EXHIBIT 10.1(b)
EXECUTION VERSION
FIRST AMENDED AND RESTATED AGREEMENT
REGARDING OWNERSHIP INTERESTS
This First Amended and Restated Agreement Regarding Ownership Interests
(the "Agreement") is made as of the 15th day of December, 1997, by and among
LIBERTY MEDIA CORPORATION, a Delaware corporation ("Liberty"), NEWS AMERICA
HOLDINGS INCORPORATED, a Delaware corporation ("News America"), FOX REGIONAL
SPORTS HOLDINGS, INC., a Delaware corporation ("Fox"), LMC NEWCO U.S., INC., a
Delaware corporation ("LMC Newco"), and LIBERTY/FOX SPORTS FINANCING LLC, a
Delaware limited liability company ("Financing LLC").
The parties to this Agreement entered into an Agreement Regarding Ownership
Interests dated as of April 29, 1996 (the "Original Agreement"). The parties
desire to amend and restate the Original Agreement in its entirety as set forth
herein.
In consideration of their mutual promises and obligations, and with the
intent of being legally bound, the parties agree as follows:
ARTICLE I: DEFINITIONS
1.1. DEFINITIONS. The following terms, when used in this Agreement, have the
------------
meanings set forth below. Capitalized terms that are used but not defined in
this Agreement will have the meanings given to them in the Company Operating
Agreement (as defined below).
Change of Control: (a) with respect to the LMC Member, the
acquisition by any Person listed on Schedule
1 (a "Restricted Person") of Control of the
LMC Member; and (b) with respect to the Fox
Member and the News America Member, the
acquisition by any Restricted Person of
Control of the Fox Member or the News
America Member. Notwithstanding the
foregoing, a Change of Control will not be
deemed to have occurred: (i) in the case of
the LMC Member, if Control of the LMC Member
is acquired by a Restricted Person through
the acquisition of Control of TCI; and (ii)
in the case of the Fox Member and the News
America Member, if Control of the Fox Member
and the News America Member is acquired by a
Restricted Person through the acquisition of
Control of News.
Company: Fox/Liberty Networks, LLC, a Delaware
limited liability company.
Company Operating Agreement: the First Amended and Restated Operating
Agreement dated of even date herewith, among
LMC Newco U.S., Inc., Fox Regional Sports
Holdings, Inc., and Liberty/Fox Sports
Financing LLC, as further amended from time
to time .
Controlled Affiliate: with respect to any Person, an Affiliate of
such Person which such Person Controls. For
purposes of this Agreement, neither the
Company nor any Business Company will be
considered an Affiliate of any of News
America, Fox, Liberty, LMC Newco, the Fox
Member, or the Liberty Member.
Credit Agreement: the $800,000,000 Credit Agreement, dated as
of the date hereof (as amended, supplemented
or otherwise modified from time to time)
among the Sports LLC, the fX LLC, the RPP
LCC (together, the Borrower), the Company,
the several lenders from time to time party
thereto, The Chase Manhattan Bank, as
Administrative Agent, Chase Securities,
Inc., as Syndication Agent, and TD
Securities (USA) Inc., as Documentation
Agent.
Current Market Price: per share of capital stock on any date
specified will be the average of the daily
market prices of such stock for 30
consecutive Business Days commencing 45
Business Days before such date if there is
then a public market for such stock, and if
there is no public market for such stock,
the Appraised Value (as defined below). The
daily market price of capital stock on any
Business Day will be (a) the last sale price
on such day on the principal stock exchange
on which such capital stock is then listed
or admitted to trading (including the NASDAQ
National Market System if such capital stock
is admitted to trading thereon), (b) if no
sale takes place on such date on any
exchange on which such stock is listed or
admitted to trading, the average of the
reported closing bid and asked prices on
such day as officially noted on any
exchange, or (c) if such capital stock is
not then listed
2
or admitted to trading on any exchange, the
average of the reported closing bid and
asked prices on such day in the over-the-
counter market, as furnished by National
Quotation Bureau, Inc. (or if such
corporation is not then engaged in the
business of reporting such prices, as
furnished by any similar firm then engaged
in such business and selected by the
Initiating Member). "Appraised Value" per
share of capital stock on any date specified
will be the Fair Market Value of such
capital stock, computed as the total Fair
Market Value of all shares of such capital
stock divided by the number of shares of
such capital stock outstanding as of the
last day of the calendar month ending
immediately prior to such date, as
determined by an appraisal conducted
pursuant to Article 15 of the Company
Operating Agreement.
Deadlock: a Deadlock will be deemed to occur on the
first day of the second Fiscal Year in any
period of two consecutive Fiscal Years in
which the Member Groups have failed to
approve, in accordance with the terms of the
Company Operating Agreement, an annual
budget for the Company, the Sports Business
or the fX Business or have failed to appoint
a chief executive officer of the Company for
such period.
Divisional Assets: as to any Divisional Company, (i) the assets
held by the Company, another Business
Company, or the selling Member Group
(including any Interest in any Business
Company owned directly by any member of the
selling Member Group), and (ii) the
liabilities of any Business Company other
than a Divisional Company, which are
exclusively for the benefit of, or for use
exclusively in connection with the business
of, such Divisional Company or any Business
Company in which such Divisional Company
owns an Interest.
Financing Operating Agreement: the Operating Agreement dated as of April
29, 1996 between LMC Newco U.S., Inc. and
News America Holdings Incorporated.
Fox Group: Fox, News America, and any of their
respective Affiliates that holds an Interest
from time to time.
3
Fox Member: Fox or any successor to or Transferee of an
Interest in the Company held by Fox pursuant
to Section 2.1(a).
Interest: an ownership interest or partnership
interest, as the case may be, in any of the
Company, the Financing LLC, or any
Divisional Company, and those ownership
interests and partnership interests that (i)
are specified on Schedule 2 or (ii)
otherwise are ownership interests or
partnership interests in Business Companies
or Divisional Companies held by the Company,
a Divisional Company, or Affiliates of Fox
or Liberty.
