. Under and subject to the terms of the Agreement, TCI will exchange its beneficial ownership of the Class C Stock and the Notes for shares of Fox Kids Series A Preferred Stock, with an initial liquidation preference of $345,000,000 (the "Preferred Stock"). TCI did not pay any new consideration in connection with the Agreement. Acquisition Pursuant to the Business Combination In connection with the Business Combination described in Item 2 above, TCI acquired beneficial ownership of 7,040,986 shares of the Class B Stock. The consideration for the acquisition of such Class B Stock was the consideration given in the Business Combination which is described in the Proxy Statement/Prospectus under the heading "THE MERGER AGREEMENT--Consideration to be Received in the Mergers". December 1995 Stock Exchange Effective December 15, 1995, as part of a plan of reorganization adopted by IFE, LIFE exchanged 220,000 shares of 10% Convertible Cumulative Preferred Stock of IFE, $.001 par value, and all accrued dividends thereon accruing or becoming payable after January 1, 1995, for 4,000,000 shares of Class B Stock. Immediately following such exchange, LIFE exchanged 5,670,986 shares of IFE Class B Stock (including said 4,000,000 shares) for 5,670,986 shares of Class C Stock. TCI did not pay any new consideration in connection with these exchanges. In connection with the reorganization, the shareholders of IFE, including LIFE, entered into an Amended and Restated Shareholder Agreement dated as of September 1, 1995 (the "Shareholder Agreement"). See Items 4 and 6 below. December 1995 Stock Split IFE effected a 5 for 4 stock split for stockholders of record on December 15, 1995. Each stockholder of Common Stock received a 25% stock dividend. The terms of the Class C Stock provide for an adjustment in the number of shares of Class B Stock underlying the Class C Stock in the case of a stock dividend. Accordingly, the Class C Stock beneficially owned by TCI became convertible into a total of 7,088,732 shares of Class B Stock. Also, the terms of the Notes provide for an adjustment in the number of shares of Class C Stock underlying the Notes in the case of a stock dividend. Accordingly, the Notes beneficially owned by TCI became convertible into a total of 2,587,500 shares of Class B Stock. ITEM 4. Purpose of Transaction Pursuant to the Agreement, TCI (through LMC and LIFE) has agreed to contribute all its beneficial ownership interest in the Class C Stock and the Notes, which will result in the transfer of the Class B Stock underlying such securities, to Fox Kids in exchange for the Preferred Stock (the "Exchange"). Consummation of the Exchange is subject to various terms and conditions as set forth in the Agreement, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Anti-trust Improvement Act. The Agreement was entered into concurrently with, among other things, the execution by Fox Kids of (i) a stock purchase agreement with the holders of the Class A Stock, and (ii) a merger agreement with IFE. In connection with those transactions, TCI, through LIFE, executed a waiver (the "Waiver") of its rights under the Shareholder Agreement. Pursuant to the Waiver, LIFE waives various rights under the Shareholder Agreement, including the right of first refusal with respect to Fox Kids' purchase of the Class A Stock from the holders thereof. The Waiver is contingent upon the Exchange being consummated before the Class A Stock is purchased by Fox Kids under the related stock purchase agreement. The Waiver will also be effective, and LIFE has waived its first refusal rights, with respect to the acquisition of the Class A 5 6 Stock by Fox Kids by means of the merger contemplated by said merger agreement between Fox Kids and IFE. Upon the closing of the Exchange, TCI will no longer have a beneficial interest in any securities of IFE. The description of TCI's agreement to contribute its beneficial ownership in the Class C Stock and the Notes, which will result in the transfer of the Class B Stock underlying such securities, in exchange for the Preferred Stock of Fox Kids, and the related Waiver is qualified in its entirety by reference to (a) the text of the Agreement attached hereto as Exhibit 7(H), and (b) the text of the Waiver attached hereto as Exhibit 7(I), each of which are incorporated herein by this reference. Except as otherwise described herein, neither TCI nor, to the best of its knowledge, any of its executive officers, directors or controlling persons, have any present plans or proposals which relate to or would result in: (i) any acquisition by any person of additional securities of IFE, or any disposition of securities of IFE; (ii) any extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving IFE or any of its subsidiaries; (iii) any sale or transfer of a material amount of assets of IFE or any of its subsidiaries; (iv) any change in the present board of directors or management of IFE, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (v) any material change in the present capitalization or dividend policy of IFE; (vi) any other material change in IFE's business or corporate structure; (vii) any changes in IFE's charter, by-laws, or other instruments corresponding thereto or other actions which may impede the acquisition of control of IFE by any person; (viii) any delisting from a national securities exchange or any loss of authorization for quotation in an inter-dealer quotation system of a registered national securities association of a class of securities of IFE; (ix) any termination of registration pursuant to section 12(g)(4) of the Exchange Act of a class of equity securities of IFE; or (x) any action similar to any of those enumerated above. TCI reserves the right, depending on other relevant factors, to acquire additional shares of the Class B Stock of IFE in open market or privately negotiated transactions, or to change its intention with respect to any or all of the matters referred to in this Item. ITEM 5. Interest in Securities of the Issuer (a) TCI presently beneficially owns 9,676,232 shares of the Class B Stock. Of the 9,676,232 shares beneficially owned, 7,088,732 shares may be acquired upon the conversion of the Class C Stock and 2,587,500 shares may be acquired upon the conversion of the Notes. The 9,676,232 shares of Class B Stock, beneficially owned by TCI, represent 22.8% of the 42,458,677 shares of IFE Class B Stock assumed to be outstanding if TCI converted its Class C Stock and the Notes. Such share amount is based on 32,782,445 shares of Class B Stock outstanding as of March 1, 1997, as reported by IFE in its Annual Report on Form 10-K for the period ended December 31, 1996. To the knowledge of TCI, none of the Schedule 1 Persons has any interest in any securities of IFE. (b) TCI has the sole power to vote, or to direct the voting of, the shares of the Class B Stock that TCI beneficially owns, and, subject to the Agreements to dispose of, or to direct the disposition of, the shares of Class B Stock that TCI beneficially owns. (c) Except for the Exchange contemplated by the Agreement, neither TCI nor, to the knowledge of TCI, any of the persons described on Schedule 1, has executed transactions in the Class B Stock of IFE during the past sixty (60) days. (d) There is no person that has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Class B Stock beneficially owned by TCI. (e) Not applicable. 6 7 ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer The Amended and Restated Shareholder Agreement, dated as of September 1, 1995, by and among M.G. Robertson, Timothy B. Robertson, the Robertson Charitable Remainder Unitrust, The Christian Broadcasting Network, Inc., LIFE and IFE, grants LIFE certain rights of first refusal, a put option, and incidental and demand registration rights. The description of these rights and other obligations of the Shareholder Agreement is more fully set forth in the Shareholder Agreement attached to this Amendment No. 2 as Exhibit 7(J) and incorporated herein by this reference. Pursuant to the terms of the Agreement, TCI has agreed, subject to the terms and conditions of the Agreement, to contribute all of its beneficial ownership in the Class C Stock and the Notes, which will result in the transfer of its beneficial ownership in the Class B Stock underlying such securities, to Fox Kids in exchange for the Preferred Stock. In connection with this Agreement, TCI, through LIFE, has agreed to waive all its rights and obligations under the Shareholder Agreement. See Item 4 above. Except as described above and in Items 3, 4 and 7, hereof, there are presently no contracts, arrangements, understandings or relationships among TCI and other persons with respect to the Class B Stock of IFE. ITEM 7. Material to be Filed as Exhibits (A) Registration Statement on Form S-4, filed by TCI/Liberty Holding Company on June 23, 1994, and thereafter amended and ordered effective June 23, 1994, under Commission File No. 33-54263, which is hereby incorporated by this reference. (Previously submitted with Original Statement filed on August 4, 1994, via incorporation by reference.) (B) Press Release dated August 4, 1994. (Previously submitted with Original Statement filed on August 4, 1994.) (C) Amended and Restated Shareholders Agreement dated April 27, 1992. (Previously submitted with Original Statement filed on August 4, 1994, via incorporation by reference.) (D) Restated Shareholder Agreement dated November 9, 1993. (Previously submitted with Original Statement filed on. August 4, 1994, via incorporation by reference) (E) Liberty Agreement dated November 9, 1993. (Previously submitted with Original Statement filed on August 4, 1994, via incorporation by reference.) (F) Exchange Agreement dated as of December 1, 1995, among IFE, Liberty Programming Corporation (an affiliate of TCI) and Liberty IFE, Inc. (an indirect subsidiary of TCI). (Previously submitted with Amendment No. 1 to Original Statement filed on December 15, 1995.) (G) Press Release dated December 15, 1995. (Previously submitted with Amendment No. 1 to Original Statement filed on December 15, 1995.) (H) Contribution and Exchange Agreement dated as June 11, 1997, by and among LMC, LIFE and Fox Kids 7 8 (I) Waiver dated as of June 11, 1997, by LIFE and The Christian Broadcasting Network, Inc. (J) Amended and Restated Shareholder Agreement, dated as of September 1, 1995, by and among M.G. Robertson, Timothy B. Robertson, the Robertson Charitable Remainder Unitrust, The Christian Broadcasting Network, Inc., LIFE and IFE 8 9 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. June 19, 1997 TELE-COMMUNICATIONS, INC. /s/ Stephen M. Brett ------------------------------ Stephen M. Brett Executive Vice President and General Counsel 9 10 SCHEDULE 1 Directors, Executive Officers and Controlling Persons of Tele-Communications, Inc. ("TCI")
DIRECTORS Principal Occupation & Principal Business or Organization in Which Name Business Address such Employment Is Conducted - ---- ---------------------- ------------------------------------------- Tony Lee Coelho Director of TCI; Chairman of the Board & Chief Cable television & telecommunications Executive Officer of ETC w/tci, Inc.; Chairman & & programming services Chief Executive Officer of Coelho Associates, LLC 1325 Avenue of the Americas, 26th Floor New York, New York 10019 Donne F. Fisher Consultant & Director of TCI Cable television & telecommunications 5619 DTC Parkway & programming services Englewood, CO 80111 John W. Gallivan Director of TCI; Chairman of the Board Newspaper publishing of Kearns-Tribune Corporation 400 Tribune Building Salt Lake City, UT 84111 Paul A. Gould Director of TCI, Managing Director of Investment banking services Allen & Company Incorporated 711 5th Avenue New York, New York 10022 Leo J. Hindery Director, President and Chief Operating Cable television & telecommunications Officer of TCI & programming services 5619 DTC Parkway Englewood, CO 80111 Jerome H. Kern Director of TCI; Business Consultant; Special Business Consulting; Law Counsel to Baker & Botts, L.L.P. 5619 DTC Parkway Englewood, CO 80111 Kim Magness Director of TCI; Manages various personal Management of personal investments investments; 4000 E. Belleview Englewood, CO 80111 John C. Malone Chairman of the Board, Chief Executive Officer & Cable television & telecommunications Director of TCI & programming services 5619 DTC Parkway Englewood, CO 80111
10 11
Principal Occupation & Principal Business or Organization in Name Business Address Which such Employment Is Conducted - ---- ---------------------- ------------------------------------- Robert A. Naify Director of TCI; President & Chief Executive Motion Picture Industry Officer of Todd-AO Corporation; 172 Golden Gate Avenue San Francisco, CA 94102 J.C. Sparkman Director of TCI Cable television & telecommunications 5619 DTC Parkway & programming services Englewood, CO 80111 EXECUTIVE OFFICERS Gary K. Bracken Senior Vice President & Controller Cable television & telecommunications of TCI Communications, Inc. & programming services 5619 DTC Parkway Englewood, CO 80111 Stephen M. Brett Executive Vice President, Secretary Cable television & telecommunications & General Counsel of TCI & programming services 5619 DTC Parkway Englewood, CO 80111 Brendan R. Clouston Executive Vice President of TCI Cable television & telecommunications 5619 DTC Parkway & programming services Englewood, CO 80111 Marvin Jones Director, Executive Vice President & Chief Cable television & telecommunications Operating Officer of TCI Communications, Inc. & programming services 5619 DTC Parkway Englewood, CO 80111 Larry E. Romrell Executive Vice President of TCI Cable television & telecommunications 5619 DTC Parkway & programming services Englewood, CO 80111 Bernard W. Schotters, II Senior Vice President - Finance & Treasurer of Cable television & telecommunications II TCI Communications, Inc. & programming services 5619 DTC Parkway Englewood, CO 80111 Robert N. Thomson Senior Vice President - Government Affairs of Cable television & telecommunications TCI Communications, Inc. & programming services 5619 DTC Parkway Englewood, CO 80111
11 12
Principal Occupation & Principal Business or Organization in Name Business Address Which such Employment Is Conducted - ---- ---------------------- ------------------------------------- Fred A. Vierra Executive Vice President of TCI Cable television & telecommunications 5619 DTC Parkway & programming services Englewood, CO 80111
12 13 EXHIBIT INDEX
- -------------------------------------------------------------------------------------------------------------------------------- EXHIBIT NUMBER EXHIBIT PAGE - --------------------------------------------------------------------------------------------------------------------------------- 7(A) Registration Statement on Form S-4, filed by TCI/Liberty Holding Company on Previously June 23, 1994, and thereafter amended and ordered effective June 23, 1994, filed under Commission File No. 33-54263, which is hereby incorporated by this reference. (Previously submitted with Original Statement filed on August 11, 1994, via incorporation by reference.) 7(B) Press Release dated August 4, 1994. (Previously submitted with Original Previously Statement filed on August 4, 1994.) filed 7(C) Amended and Restated Shareholders Agreement dated April 27, 1992. (Previously Previously submitted with Original Statement filed on August 4, 1994, via incorporation by filed reference.) 7(D) Restated Shareholder Agreement dated November 9, 1993. (Previously submitted Previously with Original Statement filed on August 4, 1994, via incorporation by filed reference) 7(E) Liberty Agreement dated November 9, 1993. (Previously submitted with Original Previously Statement filed on August 4, 1994, via incorporation by reference.) filed 7(F) Exchange Agreement dated as of December 1, 1995, among IFE, liberty Programming Previously Corporation (an affiliate of TCI) and Liberty IFE, Inc. (an indirect subsidiary filed of TCI). (Previously submitted with Amendment No. 1 to Original Statement filed on December 15, 1995.) 7(G) Press Release dated December 15, 1995. (Previously submitted with Amendment No. Previously 1 to Original Statement filed on December 15, 1995.) filed 7(H) Contribution and Exchange Agreement dated as June 11, 1997, by and among LMC, 15 LIFE and Fox Kids 7(I) Waiver dated as of June 11, 1997, by LIFE and The Christian Broadcasting 45 Network, Inc. 7(J) Amended and Restated Shareholder Agreement, dated as of September 1, 1995, by 49 and among M.G. Robertson, Timothy B. Robertson, the Robertson Charitable Remainder Unitrust, The Christian Broadcasting Network, Inc., LIFE and IFE
13 EX-7.H 2 CONTRIBUTION AND EXCHANGE AGREEMENT 1 EXHIBIT 7(H) CONTRIBUTION AND EXCHANGE AGREEMENT By and Among LIBERTY MEDIA CORPORATION, LIBERTY IFE, INC. and FOX KIDS WORLDWIDE, INC. June 11, 1997 2 TABLE OF CONTENTS
Page ---- 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. The Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.1 The Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.2 Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.3 Filing of Charter Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4. Representations and Warranties of Liberty and LIFE . . . . . . . . . . . . . . . . . . . . . . . . 7 4.1 Organization and Standing; Articles and By-Laws . . . . . . . . . . . . . . . . . . . . . 7 4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4.3 No Conflicts; Required Filings and Consents . . . . . . . . . . . . . . . . . . . . . . . 7 4.4 Litigation; Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.5 Title to the IFE Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.6 Title to the IFE Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.7 No Other Agreements Relating to IFE Securities . . . . . . . . . . . . . . . . . . . . . . 9 4.8 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4.9 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4.10 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5. Representations and Warranties of Fox Kids . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.1 Organization and Standing; Articles and By-Laws . . . . . . . . . . . . . . . . . . . . . 9 5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.3 No Conflicts; Required Filings and Consents . . . . . . . . . . . . . . . . . . . . . . . 10 5.4 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5.5 The Fox Kids and NPAL Preferred Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5.6 Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 5.7 Newly Formed Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 5.8 NPAL Financial Statements; Primary US Holding Company . . . . . . . . . . . . . . . . . . 12 5.9 TNCL SEC Filings; TNCL Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 13 5.10 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 5.11 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 5.12 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) 3 TABLE OF CONTENTS
Page ---- 6. Pre-Closing Covenants of Fox Kids, LIFE and Liberty . . . . . . . . . . . . . . . . . . . . . . . 14 6.1 Filings and other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 6.2 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 6.3 Substitution of Consideration in Certain Circumstances . . . . . . . . . . . . . . . . . . 14 6.4 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 6.5 H-S-R Filings; Best Efforts to Close. . . . . . . . . . . . . . . . . . . . . . . . . . . 16 7. Conditions to Each Party's Obligation to Effect the Contribution . . . . . . . . . . . . . . . . . 16 7.1 No Stop Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 7.2 Consummation of Share Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 7.3 H-S-R Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 8. Additional Conditions to Obligations of Fox Kids . . . . . . . . . . . . . . . . . . . . . . . . . 17 8.1 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 17 8.2 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 8.3 Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 8.4 Opinion of Counsel for Liberty and LIFE . . . . . . . . . . . . . . . . . . . . . . . . . 18 8.5 Amended Affiliation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 8.6 IFE Shareholders Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 9. Additional Conditions to the Obligations of Liberty and LIFE . . . . . . . . . . . . . . . . . . . 18 9.1 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 18 9.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 9.4 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 9.5 Funding Agreement and Exchange Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 19 9.6 Assets of NPAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 9.7 Opinion of Counsel for Fox Kids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 9.8 Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 10. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 11. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 11.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 11.2 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 11.3 Indemnification by Liberty and LIFE . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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Page ---- 11.4 Indemnification by Fox Kids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 11.5 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 12. Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 12.2 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 12.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 12.4 No Adverse Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 12.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 12.6 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 12.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 12.8 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 12.9 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 12.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 EXHIBITS AND SCHEDULES Exhibit A Share Exchange Agreement Exhibit B Amended Affiliation Agreement Exhibit C Exchange Agreement Exhibit D Funding Agreement Exhibit E NPAL Certificate of Amendment Exhibit F Fox Kids Certificate of Designations Exhibit G Press Release Exhibit H Opinion by Counsel for Liberty and LIFE Exhibit I Opinion by Counsel for Fox Kids Exhibit J Certificates regarding Tax Matters Schedule 5.8 NPAL Subsidiaries Schedule 9.8 Terms of Registration Rights Agreement
