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FOX Kids Worldwide - Llc Formation Agreement
EXHIBIT 10.11
LLC FORMATION AGREEMENT
THIS LLC FORMATION AGREEMENT (the "Agreement") is made and entered into as of November 1, 1995 by Saban Entertainment, Inc., a Delaware corporation ("SEI"), FCN Holding Company, a Delaware corporation ("FCNH") and Fox Broadcasting Company, Inc., a Delaware corporation ("FBC").
R E C I T A L S
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A. SEI, FCNH and FBC desire to maximize their respective long-term strategic values, and have determined that it would be in their respective best interests to achieve this objective by entering into a strategic alliance for the purpose of sharing with each other their strengths, to the mutual benefit of all of them all on the terms and conditions of this Agreement, all of the agreements attached hereto as exhibits and all of the other agreements referred to herein or therein (collectively, the "Alliance Agreements").
B. In connection with the foregoing, SEI, FCNH and FBC desire to cause the formation of FOX KIDS COMPANY L.L.C. (the "Management Company"), as a limited liability company under the Delaware Limited Liability Company Act (the "Act"), on the terms and conditions hereof.
A G R E E M E N T
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NOW, THEREFORE, in consideration of the foregoing facts and the mutual covenants and agreements contained herein, the parties hereto agree as follows:
1. ORGANIZATION OF THE MANAGEMENT COMPANY. On the terms and subject to the conditions set forth in this Agreement, at the "Closing" (as defined in Section 2):
1.1 ORGANIZATION OF THE MANAGEMENT COMPANY. FCNH, FBC and SEI shall
-------------------------------------- form the Management Company under the Act pursuant to the terms of an Operating Agreement, substantially in the form of Exhibit "A" hereto (the "Operating
----------- Agreement"); and
1.2 CONTRIBUTIONS; ACQUISITION OF MEMBERSHIP INTERESTS. FBC shall
-------------------------------------------------- execute and deliver to the Management Company an Asset Assignment Agreement, substantially in the form of Exhibit "B" (the "Asset Assignment Agreement") and
----------- fully perform all obligations, and deliver all cash, documents, agreements and other assets, to be performed or delivered at the Closing pursuant to the Asset Assignment Agreement (the "FBC Contribution"); and each of SEI and
FCNH shall pay and contribute $100,000 to the Management Company (the "Saban Contribution" and the "FCNH Contribution," respectively, and together with the FBC Contribution, the "Contributions"). In consideration for the FBC Contribution, FBC shall receive its Class A membership interest and in consideration for the Saban Contribution and the FCNH Contribution, SEI and FCNH, respectively, shall receive their respective Class B membership interests in the Management Company, all as provided in the Operating Agreement.
2. CLOSING.
2.1 THE CLOSING. The Closing of the formation and initial
----------- capitalization of the Management Company as provided in Section 1 (the "Closing") shall take place on December 14, 1995, at 10:00 a.m., Los Angeles time, at the offices of Troop Meisinger Steuber & Pasich, LLP, 10940 Wilshire Boulevard, Los Angeles, California, or at such other time or place as the parties hereto shall mutually determine; provided, however, that if any of the
-------- ------- conditions set forth in this Agreement have not been satisfied or waived on or prior to that date, the Closing shall take place on the second business day following satisfaction or waiver of all of such conditions, or at such other time or place as the parties hereto shall mutually agree. The date of the Closing is referred to herein as the "Closing Date."
2.2 ACTIONS OF THE PARTIES AT THE CLOSING. In addition to the
------------------------------------- Contributions provided in Section 1.2, at or prior to the Closing, SEI, FBC and FCNH shall (i) cause a Certificate of Formation of the Management Company to be filed as required under the Act; (ii) execute and deliver among themselves, and the other parties, if any, thereto, the Operating Agreement and each of the other Alliance Agreements to which such Person is a party; and (iii) cause the Management Company to execute and deliver each of the Alliance Agreements to which it is a party.