Liberty Debt: indebtedness of the Financing LLC to Liberty
Sports, Inc. in the principal amount of
$243.6 million pursuant to an Assumption
Agreement dated as of April 29, 1996.
Liberty Group: LMC Newco and any Affiliate of LMC Newco
that holds an Interest from time to time.
Liberty Member: LMC Newco or any successor to or Transferee
of an Upper Tier Interest held by LMC Newco
pursuant to Section 2.1(a).
Liberty Note: a promissory note in the principal amount of
$243.6 million dated April 29, 1996 made by
LMC Xxxxx, Inc. to the Financing LLC.
LMC Group: Liberty and its Controlled Affiliates.
Marketable Securities: securities of a corporation which are listed
on a national securities exchange in the
United States of America or are authorized
for inclusion in the National Association of
Securities Dealers Automated Quotation
System, or National Market System, or are
listed on the principal national securities
exchange of a country other than the United
States, and which, for the six calendar
months preceding any date of determination,
had an average daily trading volume of
$200,000. Securities will not be deemed to
be Marketable Securities if the number of
shares or other units described in an Offer
Notice exceeds 5% of the
4
average number of shares or other units of
the same class outstanding during the
previous six calendar months.
Member Group: either of the Fox Group or the Liberty
Group, as the context requires.
Net Equity Investment: with respect to a Divisional Company, the
aggregate Additional Contributions made
directly to the Divisional Company by a
Member Group net of any distributions made
by such Divisional Company to such Member
Group in respect of the Interests issued to
that Member Group on account of such
Additional Contributions.
News: The News Corporation Limited, a South
Australia corporation.
News America Member: News America or any successor to or
Transferee of an Interest in Financing LLC
held by News America pursuant to Section
2.1(a).
News Group: News and its Affiliates.
Residual Value: with respect to a Divisional Company, the
Stated Value of such Divisional Company less
the aggregate Net Equity Investments of all
Member Groups in such Divisional Company.
TCI: Tele-Communications, Inc., a Delaware
corporation.
Third Party Offer: a bona fide written offer from a prospective
purchaser that is not an Affiliate of the
Offeror to purchase all or part of an Upper
Tier Interest for consideration consisting
of cash or Marketable Securities or a
combination of cash and Marketable
Securities.
Transfer: with respect to any property, a sale,
exchange, transfer, assignment, grant of a
security interest in or other disposition of
all or any part of such property (whether
voluntary, involuntary or by operation of
law).
5
Transferee: a Person to whom a Transfer is made in
compliance with this Agreement.
Transferor: a Person who makes a Transfer in compliance
with this Agreement.
Trigger Date: the later of (a) any date on which any of
the following occurs: (i) any Transfer or
attempted Transfer of any material asset of
the Financing LLC, including the Liberty
Note or the Interest in the Company held by
the Financing LLC, (ii) any consensual
incurrence of any material liability or
obligation by the Financing LLC (other than
indebtedness constituting the Liberty Debt
and liabilities, if any, arising in respect
of the ownership by the Financing LLC of its
Interest in the Company), (iii) any action
taken by the Financing LLC in violation of
the permitted scope of business of the
Financing LLC set forth in the Financing
Operating Agreement, or (iv) the Liberty
Member causes the Financing LLC to take any
action pursuant to Section 6.2 of the
Financing Operating Agreement, and (b) the
date which is 30 days following the date
described in (a) above if the action
described is curable or reversible within 30
days following its occurrence but has not
been cured or reversed within such 30-day
period.
Upper Tier Interest: an Interest in the Company or the Financing
LLC.
ARTICLE II: TRANSFERS RESTRICTED
2.1. TRANSFERS. None of News America, Fox, LMC Newco, or Financing LLC will
----------
Transfer any Interest held by it, and each of News America, Fox and Liberty will
cause each of its Controlled Affiliates that owns any Interest in a Sports
Company or fX Company to exercise its voting rights and Control (if any) to
cause such Sports Company or fX Company not to Transfer any Interest or permit a
Transfer of any Interest, provided that a party and its Controlled Affiliates
may:
(a) Transfer all (but not less than all) of an Upper Tier Interest to an
Affiliate of the Transferor at any time, provided that the Transferee remains an
Affiliate of the Transferor immediately after the Transfer;
6
(b) Transfer all (but not less than all) of an Interest in a Sports Company
or fX Company to the extent provided in the operating agreement or partnership
agreement governing such Sports Company or fX Company;
(c) pledge or grant a security interest in all or part of an Upper Tier
Interest (including the right to receive Distributions) to secure loans to the
assignor or its Affiliates;
(d) pledge or grant, or cause the Company, a Sports Company or an fX
Company to pledge or grant, a security interest in all or part of an Interest
(including the right to receive Distributions) to secure loans owed by the
Company or a Business Company;
(e) after October 30, 2000, Transfer all (but not less than all) of an
Upper Tier Interest after complying with the right of first refusal provisions
set forth in Section 2.2; or
(f) Transfer its Interests pursuant to Section 2.3, Section 2.4, or
Section 2.5, if such Section is then applicable.
Nothing in this Section 2.1 will be deemed (i) to permit any Transfer of
all or any portion of an Interest in foreclosure or in lieu of foreclosure of
any pledge or security interest, or the admission of a secured party or pledgee
as a member of the Company, the Financing LLC, any Sports Company, or any fX
Company or (ii) to prohibit any Transfer of stock or of partnership or ownership
interests other than the Interests. Notwithstanding the foregoing, upon an
Event of Default (as defined in the Credit Agreement), the Administrative Agent
(as defined in the Credit Agreement) will be entitled to seek any remedy
available to it under the Pledge Agreement (as defined in the Credit Agreement),
including, without limitation, foreclosure of its security interest in one or
more Interests, and, upon such foreclosure, the Administrative Agent (as defined
in the Credit Agreement) will be admitted as a member or partner of the limited
liability company or partnership, as the case may be, in which it holds the
Interest foreclosed upon.