(iii) 5 CONTRIBUTION AND EXCHANGE AGREEMENT Contribution and Exchange Agreement (this "Agreement"), dated as of June 11, 1997, by and among Liberty Media Corporation, a Delaware corporation ("Liberty"), Liberty IFE, Inc., a Colorado corporation and a wholly owned subsidiary of Liberty ("LIFE"), and Fox Kids Worldwide, Inc., a Delaware corporation ("Fox Kids"). RECITALS A. LIFE owns of record 7,088,732 shares of Class C non-voting Common Stock, par value $.01 per share (the "IFE Stock"), of International Family Entertainment, Inc., a Delaware corporation ("IFE"), and 6% Convertible Secured Notes due 2004 of IFE in the principal amount of $23,000,000 which, as of the date hereof, are convertible into 2,587,500 shares of IFE Stock (the "IFE Notes" and, together with the IFE Stock, the "IFE Securities"). B. LIFE wishes to contribute the IFE Securities to Fox Kids in exchange for the Consideration (as hereinafter defined) (collectively, the "Contribution"). C. The Contribution is to be made concurrently with the exchange of shares of capital stock (the "Share Exchange") contemplated by that certain Agreement, dated as of the date hereof, among Fox Kids, Saban Entertainment, Inc., Fox Broadcasting Company, Fox Broadcasting Sub, Inc., Allen & Company Incorporated, Haim Saban and the other entities parties thereto, a copy of which is attached to this Agreement as Exhibit A (the "Share Exchange Agreement"). D. The Contribution and the Share Exchange are intended to qualify as a tax-free exchange pursuant to Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"), except to the extent that the Exchange Right (as hereinafter defined) constitutes taxable "boot" under the Code. AGREEMENT In consideration of the premises and of the mutual representations, warranties, covenants and agreements contained herein, and in order to set forth the terms and conditions of the Contribution, the parties to this Agreement hereby agree as follows: 1. Definitions: As used in this Agreement, terms defined in the preamble and recitals shall have the respective meanings specified therein and the terms set forth below shall have the meanings indicated: "Affiliate" means, when used with reference to a specified Person, any Person that 1 6 directly or indirectly through one or more intermediaries controls or is controlled by, or is under common control with, such specified Person. 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 purposes of this Agreement, (i) neither IFE nor any of its Subsidiaries shall be deemed an Affiliate of Liberty, LIFE, Fox Kids or any of their respective Affiliates and (ii) each of NPAL and Saban Entertainment, Inc., a Delaware corporation, and their respective Affiliates shall be deemed an Affiliate of Fox Kids. "Amended Affiliation Agreement" means that certain affiliation agreement between Satellite Services, Inc. and IFE in the form of Exhibit B hereto. "Closing" has the meaning set forth in Section 3. "Closing Date" has the meaning set forth in Section 3. "Consideration Adjustment Period" means the period commencing immediately following the Closing and ending on the date the transactions contemplated by the Merger Agreement are consummated; provided, however, that if the Merger Agreement is terminated, the "Consideration Adjustment Period" shall mean the last to occur of (i) such termination, (ii) November 30, 1997 and (iii) the consummation or termination of the sale of the IFE Class A Stock pursuant to the Robertsons Class A Purchase Agreement. "$" means the United States dollar. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Agreement" means that certain Exchange Agreement, dated as of the Closing Date, among Liberty, LIFE and NPAL, in the form of Exhibit C hereto. "Exchange Right" means the exchange right granted to Liberty and LIFE under the Exchange Agreement. "Fox Kids Certificate of Designations" has the meaning set forth in Section 2.3. "Fox Kids Disclosure Letter" has the meaning set forth in Section 5. "Fox Kids Preferred Stock" means the Series A Preferred Stock, par value $.001 per share, of Fox Kids. "Fully Diluted Share Number" means the sum of (i) the number of shares of IFE Stock owned by LIFE plus (ii) the number of shares of IFE Stock into which the IFE Notes 2 7 owned by LIFE are convertible, in each case as of the Closing Date. "Funding Agreement" means that certain Funding Agreement, dated as of the date hereof, among Fox Kids, NPAL and TNCL, in the form of Exhibit D hereto. "Governmental Authority" has the meaning set forth in Section 4.3. "Highest Per Share Amount" means the highest amount paid, or agreed to be paid, by Fox Kids, or any Affiliate of Fox Kids, for a share of capital stock of IFE (including without limitation for any shares of any class of common stock of IFE) (i) from M.G. "Pat" Robertson, the Robertson Charitable Remainder Unitrust, the Gordon P. Robertson Irrevocable Trust, the Elizabeth F. Robinson Irrevocable Trust, the Ann R. Lablanc Irrevocable Trust, Lisa N. Robertson, Timothy B. Robertson (individually and as custodian to and for each of Abigail H. Robertson, Laura N. Robertson, Elizabeth C. Robertson, Willis H. Robertson and Caroline S. Robertson), the Timothy and Lisa Robertson Children's Trust, the Timothy B. Robertson Charitable Trust, any other charitable, revocable or irrevocable trust created by or for the benefit of the Robertsons, their children or their respective heirs, The Christian Broadcasting Network, Inc. or Regent University (and, in each case, from any of their respective Affiliates), (ii) pursuant to a tender offer made to the public shareholders of IFE, (iii) pursuant to a merger, binding share exchange or similar agreement involving IFE (including without limitation the Merger Agreement) (other than an amount paid in respect of a share of capital stock of IFE to any IFE stockholder pursuant to Section 262 of the Delaware General Corporation Law), (iv) in any transaction involving 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 2 % or more of the outstanding shares of any class of common stock of IFE or (v) in any transaction, or series of related or unrelated transactions (excluding for purposes of this clause (v) any transaction referred to in clauses (i) through (iii) above), involving, in the aggregate (between January 1, 1997 and the end of the Consideration Adjustment Period), 5% or more of the outstanding shares of any class of common stock of IFE, in each case appropriately adjusted to take into account any stock dividend, subdivision, split, or combination involving the capital stock of IFE during any relevant period. "IFE Class A Stock" means the Class A Voting Common Stock, par value $.01 per share, of IFE. "IFE Class B Stock" means the Class B Common Stock, par value $.01 per share, of IFE. "IFE Shareholders Agreement" means that certain Amended and Restated Shareholder Agreement, dated as of September 1, 1995, by and among M.G. "Pat" Robertson, Timothy B. Robertson, the Robertson Charitable Remainder Unitrust, the Timothy and Lisa Robertson Children's Trust, the Christian Broadcasting Network, LIFE and IFE. "Lien" means any mortgage, pledge, lien, security interest or other encumbrance. 3 8 "Material NPAL Subsidiary" means each direct or indirect Subsidiary of NPAL that constitutes a "Significant Subsidiary" of NPAL within the meaning of Rule 1-02 of Regulation S-X of the SEC. "Material TNCL Subsidiary" means each direct or indirect Subsidiary of TNCL that constitutes a "Significant Subsidiary" of TNCL within the meaning of Rule 1-02 of Regulation S-X of the SEC. "Merger Agreement" means that certain Agreement and Plan of Merger, dated as of the date hereof, among Fox Kids, Fox Kids Merger Corporation and IFE, as the same may be amended, supplemented or otherwise modified; provided, however, that if the Merger Agreement is terminated and the Purchaser or any of its Affiliates subsequently enters into, prior to the end of the Consideration Adjustment Period, another merger agreement, binding share agreement, asset purchase agreement or other agreement with IFE that requires the approval of shareholders of IFE in order to consummate the transactions contemplated thereby, then the term "Merger Agreement" shall be deemed to refer to such agreement, as the same may be amended, supplemented or otherwise modified. "NPAL" means News Publishing Australia Limited, a Delaware corporation. "NPAL Certificate of Amendment" means the Certificate of Amendment to the Certificate of Incorporation of NPAL that creates the NPAL Preferred Stock, in the form of Exhibit E hereto. "NPAL Financial Statements" means the unaudited consolidated balance sheets of NPAL as of June 30, 1996 and December 31, 1996, and the related unaudited operating statement and profit and loss for the six-month period ended December 31, 1996 and the one-year period ended June 30, 1996 (without footnotes). "NPAL Preferred Stock" means the Preferred Stock, par value $.001 per share, of NPAL. "Outside Date" means July 30, 1997; provided, however, that if a request for additional information is made of Fox Kids (or any of its Affiliates) in connection with the filings to be made under the H-S-R Act contemplated by Section 6.5(a) hereof, then "Outside Date" shall mean the earlier of (i) November 30, 1997 and (ii) the later of (x) July 30, 1997 and (y) the second business day after receipt by Fox Kids (or the Affiliate of Fox Kids that makes the filings) of clearance or authorization to effect the transactions referred to in the first sentence of Section 6.5(a). "Person" means any individual, corporation, general or limited partnership, limited liability company, trust, joint venture, association or unincorporated entity of any kind. 4 9 "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. "Robertsons Class A Purchase Agreement" means that certain Stock Purchase Agreement, dated as of the date hereof, by and among Fox Kids, M.G. "Pat" Robertson, the Robertson Charitable Remainder Unitrust, the Gordon P. Robertson Irrevocable Trust, the Elizabeth F. Robinson Irrevocable Trust, the Ann R. Lablanc Irrevocable Trust, Lisa N. Robertson, Timothy B. Robertson (individually and as custodian to and for each of Abigail H. Robertson, Laura N. Robertson, Elizabeth C. Robertson, Willis H. Robertson and Caroline S. Robertson), the Timothy and Lisa Robertson Children's Trust and the Timothy B. Robertson Charitable Trust. "SEC" means the United States Securities and Exchange Commission. "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 through 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. "Substitute Security" has the meaning set forth in Section 6.3(a). "TCI" means Tele-Communications, Inc., a Delaware corporation. "TNCL" means The News Corporation Limited, a corporation organized and existing under the laws of South Australia, Australia. 2. The Contribution. 2.1 The Contribution. (a) At the Closing, and subject to the terms and conditions hereinafter set forth, LIFE shall contribute the IFE Securities to Fox Kids in exchange for shares of Fox Kids Preferred Stock (or, if applicable, the Substitute Security) with an aggregate initial liquidation preference (the "Initial Liquidation Preference") equal to the greater 5 10 of (i) $345 million or (ii) the sum of (x) $6.33 million plus (y) the amount determined by multiplying (x) the Highest Per Share Amount paid during the period commencing on January 1, 1997 and ending at the time of the Closing by (y) the Fully Diluted Share Number (the "Consideration"). The Consideration shall be adjusted in accordance with the provisions of subsection (b) below. It is the intention of the parties that the Consideration equal the amount (rounded to the nearest thousand to avoid the issuance of fractional shares) derived by multiplying the Highest Per Share Amount (which as of the date of this Agreement is understood by Liberty and LIFE to be $35) by the Fully Diluted Share Number, and then adding thereto $6.33 million, which represents (A) $3.5 million of interest income forfeited by LIFE as a result of its contribution of the IFE Notes to Fox Kids as provided herein and (B) $2.83 million to partially compensate Liberty and LIFE for the fact that the Exchange Right constitutes "boot" for Federal income taxes purposes. (b) If (i) during the Consideration Adjustment Period a Highest Per Share Amount is paid (a "Post-Closing Highest Per Share Amount") which is greater than the Highest Per Share Amount paid prior to or at the time of the Closing, and (ii) the Initial Liquidation Preference would have been higher had such Post-Closing Highest Per Share Amount been paid immediately prior to the Closing, then LIFE (or its nominee) shall receive, within 5 business days of such Post-Closing Highest Per Share Amount having been paid, additional shares of Fox Kids Preferred Stock (rounded up to the nearest whole number) with an aggregate initial liquidation preference equal to the difference between (x) the aggregate Initial Liquidation Preference that the Fox Kids Preferred Stock would have had if the Post- Closing Highest Per Share Amount had been paid immediately prior to the Closing and (y) the aggregate Initial Liquidation Preference of the Fox Kids Preferred Stock received by LIFE (or its nominee) at the Closing. This Section 2.1(b) shall apply with respect to each Post-Closing Highest Per Share Amount paid subsequent to the time of the Closing; provided, however, that if any adjustment is made pursuant to this Section 2.1(b), then any subsequent calculation pursuant to this subsection (b) due to a higher Post-Closing Highest Per Share Amount being paid shall be based on the aggregate Initial Liquidation Preference of all shares of Fox Kids Preferred Stock received by LIFE (or its nominee) under this Section 2.1 and the aggregate Initial Liquidation Preference for the Fox Kids Preferred Stock that LIFE would have received had such higher Post-Closing Highest Per Share Amount been paid immediately prior to the Closing. 2.2 Exchange of Stock Certificates. At the Closing, Fox Kids shall deliver, or cause to be delivered, to LIFE, against delivery to Fox Kids of the IFE Notes and the certificate or certificates evidencing the IFE Stock (together with duly executed stock powers in blank and with all requisite stock and bond transfer tax stamps duly affixed thereto), a certificate, registered in the name of LIFE or its nominee, representing the shares of Fox Kids Preferred Stock to which LIFE is entitled pursuant to Section 2.1 hereof. 2.3 Filing of Charter Amendments. The Fox Kids Preferred Stock delivered to LIFE or its nominee at the Closing shall have the preferences and relative participating, optional and other special rights, qualifications, limitations and restrictions set forth in the form 6 11 of Certificate of Designations attached hereto as Exhibit F (the "Fox Kids Certificate of Designations"). Fox Kids shall cause the Fox Kids Certificate of Designations and the NPAL Certificate of Amendment to be filed with the Delaware Secretary of State prior to or at the time of the Closing. 3. Closing Date. The closing of the Contribution (the "Closing") shall (unless the parties hereto agree otherwise) take place at the offices of Baker & Botts, L.L.P., 599 Lexington Avenue, New York, New York, at 11:00 a.m., local time, on the day on which the last of the conditions set forth in Sections 7, 8 and 9 hereof is fulfilled or waived (subject to applicable law) (the "Closing Date"). The parties covenant and agree, subject to Section 6.3(b), that they will in any event effect the Closing on the second business day after the satisfaction of the condition set forth in Section 7.3 hereof, if the other conditions to the obligations of the parties under Sections 7, 8 and 9 hereof are capable of being satisfied at that time. 4. Representations and Warranties of Liberty and LIFE. Liberty and LIFE, jointly and severally, represent and warrant to Fox Kids as follows: 4.1 Organization and Standing; Articles and By-Laws. Each of Liberty and LIFE is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation. LIFE has all requisite power and authority and all necessary governmental approvals, permits and other authorizations necessary to own the IFE Securities (which constitute its only assets, other than cash paid from time to time on the IFE Securities) and to carry on its business in the manner and in the locations it is now being conducted. 4.2 Authorization. Each of Liberty and LIFE has the requisite corporate power and authority to enter into and carry out the terms and conditions of this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the Board of Directors of Liberty and LIFE. Liberty, in its capacity as the sole stockholder of LIFE, has approved this Agreement, and no other corporate action on the part of Liberty or LIFE is necessary to authorize the execution, delivery or performance by either Liberty or LIFE of this Agreement. This Agreement has been duly executed and delivered by Liberty and LIFE and constitutes the valid and binding obligation of each of Liberty and LIFE, enforceable against Liberty and LIFE in accordance with its terms. 4.3 No Conflicts; Required Filings and Consents. The execution and delivery of this Agreement by each of Liberty and LIFE do not, and the performance of this Agreement by each of Liberty and LIFE will not, (i) conflict with or violate the certificate or articles of incorporation or bylaws of Liberty or LIFE, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to either Liberty or LIFE or by which any property or asset of either is bound or affected, or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, result in the loss of a material benefit under, or give to others any right of termination, amendment, acceleration, increased payments or cancellation of, or result in the creation of a lien 7 12 or other encumbrance on the IFE Securities pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument to which Liberty, LIFE or any other Subsidiary of Liberty is a party. The execution and delivery of this Agreement by each of Liberty and LIFE do not, and the performance of this Agreement by each of Liberty and LIFE will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign (each, a "Governmental Authority"), except for such filings as may be required under Section 13(d) of the Exchange Act. 4.4 Litigation; Compliance with Laws. There are no actions, suits or proceedings of any nature pending, or, to the knowledge of Liberty or LIFE, threatened, against Liberty or LIFE arising out of (i) LIFE's ownership of the IFE Securities or (ii), as of the date hereof, this Agreement, or any action taken or to be taken by Liberty or LIFE in connection with this Agreement. Neither Liberty nor LIFE is subject to any order, judgment, ruling, or decree of any competent authority relating to Liberty or LIFE's ownership of the IFE Securities. Neither Liberty nor LIFE has received notice of any violation of any applicable statute, regulation, code, ordinance, rule, order, judgment, decree or requirement relating to LIFE's ownership of the IFE Securities and, to Liberty's and LIFE's knowledge, no such violation exists. Each of Liberty and LIFE is in compliance with all applicable laws, rules and regulations relating to LIFE's ownership of the IFE Securities. 