EXHIBIT 10.54
REGISTRATION RIGHTS AGREEMENT
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REGISTRATION RIGHTS AGREEMENT, dated as of August 1, 1997 (this
("Agreement"), by and between FOX KIDS WORLDWIDE, INC., a Delaware corporation
(the "Company"), LIBERTY MEDIA CORPORATION, a Delaware corporation ("Liberty"),
and LIBERTY IFE, INC., a Colorado corporation and a wholly owned subsidiary of
Liberty ( "LIFE").
W I T N E S S E T H:
WHEREAS, the Company, Liberty and LIFE are parties to a Contribution
and Exchange Agreement, dated as of June 11, 1997 and amended on the date hereof
(as so amended, the "Contribution Agreement"), pursuant to which LIFE is to
receive on the date hereof, in exchange for certain securities of International
Family Entertainment, Inc. owned by LIFE, 345,000 shares of Series A Preferred
Stock, par value $.001 per share, of the Company (the "Preferred Stock");
WHEREAS, pursuant to Section 2.1(b) of the Contribution Agreement,
LIFE may receive additional shares of Preferred Stock following the date
hereof;
WHEREAS, the shares of Preferred Stock have not been registered under
the Securities Act of 1933, as amended, and are "restricted securities" as that
term is defined in Rule 144 under such Act;
WHEREAS, the Company has agreed to provide Liberty, LIFE and
subsequent holders of the Preferred Stock with the registration rights set forth
herein;
WHEREAS, the security to which the registration rights set forth
herein apply shall be a security that is a "mirror" of the Preferred Stock,
except that the holders of such security shall have no rights or benefits under
the Funding Agreement or the Exchange Agreement (as such terms are defined in
the Contribution Agreement); and
WHEREAS, the execution and delivery of this Agreement satisfies the
condition precedent to the obligations of Liberty and LIFE to consummate the
Contribution set forth in Section 9.8 of the Contribution Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
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SECTION 1.1 Definitions. The following terms, as used herein, shall have
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the following meanings:
Affiliate: With respect to any specified Person, any other Person
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directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Business Day: Any day other than a Saturday, Sunday or holiday on
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which banking institutions located in New York, New York are authorized or
obligated by law, regulation or executive order to close.
Closing Price: As to any shares as of any day, (i) the last sale
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price (or, if no sale price is reported on that day, the average of the bid and
asked prices) on such day of such shares on The Nasdaq Stock Market, or (ii), if
the primary trading market for such shares is not The Nasdaq Stock Market, then
the closing sale price regular way on such day, or, in case no such sale takes
place on such day, the reported closing bid price regular way on such day, in
each case on the principal exchange on which such shares are traded, or (iii)
if the Closing Price of such shares cannot be determined pursuant to one of the
methods specified above, then the average of the bid and asked prices for such
shares on such day as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors of the Company for that
purpose.
Commission: The Securities and Exchange Commission, or any other
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federal agency at the time administering the Securities Act and the Exchange
Act.
Common Stock: Any one or more classes or series of common stock of
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the Company, including, without limitation, the Class A Common Stock, par value
$.001 per share, and the Class B Common Stock, par value $.001 per share, of the
Company.
Company: As defined in the preamble of this Agreement.
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Contribution Agreement: As defined in the first recital above.
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Exchange Act: The Securities Exchange Act of 1934, as amended, or any
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successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
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Holder: A registered holder of shares of Preferred Stock.
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Initiating Holders: As defined in Section 2.1.
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Initiation Date: As defined in Section 2.1.
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IPO: The initial public offering and sale by the Company of shares of
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one or more classes or series of Common Stock for its own account in an
underwritten offering pursuant to a registration statement on Form S-1 (or any
successor or similar form) filed under the Securities Act and declared effective
by the Commission.
Liquidation Price: As defined in Section 4 of the Certificate of
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Designations for the Preferred Stock for purposes of determining the amount
payable to holders of Preferred Stock upon a liquidation, dissolution or winding
up of the Company.
Participating Holders: Those Holders (including Initiating Holders)
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that participate in a particular registration of Registrable Shares by the
Company pursuant to the provisions of this Agreement.
Person: An individual, corporation, partnership, joint venture,
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association, joint-stock company, trust, limited liability company,
unincorporated organization or government or any agency or political subdivision
thereof.