Any Transfer of an Interest other than as specifically permitted by this
Section 2.1 will be void and of no effect. The restrictions on, and obligations
with respect to, Transfers of Interests set forth in this Agreement will be
deemed to be in addition to, and not in lieu of, any other restrictions or
obligations set forth in the Company Operating Agreement and any other agreement
by which the parties and their Affiliates are bound.
2.2. RIGHT OF FIRST REFUSAL.
----------------------
(a) At any time after October 30, 2000, any member of either Member Group
may Transfer all (but not less than all) of any Upper Tier Interest (an "Offered
Interest") if (and only if) such Transfer is pursuant to a Third Party Offer,
subject to the provisions of this Section. If any member of either Member Group
receives and wishes to accept a Third Party Offer for the Offered Interest, such
Person (the "Offeror") must first offer the other Member Group (an "Offeree")
the opportunity to purchase the Offered Interest for the same consideration and
on the other terms and
7
conditions as those contained in the Third Party Offer. The offer will be made
by a written notice (an "Offer Notice") to the Offeree stating (i) the Offeror's
bona fide intention to Transfer the Offered Interest pursuant to the Third Party
Offer and (ii) the Offeror's agreement to provide such information as may
reasonably be requested by the Offeree to evaluate the terms of the prospective
Transfer. The Offer Notice will be accompanied by a copy of the Third Party
Offer which specifically identifies the Person making the Third Party Offer and
each Person that, to the knowledge of the Offeror, directly or indirectly
Controls such Person. If the Offeree wishes to purchase the Offered Interest,
it will respond to the Offer Notice in writing (the "Exercise Notice") within 30
days after its receipt of the Offer Notice (the "Election Period"). To the
extent the consideration proposed to be paid in the Third Party Offer consists
of Marketable Securities, the Offeree may elect, by so stating in its Exercise
Notice, to pay cash equal to the Current Market Price of such securities in lieu
of such securities. If the Offeree does not specify an election to pay cash in
its Exercise Notice, then the Offeree will be required to deliver Marketable
Securities at the closing to the extent the Offer Notice specified Marketable
Securities as consideration to be paid pursuant to the Third Party Offer. If no
Exercise Notice is given within the Election Period, the Offeree will be deemed
to have elected not to purchase the Offered Interest.
(b) If the Offeree does not elect to purchase all of the Offered Interest,
the Offeror will be free for a period of 90 days after the end of the Election
Period to sell all (but not less than all) of the Offered Interest to the Person
that made the Third Party Offer for the consideration and upon the terms and
conditions set forth in the Third Party Offer. If the Offered Interest is not
so sold during such 90-day period, the Offeror's right to Transfer such Offered
Interest will again be subject to the provisions of this Section 2.2.
(c) Unless the Offeree and Offeror otherwise agree, the closing of any
purchase by the Offeree pursuant to this Section 2.2 will be held at the
principal office of the Company at 11:00 a.m. (local time) on the date that is
20 days after the end of the Election Period, or if later, five Business Days
after the parties have obtained all required consents from governmental
authorities and other third parties (each a "material consent"), the failure of
which to obtain reasonably could be expected to result in (i) material liability
to either Member Group if the purchase were to take place or (ii) either Member
Group being deprived of all or a material part of the benefits incident to the
Interests to be purchased. If a purchase pursuant to this Section 2.2 requires
filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, the requirement for obtaining a consent for purposes of this Section
will be deemed satisfied if the applicable waiting period under that Act has
expired or has been terminated without the receipt of a notice of objection or
the commencement or threat of litigation by a government entity to restrain the
consummation of the purchase of the Interests to be purchased. If any material
consent cannot be obtained within six months after the date of the Exercise
Notice, the parties will use their reasonable best efforts to agree on a method
by which the Offeror and the Offeree each can be afforded the economic
equivalent of the desired transfer. If within 12 months after the Exercise
Notice, all material consents have not been obtained and the Offeror and the
Offeree have been unable to agree on such a method, the Offer Notice and the
Exercise Notice will be deemed rescinded and the rights and obligations of the
Offeror and the Offeree under this Section 2.2 will be as they were immediately
before the Offer Notice. In the event
8
the required consents are obtained, at the closing the Offeror will Transfer the
Offered Interest, free and clear of all liens, claims and encumbrances, to the
Offeree and will deliver such bills of sale, assignments and other agreements
and instruments to the Offeree and will take all such other reasonable actions
as the Offeree may request to vest the Offered Interest in the Offeree.
(d) The provisions of this Section 2.2 will not apply to any Transfer of
an Interest permitted by Section 2.1(a), 2.1(b), or 2.1(c).
(e) The procedures set forth in this Section 2.2 may not be initiated with
respect to any Upper Tier Interest as to which a Call Exercise Notice pursuant
to Section 2.3, a Buy-Sell Notice pursuant to Section 2.4, or a Change of
Control Notice pursuant to Section 2.5 has been given.
2.3. CALL OPTION.
-----------
(a) The Liberty Member will provide the Fox Member prompt notice of the
occurrence of any Trigger Date. Any time after the occurrence of a Trigger
Date, the Fox Member will have the right, exercisable by written notice to such
effect (the "Call Exercise Notice"), to require the Liberty Group to sell all of
its Interests (the "Optioned Assets") to the Fox Group for a cash purchase price
equal to 50 percent of the Liberty Group's aggregate net equity investment in
the Company, the Business Companies, and the Financing LLC. For these purposes,
the Liberty Group's aggregate net equity investment in the Company, the Business
Companies, and the Financing LLC will equal the aggregate capital contributions
made by the Liberty Group to the Company, the Business Companies, and the
Financing LLC less aggregate distributions therefrom received by the Liberty
Group as of the Trigger Date. The Liberty Debt will be cancelled at or prior to
any closing contemplated pursuant to this Section 2.3, and the principal amount
of the Liberty Debt and any accrued interest thereon which is canceled pursuant
to this sentence will be treated as an additional capital contribution for
purposes of calculating the Liberty Group's aggregate net equity investment in
the Company, the Business Companies, and the Financing LLC.