4.5 Title to the IFE Notes. LIFE owns good and valid title to the IFE Notes, free and clear of any Lien or Restriction. At the Closing, subject to the terms and conditions of this Agreement, Fox Kids will acquire good and valid title to the IFE Notes, free and clear of any Liens or Restrictions other than those (i) arising under the Securities Act of 1933, as amended (the "Securities Act") and "blue sky" laws of applicable jurisdictions or (ii) created by or with the consent of Fox Kids or any of its Affiliates. As of the date hereof, the IFE Notes are convertible into an aggregate of 2,587,500 shares of IFE Stock which, if issued on the date hereof upon conversion of the IFE Notes, would be convertible into shares of IFE Class B Stock on a one-for-one basis. Neither Liberty nor LIFE has entered into any agreements, understandings or undertakings (other than this Agreement) with respect to the IFE Notes under which Liberty or LIFE is or may become obligated, directly or indirectly, to transfer, dispose of, convert or assign the IFE Notes, or which would result in a Lien or Restriction upon the IFE Notes. The IFE Notes are the only debt securities of IFE legally or beneficially owned by Liberty. 4.6 Title to the IFE Stock. LIFE has good and valid title to the 7,088,732 shares of IFE Stock owned by it on the date hereof, free and clear of any Lien or Restriction. At the Closing, subject to the terms and conditions of this Agreement, Fox Kids will acquire good and valid title to the shares of IFE Stock owned by LIFE, free and clear of all Liens or Restrictions other than those (i) arising under the Securities Act and "blue sky" laws of applicable jurisdictions or (ii) created by or with the consent of Fox Kids or any of its Affiliates. As of the date hereof, the shares of IFE Stock owned by LIFE are convertible into shares of IFE Class B Stock on a one-for-one basis. Neither Liberty nor LIFE has entered into any agreements, 8 13 understandings or undertakings (other than this Agreement) with respect to the IFE Stock owned by LIFE under which Liberty or LIFE is or may become obligated, directly or indirectly, to transfer, dispose of, convert or assign such IFE Stock, or which would result in a Lien or Restriction upon such IFE Stock. The IFE Stock owned of record by LIFE are the only equity securities of IFE legally or beneficially owned by Liberty. 4.7 No Other Agreements Relating to IFE Securities. There are (i) no options, warrants, calls, subscriptions, convertible securities or other rights (including preemptive rights), agreements or commitments of any character (other than this Agreement) obligating Liberty or LIFE now or at any time in the future to sell, transfer or otherwise dispose of any of the IFE Securities and (ii) there are no voting trusts, proxies or other agreements to which Liberty or LIFE is a party with respect to the IFE Securities other than this Agreement, the IFE Shareholders Agreement and the purchase agreements pursuant to which LIFE acquired the IFE Stock and the IFE Notes from IFE. 4.8 Investment Intent. The shares of Fox Kids Preferred Stock to be acquired by LIFE pursuant to this Agreement are being acquired by LIFE for its own account for investment and with no present intention of distributing or reselling such shares or any part thereof in any transaction which would constitute a "distribution" within the meaning of the Securities Act. Liberty and LIFE understand and acknowledge that the offer and sale of the Fox Kids Preferred Stock have not been, and as of the Closing will not have been, registered under the Securities Act or any state securities laws. 4.9 No Brokers. No broker or finder is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Liberty or LIFE. 4.10 Full Disclosure. No statement herein or in the Exchange Agreement or in any certificate delivered pursuant to the requirements of this Agreement by or on behalf of Liberty or LIFE contains or will contain any untrue statement of a material fact concerning Liberty or LIFE or omits or will omit to state a material fact concerning Liberty or LIFE necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. 5. Representations and Warranties of Fox Kids. Except as set forth in the disclosure letter delivered at or prior to the execution of this Agreement by Fox Kids, which refers to the relevant Sections of this Agreement (the "Fox Kids Disclosure Letter"), Fox Kids represents and warrants to Liberty and LIFE as follows: 5.1 Organization and Standing; Articles and By-Laws. Each of Fox Kids, NPAL, each Material NPAL Subsidiary, TNCL and each Material TNCL Subsidiary is a corporation, partnership or other legal entity duly organized, validly existing and, if applicable, in good standing under the laws of the jurisdiction of its incorporation or organization. Fox Kids, 9 14 NPAL and each Material NPAL Subsidiary is qualified, licensed or domesticated as a foreign corporation, partnership or other legal entity and is in good standing in all jurisdictions where the character of its properties owned or held under lease or the nature of its activities make such qualification necessary, except where the failure to be so qualified, licensed or domesticated would not have a material adverse effect on the business, assets, results of operations or financial position of (i), in the case of Fox Kids, of Fox Kids, and (ii) in the case of NPAL, NPAL and its Subsidiaries taken as a whole. Each of Fox Kids, NPAL, each Material NPAL Subsidiary, TNCL and each Material TNCL Subsidiary has all requisite power and authority and all necessary governmental approvals, permits and other authorizations necessary to own, lease and operate its properties and assets and to carry on its business in the manner and in the locations it is now being conducted, except where the failure to have such power, authority and governmental approvals, permits and authorizations would not have a material adverse effect on the business, assets, results of operations or financial position (x), in the case of Fox Kids, of Fox Kids, (y), in the case of NPAL and any Material NPAL Subsidiary, of NPAL and its Subsidiaries taken as a whole, and (z), in the case of TNCL and any Material TNCL Subsidiary, of TNCL and its Subsidiaries taken as a whole. True and correct copies of the Certificate of Incorporation and Bylaws of each of Fox Kids and NPAL, as amended to the date hereof, have been delivered to Liberty. 5.2 Authorization. Fox Kids has the requisite corporate power and authority to enter into and carry out the terms and conditions of this Agreement. Each of Fox Kids, NPAL and TNCL has the requisite corporate power and authority to enter into and carry out the terms and conditions of the Funding Agreement. NPAL has the requisite corporate power and authority to enter into and carry out the terms of the Exchange Agreement. The execution and delivery of this Agreement and the Funding Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of Fox Kids and by any required shareholder or other action required under the charter documents of, or any shareholder agreement relating to, Fox Kids. All necessary corporate action on the part of each of NPAL and TNCL to authorize and approve the due execution, delivery and performance of the Funding Agreement by NPAL and TNCL, respectively, has been taken. All necessary corporate action on the part of NPAL to authorize and approve the due execution, delivery and performance of the Exchange Agreement by NPAL has been taken. This Agreement has been duly executed and delivered by Fox Kids and constitutes its valid and binding obligation, enforceable against it in accordance with its terms. Upon the execution and delivery of the Funding Agreement by Fox Kids, NPAL and TNCL at the Closing, the Funding Agreement will constitute the legal, valid and binding obligation of each of Fox Kids, NPAL and TNCL, enforceable against each in accordance with its terms, and will not be void or voidable by TNCL under Australian law. Upon the execution and delivery of the Exchange Agreement by NPAL at the Closing, the Exchange Agreement will constitute the legal, valid and binding obligation of NPAL, enforceable against NPAL in accordance with its terms. 5.3 No Conflicts; Required Filings and Consents. The execution and delivery of this Agreement by Fox Kids does not, and the performance of this Agreement by Fox 10 15 Kids, the execution, delivery and performance of the Funding Agreement by each of Fox Kids, NPAL and TNCL, and the execution, delivery and performance of the Exchange Agreement by NPAL will not, (i) conflict with or violate the certificate of incorporation, by-laws or other organizational documents of, or, to the knowledge of Fox Kids, any shareholder agreement relating to, Fox Kids, NPAL or TNCL, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to any of Fox Kids, NPAL, any Material NPAL Subsidiary, TNCL or any Material TNCL Subsidiary or by which any property or asset of any thereof is bound or affected, or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, result in the loss of a material benefit under, or give to others any right of termination, amendment, acceleration, increased payments or cancellation of, or result in the creation of a lien or other encumbrance on any material property or asset of Fox Kids, NPAL, any Material NPAL Subsidiary, TNCL or any Material TNCL Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument to which Fox Kids, NPAL, any Material NPAL Subsidiary, TNCL or any Material TNCL Subsidiary is a party, except, in the cases of clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not prevent or delay the consummation of the transactions contemplated by this Agreement or otherwise prevent (x) Fox Kids from timely performing its obligations under this Agreement or, following the Closing, exercising its rights, or timely performing its obligations, under the terms of the Fox Kids Preferred Stock, (y), following the Closing, any of Fox Kids, NPAL or TNCL from exercising its rights, or timely performing its respective obligations, under the terms of the Funding Agreement or (z), following the Closing, NPAL from timely performing its obligations under the terms of the Exchange Agreement. The execution and delivery of this Agreement by Fox Kids does not, and the performance of this Agreement by Fox Kids, the execution, delivery and performance of the Funding Agreement by each of Fox Kids, NPAL and TNCL, and the execution, delivery and performance of the Exchange Agreement by NPAL will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except for (i) the filing of the Fox Kids Certificate of Designations and the NPAL Certificate of Amendment with the Delaware Secretary of State prior to or at the time of the Closing and (ii) such filings as may be required under Section 13(d) of the Exchange Act. All required filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "H-S-R Act") have been made, and the waiting period thereunder has expired or terminated, with respect to the transactions contemplated by the Share Exchange Agreement. 5.4 Capital Stock. As of the date hereof, the authorized capital stock of Fox Kids consists of 10,000,000 shares of Class A Common Stock, par value $.001 per share, 10,000,000 shares of Class B Common Stock, par value $.001 per share, and 20,000,000 shares of "blank check" preferred stock, par value $.001 per share. Immediately prior to the Closing, there will be a number of shares of Fox Kids Preferred Stock duly authorized as shall be sufficient for Fox Kids to deliver to LIFE (or its nominee) at the Closing the number of validly issued, fully paid and nonassessable shares of Fox Kids Preferred Stock to which LIFE is entitled pursuant to Section 2.1 hereof. As of the Closing Date, no shares of capital stock of Fox Kids 11 16 will rank senior to the Fox Kids Preferred Stock as to dividend rights, rights of redemption, or rights on any liquidation, dissolution or winding up of Fox Kids. All of the shares of capital stock of Fox Kids to be issued pursuant to the terms of the Share Exchange Agreement will be, upon such issuance in accordance with the terms of the Share Exchange Agreement, duly authorized, validly issued, fully paid and nonassessable. 5.5 The Fox Kids and NPAL Preferred Stocks. The resolution set forth in the Fox Kids Certificate of Designations has been approved by the Board of Directors of Fox Kids and, upon the filing of the Fox Kids Certificate of Designations with the Delaware Secretary of State, the Fox Kids Preferred Stock will have all of the preferences and relative participating, optional and other special rights, qualifications, limitations and restrictions set forth in the Fox Kids Certificate of Designations. The shares of Fox Kids Preferred Stock to be received by LIFE or its nominee at the Closing will be, upon such receipt at the Closing in accordance with the terms and conditions of this Agreement, duly authorized, validly issued, fully paid and non-assessable and LIFE or such nominee will have all of the rights of a registered holder thereof under Delaware law. LIFE or such nominee will receive good and valid title to the Fox Kids Preferred Stock at the Closing, free and clear of all Liens and Restrictions other than those (i) arising under the Securities Act and "blue sky" laws of applicable jurisdictions or (ii) created by or with the consent of LIFE, Liberty or any of their respective Affiliates. Liberty will not be liable for any stamp duty or other issuance or transfer taxes or duties in connection with the issuance and delivery of the Fox Kids Preferred Stock at the Closing. The NPAL Certificate of Amendment has been approved by the Board of Directors and the stockholders of NPAL and, upon the filing of the NPAL Certificate of Amendment with the Delaware Secretary of State, the NPAL Preferred Stock will have all of the preferences and relative participating, optional and other special rights, qualifications, limitations and restrictions set forth in the NPAL Certificate of Amendment. The shares of NPAL Preferred Stock that may be received by a holder of shares of Fox Kids Preferred Stock upon the valid exercise of the Exchange Right included in the Exchange Agreement will be, upon surrender of the certificates representing such shares of Fox Kids Preferred Stock to NPAL or its agent, duly authorized, validly issued, fully paid and non-assessable. No authorization, approval or consent of any Australian Governmental Authority is currently required in order for (i) Fox Kids to declare or pay dividends on or to redeem the Fox Kids Preferred Stock, (ii) NPAL to perform its obligations under the Exchange Agreement, (iii) NPAL to declare or pay dividends on or to redeem the shares of NPAL Preferred Stock exchanged for shares of Fox Kids Preferred Stock, or (iv) Fox Kids, NPAL or TNCL to exercise or perform their respective rights or obligations under the Funding Agreement. 5.6 Compliance with Applicable Laws. Each of Fox Kids, NPAL, each Material NPAL Subsidiary, TNCL and each Material TNCL Subsidiary is in compliance with all applicable laws, ordinances, regulations, decrees and orders of any Governmental Authority, the breach or violation of which, individually or in the aggregate, could reasonably be expected to have a material adverse effect on the business, assets, results of operations or financial condition (i), in the case of Fox Kids, of Fox Kids and its Subsidiaries taken as a whole, (ii), in the case of NPAL and any Material NPAL Subsidiary, of NPAL and its Subsidiaries taken as a whole, and 12 17 (iii), in the case of TNCL and any Material TNCL Subsidiary, of TNCL and its Subsidiaries taken as a whole. 5.7 Newly Formed Corporation. Fox Kids is a recently organized corporation and, as of the date hereof, has engaged in no operating activities. As of the date hereof, Fox Kids has no material assets or liabilities (other than agreements relating to its acquisition of securities of IFE). 5.8 NPAL Financial Statements; Primary US Holding Company. (a) The NPAL Financial Statements delivered to Liberty prior to the date hereof were prepared in accordance with Australian generally accepted accounting principles (except that there are no footnotes) applied on a consistent basis throughout the periods indicated and fairly present the consolidated financial position and results of operations of NPAL and its consolidated subsidiaries as at the respective dates thereof and for the respective periods indicated therein. Since December 31, 1996, there has been no change in any of the significant accounting (including tax accounting) policies, practices or procedures of NPAL. Since December 31, 1996, there has not been any material adverse change in the financial condition, results of operations or businesses of NPAL and its Subsidiaries taken as a whole. (b) NPAL is the primary United States holding company for TNCL and owns not less than 75 % (in value) of the total assets of TNCL and its Subsidiaries located in the United States. NPAL owns, directly or indirectly, not less than 75% (in value and voting power) of the equity securities of the Subsidiaries listed on Schedule 5.8 hereto, except to the extent otherwise specified in such schedule. 5.9 TNCL SEC Filings; TNCL Financial Statements. (a) TNCL has filed all forms, reports and documents required to be filed by it with the SEC since December 31, 1995, and has heretofore made available to Liberty, in the form filed with the SEC (excluding any exhibits thereto), its Annual Report on Form 20-F for the fiscal year ended December 31, 1996 (the "TNCL Annual Report"). The TNCL Annual Report, and any other forms, reports and other documents filed by TNCL with the SEC since December 31, 1995, (x) were or will be prepared in accordance with the requirements of the Securities Act, and the Exchange Act, and the rules and regulations thereunder and (y) did not at the time they were filed, or will not at the time they are filed, contain any untrue statements of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. (b) The consolidated financial statements (including the notes thereto) contained in the TNCL Annual Report were prepared in accordance with Australian generally accepted accounting principles applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and fairly present the consolidated financial position, results of operations and cash flows of TNCL and its consolidated subsidiaries as at the respective dates thereof and for the respective periods indicated therein, and such financial 13 18 statements and the reconciliations to U.S. generally accepted accounting principles comply as to form in all material respects with applicable accounting requirements and the rules and regulations of the SEC. Since December 31, 1996, there has been no change in any of the significant accounting (including tax accounting) policies, practices or procedures of TNCL. Since December 31, 1996, there has not been any material adverse change in the financial condition, results of operations or businesses of TNCL and its Subsidiaries taken as a whole. 5.10 Investment Intent. The IFE Securities, and any shares of IFE common stock acquired upon exercise of the conversion privileges set forth in such securities, are and will be acquired by Fox Kids for its own account for investment and with no present intention of distributing or reselling such shares or any part thereof in any transaction which would constitute a "distribution" within the meaning of the Securities Act. Fox Kids understands and acknowledges that the offer and sale of the IFE Securities have not been, and as of the Closing will not have been, registered under the Securities Act or any state securities laws. 5.11 No Brokers. No broker or finder is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Fox Kids. 5.12 Full Disclosure. No statement herein or in the Fox Kids Disclosure Letter, the Funding Agreement or the Exchange Agreement or in any certificate delivered pursuant to the requirements of this Agreement by or on behalf of Fox Kids, NPAL or TNCL contains or will contain any untrue statement of a material fact concerning Fox Kids, NPAL or TNCL or omits or will omit to state a material fact necessary in order to make the statements made herein or therein concerning Fox Kids, NPAL or TNCL, in light of the circumstances under which they were made, not misleading. 6. Pre-Closing Covenants of Fox Kids, LIFE and Liberty. During the period commencing on the date hereof and ending at the time of the Closing: 6.1 Filings and other Actions. (a) Upon the terms and subject to the conditions of this Agreement, each of the parties hereto agrees to use its reasonable commercial efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations or otherwise to consummate and make effective the transactions contemplated by this Agreement. (b) Each party shall use its commercially reasonable efforts not to take any action, or enter into any transaction, which would cause any of its representations or warranties contained in this Agreement to be untrue or result in a breach of any covenant or agreement made by such party in this Agreement. 