Prospectus: The prospectus included in the Registration Statement as
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of the date it becomes effective under the Securities Act and, in the case of
references to the Prospectus as of a date subsequent to the effective date of
the Registration Statement, as amended or supplemented as of such date,
including all documents incorporated by reference therein, as amended, and each
prospectus supplement relating to the offering and sale of any of the
Registrable Shares.
Public Float Requirement: The Company shall be deemed to have met the
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Public Float Requirement if, as of any date of determination, the product of
(i) the number of shares of Common Stock issued in transactions registered
under Section 5 of the Securities Act and outstanding as of such date of
determination and (ii) the Closing Price of such shares, as of such date of
determination, equals not less than $50 million.
Qualifying Preferred Stock: Shares of preferred stock of the Company
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issued to a Holder pursuant to Section 2.8 hereof in exchange for an equal
number of shares of Preferred Stock.
Registrable Shares: Shares of Qualifying Preferred Stock and any
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other shares of capital stock of the Company issued in respect of the Preferred
Stock or the Qualifying Preferred Stock as a result of stock splits, stock
dividends, reclassification, recapitalizations, mergers, consolidations or
similar events. Any Registrable Share will cease to be a Registrable Share when
a registration statement covering such Registrable Share has been declared
effective by the Commission and such registration statement has remained
effective for the period specified
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in Section 3.1(iii) of this Agreement.
Registration Expenses: All expenses incident to the Company's
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performance of or compliance with this Agreement, including, without limitation,
(i) all Commission and stock exchange or National Association of Securities
Dealers, Inc. registration and filing fees, (ii) fees and expenses of compliance
with securities or blue sky laws (including, without limitation, reasonable fees
and disbursements of counsel for any underwriters in connection with blue sky
qualifications of Registrable Shares), (iii) printing expenses, messenger and
delivery expenses, (iv) fees and disbursements of counsel for the Company and
all independent certified public accountants (including the expenses of any
annual audit, special audit, if necessary, and "cold comfort" letters required
by or incident to such performance and compliance), (v) the reasonable fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities (other than underwriting discounts and commissions) and (vi) the
reasonable fees and expenses of any special experts or other persons retained by
the Company; provided, however, the term "Registration Expenses" shall not
include, and the Company shall not be responsible for, (x) any underwriting
discounts or commissions or transfer taxes, if any, attributable to the sale of
Registrable Shares or (y) the fees and disbursements of Special Counsel or any
other counsel retained by or for the benefit of any Holder.
Registration Statement: A registration statement of the Company which
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covers any Registrable Shares pursuant to the provisions of this Agreement, and
all amendments to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
Requisite Amount of Shares: Shares of Preferred Stock owned by
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Initiating Holders, or shares of Qualifying Preferred Stock exchangeable
therefor, with an aggregate Liquidation Price of at least $100 million.
Securities Act: The Securities Act of 1933, as amended, or any
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successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
Special Counsel: Special securities counsel selected by the
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Initiating Holders to represent the interests of all Participating Holders with
respect to a particular registration.
SECTION 1.2 Interpretation. When a reference is made in this Agreement to
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a Section, such reference shall be to a Section of this Agreement, unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the word "including" is used in this Agreement, it
shall be deemed to be followed by the words "without limitation". The use of any
gender herein shall be deemed to be or include the other genders and the use of
the singular herein shall be deemed to be or include the plural (and vice
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versa), wherever appropriate. Unless otherwise expressly provided or unless the
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context clearly indicates otherwise, as of any particular time each defined term
used in this Agreement which consists of any particular Persons, securities or
other items or particular types of any thereof is intended to include the
Persons, securities or other
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items who or which as of such time are within the scope of such definition,
rather than being confined to the Persons, securities or other items who or
which are within the scope of such definition on the date hereof.