(b) The closing of any purchase pursuant to this Section will be held at
the principal office of the Company at 11:00 a.m. (local time) on the date that
is 10 Business Days after the date of the Call Exercise Notice, or if later,
five Business Days after the parties obtain all required consents from
governmental authorities or other third parties (each a "material consent"), the
failure of which to obtain reasonably could be expected to result in (i)
material liability to either Member Group if the purchase were to take place or
(ii) the Fox Member being deprived of all or a material part of the benefits
incident to the Optioned Assets. If a purchase pursuant to this Section 2.3
requires filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, the requirement for obtaining a consent for purposes of this Section
will be deemed satisfied if the applicable waiting period under that Act has
expired or has been terminated without the receipt of a notice of objection or
the commencement or threat of litigation by a government entity to restrain the
consummation of the purchase of the Optioned Assets. If any material consent
cannot be obtained within six months after the date of the Call Exercise Notice,
the parties will use their reasonable best efforts to agree on a method by which
the Fox Member can be afforded the economic
9
equivalent of the desired transfer. If within 12 months after the Call Exercise
Notice all material consents have not been obtained and the parties have not
agreed on such a method, at the election of the Fox Member, the Liberty Member
will be liable to the Fox Member for an amount equal to the excess of the Fair
Market Value of the Optioned Assets over the purchase price that would have been
paid for the Optioned Assets pursuant to this Section 2.3 if such purchase had
been completed. In the event the required consents are obtained, at the closing,
the Fox Member will cause the purchase price to be wire transferred to the
account designated by the Liberty Member, and the Liberty Group will transfer
the Optioned Assets to the Fox Member, free and clear of all liens, claims and
encumbrances (other than any securing financing obtained by the purchaser or the
Company) and will deliver such bills of sale, assignments and other agreements
and instruments to the Fox Member and will take all such other reasonable
actions as the Fox Member may request.
2.4. SHOTGUN BUY-SELL.
----------------
(a) At any time after October 30, 2000, either Member Group (the
"Initiating Group") will have the right to initiate the buy-sell procedure set
forth in this Section 2.4 as to each of the Divisional Companies if a Deadlock
has occurred and is continuing, by giving written notice to the other Member
Group (a "Buy-Sell Notice") that it has elected to initiate the buy-sell
procedure described in this Section. A Buy-Sell Notice as to each of the
Divisional Companies may be given by either Member Group at any time after April
29, 2002, whether or not a Deadlock has occurred. The Buy-Sell Notice will
include a statement by the Initiating Member of the amount that the Initiating
Member believes to be the value of each Divisional Company (the "Stated
Values").
(b) Within 60 days after receipt by the Fox Group or the Liberty Group, as
the case may be (a "Responding Group"), of a Buy-Sell Notice the Responding
Group will give the Initiating Group written notice (an "Election Notice") of
its election, as to each Divisional Company either (i) to purchase all of the
outstanding Interests in the Divisional Company and the associated Divisional
Assets in which event the Responding Group will be entitled to purchase the same
in accordance with this Section 2.4, (ii) to sell to the Initiating Group all of
the Interests of the Responding Member and its Affiliates in the Divisional
Company and the associated Divisional Assets in which event the Initiating Group
will be obligated to purchase the same in accordance with this Section 2.4 or
(iii) if the Total Divisional Interests of the Fox Group and the Liberty Group
as to each Divisional Company are at least 49.9%, to split up the business of
the Company pursuant to 2.4(c) (a "Split Up Election"). For purposes of clauses
(i) and (ii) of the preceding sentence, the election of the Responding Member to
purchase or sell must be uniform as to all Divisional Companies that are Sports
Companies and, likewise, as to all Divisional Companies that are fX Companies.
If the Responding Group fails to timely give notice to the Initiating Group of
its election pursuant to this paragraph (b), the Responding Group will be deemed
to have elected to sell all of its Interests in each of the Divisional Companies
and the Divisional Assets to the Initiating Group.
(c) If the Responding Group makes the Split-Up Election, the Initiating
Group will within 30 days of its receipt of the Election Notice provide to the
Responding Group a notice (the "Partition Notice") which in reasonable detail
divides the Business Companies and their associated Divisional
10
Assets into two groups, one of which will include all the assets and liabilities
comprising or relating to the fX Business. For purposes of the preceding
sentence, the Initiating Member will be required to assign to the same group of
assets and liabilities all of the Interests in a particular Business Company and
the associated Divisional Assets of such Business Company. Any indebtedness of
the Company and any indebtedness of any Divisional Company will be allocated
equally between the two groups of assets and liabilities. The Initiating Group
may add to either group of assets and liabilities additional assets consisting
of cash or Marketable Securities to equalize the value of the two groups of
assets and liabilities. Within 20 days after its receipt of the Partition
Notice, the Responding Group will provide the Initiating Group notice, which
will be irrevocable, of which of the two groups of assets and liabilities will
be assigned to and assumed by the Responding Group at the closing as set forth
in Section 2.4(e). If the Responding Group fails timely to provide such notice,
the Initiating Group will choose which group of assets and liabilities will be
assigned to and assumed by each Member Group.
(d) If the Split-Up Election is not made, the purchase price payable at the
closing of the transactions contemplated by this Section as to each Divisional
Company will be determined and payable as follows:
(i) If the Total Divisional Interest of both Member Groups is (A)
greater than 25%, or (B) equal to 25% without taking into account the provisions
of 3.11[f] of the operating agreement governing such Divisional Company that
limit dilution of such Total Divisional Interest to 25%, the purchasing Member
Group will pay to the selling Member Group the product of the selling Member
Group's Total Divisional Interest in the Divisional Company and the Stated Value
of the Divisional Company.