6.2 Public Announcements. Liberty and Fox Kids shall consult with each other before issuing any press release or otherwise making any public statements with respect to 14 19 this Agreement or any transaction contemplated hereby and shall not, and shall not permit any Affiliate to, issue any such press release or make any such public statement without the prior consent of the other party, which consent shall not be unreasonably withheld; provided, however, that a party may, without the prior consent of the other party, issue such press release or make such public statement as may be required by law or any listing agreement or arrangement to which TNCL or TCI is a party with a national securities exchange or The Nasdaq Stock Market if it has used all reasonable efforts to consult with the other party and to obtain such party's consent but has been unable to obtain such consent in a timely manner. The parties hereto have agreed to the issuance on the date hereof of the press release attached hereto as Exhibit G. 6.3 Substitution of Consideration in Certain Circumstances. (a) If Liberty determines, on the advice of counsel, that the condition to its obligation to consummate the transactions contemplated by this Agreement set forth in Section 9.4(b) will not be satisfied, then the parties shall negotiate in good faith the terms of a substitute security (the "Substitute Security") for the Fox Kids Preferred Stock to be received by LIFE pursuant to the Contribution. The Substitute Security shall (i) have terms that are mutually acceptable to Fox Kids and Liberty, (ii) at the election of Liberty, be exchangeable for a "mirror" security of NPAL or another Affiliate of Fox Kids acceptable to Liberty, (iii) have an economic value to Liberty not less, in any material respect, than, and an economic cost to Fox Kids (and, in the case of an NPAL "mirror" security, an economic cost to NPAL) not greater, in any material respect, than, the value and cost, respectively, of the Fox Kids Preferred Stock (and the NPAL Preferred Stock), (iv) not, in the sole judgment of Liberty based upon advice of counsel, upon receipt by Liberty result in recognition by Liberty of taxable income or gain for United States or Australian federal income tax purposes (except to the extent any exchange right may constitute "boot"), and (v) not result in the recognition by Fox Kids or NPAL, as the case may be, of taxable income or gain for United States or Australian federal income tax purposes to a greater extent than that which would be recognizable by Fox Kids or NPAL if the transactions contemplated by this Agreement and the Exchange Agreement (including the issuance of the NPAL Preferred Stock in exchange for shares of Fox Kids Preferred Stock) were consummated on the date hereof. Any Substitute Security shall have voting rights, or no voting rights, as may be determined by Fox Kids in its sole discretion. (b) If the terms of the Substitute Security require that filings be made under the H-S-R Act, each of Fox Kids, Liberty and LIFE shall, or shall cause its appropriate Affiliate(s) to, file an appropriate notification and report form under the H-S-R Act within 5 business days of the date the terms of the Substitute Security are determined. Each party shall cause, or shall cause such appropriate Affiliate(s) to, supply promptly any additional information and documentary material that may be requested pursuant to the H-S-R Act. If filings are made under the H-S- R Act pursuant hereto, then (i) the obligations of each of Liberty and LIFE, on the one hand, and Fox Kids, on the other hand, to consummate the transactions contemplated by this Agreement (in addition to the conditions set forth in Sections 7, 8 and 9 hereof) shall be subject to the expiration (or earlier termination) of the waiting period under the H-S-R Act, and (ii) the Outside Date shall be extended, if necessary, to the earlier of (x) the second business day after 15 20 the expiration (or earlier termination) of such waiting period and (y) November 30, 1997. 6.4 Notification of Certain Matters. Each of Liberty and LIFE, on the one hand, and Fox Kids, on the other hand, shall give prompt notice in writing to the other of: (i) any information that indicates that any of its representations or warranties contained herein was not true and correct as of the date hereof or will not be true and correct, in any material respect, as of the Closing Date, (ii) the occurrence of any event which will result, or has a reasonable prospect of resulting, in the failure to satisfy a condition specified in Section 7, 8 or 9 hereof, or (iii) any notice of, or other communication relating to, any claim, litigation, proceeding or investigation that questions the validity or enforceability of this Agreement or any of the transactions contemplated hereby. 6.5 H-S-R Filings; Best Efforts to Close. (a) As promptly as practicable after the execution of this Agreement, but in any event within 5 business days, Fox Kids shall, or shall cause its appropriate Affiliate(s) to, file an appropriate notification and report form under the H-S-R Act with respect to (i) the conversion of the IFE Stock and the IFE Notes into voting securities of IFE, (ii) the acquisition of voting securities of IFE under the Robertsons Class A Purchase Agreement and from The Christian Broadcasting Network, Inc. and Regent University and (iii) the merger contemplated by the Merger Agreement; provided, however, that such five-business day period shall be extended to the extent necessary for Fox Kids to obtain from IFE all information reasonably necessary to complete such notification and report form that is not in the public domain or available from IFE's periodic reports filed under the Exchange Act. Fox Kids shall, or shall cause such Affiliate(s) to, request early termination of the waiting period under the H-S-R Act. Fox Kids shall, or shall cause such Affiliate(s) to, supply promptly any additional information and documentary material that may be requested of it pursuant to the H-S-R Act and use, or cause such Affiliate(s) to use, its commercially reasonable efforts to obtain clearance or authorization under the H-S-R Act to consummate the transactions described in the immediately preceding sentence as promptly as practicable. Fox Kids shall not, and shall not permit any Affiliate to, take any action that will have the effect of delaying, impairing or impeding the receipt of early termination or such clearance or authorization under the H-S-R Act. Fox Kids shall use its commercially reasonable efforts to cause IFE, as soon as reasonably practicable, (i) to provide Fox Kids, or its appropriate Affiliate(s), with such information as may be reasonably necessary for Fox Kids, or such Affiliate(s), to complete and submit its notification and report form under the H-S-R Act, (ii) to file its own (or its appropriate Affiliate(s) notification and report form under the H-S-R Act in connection with the transactions referred to in the first sentence of this Section 6.5(a) and (iii) to supply promptly any additional information and documentary material that may be requested of it (or such Affiliate) pursuant to the H-S-R Act. (b) Fox Kids covenants and agrees with Liberty and LIFE to use its best efforts to effect the Contribution prior to the consummation of the merger contemplated by the Merger Agreement. Fox Kids acknowledges and agrees that a failure to effect the Contribution prior to such merger would result in Liberty and LIFE suffering significant damages, and agrees to indemnify and hold harmless Liberty and LIFE from and against any and all monetary damages 16 21 suffered by either of them arising out of the failure of the Contribution to be effected prior to such merger. Such monetary value shall be deemed to equal the difference between the amount received by LIFE in the merger and the value of the Consideration (assuming for this purpose no change in applicable tax laws or regulations from those in effect on the date of this Agreement). Notwithstanding the foregoing, Fox Kids shall not be liable to Liberty or LIFE pursuant to this Section 6.5(b) if the failure of the Contribution to be effected prior to such merger is due to a material breach by Liberty or LIFE of any of its covenants, agreements, representations or warranties set forth in this Agreement. 7. Conditions to Each Party's Obligation to Effect the Contribution. The respective obligations of each party to effect the Contribution and the other transactions contemplated by this Agreement shall be subject to the fulfillment at or prior to the Closing of the following conditions, any or all of which may be waived, in whole or in part, to the extent permitted by applicable law: 7.1 No Stop Order. There shall be no effective injunction, writ or preliminary restraining order or any order of any nature issued by any court of competent jurisdiction or by any Governmental Authority directing that the transactions provided for herein, or any of them, not be consummated as herein provided; provided, however, that the parties shall use their reasonable commercial efforts to prevent the entry of, or, if entered, to cause to be vacated or lifted as promptly as practicable, any such injunction or other order. 7.2 Consummation of Share Exchange. All of the conditions precedent to the consummation of the transactions contemplated by the Share Exchange Agreement shall have been satisfied or, to the extent permitted by applicable law, waived by the parties thereto, and the Share Exchange shall be consummated and become effective concurrently with the consummation and effectiveness of the Contribution. 7.3 H-S-R Act. The waiting period applicable to the filings made under the H-S-R Act pursuant to Section 6.5(a) hereof shall have expired or been terminated. 7.4 No Adverse Enactments. There shall not have been any statute, rule, regulation or order promulgated, enacted or issued or deemed applicable to the Contribution by any Governmental Authority or court of competent jurisdiction which would make the consummation of the Contribution illegal. 8. Additional Conditions to Obligations of Fox Kids. The obligation of Fox Kids to consummate the transactions contemplated by this Agreement is also subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions, any or all of which may be waived by Fox Kids, in whole or in part, to the extent permitted by applicable law: 8.1 Accuracy of Representations and Warranties. All representations and warranties of Liberty and LIFE contained herein shall be true and correct in all material respects 17 22 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. 8.2 Performance of Agreements. Each of Liberty and LIFE shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to or at the Closing Date. 8.3 Officer's Certificates. Fox Kids shall have received certificates of Liberty and LIFE, signed by officers of Liberty and LIFE, respectively, evidencing compliance with the conditions set forth in Sections 8.1 and 8.2 above. 8.4 Opinion of Counsel for Liberty and LIFE. Fox Kids shall have received from counsel to Liberty and LIFE an opinion, dated the Closing Date, to the effect set forth on Exhibit H hereto. In rendering their opinions such counsel may rely as to factual matters upon certificates or other documents furnished by officers and directors of Liberty and LIFE and by government officials, and upon such other documents and data as such counsel deem appropriate as a basis for their opinions. Such counsel may specify the jurisdiction or jurisdictions in which they are admitted to practice, that they are not admitted to practice in any other jurisdiction or experts in the law of any other jurisdiction and that, to the extent their opinions concern the laws of any other jurisdiction or pertain to matters beyond the scope of such counsel's engagement, such counsel may rely upon the opinion of counsel admitted to practice in such other jurisdiction. Any opinion relied upon by such counsel shall be delivered together with the opinion of such counsel, which shall state that such counsel believes that their reliance thereon is justified. 8.5 Amended Affiliation Agreement. The Amended Affiliation Agreement, in the form of Exhibit B hereto, shall have been duly executed and delivered. 8.6 IFE Shareholders Agreement. The IFE Shareholders Agreement shall have been terminated or LIFE shall have irrevocably waived all of its rights and obligations thereunder such that LIFE has no further rights or obligations under the IFE Shareholders Agreement. 9. Additional Conditions to the Obligations of Liberty and LIFE. The obligation of each of Liberty and LIFE to consummate the transactions contemplated by this Agreement is also subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions, any or all of which may be waived by Liberty and LIFE, in whole or in part, to the extent permitted by applicable law: 9.1 Accuracy of Representations and Warranties. All representations and warranties of Fox Kids 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. 18 23 9.2 Performance of Agreements. Fox Kids shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to or at the Closing Date. 9.3 Officer's Certificate. Liberty and LIFE shall have received a certificate of Fox Kids, signed by officers of Fox Kids, evidencing compliance with the conditions set forth in Sections 9.1 and 9.2 above. 9.4 Tax Matters. (a) Liberty and LIFE shall have received duly executed copies of the certificates attached hereto as Exhibit J. (b) Liberty shall have received from Baker & Botts, L.L.P. an opinion of counsel to the effect that since June 11, 1997, there has been no amendment to, change (including any announced prospective change) in, or effective date set for any proposed amendment or change in, the laws (or any regulations thereunder) of the United States or Australia or any political subdivision or taxing authority of either thereof or therein, or any amendment to, change in, or effective date set for any proposed amendment or change in, an interpretation or application of such laws or regulations by any legislative body, court, governmental agency or regulatory authority, which would result in Liberty recognizing taxable income or gain for United States or Australian federal income tax purposes by virtue of the Contribution or the consummation of any of the transactions contemplated by this Agreement (except to the extent the Exchange Right constitutes "boot" for federal income tax purposes). 9.5 Funding Agreement and Exchange Agreement. The Funding Agreement, in the form attached hereto as Exhibit D, shall have been duly executed and delivered by Fox Kids, NPAL and TNCL and the Exchange Agreement, in the form attached hereto as Exhibit C, shall have been duly executed and delivered by NPAL. 9.6 Assets of NPAL. Liberty shall have received evidence reasonably satisfactory to it that NPAL owns, as of the Closing Date, directly or indirectly through one or more Subsidiaries of NPAL, not less than 75% (in value) of the assets of TNCL and its Subsidiaries located in the United States. 9.7 Opinion of Counsel for Fox Kids. Liberty and LIFE shall have received an opinion of counsel to Fox Kids, dated the Closing Date, substantially to the effect set forth on Exhibit I. In rendering their opinions such counsel may rely as to factual matters upon certificates or other documents furnished by officers and directors of Fox Kids and by government officials, and upon such other documents and data as such counsel deem appropriate as a basis for their opinions. Such counsel may specify the jurisdiction or jurisdictions in which they are admitted to practice, that they are not admitted to practice in any other jurisdiction or experts in the law of any other jurisdiction and that, to the extent their opinions concern the laws of any other 19 24 jurisdiction or pertain to matters beyond the scope of such counsel's engagement, such counsel may rely upon the opinion of counsel admitted to practice in such other jurisdiction. Any opinion relied upon by such counsel shall be delivered together with the opinion of such counsel, which shall state that such counsel believes that their reliance thereon is justified. 9.8 Registration Rights Agreement. Liberty and LIFE shall have entered into a registration rights agreement with Fox Kids having the terms set forth on Schedule 9.8 hereto. 10. Termination. 10.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time: 10.1.1 by the mutual written consent of Liberty and Fox Kids; 10.1.2 by Fox Kids if there has been a breach of any covenant or agreement on the part of Liberty or LIFE set forth in this Agreement, or if any representation or warranty of Liberty or LIFE shall have become untrue in any material respect, in either case such that such breach or untruth is incapable of being cured by the Outside Date; provided, however, that Fox Kids shall not have the right to terminate this Agreement pursuant to this Section 10.1.2 if Fox Kids, at such time, is in material breach of any of its covenants, agreements, representations or warranties set forth in this Agreement; 10.1.3 by Liberty if there has been a breach of any covenant or agreement on the part of Fox Kids set forth in this Agreement, or if any representation or warranty of Fox Kids shall have become untrue in any material respect, in either case such that such breach or untruth is incapable of being cured by the Outside Date; provided, however, that Liberty shall not have the right to terminate this Agreement pursuant to this Section 10.1.3 if Liberty or LIFE, at such time, is in material breach of any of its covenants, agreements, representations or warranties set forth in this Agreement; 10.1.4 by either Fox Kids or Liberty if the Contribution shall not have been consummated on or before the Outside Date, unless the absence of such consummation shall be due to the failure of the party seeking termination to perform each of its obligations under this Agreement required to be performed by it at or prior to the Closing Date; or 10.1.5 by either Fox Kids or Liberty if a court of competent jurisdiction or a Governmental Authority shall have issued a non-appealable final order, decree or ruling or taken any other action, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the Contribution or any of the other transactions contemplated hereby. 10.2 Effect of Termination. If this Agreement is terminated pursuant to 20 25 Section 10.1, this Agreement shall become void and of no effect with no liability on the part of any party hereto, or any of their respective officers or directors, to the others and all rights and obligations of each party hereby shall cease, except that (a) the agreements contained in Section 6.5(b), this Section 10.2 and in Sections 11.2 and 12.6 shall survive the termination hereof and (b) nothing herein shall relieve any party from liability for the willful breach of any of its representations, warranties, covenants or agreements set forth in this Agreement. If this Agreement is terminated, Fox Kids covenants and agrees to cause the Robertsons Class A Purchase Agreement to be terminated, unless (i) such termination is the result of a court of competent jurisdiction or a Governmental Authority having issued a non-appealable final order, decree or ruling or taken any other action, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the Contribution or (ii) such termination was due to a material breach by Liberty or LIFE of any of its covenants, agreements, representations or warranties set forth in this Agreement. 11. Indemnification. 11.1 Survival. All representations and warranties and covenants and agreements contained herein shall survive until the first anniversary of the date of this Agreement; provided, however, that such limitation shall not apply to (i) the representations set forth in Sections 4.5, 4.6 and 5.5 and (ii) the covenants and agreements set forth in Section 2.1, in this Section 11 and in Sections 12.2, 12.6 and 12.7, each of which shall survive without limitation. 