ARTICLE II
REGISTRATION
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SECTION 2.1 Demand Registration. Upon the written request (the "Request")
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of Holder(s) (the "Initiating Holders") that own the Requisite Amount of Shares
that the Company effect the registration under the Securities Act of all or
part of the Registrable Shares to which such Initiating Holders are entitled
pursuant to Section 2.8 below (provided that, if such Request is in respect of
less than the maximum number of Registrable Shares that could be issued to such
Initiating Holders in exchange for their shares of Preferred Stock, the number
of shares requested to be so registered is equal to at least the Requisite
Amount of Shares), and specifying the intended method of disposition of such
Registrable Shares, the Company will promptly give written notice of the Request
to all other Holders (the date of the Company's receipt of the Request being
referred to herein as the "Initiation Date"). The Company shall use its
reasonable commercial efforts to effect, at the earliest practicable date after
the Initiation Date, the registration under the Securities Act of the
Registrable Shares which the Company has been so requested to register (i) by
the Initiating Holders and (ii) by any other Holders who notify the Company in
writing, within 15 days after receiving the Company's notice as hereinabove
provided, of their desire to participate in the registration (whose notice shall
specify the number of Registrable Shares to be so included and the intended
method of disposition), all to the extent necessary to permit the disposition
(in accordance with the intended methods thereof as aforesaid) of the
Registrable Shares so to be registered. Notwithstanding the foregoing, the
Company shall not be required to effect a registration pursuant to this Section
2.1:
(A) until 180 days after the IPO and only if, as of the Initiation
Date, the Public Float Requirement is met;
(B) subject to Section 2.3(iii), during the 90-day period after the
effectiveness of any registration statement of the Company involving a
primary underwritten public offering of shares of Common Stock or
securities of the Company that are convertible into or exercisable for
shares of Common Stock (or such shorter period as (x) may be agreed to by
the managing underwriters for such offering or (y) may be applicable to any
other stockholder of the Company that is required to enter into a stand-
still agreement in respect of such offering); or
(C) during the 90-day period after the effectiveness of any
registration statement of the Company involving a non-underwritten primary
public offering of Common Stock or securities of the Company that are
convertible into or exercisable for shares of Common Stock (other than a
registration statement on Form S-4 or Form S-8 or any successor or
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similar form) (or such shorter period as may be agreed to by the Company).
SECTION 2.2 Number of Demands. The Company shall not be required to
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effect a registration pursuant to Section 2.1 more than twice. Subject to
Section 2.5, a registration requested pursuant to this Section 2.1 will not be
deemed to have been effected unless the registration statement relating thereto
has become effective and has remained effective for the period set forth in
Section 2.3(iii) (as adjusted pursuant to Section 3.2(iii)). The Company may not
include in a registration effected pursuant to Section 2.1 any shares for the
account of the Company or for the account of any stockholder other than a
Holder. The Company shall not be obligated to register Registrable Shares
issuable to a Holder if, in the opinion of the counsel to the Company reasonably
acceptable to such Holder, such Holders's proposed method of disposition of such
Registrable Shares may be lawfully effected without registering such shares
under the Securities Act; provided, however, that the Company shall not have the
right to refuse a registration of Registrable Shares otherwise permitted under
this Agreement if the proposed method of distribution of such shares is an
underwritten public offering.
SECTION 2.3 Company's Right to Postpone Registration. (a) The Company
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shall be entitled to postpone the filing of a registration statement otherwise
required to be prepared and filed by it pursuant to Section 2.1 for a
reasonable period of time if, at the time it receives a Request:
(i) such registration would require the public disclosure of
material non-public information concerning any transaction or negotiations
involving the Company, or any other information, that, in the opinion of
counsel to the Company, is not yet required to be publicly disclosed and
that the Board, in good faith, determines would materially interfere with
such transaction or negotiations or would otherwise be materially adverse
to the Company; provided such postponement is for a period of time that
does not exceed the earlier of (x) 180 days from the Initiation Date or
(ii) the date such non-public information is publicly disclosed by the
Company.
(ii) such registration would interfere, in the good faith judgment of
the Board, with bona fide financing, acquisition or disposition plans of
the Company or with any other material transaction involving the Company or
any of its majority-owned subsidiaries; provided such postponement is for a
period of time that does not exceed a period of 180 days from the
Initiation Date; or
(iii) the Company proposes to file a registration statement under the
Securities Act for the offering and sale of securities for its own account
in an underwritten offering, and the managing underwriter(s) therefor shall
advise the Company in writing that in their opinion the filing or
effectuation of a registration requested pursuant to Section 2.1 would
adversely affect the success of the offering of the securities proposed to
be registered for the account of the Company; provided such postponement is
for a period of time not to exceed 150 days from the Initiation Date (or
such shorter period as (x) may be agreed to by the managing underwriter(s)
for such offering or (y) may be applicable to any other stockholder of the
Company that is required to enter into a stand-still agreement in respect
of such offering).
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(b) If the Company shall postpone the filing of any registration statement
requested pursuant to Section 2.1, the holders of a majority of the Registrable
Shares requested by the Holders (including the Initiating Holders) to be
included in such registration statement shall have the right to withdraw the
Request for such registration by giving written notice to the Company within 15
days after the date of the Company's notice of postponement. In such event, the
withdrawn Request shall not be counted as a demand for registration for purposes
of Section 2.1 or Section 2.2.