(ii) If the Total Divisional Interest of either Member Group is 25%
and would be less than 25% but for the provisions of 3.11[f] of the operating
agreement governing such Divisional Company, the purchasing Member Group will
pay to the selling Member Group the sum of (A) the selling Member Group's Net
Equity Investment in the Divisional Company, and (B) the product of the selling
Member Group's Total Divisional Interest in the Divisional Company and the
Residual Value of the Divisional Company.
(iii) The purchase price will be payable at closing by wire transfer
of funds to an account of the selling Member Group designated by the selling
Member Group. The purchasing Member Group will pay all stamp or transfer taxes
incurred in connection with the sale of Interests pursuant to this Section.
(e) Unless the purchasing Member Group has elected to purchase all of the
Interests in both Divisional Companies (in which event such Member Group will
acquire all the Interests of the selling Member Group in the Company, the
Financing LLC, and each of the Business Companies), transfers of the Divisional
Company Interests of the selling Member Group to the purchasing Member Group
will take place on the closing date as follows:
11
(i) The Company will distribute to the Members in accordance with
Article 5 of the Company Operating Agreement all of the Interests in the
applicable Divisional Company held by the Company and all of the Divisional
Assets held by the Company which are used exclusively in connection with the
operations of, or are held exclusively for the benefit of, the applicable
Divisional Company; and
(ii) The Financing LLC will distribute to its members in accordance
with Article 5 of the Financing Operating Agreement all of the Interests in the
applicable Divisional Company held by the Financing LLC and all of the
Divisional Assets held by the Financing LLC which are used exclusively in
connection with the operations of, or are held exclusively for the benefit of,
the applicable Divisional Company; and
(iii) The selling Member Group will Transfer to the purchasing Member
Group all of such Interests and Divisional Assets held by the selling Member
Group, and the purchasing Member Group will assume the liabilities related
thereto.
(f) The closing of the transactions contemplated by this Section 2.4 will
be held on a date specified by the purchasing Member Group (or, if applicable,
the Person making the Split-Up Election), provided that such date will not be
later than the latest of (i) 30 days after the date of an Election Notice if
Interests are to be purchased for cash, (ii) 5 days after the first date
following the date of an Election Notice that the Current Market Price of any
securities to be issued pursuant to Section 2.4(h) can be determined, (iii) 30
days after a Partition Notice is given if a Split-Up Election is made, or (iv)
the date that is five Business Days after the parties obtain all required
consents from governmental authorities and other third parties (each a "material
consent"), the failure of which to obtain reasonably could be expected to result
in (A) material liability to either Member Group if the purchase were to take
place or (B) either Member Group being deprived of all or a material part of the
benefits incident to the Interests to be purchased. If a purchase pursuant to
this Section 2.4 requires filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, the requirement for obtaining a consent
for purposes of this Section will be deemed satisfied if the applicable waiting
period under that Act has expired or has been terminated without the receipt of
a notice of objection or the commencement or threat of litigation by a
government entity to restrain the consummation of the purchase of the Interests
to be purchased. If any material consent cannot be obtained within six months
after the date of the Election Notice, the parties will use their reasonable
best efforts to agree on a method by which the Members can be afforded the
economic equivalent of the desired transfer. If within 12 months after the
Election Notice all material consents have not been obtained and the Members
have not been able to agree on such a method, the Buy-Sell Notice and the
Election Notice will be deemed rescinded and the rights and obligations of the
Member Groups under this Section 2.4 will be as they were immediately before the
Buy-Sell Notice. In the event the required consents are obtained, at the closing
(if no Split-Up Election has been made) the selling Member Group will deliver
and assign to the purchasing Member Group the Interests and the Divisional
Assets, if any, to be transferred free and clear of all liens, claims or
encumbrances (other than any encumbrances securing financing obtained by the
purchasing Member Group, by the Divisional Company being Transferred, or in the
case of a Transfer of the Company
12
and the Business Companies as a whole, by the Company), and the selling Member
Group will take any other actions in connection with the closing reasonably
requested by the purchasing Member Group to give effect to the transactions
contemplated by this Section. If a Split-Up Election has been made, at the
closing the parties will assume the liabilities to be assumed by each of them
and will cooperate to cause the Company and the Financing LLC to distribute in
kind the assets to be distributed to each party and to cause the Company and the
Financing LLC to be liquidated and dissolved in accordance with their respective
constituent documents and applicable law. At such closing the parties will
deliver instruments of assignment and assumption and take such other acts and
deliver such other instruments as either party may reasonably request to
effectively vest each Interest to be Transferred in the purchasing Member Group.
(g) If the Company and the Financing LLC are to be liquidated and dissolved
pursuant to a Split-Up Election, it will be a condition to the parties'
obligations to effect such transaction that the liquidation and dissolution be
effected as a tax-free asset distribution under applicable provisions of the
Code. If a purchase of Interests is to be effected pursuant to this Section
2.4, at the selling Member Group's request, the parties will negotiate in good
faith to structure the transaction as a tax-free reorganization under Section
368 of the Code, provided that the selling Member Group will not be required to
accept, in exchange for its Interests, securities which are not Marketable
Securities. Securities issued in such transaction may be voting, nonvoting or
convertible into voting securities at the election of the issuer. The aggregate
Fair Market Value of securities issued in any such transaction will be equal to
the cash purchase price which would have been paid in such transaction had the
selling Member Group not elected to effect a reorganization pursuant to Section
368 of the Code. The Fair Market Value of securities issued in such a
transaction will be deemed to be their Current Market Price as of a date that is
five days prior to the closing of such transaction (or the next following
Business Day if such date is not a Business Day). Unless otherwise stipulated
by the selling Member Group at least three Business Days prior to closing, the
purchasing Member Group will pay any required transfer tax or fee or stamp duty
payable upon the issuance or transfer of such securities.
