Contribution And Exchange Agreement

EXHIBIT 10.27


CONTRIBUTION AND EXCHANGE AGREEMENT


BY AND AMONG


LIBERTY MEDIA CORPORATION,


LIBERTY IFE, INC.


AND


FOX KIDS WORLDWIDE, INC.


JUNE 11, 1997


TABLE OF CONTENTS
Page
---- 1. Definitions........................................................... 1
-----------


2. The Contribution...................................................... 5
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2.1 The Contribution............................................... 5
2.2 Exchange of Stock Certificates................................. 6
2.3 Filing of Charter Amendments................................... 6


3. Closing Date.......................................................... 7
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4. Representations and Warranties of Liberty and LIFE.................... 7
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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
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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


6. Pre-Closing Covenants of Fox Kids, LIFE and Liberty................... 14
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(i)


TABLE OF CONTENTS
Page
----
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
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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
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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
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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
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10.1 Termination.................................................. 19
10.2 Effect of Termination........................................ 20


11. Indemnification..................................................... 21
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11.1 Survival..................................................... 21
11.2 Certain Actions.............................................. 21
11.3 Indemnification by Liberty and LIFE.......................... 21
11.4 Indemnification by Fox Kids.................................. 21
11.5 Claims....................................................... 22


(ii)


TABLE OF CONTENTS
Page
---- 12. Miscellaneous Provisions............................................ 23
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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)


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 directly or indirectly through one or more intermediaries controls or is controlled by, or is under


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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 owned by LIFE are convertible, in each case as of the Closing Date.


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"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 1/2 % 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.


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"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.


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"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.
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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 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


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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 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.


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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 t ...