SECTION 2.4 Underwritten Offerings. If the registration requested by the
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Initiating Holders pursuant to Section 2.1 is to be an underwritten offering,
the Initiating Holders shall have the right to select the manager or co-managers
of the offering, provided such manager or co-managers are acceptable to the
Company in its sole discretion. Each Holder who subsequently requests that any
of his Registrable Shares be included in such registration must sell such
Registrable Shares to the underwriters on the same terms and conditions as apply
to the Initiating Holders.
SECTION 2.5 Revocation of Request. The holders of a majority of the
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Registrable Shares requested by the Participating Holders to be included in a
registration pursuant to Section 2.1 may revoke any Request prior to the
effectiveness of the related registration statement, provided that such Request
shall, subject to Section 2.3(b), still be counted a demand for registration
pursuant to Section 2.1.
SECTION 2.6 Payment of Registration Expenses. The Company will pay all
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Registration Expenses in connection with the registration of Registrable Shares
effected by the Company pursuant to Section 2.1 (including a registration that
is revoked in accordance with Section 2.3(b)), and each Participating Holder
will pay (i) all underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or other disposition of such Holder's Registrable
Shares pursuant to such registration and (y) its pro rata share (or such other
portion as it shall agree upon with the other Participating Holders) of the fees
and disbursements of Special Counsel.
SECTION 2.7 No Piggyback Rights. The Holders shall not have the right to
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include any Registrable Shares in any registration statement prepared and filed
by the Company for its own account or for the account of any other
stockholder(s) of the Company.
SECTION 2.8 Exchange of Preferred Stock for Qualifying Preferred Stock.
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The Company shall, immediately prior to the effectiveness of a Registration
Statement requested pursuant to Section 2.1, exchange with the Participating
Holders, on a one-for-one basis, shares of duly authorized and validly issued
Qualifying Preferred Stock for shares of Preferred Stock owned by such holders,
such that such Participating Holders shall own, immediately prior to such
effectiveness, the number of shares of Qualifying Preferred Stock which have
been registered on their behalf pursuant to such Registration Statement. The
Qualifying Preferred Stock shall have terms that are identical to the Preferred
Stock (including but not limited to a carry-over of any accrued but unpaid
dividends on, and the Liquidation Preference (including any cumulated dividends)
of, the shares of Preferred Stock exchanged), except that such Qualifying
Preferred Stock shall not have any rights under, and shall not in any manner
refer to, the Funding Agreement or the Exchange Agreement.
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ARTICLE III
REGISTRATION PROCEDURES
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SECTION 3.1 Company's Obligations with Respect to Registration. If and
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whenever the Company is required to use its reasonable commercial efforts to
effect the registration under the Securities Act of Registrable Shares owned by
any of the Holders, the Company shall, as expeditiously as possible:
(i) prepare and file with the Commission a Registration Statement
(on a form for which the Company then qualifies and which shall be
available for the sale of Registrable Shares in accordance with the
intended methods of disposition thereof), and use its reasonable commercial
efforts to cause such Registration Statement to become effective as soon as
practicable; provided, however, that before filing a Registration Statement
and the related Prospectus or any pre-effective amendments thereto the
Company shall afford the Participating Holders, Special Counsel and any
managing underwriters and their counsel an opportunity to review copies
thereof. The Company shall not file the Registration Statement or any
amendments thereto if any of the aforementioned Persons shall reasonably
object on a timely basis;
(ii) notify the Participating Holders, Special Counsel and any
managing underwriters and their counsel (A) of the receipt of any comments
from the Commission on the Registration Statement prior to its becoming
effective, and the Company's responses thereto, and (B) when the
Registration Statement becomes effective;
(iii) promptly prepare and file with the Commission such post-
effective amendments to the Registration Statement and supplements to the
related Prospectus (or file a Form 8-K or other appropriate report that
will be incorporated by reference into the Registration Statement) as may
be necessary to keep such Registration Statement effective and to comply
with the provisions of the Securities Act with respect to the disposition
of the Registrable Shares covered by such Registration Statement until the
earlier of such time as all of such Registrable Shares have been disposed
of in accordance with the intended methods of disposition thereof as set
forth in the Registration Statement or the expiration of 180 days after
such Registration Statement first becomes effective; provided, however,
that before filing any post-effective amendment to the Registration
Statement or supplement to the related Prospectus the Company shall afford
the Participating Holders, Special Counsel and any managing underwriters
and their counsel an opportunity to review copies thereof. The Company
shall not file any such post-effective amendment or supplement if any of
the aforementioned Persons shall reasonably object on a timely basis;
(iv) notify the Participating Holders, Special Counsel and any
managing underwriters and their counsel (A) when the filing of a post-
effective amendment to the Registration Statement or a supplement to the
Prospectus is required, when the same is filed, and in the case of a post-
effective amendment, when the same becomes effective, (B) of any
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request by the Commission or any state securities authority for any