11.2 Certain Actions. Fox Kids agrees to indemnify and hold harmless each Liberty Party (as defined below) from and against any and all losses, claims, damages, liabilities, judgments, costs, disbursements and expenses of any kind or nature (including reasonable fees and disbursements of counsel) arising out of any suit, action or proceeding instituted by any Person not a party to this Agreement that in any manner results from, arises out of, is based upon or is related or attributable to any action taken by TNCL, NPAL, Fox Kids or any of their respective Affiliates (each, a "News Corp Party") with respect to any transaction or proposed transaction involving any News Corp Party, on the one hand, and any of M.G. "Pat" Robertson, the Robertson Charitable Remainder Unitrust, the Gordon P. Robertson Irrevocable Trust, the Elizabeth F. Robertson Irrevocable Trust, the Ann R. Lablanc Irrevocable Trust, Lisa N. Robertson, Timothy B. Robertson (individually and as custodian to and for each of Abigail H. Robertson, Laura N. Robertson, Elizabeth C. Robertson, Willis H. Robertson and Caroline S. Robertson), the Timothy and Lisa Robertson Children's Trust, the Timothy B. Robertson Charitable Trust, any other charitable, revocable or irrevocable trust created by or for the benefit of the Robertsons, their children or their respective heirs, The Christian Broadcasting Network, Inc. or Regent University, on the other hand. All fees, costs and expenses of a Liberty Party which are reimbursable pursuant to this Section 11.2 shall be reimbursed as they are incurred. Fox Kids shall not be liable for any settlement of any suit, action or proceeding effected without its written consent, but if settled with its written consent, or if there be a final judgment for the plaintiff in any such suit, action or proceeding, Fox Kids shall indemnify and hold harmless each Liberty Party from and against any damage, loss or liability by reason of such settlement or 21 26 judgment. As used in this Section 11.2, the term "Liberty Party" means (i) LIFE, Liberty and TCI, (ii) the respective directors, officers, employees and agents of the Persons specified in clause (i) of this sentence, and (iii) the respective successors, assigns, executors, heirs and legal representatives of the foregoing. 11.3 Indemnification by Liberty and LIFE. Subject to the other terms and conditions of this Agreement, Liberty and LIFE shall, jointly and severally, indemnify Fox Kids against and hold Fox Kids harmless from all demands, claims, losses, costs, fines, liabilities, damages (excluding consequential damages) and expenses, including reasonable fees and expenses incurred in the investigation and defense of claims and actions (collectively, "Losses"), arising out of the breach of any representation, warranty, covenant or agreement of Liberty or LIFE contained herein. 11.4 Indemnification by Fox Kids. Subject to the other terms and conditions of this Agreement, Fox Kids shall indemnify each of Liberty and LIFE against and hold each of Liberty and LIFE harmless from all Losses arising out of (i) the breach of any representation, warranty, covenant or agreement of Fox Kids contained herein or (ii) the invalidity or unenforceability, or alleged invalidity or unenforceability, of any provision of the Fox Kids Certificate of Designations, the NPAL Certificate of Amendment, the Exchange Agreement or the Funding Agreement. 11.5 Claims. If any claim or assertion of liability is made or asserted against a party entitled to be indemnified pursuant to Section 11.3 or 11.4 (an "Indemnified Party") by any Person who is not a party to this Agreement, the Indemnified Party shall give to the other party (an "Indemnifying Party") prompt written notice of such claim or assertion, or of any event or proceeding by or in respect of a third party of which it has knowledge, concerning any liability or damage as to which it may request indemnification hereunder. The failure by an Indemnified Party to give notice as provided in this Section 11.5 shall not relieve the Indemnifying Party of its obligations under this Section 11.5 except to the extent that the failure results in a failure of actual notice to the Indemnifying Party and the Indemnifying Party is damaged solely as a result of the failure to give notice. The Indemnifying Party shall have the right to direct, through counsel chosen by the Indemnifying Party and reasonably satisfactory to the Indemnified Party, the defense or settlement of any such claim or proceeding at its own expense. If the Indemnifying Party elects to assume the defense of any such claim or proceeding, the Indemnified Party may participate in such defense, but in such case the expenses of the Indemnified Party shall be paid by the Indemnified Party; provided, however, that if the Indemnified Party asserts that there exists a conflict of interest that would make it inappropriate for the same counsel to represent the Indemnifying Party and the Indemnified Party and the counsel for the Indemnifying Party concurs with such assertion, then the Indemnifying Party shall reimburse the Indemnified Party for the reasonable fees and expenses of separate counsel, to the extent such fees and expenses are incurred solely in connection with the matters with respect to which the counsel for the Indemnifying Party agrees there is a conflict of interest. The Indemnified Party shall provide the Indemnifying Party with access to its records and personnel relating to any such claim, assertion, 22 27 event or proceeding during normal business hours and shall otherwise cooperate with the Indemnifying Party in the defense or settlement thereof, and the Indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection therewith, as such expenses are incurred. If the Indemnifying Party elects to direct the defense of any such claim or proceeding, the Indemnified Party shall not pay, or permit to be paid, any part of any claim or demand arising from such asserted liability, unless the Indemnifying Party, subject to the penultimate sentence of this Section 11.5, withdraws from the defense of such asserted liability, or unless a final judgment from which no appeal may be taken by or on behalf of the Indemnifying Party is entered against the Indemnified Party for such liability. If the Indemnifying Party fails to defend, or if, after commencing or undertaking any such defense, the Indemnifying Party fails to prosecute or withdraws from such defense, the Indemnified Party shall have the right to undertake the defense or settlement thereof, at the Indemnifying Party's expense. If the Indemnified Party assumes the defense of any such claim or proceeding pursuant to this Section 11.5 and proposes to settle such claim or proceeding prior to a final judgment thereon or to forego appeal with respect thereto, then the Indemnified Party shall give the Indemnifying Party prompt written notice thereof and the Indemnifying Party shall have the right to participate in the settlement or assume or reassume the defense of such claim or proceeding. The Indemnifying Party shall not settle any claim or assertion unless the Indemnified Party consents in writing to such settlement, which consent shall not be unreasonably withheld. 12. Miscellaneous Provisions. 12.1 Notices. All notices or other communications hereunder shall be in writing and shall be deemed to have been duly given or made if (i) delivered in person, on the date actually delivered, (ii) by United States mail, certified or registered, with return receipt requested, on the date which is two business days after the date of mailing, or (iii) if sent by telex or facsimile transmission, with a copy mailed on the same day in the manner provided in (ii) above, on the date transmitted provided receipt is confirmed by telephone: If to Fox Kids: c/o News America Publishing Incorporated 1211 Avenue of the Americas New York, New York 10036 Attention: Arthur M. Siskind, Esq. Telecopy No.: 212-768-2027 With copies to: Squadron, Ellenoff, Plesent & Sheinfeld, LLP 551 Fifth Avenue New York, New York 10176 Attention: Joel I. Papernik, Esq. 23 28 Telecopy No.: 212-697-6686 Saban Entertainment 10960 Wilshire Boulevard Los Angeles, California 90024 Attention: Haim Saban/Mel Woods Telecopy No.: 310-235-5108 Troop Meisinger Steuben & Pasich, LLP 10940 Wilshire Boulevard Los Angeles, California 90024 Attention: Dick Troop, Esq. Telecopy No.: 310-443-8503 If to Liberty or LIFE: Liberty Media Corporation 8101 East Prentice Avenue Englewood, Colorado 80111 Attention: President Telecopy No.: 303-721-5415 With a copy to: Baker & Botts, L.L.P. 599 Lexington Avenue New York, New York 10022 Attention: Robert W. Murray Jr., Esq. Telecopy No.: 212-705-5125 or at such other address as may have been furnished by a party in writing to the other parties. 12.2 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Agreement shall nonetheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon any such determination that a term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. 24 29 12.3 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of law. 12.4 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 provision hereof. 12.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 12.6 Fees and Expenses. All costs and expenses, including without limitation fees and disbursements of counsel, incurred by the parties hereto shall be borne solely and entirely by the party which has incurred such costs and expenses; provided, however, that if pursuant to Section 6.3 the terms of a Substitute Security are negotiated, and such terms require that filings be made under the H-S-R Act, then Fox Kids shall pay all filing fees required to be paid under the H-S-R Act in connection with such filings. 12.7 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns, but neither this Agreement nor any of the rights, interests or other obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. 12.8 Amendment. This Agreement may be amended by the parties hereto at any time prior to the Closing. This Agreement may be not be amended except by an instrument in writing signed by each of the parties hereto. 12.9 Waiver. Any party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties of the other parties contained herein or in any document delivered pursuant hereto, and (iii) waive compliance by the other parties with any of the agreements or conditions contained herein; provided, however, that neither Liberty nor LIFE may waive the condition to their respective obligations to effect the Contribution set forth in Section 9.4. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party or parties to be bound thereby. 12.10 Entire Agreement. This Agreement (including the Exhibits and Schedules attached hereto, the Fox Kids Disclosure Letter and other documents referred to herein and which form a part hereof) constitutes the entire agreement among the parties hereto and supersedes all prior agreements and understandings, oral and written, among the parties with respect to the subject matter hereof. 25 30 The parties hereto have executed and delivered this Agreement as of the date first above written. LIBERTY MEDIA CORPORATION By: ----------------------------- Name: Title: LIBERTY IFE, INC. By: ----------------------------- Name: Title: FOX KIDS WORLDWIDE, INC. By: ----------------------------- Name: Title: 26 EX-7.I 3 WAIVER DATED AS OF 6-11-97 1 EXHIBIT 7(I) 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 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. 2 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 Stock is consummated simultaneously with the acquisition of any of the Class C Stock of the Notes). 3 (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 there, 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. 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: THE CHRISTIAN BROADCASTING NETWORK, INC. By: /s/ J. Arbach ---------------------------------- Title: Vice President 4 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 ------------------------------------------- Title: M.G. "Pat" Robertson, individually and as trustee TIMOTHY B. ROBERTSON THE TIMOTHY AND LISA ROBERTSON CHILDREN'S TRUST By: /s/ Timothy B. Robertson ------------------------------------------- Title: 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: /s/ M. Woods ------------------------------------------- Title: President EX-7.J 4 AMENDED AND RESTATED SHAREHOLDER AGREEMENT 1 EXHIBIT 7(J) AMENDED AND RESTATED SHAREHOLDER AGREEMENT THIS AMENDED AND RESTATED SHAREHOLDER AGREEMENT, dated as of September 1, 1995, by and among M.G. ROBERTSON and TIMOTHY B. ROBERTSON, residents of Virginia (hereinafter collectively referred to as the "Management"), M.G. Robertson, as trustee of the ROBERTSON CHARITABLE REMAINDER UNITRUST (the "Charitable Trust"), THE CHRISTIAN BROADCASTING NETWORK, INC., a Virginia corporation (hereinafter referred to as "CBN"), LIBERTY IFE, INC. ("Liberty IFE"), a Colorado corporation and a successor in interest to LIBERTY PROGRAMMING CORPORATION ("Liberty"), a Wyoming corporation and INTERNATIONAL FAMILY ENTERTAINMENT, INC., a Delaware corporation (hereinafter referred to as the "Corporation"), amends and restates in its entirety the Subscription and Shareholder Agreement, dated as of December 11, 1989, as amended through November 9, 1993 (the "Original Agreement"), by and among Management, CBN, TCI Development Corporation, a Colorado corporation ("TCID"), Tele-Communications, Inc., a Delaware corporation, and the Corporation. Certain capitalized terms used herein are defined in Section 10 hereof. WHEREAS, Liberty IFE, a direct wholly owned subsidiary of Liberty Media Corporation, a Delaware corporation is the holder of $23,000,000 in principal amount of 6% Convertible Secured Notes due 2004 of the Corporation (the "Notes"), which are currently convertible into 2,070,000 shares of Class B Stock of the Corporation; and WHEREAS, the Corporation and Liberty IFE have agreed to amend and restate that certain Convertible Note Agreement dated as of January 5, 1990, by and between the Corporation and the Christian Broadcasting Network, Inc. (whose rights and obligations under such agreement have been assigned through a series of assignments to Liberty IFE), as amended to the date hereof (the "Convertible Note Agreement") relating to the Notes such that the Notes will be convertible into 2,070,000 shares of the Corporation's non-voting Class C Stock upon consummation of the transactions contemplated by that certain Exchange Agreement (the "Exchange Agreement") between the Corporation, Liberty and Liberty IFE of even date herewith; and WHEREAS, Liberty IFE is the holder of 220,000 shares (the "Liberty IFE Preferred Shares") of Preferred Stock, which are currently convertible into 3,300,000 shares of Class B Stock; and WHEREAS, pursuant to the Exchange Agreement, Liberty IFE has agreed to exchange all of the Liberty IFE Preferred Shares pursuant to an exchange with Liberty IFE (the "Preferred 2 Exchange"), pursuant to which all of the Liberty IFE Preferred Shares will be exchanged for an aggregate of 4,000,000 shares (the "Exchange Shares") of the Class B Stock, which 4,000,000 shares shall represent full payment both for all of the Liberty Preferred Shares and any dividends thereon accruing or becoming payable after January 1, 1995; and WHEREAS, Liberty IFE has agreed to exchange all of the Liberty IFE Preferred Shares in the Preferred Exchange; and WHEREAS, Liberty IFE is the holder of 1,670,986 shares (the "Liberty IFE Shares") of Class B Stock; and WHEREAS, subsequent to the Preferred Exchange, Liberty IFE will be the holder of 5,670,986 shares of Class B Common Stock: and WHEREAS, pursuant to the Exchange Agreement, the Corporation has agreed to offer to reacquire all of the Liberty IFE Shares and the Exchange Shares pursuant to an exchange with Liberty IFE (the "Common Exchange"), pursuant to which each Liberty IFE Share will and each Exchange Share will be exchanged for one (1) share of Class C Stock; and WHEREAS, Liberty IFE has agreed to exchange all of the Liberty IFE Shares and the Exchange Shares in the Common Exchange; and WHEREAS, IFE proposed to its stockholders and its stockholders approved at the 1995 annual meeting of IFE stockholders amendments to certain provisions of the IFE Amended and Restated Certificate of Incorporation ("Certificate of Incorporation") which were necessary for the consummation of the Common Exchange; and WHEREAS, in connection with the execution of the Exchange Agreement the parties hereto have agreed to amend and restate in its entirety the Original Agreement to provide certain registration rights to Liberty IFE pursuant to Section 4 hereof; and WHEREAS, it is the intent of the parties hereto that this Amended and Restated Shareholder Agreement amend and restate in its entirety the Original Agreement and that, from and after the date hereof, the Original Agreement shall be of no force and effect except to evidence the terms and conditions under which the parties hereto heretofore incurred obligations and liabilities to each other. NOW, THEREFORE, in consideration of the mutual covenants, undertakings, agreements, representations and warranties hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, it is hereby agreed as follows: 2 3 1. Right of First Refusal; Go Along Rights. Until January 5, 2010, Liberty IFE shall have the right to acquire (x) any shares of Class A Stock offered for sale or transfer by any holder of Class A Stock on the same terms and price as those shares have been offered to any bona fide prospective purchaser, but in no event for a price greater than the Fair Value of such Class A Stock and (y) any shares of Class A Stock proposed to be converted by any holder of Class A Stock for cash in an amount equal to the Fair Value of such Class A Stock. Notwithstanding anything to the contrary contained herein, the right of first refusal provided by the preceding sentence (the "First Refusal") shall not apply to Permitted Transfers or to the transfers described in paragraph (g) hereof. The First Refusal shall be subject to the following terms: (a) Notice. The party desiring to sell or convert any shares of Class A Stock (the "Selling Party"), in the case of a proposed sale, shall give Liberty IFE and CBN written notice of the offer for sale including the number of shares to be sold, the offering price and payment terms and representing and warranting that, to the best of such party's knowledge, the offering price and other terms of the offer have not been established for the purpose of circumventing the First Refusal, that the offering price reflects the price the offeror would be willing to offer in an isolated transaction consisting solely of the purchase of the shares of Class A Stock offered to be purchased absent any other related or contemporaneous transaction between the offeror and the offeree and otherwise is bona fide and in good faith, and enclosing a copy of the offer or, in the case of a proposed conversion, shall give Liberty IFE and CBN written notice thereof, including the number of shares to be converted and the Fair Value of such shares. (b) Exercise. In order to be effective, the First Refusal must be exercised against all shares of Class A Stock being offered for sale or proposed to be converted; the failure of Liberty IFE to exercise the First Refusal against all such shares being offered for sale or proposed to be converted shall constitute a waiver of the First Refusal as to that specific sale. Liberty IFE shall have thirty (30) days from receipt of the written notice provided for in Section 1(a) to notify the Selling Party whether it will exercise the First Refusal. (c) Consummation After Exercise. Should the First Refusal be exercised, Liberty IFE shall consummate said purchase within sixty (60) days thereafter, subject to an automatic extension of such consummation for up to one hundred twenty (120) days as necessary to obtain any required governmental approvals. (d) Rights Not Exercised; Conditions on Sale. If the First Refusal has not been exercised in a timely manner as to all of the shares of Class A Stock offered for sale hereunder or proposed to be converted, or if Liberty IFE is unable to consummate its purchase of such shares after timely exercise of its First Refusal due to an inability to obtain any required governmental approvals within the period required by Section 1(c) above, the 3 4 Selling Party shall have sixty (60) days thereafter in which to consummate the sale of such shares to the same Person on the same terms, or to convert such shares into Class B Stock, as specified in its notice to Liberty IFE; provided, however, that it shall be a condition upon the right of the Selling Party to so sell its shares of Class A Stock, or to sell the Class B Stock into which such Class A Stock has been converted, to cause the purchaser of such shares to also purchase the Covered Securities held by either CBN or Liberty IFE (on the same terms and at the same price as specified in the Selling Party's initial notice to Liberty IFE), if either CBN or Liberty IFE shall have given notice, no later than five (5) days after the expiration of all applicable periods referred to in Section 1(b) or Section 1(c), as the case may be, of its desire to require such sale and purchase of its Covered Securities. The highest price per share which is offered for the shares of Class A Stock or Class B Stock, as the case may be, subject to the First Refusal shall be the purchase price for any Common Stock tendered by Liberty IFE or CBN, without regard to any distinctions in class, and Notes shall be treated as if converted, and a price computed based on the aggregate number of shares of Class B or Class C Stock into which such Notes could be converted. Where no specific price per share is readily determinable, an appraisal of the Fair Market Value of the Corporation shall be determined as of the date of the notice by the Selling Party provided for herein pursuant to the procedure set forth in Section 2(b) hereof, and the price per share shall be determined by dividing such Fair Market Value so determined by the number of issued and outstanding shares of Common Stock of the Corporation on a fully diluted basis (as determined in accordance with generally accepted accounting principles). Should the Selling Party fail to consummate the contemplated sale or conversion within the said sixty (60) day period on exactly the same terms and to the same bona fide purchaser as stated in the notice provided for herein, then no sale of shares of Class A Stock shall thereafter be effectuated without the Selling Party re-offering the same, pursuant to the terms of this Section 1. (e) Continuing Nature of Right. The failure of Liberty IFE to exercise the First Refusal to purchase shares of Class A Stock offered by any holder of Class A Stock shall not affect the First Refusal as to any other shares of Class A Stock (held by such holder or any other Person) subsequently offered for sale or proposed to be converted. (f) Transfer to New Shareholders. Upon the sale and transfer of any Covered Securities either to a Permitted Transferee, a party hereto, or a bona fide purchaser under this Section 1, the certificates representing such Covered Securities shall be returned to the Corporation and replacement securities issued to the purchaser or transferee only after the Corporation has received satisfactory evidence that said purchaser or transferee has executed and delivered to each party to this Agreement an agreement in writing that such purchaser or transferee shall receive and hold such Covered Securities subject to all the 4 5 terms, conditions, burdens, and benefits of this Agreement as if such purchaser or transferee were initially a party hereto, and subject to the same restrictions on transfer as was the transferor of such Covered Securities. (g) Exception to Right of First Refusal. Notwithstanding anything to the contrary Contained in this Section 1, Management or the Charitable Trust or any Permitted Transferee of Management or the Charitable Trust may collectively convert up to an aggregate of 1,075,000 shares of Class A Stock to Class B Stock (as such number of shares may be adjusted to reflect any subdivision of outstanding shares of Class A Stock by reclassification, stock split, stock dividend or otherwise or any combination of outstanding shares of Class A Stock by reverse stock split, reclassification or otherwise after the date hereof), and freely dispose of such Class B Stock to any Person, in each case free of the provisions of this Agreement, including but not limited to the provisions of this Section 1. (h) Certain Transfers to Charitable organizations; Go Along Rights. In the event any holder of Class A Stock desires to make a Permitted Transfer of any shares of Class A Stock to a Charitable Organization, and the Class B Stock is not publicly traded at that time, Liberty IFE shall have the right to require such holder of Class A Stock to cause the Charitable Organization purchasing such Class A Stock to also purchase the Covered Securities held by Liberty IFE on the terms and conditions set forth in Section l(d) hereof. 