(h) Prior to the closing of any transaction contemplated by this Section
2.4 whereby (i) there is a Split-Up Election or (ii) the Fox Member is the
purchaser, the Liberty Member will cause the obligor of the Liberty Note to pay
all outstanding principal and interest to the Financing LLC pursuant to the
Liberty Note. Immediately thereafter, the Liberty Member and the Fox Member
will cause the Financing LLC to apply the proceeds it receives from the obligor
of the Liberty Note to the payment of principal and interest to the holder of
the Liberty Debt. At the election of the Liberty Member, the Liberty Member
instead may cause the outstanding principal of the Liberty Note and any accrued
interest thereon to be offset against the outstanding principal and interest of
the Liberty Debt in full satisfaction of both the Liberty Debt and the Liberty
Note.
2.5. CHANGE OF CONTROL.
-----------------
(a) The Liberty Member will give the Fox Member prompt written notice if a
Change of Control occurs or is proposed to occur pursuant to one or more binding
agreements with respect to
13
the Liberty Member and the Fox Member or the News America Member, as the case
may be, will give the Liberty Member prompt written notice if a Change of
Control occurs or is proposed to occur pursuant to one or more binding
agreements with respect to the Fox Member or the News America Member (a "Change
of Control Notice"). A party entitled to receive a Change of Control Notice (a
"CC Rights Holder") will have the right but not the obligation, exercisable by
written notice (an "Acceptance Notice") given within 90 days after the receipt
of a Change of Control Notice, to require the Member experiencing the Change of
Control to sell all Interests held by its Member Group to the CC Rights Holder
or its designee for a cash purchase price equal to the Fair Market Value thereof
(determined as provided in subsection (b) of this Section 2.5), subject, in the
case of a Change of Control Notice given before a Change of Control has
occurred, to occurrence of the Change of Control.
(b) The Fair Market Value of each Interest required to be determined
pursuant to the preceding paragraph will be equal to the Fair Market Value of
the Person in which such Interest is owned as of the last day of the fiscal
quarter immediately preceding the fiscal quarter in which the Change of Control
occurs, multiplied by the percentage (expressed as a decimal) that such Interest
represents of all outstanding Interests in such Person. If the parties cannot
agree on a Fair Market Value of any Interest subject to sale within 15 days
after the giving of an Acceptance Notice, the Fair Market Value of such Interest
will be determined by appraisal pursuant to Article 15 of the Company Operating
Agreement.
(c) The closing of any purchase pursuant to this Section 2.5 will be held
at the principal office of the Company at 11:00 a.m. (local time) on the date
that is 10 Business Days after final determination of the purchase price or, if
later, five Business Days after the parties obtain all consents and waivers from
governmental authorities and other third parties (each a "material consent")
the failure to obtain which would be likely to result in (A) material liability
to either Member Group if the purchase were to take place or (B) the purchasing
Member Group being deprived of all or a material part of the benefits incident
to the Interests to be purchased. If a purchase pursuant to this Section 2.5
requires filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, the requirement for obtaining a consent for purposes of this Section
will be deemed satisfied if the applicable waiting period under that Act has
expired or has been terminated without the receipt of a notice of objection or
the commencement or threat of litigation by a government entity to restrain the
consummation of the purchase. If any material consent cannot be obtained within
six months after the final determination of the purchase price, the parties will
use their reasonable best efforts to agree on a method by which each party can
be afforded the economic equivalent of the desired transfer. The parties will
use their reasonable best efforts to cause the conditions set forth above to any
purchase pursuant to this Section 2.5 to be satisfied as promptly as practicable
after an Acceptance Notice is given. At the closing, the purchasing Member
Group will cause the purchase price to be wire transferred to the account
designated by the selling Member Group, and the selling Member Group will
transfer the Interests, free and clear of all liens, claims and encumbrances
(other than any encumbrances securing financing obtained by the purchasing
Member Group or the Company) and will deliver such bills of sale,
14
assignments and other agreements and instruments and will take all such other
reasonable actions as the purchasing Member Group may request.
2.6. SATISFACTION OF CONDITIONS TO SALE AND PURCHASE. The parties will use
-----------------------------------------------
their reasonable best efforts to cause to be satisfied, as promptly as possible,
any conditions to a sale and purchase contemplated by Section 2.2, Section 2.3,
Section 2.4, or Section 2.5, including any requirement for obtaining consents of
governmental entities or other Persons.
2.7. STATUS OF PERMITTED TRANSFEREE. Any Permitted Transferee will be admitted
------------------------------
as a member of the Company or the Financing LLC, as the case may be, as of the
date of the Transfer of an Upper Tier Interest to the Permitted Transferee or
such later date on which the Permitted Transferee agrees in writing to be bound
by the terms of this Agreement and the Company Operating Agreement or the
Financing Operating Agreement, as the case may be, and assumes all obligations
of the Transferor and its Affiliates with respect to the Company or the
Financing LLC from and after the date of the Transfer.
ARTICLE III: MISCELLANEOUS
3.1. SECTION 708 TERMINATION. If any transaction contemplated by Article II of
------------------------
this Agreement (other than a Transfer pursuant to Section 2.3, 2.4, or 2.5)
would violate or conflict with any provision of the Company Operating Agreement,
the Financing Operating Agreement or an operating agreement or partnership
agreement governing a Sports Company or fX Company that prohibits or restricts
Transfers that would cause a deemed dissolution of the Company, the Financing
LLC, a Sports Company or fX Company pursuant to Section 708 of the Code, such
transaction will be permitted to occur immediately only to the extent it will
not cause such a deemed dissolution, and the remainder of the Interest that
otherwise would be Transferred will be Transferred as soon as practicable after
such prohibition or restriction is no longer applicable.