amendment of or supplement to the Registration Statement or the Prospectus
or for additional information, (C) of the entry of any stop order
suspending the effectiveness of the Registration Statement or of the
initiation of any proceedings for that purpose, (D) of the happening of any
event or the failure of any event to occur or the discovery of any facts or
otherwise that makes any statement made in the Registration Statement or
the Prospectus relating thereto untrue in any material respect or that
causes such Registration Statement or Prospectus to omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and (E) of the
reasonable determination by the Company that a post-effective amendment to
the Registration Statement would be appropriate;
(v) use commercially reasonable efforts to obtain the withdrawal of
any stop order suspending the effectiveness of the Registration Statement
as soon as reasonably practicable;
(vi) furnish to the Participating Holders, Special Counsel and any
managing underwriters and their counsel a conformed copy of the
Registration Statement and of each pre- and post-effective amendment
thereto (including, in each case, all amendments thereto), and such number
of copies of the final Prospectus and of each supplement thereto as may
reasonably be required to facilitate the distribution of Registrable
Shares in accordance with the method(s) of distribution described in the
Registration Statement;
(vii) cooperate with the Participating Holders and any managing
underwriters to facilitate the timely preparation and delivery of
certificates representing Registrable Shares to be sold under the
Registration Statement not bearing any restrictive legends and in such
denominations and registered in such names as the Participating Holders or
such managing underwriters may reasonably request at least two Business
Days prior to the closing of the sale of such Registrable Shares pursuant
to the Registration Statement;
(viii) make generally available to its securityholders earning
statements satisfying the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of the 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year), commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which
statements shall cover said 12-month period;
(ix) register or qualify the Registrable Shares covered by the
Registration Statement under the securities or blue sky laws of such
jurisdictions as any Participating Holder or any managing underwriters may
designate and do any and all other acts and things which may be necessary
to enable the Participating Holders or any underwriters to consummate the
disposition in such jurisdictions of Registrable Shares in accordance with
the intended method of distribution thereof as described in such
Registration Statement;
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provided, however, that the Company shall in no event be required to
qualify to do business as a foreign corporation or as a dealer in any
jurisdiction where it is not so qualified, to conform its capitalization or
the composition of its assets at the time to the securities or blue sky
laws of such jurisdiction, to execute or file any general consent to
service of process under the laws of any jurisdiction, to take any action
that would subject it to service of process in suits other than those
arising out of the offer and sale of Registrable Shares covered by such
Registration Statement, or to subject itself to taxation in any
jurisdiction where it has not theretofore done so;
(x) use reasonable efforts to cause the Registrable Shares covered
by the Registration Statement to be listed on the principal exchange or
exchanges or qualified for trading on the principal over-the-counter market
on which shares of Common Stock are listed or traded at the time of the
sale of such Registrable Shares pursuant to the Registration Statement;
(xi) make available for inspection by Special Counsel and, in the
case of an underwritten offering, any managing underwriters and their
counsel, such financial and other records, pertinent corporate documents
and properties of the Company and its Affiliates (collectively, the
"Records") as shall be reasonably necessary to enable the Participating
Holders and any such managing underwriters to exercise their due diligence
responsibility, and make available the executive officers of the Company
and of such Affiliates to respond to questions relevant to such due
diligence examination. Records which the Company determines, in good faith,
to be confidential shall be subject to the terms of a customary
confidentiality agreement to be entered into among the Company, the
Participating Holders and any managing underwriters;
(xii) if the Participating Holders are to effect an underwritten
offering of Registrable Shares, the Company shall: (w) enter into such
agreements (including underwriting agreements) as are customary in
underwritten offerings; (x) obtain opinions of counsel to the Company and
updates thereof (which may be in the form of a reliance letter), in form
and substance reasonably satisfactory to the managing underwriters, their
counsel and Special Counsel and addressed to the underwriters and the
Participating Holders, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by such underwriters, their counsel and Special
Counsel (it being agreed that the matters to be covered by such opinion may
be subject to customary qualifications and exceptions); and (y) obtain
"cold comfort" letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriters, their counsel and Special
Counsel from the independent certified public accountants of the Company
(and, if necessary, any other independent certified public accountants of
any subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are required to
be, included in the Registration Statement), addressed to each of the
underwriters and the Participating Holders, such letters to be in customary
form and covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings and such other matters as
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reasonably requested by such underwriters in accordance with Statement on
Auditing Standards No. 72; and
(xiii) otherwise comply with applicable rules and regulations of the
Commission and use its commercially reasonable efforts to take such other
actions as may be required to permit unrestricted sales of Registrable
Shares under the Registration Statement in accordance with the intended
methods of distribution described therein.