2. Put Option. (a) Liberty IFE Put. Upon the occurrence of both of the events described in clauses (x) and (y) of this Section 2 (a) prior to January 5, 2010: (x) the death of both M.G. Robertson and Timothy B. Robertson or, alternatively, the disassociation of both of them from the management and governance of both CBN and the Corporation and (y) the holding of Voting Power over at least a majority of the outstanding shares of Class A Stock on the date of determination by either CBN or the heirs of Timothy B. Robertson (the "Heirs"), then Liberty IFE may, at its option, require, subject to clause (vi) below, the purchase of all of the Covered Securities held by it on June 30, 1995 (including any Class B Stock or Class C Stock into which any of such Covered Securities may be converted, and any securities that may hereafter be issued with respect to such Covered Securities) by CBN or the Heirs, as the case may be, at the Fair Market value of such Covered Securities on the following terms (the "Put Option"): (i) CBN or the Heirs, as the case may be, shall give Liberty IFE written notice of Liberty IFE's right to exercise the Put Option (the "Put Option Notice") promptly after the occurrence of both of the events described in clauses (x) and (y) of Section 2(a) above. Within six (6) months after the receipt of such notice, Liberty IFE may notify both CBN and the Heirs in 5 6 writing of its intent to exercise the Put Option (the "Put Exercise Notice"). In the event Liberty IFE does not so notify both CBN and the Heirs, such Put option shall be deemed to have been waived by Liberty IFE. (ii) The Covered Securities subject to the Put Option shall be purchased by whomever of CBN or the Heirs (the "Put Party") possesses Voting Power over a majority of the outstanding shares of Class A Stock on the date of the Put Option Notice. (iii) Within 30 days after its receipt of the Put Exercise Notice, the Put Party, at its option, may notify Liberty IFE in writing of the Put Party's intention to seek a bona fide purchaser for (x) all of the outstanding capital stock of the Corporation or (y) all or substantially all of the assets and business of the Corporation. In such event, the purchase of the Covered Securities subject to the Put Option shall be delayed for a period of 180 days from the date of the Put Exercise Notice pending the sale of the Corporation's capital stock or assets. Any such sale shall be for an amount in cash which results in Liberty IFE receiving an amount equal to not less than 95% of the Fair Market Value, as of the date of the Put Exercise Notice, of the Covered Securities subject to the Put Option. If a sale as aforesaid is not consummated within the foregoing 180-day period, the Put Party shall purchase the Covered Securities subject to the Put Option within 30 days after the expiration of such period for an amount equal to the Fair Market Value of such Covered Securities. Liberty IFE will cooperate with the Put Party in its efforts to sell the Corporation's capital stock or assets and will use reasonable commercial efforts to consummate any such sale. (iv) Promptly after receipt by the Put Party of the Put Exercise Notice, an appraisal shall be conducted pursuant to the provisions of Section 2(b) hereof to determine the Fair Market Value as of the date of the Put Exercise Notice of the Covered Securities subject to the Put Option. The Corporation shall afford each appraiser and its representatives, upon reasonable notice, full access to the officers and employees and the books, records and properties of the Corporation and its subsidiaries. (v) Subject to Section 2(a)(iii) above, within sixty (60) days after receipt of said appraisal, the Put Party shall tender to Liberty IFE payment equal to the Fair Market Value of the Covered Securities subject to the Put Option and Liberty IFE shall tender such securities to the Put Party, subject to an automatic extension of such consummation for up to one hundred sixty (160) days as necessary to obtain any required governmental approvals. (vi) In lieu of immediate cash payment, the Put Party may, at its or their option, issue notes, due in five years, with annual interest payments at the prime rate of Crestar Bank, Richmond, Virginia, or the successor thereto, as consideration for 6 7 the purchase of Liberty IFE's securities. Payment to Liberty IFE under such notes shall be secured by a perfected first security interest in the securities being conveyed by Liberty IFE, and the Put Party shall execute and deliver to Liberty IFE such documents as may be reasonably necessary to perfect said security interest. Said first security interest shall be promptly released by Liberty IFE upon its receipt of payment in full of said notes. (b) Appraisal. Any appraisal required under this Section 2 or under Section 1(d) to determine Fair Market Value shall be governed by the following procedure: (i) At the time Liberty IFE gives the Put Exercise Notice, or at the time CBN or Liberty IFE, as the case may be, gives its notice pursuant to Section 11(d), it shall specify the name of a Qualified Independent Appraiser to participate in the determination of the Fair Market Value of the securities to be appraised. (ii) The Put Party, or the Selling Party in the case of an appraisal required under Section i(d), shall have ten (10) days to specify the name of a second Qualified Independent Appraiser to participate in the determination of the Fair Market Value of said securities. (iii) The two appraisers shall have thirty (30) days to complete independent appraisals of the Fair Market Value of said securities, and they shall each submit a written report of their valuation, and the basis therefor, to Liberty IFE and the Put Party, in the case of an appraisal required under this Section 2, or to CBN or Liberty IFE, as the case may be, and to the Selling Party, in the case of an appraisal required under Section 1(d). "Fair Market Value" means, with respect to the Corporation, the fair market value of the Corporation as of the appraisal date on a going concern basis (as a sale of stock), taking into account such considerations (including but not limited to tax considerations which are specific to a sale of stock) as would customarily affect the price at which a willing seller would sell and a willing buyer would buy a comparable business as a going concern in an arm's length transaction. In determining the Fair Market Value of a share of Common Stock and of a Convertible Security that is convertible into shares of Common Stock, such Convertible Security shall be deemed converted into such shares, and the Fair Market value per share of Common Stock shall equal the quotient of (x) the Fair Market Value of the Corporation as of the appraisal date, divided by (y) the total number of shares of Common Stock outstanding (or deemed outstanding upon the conversion of Convertible Securities) as of such appraisal date, plus the number of shares of Common Stock issuable upon exercise of outstanding warrants, rights and options to purchase or acquire Common Stock to the extent any such exercise would result in a profit to the holder of the related warrant, right or option given the Fair Market Value per share so determined. In no event, however, shall the Fair Market Value of any Note be less than the unpaid principal plus 7 8 accrued and unpaid interest thereon and in no event shall the fair market value of any Preferred Stock be less than the liquidation preference plus accrued and unpaid dividends in each case as of the date of purchase. (iv) If the lesser of the two valuations fixed by the two appraisers is ninety percent (90%) or more of the higher of the two valuations, then the Fair Market value shall conclusively be the average of the two appraisals (determined by adding the appraisals and dividing by the number two (2)). (v) If the lesser of the two valuations fixed by the two appraisers is less than ninety percent (90%) of the higher of the two valuations, then the two appraisers shall jointly choose a third Qualified Independent Appraiser, who shall have an additional fifteen (15) days to complete a third written appraisal of the Fair Market Value of the relevant securities. The Fair Market Value fixed by the third appraiser will be compared with the previous two appraisals, and the Fair Market Value shall conclusively be the average of the two appraisals nearest in dollar amount (determined by adding the two appraisals and dividing by the number two (2)). (vi) Each party shall pay the fees and expenses of the appraiser it has chosen, and, if a third appraiser is chosen, the cost of the third appraisal shall be paid equally by both parties, except that if the appraisal is required pursuant to Section 1(d), the Selling Party shall pay the fees and expenses of all appraisers chosen. (c) Warranties of Title. As a condition to the exercise of the Put Option, Liberty IFE shall furnish to the purchaser of its securities of the Corporation pursuant thereto full warranties of title. (d) Regulatory Approval. It shall be a condition to the closing of the purchase of the securities subject to the Put Option that all governmental approvals required to be obtained by applicable law with respect to such purchase shall have been obtained, to the extent the failure to obtain such approvals (x) would prevent Liberty IFE or the Put Party from selling or purchasing, respectively, such securities or (y) would have a material adverse effect on the business, results of operations or financial condition of the Corporation. All parties hereto mutually covenant, one to the other, that they will use their best efforts (without unreasonable cost or action) to obtain such regulatory and governmental approvals, provided, however, that the failure to obtain such approvals shall not be a breach or default of any party's obligations hereunder. 3. Incidental Registration Rights. (a) If, at any time or from time to time, the Board of Directors of the Corporation shall authorize the registration (a 8 9 "Registration") under the Act of any Common or Preferred Stock or Notes (or any other securities issued with respect thereto), in each case other than with respect to the initial public offering of Class B Stock on Form S-1, registration number 33-45967 (the "Initial Public Offering"), in the case of each such filing (hereinafter, as amended and supplemented, referred to as a "Registration Statement"), the Corporation shall notify Liberty IFE and CBN (each a "Designated Holder"), so long as such party then holds Covered Securities, at the address of such Designated Holder as shown on the Corporation's records, of such proposed filing. At the request of any Designated Holder in writing made not more than fifteen (15) days after the date of the mailing of such notification, the Corporation shall include in such Registration Statement, subject to Section 3(b), such number of such Designated Holder's Included Securities as such Designated Holder shall specify in such request. As used herein, the term "Included Securities" means Common Stock, Preferred Stock or Notes (or any other securities issued with respect thereto) of the Corporation proposed to be included in such Registration Statement by the Corporation or any other Person. (b) If the managing underwriter or underwriters, if any, advise a Designated Holder making a request under Section 3(a) in writing that in its or their opinion or, in the case of a Registration not being underwritten, the Corporation shall reasonably determine (and notify such Designated Holder of such determination) after consultation with an investment banker of nationally recognized standing that the number or kind of securities proposed to be sold in such Registration will adversely affect the success of such offering, the Corporation will include in such Registration the Included Securities which, in the opinion of such underwriter or underwriters, or the Corporation, as the case may be, may be sold as follows: (i) first, the Included Securities the Corporation proposes to sell or to register for the benefit of the Company, (ii) second, the Included Securities requested to be included in such Registration by CBN; (iii) third, the Included Securities requested to be included in such Registration by Liberty IFE, and (iv) fourth, the Included Securities held by any Persons ("Other Investors") other than the Designated Holders requested to be included in such Registration. To the extent that the number of Included Securities to be included in the Registration pursuant to any of clause (ii), (iii) or (iv) above exceeds the number which the Corporation has been advised or has determined can be sold, the number of Included Securities which may be included in such Registration shall be further allocated pro rata among CBN, Liberty IFE and the Other Investors, as the case may be, based on the number of Included Securities that each such participant shall have requested to be included therein. Notwithstanding the foregoing, if as a result of the above provisions of this Section 3(b) such Registration Statement includes fewer than all of the Included Securities which Liberty IFE or CBN requested to be included therein, the balance of such securities nonetheless shall be included therein if Liberty IFE or CBN, as the case may be, agrees to postpone the sale of such 9 10 balance until after the expiration of a sixty (60) day period beginning on the effective date of such Registration Statement or until such earlier time as all other securities included in such Registration Statement have been disposed of pursuant thereto, in which event the period during which the Registration Statement is required to be kept effective pursuant to Section 3(c) shall be extended for a period extending beyond one (1) year from the initial effective date thereof. (c) With respect to any Registration, the Corporation will as expeditiously as practicable: (i) prepare and file with the Securities and Exchange Commission a Registration Statement and use its reasonable efforts to cause such Registration Statement to become effective; (ii) prepare and file with the Securities and Exchange Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for as long as reasonably required to permit the distribution of the securities covered thereby, in accordance with the plan(s) of distribution described therein; cause the prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act; and comply with the provisions of the Act applicable to it with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement or in the prospectus, as supplemented; (iii) furnish to any person holding securities included in such Registration Statement and the underwriter or underwriters, if any, without charge, at least one signed copy of the Registration Statement and any post-effective amendment thereto, upon request, as soon as such documents become available to the Corporation, and such number of conformed copies thereof and such number of copies of the prospectus (including each preliminary prospectus) and any amendments or supplements thereto, and any documents incorporated by reference therein, as such person or underwriter may reasonably request in order to facilitate the disposition of the securities being sold by such person; (iv) notify each person holding securities included in such Registration Statement, at any time when a prospectus relating thereto is required to be delivered under the Act, of the happening of any event as a result of which the prospectus included in such Registration Statement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of the prospectus or any preliminary prospectus, in light of the circumstances under which they were made) not misleading, and the Corporation will, as promptly as practicable thereafter, prepare and file with the Securities and Exchange Commission and furnish a 10 11 supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such securities, such prospectus will 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 light of the circumstances under which they were made, not misleading; (v) enter into customary agreements (including an underwriting agreement in customary form in the case of an underwritten offering), make such representation and warranties to the sellers and underwriter as in form and substance and scope are customarily made by issuers to underwriters in underwritten offerings and take such other actions as the holders of a majority of the securities or the managing underwriter or agent, if any, reasonably require in order to expedite or facilitate the disposition of such securities; (vi) use its reasonable efforts to obtain a "cold comfort" letter from the Corporation's independent public accountants in customary form and covering such matters of the type customarily covered by "cold comfort" letters as the holders of a majority of the securities being sold or the managing underwriter reasonably request; (vii) use its reasonable efforts to obtain an opinion or opinions from counsel for the Corporation in customary form and reasonably satisfactory to such holders, underwriters or agents and their counsel; (viii) make generally available to its security holders earnings statements, which need not be audited, satisfying the provisions of Section 11 (a) of the Act no later than ninety (90) days after the end of the 12-month period beginning with the first month of the Corporation's first fiscal quarter commencing after the effective date of the Registration Statement, which earnings statements shall cover said 12-month period; and (ix) on or prior to the date on which the Registration Statement is declared effective, use its reasonable efforts to register or qualify, and cooperate with the persons holding securities included in such Registration Statement, the managing underwriter or underwriters or agent, if any, and their counsel, the securities covered by the Registration Statement for offer