2.3 FURTHER ASSURANCES. From and after the date hereof, each of the
------------------ parties shall do such acts and things, and, in connection therewith, execute and deliver such documents and instruments, as may be required to effect and otherwise carry out the purposes of this Agreement and the transactions contemplated hereby, including using its best efforts to obtain all necessary waivers, consents and approvals, executing and delivering all such documents, and effecting all necessary registrations, filings and applications, including, without limitation, effecting all required filings, if any, under the Hart- Scott-Rodino Antitrust Improvements Act of 1986 ("HSR Act") and using its best efforts to respond to any requests or inquiries from any government or government agency (each, a "Governmental Entity") with respect thereto. Without limiting the generality of the foregoing, if and to the extent that any Governmental Entity or other Person demands, as a condition to
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granting any such waiver, consent or approval, that the parties hereto, or either of them, execute any agreements or perform or refrain from performing any acts or actions, including, without limitation, the disposition by the parties of any assets, or restrictions on or modifications to the terms of the Operating Agreement or any other Alliance Agreement, and if the parties are unable to agree upon the course of action to be taken with respect thereto, the parties shall select and designate special counsel (whose firm shall not have represented either of the parties or any of their Affiliates within the prior three years) to represent the interests of the Management Company in respect thereto, and the parties shall take such acts as such counsel shall advise are mandatorily required in order to obtain such waivers, consents and/or approvals.
3. REPRESENTATIONS AND WARRANTIES. SEI represents and warrants to FCNH and FBC with respect to SEI; FCNH represents and warrants to SEI and FBC with respect to FCNH; and FBC represents and warrants to SEI and FCNH with respect to FBC (each of SEI, FBC and FCNH being separately referred to below as "Company") that, except as set forth in the Schedule of Exceptions with respect to that Company attached hereto as Schedules "SEI," "FBC" and "FCNH," the following statements are true and correct in all material respects as of the date hereof:
3.1 DUE INCORPORATION AND AUTHORITY. Company is a corporation duly
------------------------------- organized, validly existing and in good standing under the laws of the state of its incorporation and has all requisite corporate power and authority to own its properties and to carry on its business as now conducted.
3.2 AUTHORIZATION; EXECUTION AND DELIVERY. Company has the requisite
------------------------------------- power and authority to execute and deliver this Agreement, and each of the Alliance Agreements to which it is to be a party, and to consummate the transactions pursuant hereto and thereto, and such execution, delivery and consummation has been duly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by Company and constitutes the valid and binding obligation of Company, enforceable against Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings at law or in equity) and each of the Alliance Agreements to which Company is a party, when executed and delivered by Company, will constitute the valid and binding obligation of Company, enforceable against Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the enforcement of creditors' rights
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generally and by general equitable principles (whether enforcement is sought by proceedings at law or in equity).
3.3 NO VIOLATION OR CREATION OF RIGHTS. The execution and delivery
---------------------------------- of this Agreement and each of the Alliance Agreements to which it is a party by the Company and the performance by the Company of its obligations hereunder or thereunder does not and will not (a) violate, conflict with, or constitute or result in a breach of, any term, condition or provision of, or constitute a default (or an event which, with notice or the lapse of time, or both, would constitute a default), or result in the creation of any Lien upon any of its assets under this or (with respect to the execution, delivery and closing under this Agreement or the execution, delivery and closing of the other Alliance Agreements which execution, delivery and closing are being effected concurrently hereunder) result in the creation of any other right on the part of a third party to receive a payment of funds or other consideration on account thereof under (i) the certificate of incorporation or by-laws of Company, or (ii) any mortgage, indenture, loan or credit agreement or any other agreement or instrument to which Company is a party, or pursuant to which it is the direct or indirect obligor, or by which Company's properties are bound or affected; (b) violate any law, regulation, judgment, injunction, order or decree binding upon Company; (c) result in the loss of any license, franchise, permit, legal privilege or legal right enjoyed or possessed by Company; or (d) require the consent of any third party (including a governmental entity). Company is not in violation of any statute, judgment, decree, order, rule or regulation applicable to it, which, singly or in the aggregate, has materially adversely affected or could reasonably be expected to materially adversely affect Company's ability to perform its obligations hereunder or under any of the other Alliance Agreements to which it is a party.
4. PRE-CLOSING COVENANTS.
4.1 COVENANTS OF FCNH. From and after the date hereof and through the
----------------- Closing, FCNH shall take any and all actions as may be necessary to execute and deliver at the Closing the Operating Agreement and each of the other Alliance Agreements to which it is a party, and FCNH shall take any and all actions as may be necessary to cause FCNH Sub, Inc., a Delaware corporation and a wholly owned subsidiary of FCNH ("FCNH Sub"), to execute and deliver at the Closing each of the Alliance Agreements to which FCNH Sub is a party. Except with the prior consent of SEI, from and after the date hereof and through the Closing, FCNH shall, and FCNH shall cause FCNH Sub, to, perform all acts and refrain from performing any act, which, had the Operating Agreement and all of the Alliance Agreements then been in full force and effect, would be required, or prohibited, as the case may be, thereunder, or
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which would result in the representations and warranties of FCNH hereunder not being true and correct at and as of the Closing Date.