SECTION 3.2 Holders' Obligations with Respect to Registration. The
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Company's obligations under this Agreement to the Holders shall be conditioned
upon the compliance by the Participating Holders with the following in
connection with any registration of Registrable Shares pursuant to the
provisions of this Agreement:
(i) the Participating Holders shall cooperate with the Company in
connection with the preparation of the Registration Statement and related
Prospectus and, for so long as the Company is obligated to keep the
Registration Statement effective, the Participating Holders shall provide
to the Company, in writing, for use in the Registration Statement and the
Prospectus, all information regarding the Participating Holders and such
other information as may be reasonably required to enable the Company to
prepare the Registration Statement and Prospectus covering the Registrable
Shares and to maintain the currency and effectiveness thereof;
(ii) during such time as the Participating Holders may be engaged in
a distribution of the Registrable Shares, the Participating Holders shall
comply with all applicable laws, rules and regulations, including, but not
limited to, Regulation M promulgated by the Commission under the Exchange
Act and pursuant thereto will, among other things: (A) not engage in any
stabilization activity in connection with the securities of the Company in
contravention of such rules; (B) distribute the Registrable Shares solely
in the manner described in the Registration Statement; and (C) not bid for
or purchase any securities of the Company or attempt to induce any person
to purchase any securities of the Company other than as permitted under the
Exchange Act; and
(iii) on notice from the Company of the happening of any of the events
specified in clauses (A), (B), (C), (D) or (E) of Section 3.1(iv), the
Participating Holders shall cease offering or distributing the Registrable
Shares until such time as the Company notifies the Participating Holders
that offering and distribution of the Registrable Shares may recommence. In
the event the Company shall give any such notice, the 180-day period
referred to in Section 3.1(iii) shall be extended by the number of days
during the period from and including the date of the giving of such notice
to and including the date when (x) the Participating Holders have been
notified by the Company that offering and distribution of the Registrable
Shares may recommence and (y) each Participating Holder (or, in the case of
an underwritten offering, the underwriters) has received the copies of the
supplemented or amended Prospectus contemplated by Section 3.1 (vi).
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SECTION 3.3 Pro Rata Participation in Certain Underwritten Offerings. If
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a registration pursuant to Section 2.1 involves an underwritten offering and the
managing underwriters shall advise the Participating Holders and the Company in
writing that, in their opinion, the number of Registrable Shares proposed to be
included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of such shares, including
the price at which such shares can be sold, the Company shall include in such
registration: First, the Registrable Shares requested to be included in such
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registration by the Initiating Holders (provided that if the number of such
Registrable Shares exceeds the number which the Participating Holders and the
Company have been advised can be sold without having the adverse effect referred
to above, the number of such Registrable Shares included in such registration
shall be allocated pro rata among all the Initiating Holders on the basis of the
relative number of Registrable Shares each such Initiating Holder has requested
to be included in such registration, or on such other basis as all such
Initiating Holders shall agree to in writing); and Second, if the number of
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Registrable Shares requested to be included in such registration by the
Initiating Holders is less than the number which the Participating Holders and
the Company have been advised can be sold in such offering without having the
adverse effect referred to above, then there shall be included in such
registration a number of Registrable Shares requested to be included therein by
the Participating Holders other than the Initiating Holders equal to the number
that does not exceed, in combination with the Registrable Shares of the
Initiating Holders to be included in such registration, the number of
Registrable Shares which the Participating Holders and the Company have been
advised can be sold without having the adverse effect referred to above
(allocated pro rata among all such Participating Holders other than Initiating
Holders on the basis of the relative number of Registrable Shares each such
Participating Holder has requested to be included in such registration, or on
such other basis as all of such Participating Holders shall agree to in
writing).