3.2. CONTINUING RIGHTS. The purchaser of all Interests held by a Member Group
------------------
in the Company or any Business Company as applicable, in a transaction pursuant
to Section 2.2, 2.3, 2.4, or 2.5 and either party in a transaction effected
pursuant to a Split-Up Election may elect to extend for a period not more than
two years after the closing of such transaction any agreements between the
Company or any such Business Company and any member of the News Group (if the
purchase or election is made by a member of the Liberty Group) or between the
Company or any such Business Company and any member of the LMC Group (if the
purchase or election is made by a member of the News Group) if such agreement
otherwise would terminate within two years after the closing of such
transaction. Notwithstanding the foregoing, (i) any right to use the name "Fox"
will terminate not later than the first anniversary of such closing and (ii) the
exclusivity agreement set forth in Section 2.1(a) of the Parents Agreement that
is binding upon the seller will terminate (A) immediately upon the closing of a
sale by such party pursuant to Section 2.4 or (B) on the second anniversary of
the closing in any such transaction effected pursuant to Section 2.2. Except as
otherwise agreed by the parties, any extension of any such agreement will be on
terms in effect prior to such extension.
15
3.3. APPRAISALS. Whenever an appraisal is required to be made hereunder, such
-----------
appraisal will be conducted in accordance with the procedures set forth in
Article 15 of the Company Operating Agreement.
3.4. SPECIAL ALLOCATIONS OF PROFITS AND LOSSES. Profits and Losses attributable
-----------------------------------------
to an Interest will be allocated to each Person in accordance with the
respective operating agreements or partnership agreements of the Company, the
Business Companies and the Financing LLC unless such allocations would result in
any Member Group having a disproportionate percentage of total Profits or
Losses, as determined by aggregating the Member Group's shares of Profits and
Losses from the Company, the Business Companies and the Financing LLC and
comparing that amount to the Member Group's shares of Profits and Losses
determined as if the Company, the Business Companies and the Financing LLC were
each a division of a single entity of which each of the Member Groups owned the
aggregate of its Total Divisional Interests for all Divisional Companies. The
aggregate allocations of Profits and Losses to the Member Groups from the
Company, the Business Companies and the Financing LLC is hereinafter referred to
as the "Aggregate Allocation," and the allocation of Profits and Losses to the
Member Groups determined as if the Company, the Business Companies and the
Financing LLC were each a division of a single entity is hereinafter referred to
as the "Required Allocation." If the Aggregate Allocation for any Fiscal Year
differs from the Required Allocation for such Fiscal Year, notwithstanding the
allocation provisions of the operating agreements and partnership agreements,
the Profits and/or Losses of each of the Company, the Business Companies and the
Financing LLC for the Fiscal Year will be allocated in a fair and equitable
manner so that the Aggregate Allocation for the Fiscal Year, equals the Required
Allocation for such Fiscal Year. Notwithstanding the foregoing, this Section
3.4 will apply only for so long as the Total Divisional Interest of each the Fox
Member and the Liberty Member in each Divisional Company is at least 49.9%.
3.5. CONVERSION TO NON-VOTING INTEREST. If a Member's Interest in a Divisional
---------------------------------
Company converts to a non-voting Interest pursuant to 3.11[f] of the Divisional
Company's operating agreement, [a] all other Interests of that Member and of its
Affiliates in Business Companies in which that Divisional Company owns an
Interest also will convert to non-voting Interests, subject only to the right to
vote with respect to any amendment of any constituent or governing documents of
each entity in which such Interest is held, a dissolution or liquidation of an
entity in which such Interest is held, or as may be required by law; and [b] the
Company's interest in such Divisional Company also will convert to a non-voting
Interest, subject only to the right to vote with respect to any amendment of any
constituent or governing documents of such Divisional Company, a dissolution or
liquidation of such Divisional Company, or as may be required by law. If a
Member's voting rights with respect to a Divisional Company are restricted
pursuant to 3.11[e] of the Divisional Company's operating agreement, [a] the
voting rights of such Member and its Affiliates with respect to all Interests
owned by them in Business Companies in which that Divisional Company owns
Interests will be restricted to the same extent; and [b] the voting rights of
the Company in such Divisional Company will be restricted to the same extent.
Notwithstanding the foregoing, if [a] an Interest in Sports LLC held by either
Member or an Affiliate of either Member is converted pursuant to 3.11[f] of the
Divisional Company's operating agreement and [b] such
16
Member or an Affiliate of such Member is a general partner in a Business Company
formed as a limited partnership, then the general partner Interest held by such
Member or Affiliate of such Member in such limited partnership will be so
converted only at the election of, and upon Notice to such Member or Affiliate
from, any limited partner.
3.6. TERMINATION OF SECURITY AGREEMENTS; RIGHTS UPON DEFAULT ON THE LIBERTY
----------------------------------------------------------------------
NOTE.
----
(a) The parties shall cause the security agreements dated as of the date
of the Original Agreement between the Financing LLC, as secured party, and any
of the Liberty Member, Liberty Sports Member, Inc. and Liberty fX, Inc., as
grantors of the security interests granted therein, to be terminated effective
as of the date hereof, and shall execute and deliver such further documentation
as may be necessary or desirable to evidence the termination of such security
agreements and the release of the Collateral (as defined therein), including
UCC-3 Termination Statements.
(b) In the event of any breach by LMC Xxxxx, Inc. of any of its
obligations under the Liberty Note and continuation of such breach beyond any
applicable grace or cure period (an "Event of Default"), the members of the Fox
Group shall have the right (in addition to any other remedies that may be
available to them) to exercise or to cause to be exercised any and all voting
and other rights incident to the ownership of the Collateral released in
accordance with Section 3.6(a) hereof. The members of the Fox Group will not be
obligated to do any of the acts authorized above, but in the event that they
elect to do any such act, they will not be responsible to the members of the
Liberty Group except for gross negligence or willful misconduct.
(c) LMC Newco shall execute and deliver to the Financing LLC a guaranty
for the benefit of Financing LLC of all of the obligations of LMC Xxxxx under
the Liberty Note. Such guaranty shall be in the form of the Guaranty Agreement
dated as of the date of the Original Agreement executed by Liberty QVC, Inc. for
the benefit of Financing LLC.