4.2 COVENANTS OF SEI. From and after the date hereof and through the
---------------- Closing, SEI shall take any and all actions as may be necessary to execute and deliver at the Closing the Operating Agreement and each of the other Alliance Agreements to which it is a party. Except with the prior consent of FCNH, from and after the date hereof and through the Closing SEI shall perform all acts, and refrain from performing any act, which, had the Operating Agreement and the Alliance Agreements then been in full force and effect, would be required, or prohibited, as the case may be, thereunder, or which would result in the representations and warranties of SEI hereunder not being true and correct at and as of the Closing Date.
4.3 COVENANTS OF FBC. From and after the date hereof and through the
---------------- Closing, FBC shall take any and all actions as may be necessary to execute and deliver at the Closing the Operating Agreement and each of the other Alliance Agreements to which it is a party. Except with the prior consent of SEI, from and after the date hereof and through the Closing, FBC shall perform all acts, and refrain from performing any act, which, had the Operating Agreement and the Alliance Agreements then been in full force and effect, would be required, or prohibited, as the case may be, thereunder, or which would result in the representations and warranties of FBC hereunder not being true and correct at and as of the Closing Date.
4.4 SABAN EMPLOYMENT AGREEMENTS. Promptly following execution and
--------------------------- delivery of this Agreement, Haim Saban ("Saban") and FCNH, on behalf of the Management Company, shall negotiate and use their respective best efforts (i) to agree upon all of the terms and conditions of a seven-year employment agreement between the Management Company and Saban, for services of Saban within the United States, and a seven-year employment agreement between Saban International, N.V., a Netherlands Antilles corporation ("SINV"), and Saban, for services of Saban outside of the United States, which agreements shall be on terms and conditions complementary to this Agreement and the Operating Agreement, shall provide that Saban shall devote substantially all of his business time and otherwise within industry-standard terms applicable to the chief executive officer of a company within the entertainment industry comparable to the combined businesses of FCN, Fox Children's Productions, Inc., a Delaware corporation, SEI and the Management Company; and (ii) to cause such employment agreements (the "Saban Employment Agreements") to be prepared, and to be executed and delivered on or prior to the Closing Date. If Saban and FCNH have not reached agreement as to the terms and conditions of the Saban Employment Agreements within 30 days following the date of this Agreement, either party shall have the right at any time thereafter
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by notice to the other to initiate the following dispute resolution procedure:
(a) Saban and FCNH shall each (i) appoint a reputable lawyer whose practice includes significant representation and advice concerning executive employment agreements, and who has not within the prior three years represented or acted on behalf of any of the parties, or any of their Affiliates and (ii) advise the other of such appointment, accompanied by a written undertaking of such lawyer to be bound by the time constraints and other terms of this Section 4.3. If either party fails to so act, that party's lawyer shall be appointed pursuant to the procedure provided below to be followed when agreement cannot be reached as to the third lawyer. Within five days after such appointment, such lawyers shall appoint a third, similarly qualified, lawyer (together with the first two lawyers, the "Panel"), who shall deliver a similar undertaking. If the appointment of a third lawyer has not been effected within such period, such appointment and notification shall be made as rapidly as practicable by any court of competent jurisdiction, by any licensing authority, agency or organization having jurisdiction over such lawyers, by any professional association of lawyers located in Los Angeles County, or by any recognized arbitration association or organization located in Los Angeles County, as selected by the party commencing such proceedings.
(b) The members of the Panel shall utilize their utmost skill and shall apply themselves diligently so as to promptly determine any then-open terms and conditions of the Saban Employment Agreement and decide, by majority vote, the outcome and resolution of any dispute or disagreement submitted to them as promptly as possible, but in any event on or before the expiration of thirty days after the appointment of the last member of the Panel.
(c) In connection with the proceedings, the Panel shall (i) interpret the rights and obligations set forth in this Agreement, (ii) retain such compensation experts as it considers appropriate, and (iii) retain jurisdiction over the matter until it has been furnished and has reviewed and approved the final draft of the Saban Employment Agreements.
(d) The decision of the Panel shall be final and binding upon Saban, FCNH, FBC, SEI and the Management Company, and may not be appealed to any court or otherwise.
(e) Each member of the Panel shall be compensated at his or her then regular hourly rates, and shall be reimbursed for any and all expenses incurred in connection with the rendering of such services. Such compensation and reimbursement shall be borne and paid by the Management Company.