ARTICLE
HOLDBACK AGREEMENT
------------------
If any registration of Registrable Shares shall be in connection with
an underwritten public offering, the Company agrees not to effect any public
sale or distribution of any security that is substantially similar to the
Preferred Stock or the Qualifying Preferred Stock (it being acknowledged that
the Common Stock is not substantially similar to either such security) or of any
security convertible into or exchangeable or exercisable for any such
substantially similar security (other than any such sale or distribution of such
securities in connection with any merger or consolidation by the Company or any
subsidiary of the Company or in connection with an employee stock option or
other benefit plan) during the 90-day period beginning on the effective date of
the related Registration Statement (unless the underwriters managing such public
offering otherwise agree).
12
ARTICLE V
INDEMNIFICATION
---------------
SECTION 5.1 Indemnification by the Company. The Company agrees to
------------------------------
indemnify and hold harmless each Participating Holder, and each person, if any,
who controls such Participating Holder within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein 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, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any such untrue
statement or omission or allegation thereof based upon information furnished in
writing to the Company by such Participating Holder expressly for use therein;
provided, however, that the Company shall not indemnify any Participating Holder
or any person who controls any such Participating Holder from any such losses,
claims, damages or liabilities alleged by any person who purchased Registrable
Shares from such Participating Holder if the untrue statement, omission or
allegation thereof upon which such losses, claims, damages or liabilities are
based was made in: (i) any preliminary prospectus, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Participating Holder to such person at or prior to the written confirmation of
the sale of Registrable Shares to such person, and if the Prospectus (as so
amended or supplemented) corrected the untrue statement or omission giving rise
to such loss, claim, damage or liability; or (ii) any Prospectus used by such
Participating Holder or any person who controls such Participating Holder, after
such time as the Company advised such Participating Holder that the filing of a
post-effective amendment or supplement thereto was required, except the
Prospectus as so amended or supplemented All fees and expenses which are
reimbursable pursuant to this Section 5.1 shall be reimbursed as they are
incurred.
SECTION 5.2 Indemnification Mechanics. If any action or proceeding
-------------------------
(including any governmental investigation) shall be brought or asserted against
any Participating Holder or any person controlling such Participating Holder in
respect of which indemnity may be sought from the Company, such Participating
Holder or such controlling person shall promptly notify the Company in writing,
and the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Participating Holder or controlling
person and the payment of all expenses. Any omission so to notify the Company
shall not, however, relieve the Company from any liability which it may have to
any indemnified party otherwise than under this Article V. A Participating
Holder or any person controlling a Participating Holder shall have the right to
employ separate counsel in any such action or proceeding and to participate in
the defense thereof, but the fees and expenses of such separate counsel shall be
such Participating Holder's expense or the expense of such controlling person
unless (a) the Company has agreed to pay such fees and expenses or (b) the
Company shall have failed to assume the defense of such action or proceeding and
employ
13
counsel reasonably satisfactory to such Participating Holder or controlling
person in any such action or proceeding or (c) the named parties to any such
action or proceeding (including any impleaded parties) include both such
Participating Holder or such controlling person and the Company and such
Participating Holder or such controlling person shall have been advised by
counsel to such Participating Holder or such controlling person that there may
be a conflict of interest between such Participating Holder or such controlling
person and the Company in the conduct of the defense of such action (in which
case, if the Participating Holder or such controlling person notifies the
Company in writing that it elects to employ separate counsel at the expense of
the Company, the Company shall not have the right to assume the defense of such
action or proceeding on behalf of the Participating Holder or such controlling
person), it being understood, however, that the Company shall not, in connection
with any one such action or proceeding or separate but substantially similar or
related actions or proceedings arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (unless the members of such firm are not admitted to
practice in a jurisdiction where an action is pending, in which case the Company
shall pay the reasonable fees and expenses of one additional firm of attorneys
to act as local counsel in such jurisdiction). The Company shall not be liable
for any settlement of any such 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 action or proceeding, the Company agrees
to indemnify and hold harmless such Participating Holder and any such
controlling person from and against any loss or liability by reason of such
settlement or judgment.
SECTION 5.3 Indemnification by Participating Holders. The Participating
----------------------------------------
Holders, jointly and severally, agree to indemnify and hold harmless the
Company, including its directors and each of its officers, and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to such Participating Holders, but only
with respect to information furnished in writing by such Participating Holders
expressly for use in the Registration Statement, the related Prospectus, or any
amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or the Company's
directors or officers or any such controlling person, in respect of which
indemnity may be sought against any Participating Holder, such Participating
Holder shall have the rights and duties given to the Company, and the Company or
the Company's directors or officers or such controlling person shall have the
rights and duties given to such Participating Holder, by Section 5.2.