and sale under the securities or blue sky laws of each state and other jurisdiction of the United States as any such person or underwriter reasonably requests in writing, use its reasonable efforts to keep each registration or qualification effective, including through new filings, or amendments or renewals, during the period such Registration Statement is required to be kept effective and do any and all other acts or things reasonably necessary or advisable to enable the disposition in all such jurisdictions of the securities covered by the applicable Registration Statement provided that the Corporation will not be required to qualify generally to do business in any jurisdiction 11 12 where it is not then so qualified or to take any action which would subject it to general service of process in and such jurisdiction. (d) The Designated Holders and the Corporation agree not to effect (except pursuant to such Registration Statement) any public sale or distribution of Included securities, including a sale pursuant to Rule 144 (or any similar provision then in force) under the Act, during the ten (10) business days prior to the date of anticipated filing of a Registration Statement, and during the ninety (90) day period beginning on the effective date of such Registration Statement (or such earlier time prior to the expiration of such period which is 30 days after the date all the Included Securities included in such Registration Statement have been disposed of pursuant thereto, subject to any lock-up agreement between any Designated Holder and the underwriters of such offering). (e) It shall be a condition precedent to the Corporation's obligation to register any Designated Holder's Included Securities pursuant to the provisions hereof that such Designated Holder shall provide promptly to the Corporation such information as the Corporation may reasonably request at any time and from time to time upon reasonable prior notice to enable the Corporation to comply with any applicable law or regulation or to facilitate the preparation of the Registration Statement. (f) The Corporation shall pay all of the expenses of each Registration, except that each Designated Holder shall pay all fees and expenses of such Designated Holder's counsel and the underwriting discounts and fees and transfer taxes applicable to the securities of such Designated Holder included in such Registration. (g) The Corporation shall indemnify and hold harmless each Designated Holder who has securities included in a Registration Statement, and any underwriter (as defined in the Act) of such Designated Holder's securities, and each person, if any, who controls such Designated Holder or such underwriter within the meaning of the Act (but only if such Designated Holder or such underwriter agrees to indemnify the persons mentioned in Section 3(h) in the manner set forth in Section 3(h)) from and against, and will reimburse such Designated Holder and each such underwriter and controlling person with respect to, any and all claims, losses, damages, liabilities, costs and expenses, insofar as such claims, losses, damages, liabilities, costs and expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in such Registration Statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Corporation shall not be liable in any such case to the extent that any such claim, loss, damage, liability, cost, or expense arises out of or is based upon any untrue statement or alleged untrue 12 13 statement or omission or alleged omission so made in conformity with information furnished by such Designated Holder, such underwriter, or such controlling person in writing specifically for inclusion therein. (h) In the event that any Designated Holder' securities are included in a Registration Statement, such Designated Holder shall indemnify and hold harmless the Corporation, each of its directors, each of its officers who have signed such Registration Statement, and each person, if any, who controls the Corporation within the meaning of the Act from and against, and will reimburse the Corporation and each such director, officer and controlling person with respect to, any and all claims, losses, damages, liabilities, costs, and expenses to which the Corporation or any such director, officer, or controlling person may become subject under the Act or otherwise, insofar as such claim, losses, damages, liabilities, costs, or expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any prospectus contained therein, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in conformity with written information furnished by such Designated Holder for inclusion therein. (i) Promptly after receipt by an indemnified party, pursuant to the provisions of Section 3(f) or 3(g) hereof, of notice of the commencement of any action, such indemnified party shall, if a claim thereof is to be made against the indemnifying party pursuant to the provisions of said Sections 3(f) or 3(g), notify the indemnifying party of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnifying party otherwise than hereunder. In case such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, at the sole expense of the indemnifying party, with counsel reasonably satisfactory to such indemnified party, and after notice of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party, pursuant to the provisions of said Sections 3 (f) or 3 (g), for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof, other than reasonable costs of investigation. (j) If for any reason the indemnification provided for in Section 3 (f) or 3 (g) is unavailable to an indemnified party, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, 13 14 damage, or liability in such proportion as is appropriate to reflect not only the relative benefits received by the indemnified party and the indemnifying party, but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations, provided that no Designated Holder shall be required to contribute an amount greater than the difference between the net proceeds received by such Designated Holder with respect to the sale of any Included Securities of such Designated Holder and all amounts already contributed by such Designated Holder with respect to such claims. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of fraudulent misrepresentation. (k) No Designated Holder may participate in any underwritten registration hereunder unless such Designated Holder (a) agrees to sell its securities included therein on the basis provided in any underwriting arrangements approved by the persons or entities entitled to approve such arrangements and (b) accurately completes and executes all questionnaires, powers of attorney, underwriting agreements and other documents customarily required under the terms of such underwriting arrangements. 4. Demand Registration Rights. (a) At any time and after the date hereof, each of Liberty IFE and CBN (each an "Initiating Holder"), so long as such Initiating Holder continues to hold at least 300,000 shares of Class B Stock (including Class B Stock issuable upon conversion of Convertible Securities) (as such number of shares may be adjusted to reflect any subdivision of outstanding shares of Class B Stock by reclassification, stock split, stock dividend or otherwise or any combination of outstanding shares of Class B Stock by reverse stock split, reclassification or otherwise) may make a written request to the Corporation (specifying that it is being made pursuant to this Section 4) that the Corporation file a registration statement under the Act (or a similar document pursuant to any other statute then in effect corresponding to the Act) covering the registration of all or any portion of the Covered Securities held by such Initiating Holder. In such event, the Corporation shall use its best efforts to cause to be registered under the Act all Covered Securities that the Initiating Holder has requested be registered. (b) If the Initiating Holder intends to distribute the Covered Securities included in its request by means of an underwritten offering, it shall so advise the Corporation as a part of its request pursuant to Section 4(a) above. In such event, the Initiating Holder and the Corporation shall enter into an underwriting agreement in customary form with the underwriter or underwriters thereof. Such underwriter or underwriters shall be selected by the Initiating Holder and shall be approved by the Corporation, which approval shall not be unreasonably withheld. 14 15 (c) Notwithstanding any provision of this Agreement to the contrary, the Corporation shall not be required to effect a registration pursuant to this Section 4 during the ten (10) business days prior to the date of anticipated filing of a registration statement by the Corporation, and during the ninety (90) day period beginning on the effective date of such registration statement (or such earlier time prior to the expiration of such period which is 30 days after the date all the securities included in such registration statement have been disposed of pursuant thereto, subject to any lock-up agreement between the Initiating Holder and the underwriters of any such offering) pertaining to a public offering of securities for the account of the Corporation; provided, however, that the Corporation may refuse to register shares of Covered Securities of an Initiating Holder pursuant to this Section 4(c) no more than once in any 12-month period. (d) As of the date of this Agreement, the Corporation shall be obligated to effect only five (5) registrations for Liberty IFE and four (4) registrations for CBN pursuant to this Section 4 and shall not be required to effect more than one (1) such registration for each of Liberty IFE and CBN in any 12 month period; the Corporation shall pay all of the expenses of each such registration, except that the Initiating Holder shall pay all fees and expenses of such Initiating Holder's counsel and the underwriting discounts and fees and transfer taxes applicable to the securities of the Initiating Holder included in such registration; provided, however, that the Corporation shall have no obligation to pay any such costs or expenses, and the Initiating Holder shall pay all such costs and expenses incurred by the Corporation and such Initiating Holder as a result of the Initiating Holder's request pursuant to this Section 4, in the event the Initiating Holder determines not to go forward with any such registration for a reason other than the inability of the underwriters, if any, to market the Covered Securities of the Initiating Holder included in such registration after a good faith attempt to do so, and no other securities are sold by the Corporation or any other holder of securities of the Corporation pursuant to such registration. A registration shall not be deemed a demand registration pursuant to this Section 4 unless the registration statement filed with respect thereto includes at least 80% of the Covered Securities requested to be included therein by the Initiating Holder and such registration statement is declared effective under the Act. (e) The rights and obligations of the Designated Holders and the Corporation set forth in paragraphs (c), (e), (g), (h), (i), (j) and (k) of Section 3 shall be applicable to the Initiating Holder and the Corporation, respectively, in connection with demand registrations made pursuant to this Section 4. 5. Initial Public offering. [Deleted] 15 16 6. Covenants of the Corporation. From and after the date hereof, the Corporation covenants and agrees that it will comply with the following provisions: (a) Additional Issuances of Class A Stock. The Corporation agrees that it will issue no additional Class A Stock, except through a stock dividend or stock split in which the Class B Stock (and Class C Stock, if any) is equally dividended or split. (b) Rights in Future offering. The Corporation agrees that if hereafter the Corporation at any time or from time to time proposes to issue (an "Issuance") any Class B Stock, Class C Stock or Preferred Stock or any Rights to acquire Class B Stock, Class C Stock or Preferred Stock or any other capital stock or Rights to acquire any other capital stock of the Corporation, Management, the Charitable Trust, Liberty IFE and CBN shall be offered the opportunity to acquire from the Corporation, on the same terms as such securities would be offered to others (provided, that if such terms include any non-cash consideration the person exercising its Preemptive Right (as defined below) may substitute cash of equivalent value in an amount determined in good faith by the Board of Directors of the Corporation and; provided further, that in the case of an Issuance made pursuant to a public offering,the price at which the securities may be purchased pursuant to a Preemptive Right will be equal to the price to the public of the securities being offered in such public offering), a number of shares of the class and series to be offered in such Issuance to be determined as follows (as to each party, all "Preemptive Right"): (i) in the case of an Issuance of shares of Preferred Stock or Rights to acquire Preferred Stock, Liberty IFE shall be offered the exclusive right to acquire all or any part of such shares or Rights, provided that if Liberty IFE fails to exercise this Preemptive Right with respect to any particular Issuance, such Preemptive Right shall lapse with regard to that Issuance only and (ii) in the case of an Issuance of shares, or Rights to acquire shares, of any other capital stock ranking senior to or on a parity with the Preferred Stock as to dividends, rights on liquidation or redemption, or in the case of an Issuance of shares or Rights to acquire shares, of Class B Stock, Class C Stock or any other capital stock of the Corporation, except capital stock and Rights referred to in clause (i) of this sentence, Management, the Charitable Trust, Liberty IFE and CBN shall each be offered the right to acquire up to such number of such shares or Rights as will result in their each owning of record the same percentage (rounded to the nearest whole share) of such class of capital stock or of such Rights after the Issuance (and the exercise of this Preemptive Right by each of such parties) as they each owned of record of the Class B Stock prior to the Issuance (calculated in each case on a fully diluted basis, both before and after the Issuance). The Corporation shall give prompt notice (the "Corporation Notice") of a proposed Issuance subject to the terms of this Section 6 (b), and the number of shares or Rights proposed to be issued in such Issuance, to Management, the Charitable Trust, Liberty IFE and CBN; provided that in the case of an Issuance of Preferred Stock or 16 17 Rights to acquire Preferred Stock pursuant to clause (i) of this paragraph, the Corporation shall be required to give notice of such Issuance only to Liberty IFE. Such Corporation Notice shall be given by facsimile transmission or by overnight courier guaranteeing next day delivery. Following receipt of a Corporation Notice, this Preemptive Right may be exercised, based upon the number of shares or Rights proposed to be issued in such Issuance, by Management, the Charitable Trust, Liberty IFE or CBN giving written notice (the "First Purchase Notice") to the Corporation, which notice must be received by the Corporation on or before the tenth (10th) Business Day after delivery of the Corporation Notice (the "Election Date"), such party or parties shall be deemed to have waived its Preemptive Right with regard to that Issuance (each party electing to exercise its Preemptive Right, an "Electing Party" and, collectively, the "Electing Parties"). If the Corporation receives a First Purchase Notice from any of the parties hereto, then, the Corporation shall, on or before the third (3rd) Business Day after the Election Date, provide written notice (the "Second Corporation Notice"), by facsimile transmission or overnight courier guaranteeing next day delivery, to each Electing Party as to the number of shares or Rights each Electing Party is entitled to purchase, based upon the number of shares or Rights proposed to be issued in such Issuance and the maximum number of shares or Rights issuable to the Electing Parties in the aggregate pursuant to their exercise of their Preemptive Rights. On or before the fifth (5th) business Day after the delivery of the Second Corporation Notice to each Electing party (the "Exercise Date"), each Electing Party shall notify the Corporation in writing (the "Second Purchase Notice") of the number of shares or Rights such Electing Party will purchase, which notice will be binding as to the number of shares specified therein and subject only to the closing of such Issuance; provided that if the Corporation has not received a Second Purchase Notice from an Electing Party on or before the Exercise Date, such party or parties shall be deemed to have waived its Preemptive Right with regard to any such shares or Rights. The Corporation shall promptly notify the Electing Party of the time, date and place of closing of the Issuance (the "Closing Notice"), which shall be determined by the Corporation in its sole discretion. Failure to make timely payment for such shares or Rights subject to a Preemptive Right in accordance with the terms of the Closing Notice shall be deemed a waiver of the Preemptive Right with regard to that Issuance. Notwithstanding the foregoing, the Preemptive Rights shall not apply (i) to any issuance of Class B or Class C Stock (or securities convertible into or exchangeable for, or options to purchase, Class B or Class C Stock) to employees or directors of the Corporation or any subsidiary, pursuant to any plan, arrangement or program in which the Corporation participates, whether now existing or hereafter created and as may be amended from time to time, including, without limitation, the Corporation's Stock Incentive Plan, Senior Stock Incentive Plan or (ii) to any issuance, pro rata to all holders of Class B or Class C Stock or Preferred Stock, of Class B or Class C Stock or Preferred Stock (or 17 18 securities convertible into or exchangeable for, or options to purchase, Class B or Class C Stock or Preferred Stock) as a dividend on, subdivision of, or other distribution in respect of, the Class B or Class C Stock or Preferred Stock. (c) Status of Dividends on Preferred Stock. The Corporation covenants and agrees for the benefit of Liberty IFE that, for all tax, financial and regulatory purposes, to the extent permitted by law and the Corporation's independent auditors, the Corporation will treat the Preferred Stock as equity capital and the dividends paid thereon as dividends on equity capital. In addition, so long as no cost would be incurred by the Corporation as a result, the Corporation shall cooperate with and support Liberty IFE or a Permitted Transferee of Liberty IFE of Preferred Stock, in any litigation, appeal or other proceeding challenging or contesting any ruling, technical advice, finding or determination of the Internal Revenue Service that dividends paid on such Preferred Stock out of the Corporation's current or accumulated earnings and profits are not eligible for the dividends received deduction provided by Section 243 of the Internal Revenue Code of 1986, as amended, or any successor provision. (d) Programming Theme Changes. So long as Liberty IFE or CBN or any Affiliate of Liberty IFE or CBN holds at least 300,000 shares of Class B Stock or Class C Stock (including Class B Stock or Class C Stock issuable upon conversion of Convertible Securities) (as such number of shares may be adjusted to reflect any subdivision of outstanding shares of Class B Stock or Class C Stock by reclassification, stock split, stock dividend or otherwise or any combination of outstanding shares of Class B Stock or Class C Stock by reverse stock split, reclassification or otherwise after the date hereof) the Corporation shall not, without the consent of Liberty IFE and/or CBN, as the case may be, which consent shall not be unreasonably withheld, directly or indirectly, make any significant change in the theme of the Programming for The Family Channel, the basic cable television network owned and operated by the Corporation. (e) Affiliate Transactions. Any transaction between the Corporation and any Affiliate of the Corporation shall be (i) on terms no less favorable to the Corporation than would be available in a similar transaction concluded on an arms' length basis with an independent third party and (ii) approved by the Audit Committee of the Corporation. No Material Transaction shall be consummated unless the material terms of such transaction have been approved in advance by Liberty IFE and CBN. No such approval shall be withheld unreasonably. In the event the Corporation intends to enter into any Material Transaction, it shall give written notice of said intent to Liberty IFE and CBN (which notice shall contain the material terms of such transaction), and Liberty IFE and CBN shall have five (5) days in which to consent or object to such transaction. If Liberty IFE or CBN neither consents nor objects within such period, consent shall be conclusively presumed. The special consent rights granted under this Section 6(e) shall 18 19 lapse as to CBN or as to Liberty IFE when that party ceases to hold at least five percent (5%) of the Common Stock (including Common Stock issuable upon conversion of Convertible Securities); such special consent rights may not be transferred or assigned except pursuant to a Permitted Transfer. (f) Redemption of Class A Stock. So long as Liberty IFE owns at least five percent (5%) of the Common Stock (including Common Stock issuable upon conversion of Convertible Securities) the Corporation will not redeem, purchase or otherwise acquire, directly or indirectly, any shares of Class A Stock without the consent of Liberty IFE; provided, however, that the foregoing shall not be deemed to restrict transfers of Class A Stock to Permitted Transferees. (g) Automatic Conversion of Class A Stock. Until the earlier of (i) such time as Liberty IFE ceases to own at least five percent (5%) of the Common Stock (including Common Stock issuable upon conversion of Convertible Securities) and (ii) January 5, 2010, each holder of Class A Stock agrees that in the event any of such holder's Class A Stock is transferred to a Person other than a Permitted Transferee, such Class A Stock shall be automatically converted into Class B Stock. 