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4.5 CORPORATE RESTRUCTURING. On or prior to the Closing, FCNH shall
----------------------- form a new, wholly owned subsidiary ("FCNH Sub") and FBC and FCNH, and their respective Affiliates, shall take any and all actions necessary (i) to cause FCN and FCP to become wholly owned subsidiaries of FCNH Sub and (ii) to cause Storymakers, Inc., a Delaware corporation, ("SI") to become a wholly owned subsidiary of FCP. Fox Children's Music, Inc., a Delaware corporation, ("FCM") and Fox Kids Music, Inc., a Delaware corporation, ("FKM") are wholly owned subsidiaries of FCN.
4.6 ELECTION RE CLOSE CORPORATION. On or prior to the Closing, SEI
----------------------------- shall elect, and FCNH shall cause each of FCNH Sub, FCN, FCP, FCM, FKM and SI to elect, pursuant to the provisions of Section 344 of the Delaware General Corporation Law, to become a "close corporation," as defined in Subchapter XIV of such law, by executing, acknowledging, filing and recording the certificate of amendment of its certificate of incorporation, substantially in the form of Exhibit "E" to this Agreement. - -----------
5. CONDITIONS TO OBLIGATIONS OF SEI. The obligations of SEI to perform the actions required hereunder to be performed at the Closing are subject to the fulfillment at or prior to the Closing of the following conditions, any of which may be waived,in whole or in part, by SEI:
5.1 CONSENTS AND WAIVERS. FCNH and FBC shall have obtained any and
-------------------- all consents, permits and waivers, and made any and all filings, necessary or appropriate for the consummation of the transactions contemplated by this Agreement and the Alliance Agreements, including, without limitation, such filings as are required under the HSR Act.
5.2 HSR ACT WAITING PERIOD. The HSR Act waiting period, if any,
---------------------- shall have expired and no proceeding or action thereunder with respect thereto shall have been instituted or filed.
5.3 SABAN EMPLOYMENT AGREEMENTS. The Management Company shall have
--------------------------- executed and delivered to Saban a signed counterpart of the Saban Employment Agreement to which it is a party.
5.4 OTHER ALLIANCE AGREEMENTS. Each of FCN, FBC, FCNH Sub and News
------------------------- Corporation shall have executed and delivered counterpart copies of each of the Alliance Agreements to which it is a party.
6. CONDITIONS TO OBLIGATIONS OF FCNH AND FBC. The obligations of FCNH to perform the actions required hereunder to be performed at the Closing are subject to the fulfillment at or prior to the Closing of the following conditions, any of which may be waived,in whole or in part, by FCNH and FBC:
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6.1 CONSENTS AND WAIVERS. SEI shall have obtained any and all
-------------------- consents, permits and waivers, and made any and all filings, necessary or appropriate for the consummation of the transactions contemplated by this Agreement and the Alliance Agreements, including, without limitation, such filings as are required under the HSR Act.
6.2 HSR ACT WAITING PERIOD. The HSR Act waiting period shall have
---------------------- expired and no proceeding or action thereunder with respect thereto shall have been instituted or filed.
6.3 SABAN EMPLOYMENT AGREEMENTS. Saban shall have executed and
--------------------------- delivered to the Management Company a signed counterpart of the Saban Employment Agreement to which they are parties, and Saban and SINV shall have executed and delivered among themselves signed counterparts of the Saban Employment Agreement to which they are parties.
6.4 OTHER ALLIANCE AGREEMENTS. Each of the stockholders of SEI shall
------------------------- have executed and delivered counterpart copies of each of the Alliance Agreements to which it is a party.
7. MISCELLANEOUS PROVISIONS.
7.1 GENERAL. In this Agreement, headings are for con venience only
------- and shall not affect interpretation, and except to the extent that the context otherwise requires: (a) words denoting the singular include the plural and vice versa; (b) words denoting individuals include corporations and other Persons and vice versa; (c) words denoting any gender include all genders; (d) references to clauses, sub-clauses, sections, sub-sections, Schedules and Exhibits are to clauses, sub-clauses, sections, sub-sections, Schedules and Exhibits of this Agreement; (e) "or" is not exclusive; and (f) "$", and all other references to dollar amounts, are in U. S. currency;
7.2 NOTICES. All notices, demands or other communications hereunder
------- shall be in writing and shall be deemed to have been duly given (i) if delivered in person, upon delivery thereof, or (ii) if mailed, certified first cl...
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