SECTION 5.4 Contribution. (a) If the indemnification provided for in
------------
this Article V is unavailable to an indemnified party under Section 5.1 or
Section 5.3 in respect of any losses, claims, damages or liabilities referred to
therein (other than by reason of such indemnified party's failure to comply with
the first sentence of Section 5.2), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and of the Participating Holders on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
Participating Holders on the other shall be
14
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Participating Holders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages
and liabilities referred to above shall be deemed to include, subject to the
limitations set forth in Section 5.2, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
(b) Each of the Company and the Participating Holders agrees that it
would not be just and equitable if contribution pursuant to this Section 5.4
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
Section 5.4(a). Notwithstanding the provisions of this Section 5.4, no
Participating Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Shares owned by such
Participating Holder were offered to the public exceeds the amount of any
damages which such Participating Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
SECTION 5.5 Enforceability. The indemnity and contribution agreements
--------------
contained in this Article V shall remain operative and in full force and effect
regardless of (a) any investigation made by or on behalf of any Participating
Holders, by or on behalf of any person controlling such Participating Holders or
by or on behalf of the Company or (b) any termination of this Agreement.
ARTICLE VI
MISCELLANEOUS
-------------
SECTION 6.1 No Inconsistent Agreements. The Company represents and
--------------------------
warrants to, and covenants and agrees with, Liberty, LIFE and each subsequent
Holder that the Company has not entered into and, on and after the date of this
Agreement, will not enter into, any agreement which is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with any rights granted by the Company to
the holders of the Company's issued and outstanding securities other than the
Preferred Stock.
SECTION 6.2 Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this Section 6.2, may not be amended, modified or
supplemented, and waivers of compliance with the provisions hereof may not be
given, unless and until the Company shall have obtained the written consent of
Holders of at least 66 2/3% of the Registrable Shares.
15
SECTION 6.3 Notices. (a) All notices and other communications provided
-------
for or permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telecopier, or any courier guaranteeing overnight delivery (i)
if to a Holder, at its address as set forth in the register of the Company, or
at such other address as may be provided to the Company by a Holder in writing
and (ii) if to the Company, to it at c/o News America Publishing Incorporated,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X.
Xxxxxxx, Esq., Telecopy No.: 000-000-0000, or at such other address as may be
provided to the Holders in writing, with a copy to Xxx Xxxxx, c/o Fox Kids
Worldwide, Inc., 00000 Xxxxxxxx Xxxx., Xxx Xxxxxxx, Xxxxxxxxxx 00000.
(b) All such notices and communications shall be deemed to have been
duly given: (i) if delivered by hand, at the time received; (ii) if mailed,
three Business Days after being deposited in the mail, postage prepaid; (iii) if
telecopied, when receipt is acknowledged; and (iv) if timely delivered to an air
courier guaranteeing overnight delivery, on the next Business Day.
SECTION 6.4 Successors and Assigns. (a) This Agreement shall inure to
----------------------
the benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including, without limitation and without the need for an
express assignment, the successors, assigns and transferees of Liberty and LIFE
and each subsequent Holder. If any transferee of Liberty or LIFE or any
subsequent Holder shall acquire any shares of Preferred Stock, such shares shall
be held subject to all of the terms of this Agreement, and by taking and holding
such shares, such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement and such
person shall be entitled to receive the benefits hereof.
(b) The Company may not assign its right or delegate its duties under
this Agreement to any Person without the prior written consent of Holders of at
least 66 2/3% of the Registrable Shares.
SECTION 6.5 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 6.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
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CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
SECTION 6.7 Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
SECTION 6.8 Remedies. The Company acknowledges and agrees that in the
--------
event of any breach of this Agreement by it, the Holders would be irreparably
harmed and could not be made
16
whole by monetary damages. The Company accordingly agrees to waive the defense
in any action for specific performance that a remedy at law would be adequate
and that the Holders, in addition to any other remedy to which they may be
entitled at law or in equity, shall be entitled to compel specific performance
of this Agreement in any action brought in any court.
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
FOX KIDS WORLDWIDE, INC.
By: /s/ Xxx Xxxxxxxxx
---------------------------------
Name:
Title:
LIBERTY MEDIA CORPORATION
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and CEO
LIBERTY IFE, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and CEO
18