7. Assignment. No party hereto may assign or transfer his or its rights, benefits, duties, burdens, or obligations under this Agreement other than to a Permitted Transferee; provided, however, the rights, benefits, obligations, duties and burdens under this Agreement may be transferred to any partnership, joint venture, corporation or other entity into which any party may merge with which it may be consolidated or to any corporation, partnership, joint venture or other entity which shall succeed to all or substantially all of its assets and business or to any wholly owned subsidiary of any such corporation, partnership, joint venture or other entity, provided always that such transferee agrees in writing to accept, assume and be bound by all of the provisions of this Agreement to the same extent as its transferor, and, further provided, that such transfer shall be without effect on or diminish the duties and obligations of such transferor hereunder, which duties and obligations shall remain primary to such transferor notwithstanding such transfer, and that the performance of such transferee hereunder shall be unconditionally guaranteed by such transferor in all respects at all times thereafter. 8. Termination of Rights of Liberty IFE. Notwithstanding any other provision set forth herein, none of the rights of Liberty IFE are assignable (except in connection with a Permitted Transfer), and shall terminate in the event a controlling interest in Liberty IFE (or any Person that controls Liberty IFE within the meaning of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) is transferred, or Liberty IFE is dissolved, liquidated, or the subject of a petition in bankruptcy not dismissed within thirty (30) days of filing, or Liberty IFE 19 20 merges or otherwise loses its corporate identity, unless in any such case the successor to Liberty IFE is a Permitted Transferee (in which case all references in this Section shall refer to the Permitted Transferee). 9. Separability of Provisions. If any provision of this Agreement or the application of such provision to any person or circumstance is held invalid, the remainder of this Agreement and the application of such provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby. 10. Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated and include the plural as well as the singular: (a) Act. The Securities Act of 1933, as amended. (b) Affiliate. With respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with, such Person. 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. The parties hereto shall be deemed to be an Affiliate of the Corporation so long as any of them hold Covered Securities representing ten percent (10%) or more of the Fully Diluted Voting Power of the Corporation. M. G. Robertson, Timothy B. Robertson and any director of the Corporation shall be deemed to be an Affiliate of the Corporation. (c) Agreement. This Amended and Restated Shareholders Agreement, as the same may be amended, supplemented or modified in accordance with the terms hereof. (d) Business Day. Each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the City of New York, New York are authorized or obligated by law to close. (e) CBN. As defined in the preamble to this Agreement. (f) Charitable Organization. A Person to which contributions are deductible for federal income, estate and gift tax purposes. (g) Charitable Trust. As defined in the preamble to this Agreement. 20 21 (h) Class A Stock. The Class A Voting Common Stock, par value $.01 per share, of the Corporation. (i) Class B Stock. The Class B Voting Common Stock, par value $.01 per share, of the Corporation. (j) Class C Stock. The Class C Non-voting Common Stock, par value $.01 per share, of the Corporation. (k) Common Stock. The Class A Stock, the Class B Stock, the Class C Stock or all of the Class A Stock, Class B Stock and Class C Stock, as the context requires. (l) Compensation. Cash salaries, bonuses and deferred compensation, compensation paid or distributed pursuant to plans, stock options, restricted stock, phantom stock, stock appreciation rights, warrants, performance units, performance shares and other items of compensation that are reportable in a proxy statement for an annual meeting of stockholders (disregarding any minimum reportable dollar amounts) pursuant to Item 402 of Regulation S-K promulgated by the Securities and Exchange Commission. Notwithstanding the foregoing, Compensation does not include any amounts paid or distributed under health, hospitalization, group life, medical reimbursement and other plans that do not discriminate in favor of officers or directors of the Corporation and are available generally to full-time salaried employees of the Corporation, in each case within the meaning of the Employee Retirement Income Security Act of 1974, as amended. Stock options granted under the Corporation's Stock Incentive Plan or Senior Stock Incentive Plan will not be deemed part of Compensation if granted with an exercise price equal to the fair market value of a share of Class B Stock on the date of grant. (m) Corporation. As defined in the preamble to this Agreement. (n) Convertible Securities. The Preferred Stock, the Notes and any other Covered Securities which are or become convertible into capital stock of the Corporation. (o) Covered Securities. Any (x)(i) Note, (ii) share of Preferred Stock, (iii) share of Class C Stock, (iv) share of Class B Stock or (v) share of Class A Stock, in each case held by Liberty IFE, CBN or any other party to this Agreement on the date hereof, (y) any Class B Stock issued upon conversion of any of the securities described in clauses (x)(i), (ii), (iii) and (v) above and (z) securities issued with respect to any securities referred to in either of clauses (x) or (y) above by way of a stock dividend or stock split or exchange in connection with a combination of shares, recapitalization, merger, adjustment or compromise of debt, consolidation or other reorganization or otherwise, including, without limitation, the shares of Common Stock to be issued to Liberty IFE pursuant to the Exchange Agreement. 21 22 (p) Designated Holder. As defined in Section 3 (a) (q) Fair Market Value. As defined in Section 2 (b) (r) Fair Value. With respect to a share of Class A Stock, (i) if no class of Common Stock is publicly traded, the Fair Market Value of such share as determined pursuant to Section 2(b) hereof, (ii) if the Class B Stock is traded in the over-the-counter market (or, if the Class B Stock is not so traded, any other class of Common Stock so traded) and not in the NASDAQ National Market System or on any national securities exchange, the average of the daily mean of the closing bid and asked prices of a share of such class of Common Stock on the 30 consecutive trading days immediately preceding the date in question, as reported by NASDAQ or an equivalent generally accepted reporting service, or (iii) if the Class B Stock is traded in the NASDAQ National Market System or on a national securities exchange (or if the Class B Stock is not so traded, any other class of Common Stock so traded), the average for the 30 consecutive trading days immediately preceding the date in question of the daily per share closing prices of such class of Common Stock in the NASDAQ National Market System or on the principal stock exchange on which such class of Common Stock is listed, as the case may be. The closing price referred to in clause (iii) above shall be the last reported sales price or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices, in either case in the NASDAQ National Market System or on the national securities exchange on which the class of Common Stock in question is then listed. If the Class B Stock does not publicly trade but two or more other classes of Common Stock publicly trade, Fair Value shall be determined by reference to the class of publicly traded common Stock that results in the highest Fair Value per share of Class A Stock. (s) First Refusal. As defined in Section i(a). (t) Fully Diluted Voting Power. With respect to any Covered Securities at any time, the aggregate number of votes such Covered Securities would be entitled to cast (on any matter not requiring a class vote) at a meeting of stockholders of the issuer held at that time, assuming that all Rights and all convertible securities which are Covered Securities had been exercised and converted immediately before the record date for such meeting. (u) Heirs. As defined in Section 2(a). (v) Included Securities. As defined in Section 3(a). (w) Initial Public offering. As defined in Section 3(a). (x) Initiating Holder. As defined in Section 4(a). 22 23 (y) International Family Entertainment, Inc. As defined in the preamble to this Agreement. (z) Liberty IFE. As defined in the preamble to this Agreement. (aa) Management. As defined in the preamble to this Agreement. (ab) Material Transaction. With respect to noncompensation transactions, any transaction or related series of transactions between the Corporation and an Affiliate of the Corporation involving consideration in excess of $500,000 in the aggregate; provided, however, that such $500,000 threshold shall be adjusted semi-annually to reflect the percentage relationship the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor as of the date of adjustment bears to such index for April 1992. With respect to Compensation, amounts paid or distributed to, or deferred on behalf of, an Affiliate of the Corporation by the Corporation that, in the aggregate, exceed by 15% or more the Compensation received by such Affiliate from the Corporation during the prior fiscal year. Notwithstanding the foregoing, neither Liberty IFE nor CBN shall have the right to approve or disapprove Compensation to the extent it involves amounts paid, distributed or deferred pursuant to the non-discretionary (e.g., formula-based) terms of any plan or contract in effect on the date of this Agreement (including any extension or renewal thereof that does not materially change the terms of such plan or contract and which is approved by the Audit Committee of the Corporation) or which previously has been approved by Liberty IFE and CBN, and any such amounts shall not be included in the calculation of Compensation pursuant to the previous sentence; provided, that Compensation of an Affiliate that so exceeds by 15% or more the prior fiscal year's Compensation of such Affiliate shall be deemed, for purposes of the approval rights of Liberty IFE and CBN in the next succeeding fiscal year, to equal 115% of such prior fiscal year's Compensation. (ac) Notes. The 6% Convertible Secured Notes due 2004 of the Corporation. (ad) Permitted Transfer. With respect to any Person who holds Class A Stock, a sale, transfer, or bequest of Class A Stock for a purchase price (if any) not in excess of Fair Value to (i) such Person's spouse; (ii) a lineal descendant of a great-grandparent of such Person; (iii) the trustee of a trust in whole or in part for the benefit of such Person, any other Persons who hold Class A Stock or any of the Persons described in clauses (i) and (ii) above; (iv) a Charitable Organization; or (v) Liberty IFE or any Affiliate of Liberty IFE. In the case of an estate of a deceased holder of Class A Stock or an estate of a bankrupt or insolvent holder of Class A Stock, a Permitted Transfer shall include a sale, transfer or bequest of Class A Stock for a purchase 23 24 price (if any) not in excess of Fair value to any Person determined to be a Permitted Transferee of such holder of Class A Stock pursuant to the preceding sentence. In the case of a trust or Charitable Organization that received Class A Stock either prior to the date hereof or in a Permitted Transfer by a Person pursuant to the first sentence of this paragraph, a Permitted Transfer shall include a sale, transfer or bequest by such trust or Charitable organization of Class A Stock for a purchase price (if any) not in excess of Fair Value to such Person or any Permitted Transferee of such Person pursuant to the first sentence of this paragraph. A Permitted Transfer by any Person shall also include a sale, transfer, bequest or other disposition of Covered Securities for a purchase price (if any) not in excess of Fair Value to (i) any corporation or entity which shall be a direct or indirect wholly-owned subsidiary or parent of such Person (or, in the case of CBN, Regent University) or (ii) any corporation or entity (such corporation or entity known as "New Entity") into which such Person shall be merged or consolidated or which shall succeed to all or substantially all of the business and assets of such Person provided that, upon and subsequent to such merger, consolidation, or succession, at least fifty-one percent (51%) of the voting power in the New Entity is held by persons or entities holding at least fifty-one percent (51%) of the voting power in such Person on the date of this Agreement. (ae) Permitted Transferee. The transferee of Covered Securities pursuant to a Permitted Transfer. (af) Person. An individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind. (ag) Preemptive Rights. As defined in Section 6(b). (ah) Preferred Stock. The 10% Convertible Cumulative Preferred Stock, par value $.001 per share, of the Corporation. (ai) Programming. The television programming currently distributed by The Family Channel, which consists of wholesome, family oriented television programming, including religious, inspirational, current affairs or entertainment programs. (aj) Put Exercise Notice. As defined in Section 2(a). (ak) Put Option. As defined in Section 2(a). (al) Put Option Notice. As defined in Section 2 (a). (am) Put Party. As defined in Section 2(a). 24 25 (an) Qualified Appraiser. A nationally recognized investment banking firm or other firm or person experienced in appraising firms similar in size and field of business to the Corporation. (ao) Qualified Independent Appraiser. A Qualified Appraiser that is not an employee of, an Affiliate of, or otherwise affiliated with, any party hereto. (ap) Registration Statement. As defined in Section 3(a). (aq) Rights. Any outstanding subscriptions, options, warrants, rights, convertible securities or other agreements or commitments of any character obligating the Corporation to issue any securities. (ar) Selling Party. As defined in Section 1(a). (as) Senior Stock Incentive Plan. The Corporation's Senior Executive Stock Incentive Plan originally providing for the issuance to the Chairman of the Corporation's Board of Directors, M.G. Robertson, and the Corporation's Chief Executive Officer and President, Timothy B. Robertson of up to 2,700,000 shares of Class B Stock (which number gives effect to the 3 for 1 stock split declared by the Board of Directors of the Corporation on March 3, 1992) minus the aggregate number of shares awarded under the Stock Incentive Plan, as the same may be amended from time to time. (at) Stock Incentive Plan. The Corporation's Stock Incentive Plan originally providing for the issuance to employees of the Corporation of up to 2,700,000 shares of Class B Stock (which number gives effect to the 3 for 1 stock split declared by the Board of Directors of the Corporation on March 3, 1992) minus the aggregate number of shares awarded under the Senior Stock Incentive Plan. (au) TCID. As defined in the preamble to this Agreement. (av) Voting Power. With respect to any security, the power to vote, or to direct the voting of, such security. A Person shall be deemed to possess Voting Power over a security if such Person, through any arrangement, may immediately and without cost acquire, at such Person's discretion, the power to vote, or to direct the voting of, such security. 11. Notices. Any notices and other communications hereunder shall be in writing and shall be deemed to have been made when delivered, or mailed first class postage prepaid; provided, however, that notice of proposed Affiliate transactions pursuant to Section 6(d) shall be deemed to have been made when delivered only. 25 26 If to M.G. Robertson, to: M.G. Robertson 2877 Guardian Lane P.O. Box 2050 Virginia Beach, Virginia 23450-2050 If to Timothy B. Robertson, to: Timothy B. Robertson 2877 Guardian Lane P.O. Box 2050 Virginia Beach, Virginia 23450-2050 If to the Charitable Trust, to: M.G. Robertson, Trustee Robertson Charitable Remainder Unitrust 2877 Guardian Lane P.O. Box 2050 Virginia Beach, Virginia 23450-2050 If to CBN, to: The Christian Broadcasting Network, Inc. Attention: Michael D. Little, President CBN Center 1000 Centerville Turnpike Virginia Beach, Virginia 23463 With a copy to: Joel R. Kaswell, Esq. Fisher, Wayland, Cooper and Leader 1255 23rd Street, N.W. Suite 800 Washington, D.C. 20037 If to Liberty IFE, to: Liberty IFE, Inc. Attention: Robert R. Bennett 8101 East Prentice Avenue Englewood, Colorado 80111 With a copy similarly addressed to the President 26 27 If to the Corporation, to: International Family Entertainment, Inc. Attention: Timothy B. Robertson President & Chief Executive Officer 2877 Guardian Lane P.O. Box 2050 Virginia Beach, Virginia 23450-2050 With a copy to: Louis A. Isakoff, Esq. International Family Entertainment, Inc. 2877 Guardian Lane P.O. Box 2050 Virginia Beach, Virginia 23450-2050 and to: Kirk A. Davenport, Esq. Latham & Watkins 885 Third Avenue Suite 1000 New York, New York 10022-4802 or at such other address as any addressee may request in writing by notice to all other addresses. 12. Entire Agreement. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, permitted assigns and successors subject, however, to the provisions of Sections 6 and 7 hereof, restricting assignment. This Agreement constitutes the entire understanding between the parties and supersedes all preexisting oral, letter or other agreements, and any amendment hereof must be in writing executed by all parties hereto. This Agreement shall become effective at the time (but not before) the registration statement relating to the Initial Public offering is declared effective by the Securities and Exchange Commission under the Act. This Agreement, upon its effectiveness, supersedes the Original Agreement in its entirety. 13. Headings. The headings in this Agreement are inserted for convenience only and shall not constitute a part hereof. 14. Counterparts. This Agreement may be signed in any number of counterparts with the same effect as if the signatures of each such counterpart were upon the same instrument. 15. Governing Law. This Agreement shall be construed in accordance with and be governed by the laws of the Commonwealth of Virginia. Venue and jurisdiction on any lawsuit under this Agreement shall be held solely in the Commonwealth of Virginia. 27 28 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. /s/ M.G. ROBERTSON --------------------------------- M.G. ROBERTSON /s/ TIMOTHY B. ROBERTSON --------------------------------- TIMOTHY B. ROBERTSON ROBERTSON CHARITABLE REMINDER UNITRUST By: /s/ M.G. ROBERTSON --------------------------------- M.G. Robertson, Trustee THE CHRISTIAN BROADCASTING NETWORK, INC. By: /s/ MICHAEL D. LITTLE --------------------------------- Michael D. Little, President LIBERTY IFE, INC. By: /s/ ROBERT R. BENNETT --------------------------------- Robert R. Bennett, Senior Vice President, Treasurer and Secretary INTERNATIONAL FAMILY ENTERTAINMENT, INC. By: /s/ LOUIS A. ISAKOFF --------------------------------- Louis A. Isakoff, Senior Vice-President, General Counsel and Secretary 28 -----END PRIVACY-ENHANCED MESSAGE-----