(d) Liberty and LMC Newco hereby represent and warrant that the assets of
LMC Newco consist solely of its Upper Tier Interests, the stock of Liberty
Sports Member, Inc., and the ownership interest in Liberty Denver Arena LLC, a
Delaware limited liability company (collectively, "Newco Interests"), LMC Newco
is not engaged in any business activities other than owning such Newco
Interests, and LMC Newco has not engaged in any other business activities since
the date of its formation, except that in connection with the formation of the
Company, LMC Newco issued a $243,600,000 Promissory Note dated April 29, 1996 to
Liberty Sports, Inc., which Promissory Note was assumed by the Financing LLC and
constitutes the Liberty Debt. LMC Newco hereby covenants and agrees that, so
long as the Liberty Note shall remain outstanding, LMC Newco shall not (i)
Transfer or create (or suffer to exist) any Lien on any of its assets, (ii)
engage in any material business activities other than owning the Newco Interests
or (iii) incur any indebtedness, other than the Liberty Debt (for which it is
contingently liable).
(e) Each of Liberty and LMC Newco shall do or cause to be done all acts
and things (including, without limitation, exercising voting or other rights as
directed by any member of the Fox
17
Group or executing and delivering proxies with respect thereto) necessary in
order to carry out the intent and effectuate the provisions of this Section 3.6.
3.7. NOTICES. All notices, requests, demands and other communications called
-------
for or contemplated hereunder will be in writing and will be deemed to have been
duly given if delivered in person or by United States certified or registered
mail, prepaid, addressed to the parties, their permitted successors in interest
or assignees, or sent by courier or telecopier:
To Liberty or any member of the Liberty Group at:
Liberty Media Corporation
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: President
Telecopy: (000) 000-0000
with copies to:
Tele-Communications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Legal Department
Telecopy: (000) 000-0000
and
Xxxxxxx & Xxxxxx L.L.C.
0000 Xxxxx Xxxxxxxxxx Xxxxx Xxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
To Fox or any member of the Fox Group at:
Fox Regional Sports Holdings, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
18
With copies to:
The News Corporation Limited
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Senior Executive Vice President
and Group General Counsel
Telecopy: (000) 000-0000
Fox Television
00000 Xxxx Xxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxxxxx, Esq.
Senior Vice President
Legal Affairs
Telecopy: (000) 000-0000
and
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section. All
notices will be deemed to have been received on the date of delivery if
personally delivered or sent by courier or telecopy, or on the third business
day after the mailing thereof if sent by mail.
3.8. MODIFICATION; WAIVER. This Agreement may be modified or terminated by
--------------------
mutual agreement only by a writing signed by all the parties, and no provision
or condition herein may be waived other than by a writing signed by the party
waiving such provision or condition.
3.9. HEADINGS. Article and Section headings in this Agreement are for the
--------
sole purpose of convenient reference and in no way define, limit or prescribe
the scope or intent of this Agreement or any part hereof, and such headings will
not be considered in interpreting or construing this Agreement.
3.10. ASSIGNMENT. No party will assign any of its rights under this Agreement
----------
or delegate its duties hereunder except to a Permitted Transferee unless it
obtains the prior written consent of the other party, which consent may be
withheld at such party's absolute discretion. Notwithstanding the
19
preceding sentence, any party may assign its rights under this Agreement to any
Affiliate of such party without the consent of any other party.
3.11. COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, each of which may be deemed to be an original, and all of which
taken together will constitute one instrument.
3.12. CONFLICTS WITH OTHER AGREEMENTS. To the extent that any provision of
-------------------------------
this Agreement is inconsistent with any provision of the Formation Agreement,
the Company Operating Agreement, the Financing Operating Agreement or any
operating or partnership agreement of a Business Company, this Agreement will
prevail to the extent of any such inconsistencies.
3.13. OTHER. This Agreement constitutes the entire agreement of the parties
-----
regarding the subject matter hereof, and all prior or contemporaneous
agreements, understandings, representations and statements, oral or written, are
hereby merged into this Agreement. This Agreement will be binding upon and
inure to the benefit of the parties and, subject to the limitations set forth in
Section 3.9, their respective successors and assigns. The provisions of this
Agreement are for the exclusive benefit of the parties and their permitted
successors and assigns, and no other Person is intended to be a third party
beneficiary or to have any rights by virtue of this Agreement.
3.14. GOVERNING LAW. This Agreement will be governed by the laws of the State
-------------
of New York, without regard to any conflicts of laws rules. Any action to
enforce any provision of this Agreement may be brought only in a court in the
state of New York or in the United States District Court for the Southern
District of New York. Each party [i] agrees to submit to the general
jurisdiction of such courts and to accept service of process at its address for
notices pursuant to this Agreement in any such action or proceeding and [ii]
irrevocably waives any objection it may have to the laying of venue of such
action or proceeding brought in any such court and any claim that such action or
proceeding brought in any such court has been brought in an inconvenient forum.
3.15. ELECTION OF PARTNERSHIP STATUS UNDER PROPOSED REGULATIONS. The parties
---------------------------------------------------------
to this Agreement intend that the Company, Financing LLC and each Business
Company be treated as a partnership for U.S. federal, state and local income tax
purposes, and each such party will, and will cause its Affiliates to, act, file
tax returns and otherwise take positions consistent with such intention. After
the effective date, if ever, of final treasury regulations under Section 7701 of
the Code permitting an entity to elect to be treated as a partnership for
federal income tax purposes (61 F.R. 21989 (May 13, 1996)), the Tax Matters
Partner of each of the Company, Financing LLC and each Business Company will,
and, if necessary, the parties to this Agreement and their respective Affiliates
will take such action as is necessary to, elect in compliance with such
regulations that such entity be treated for federal income tax purposes as a
partnership, and execute and deliver such documents and take such other actions
as may be reasonably necessary or desirable in connection with such election.
20
IN WITNESS WHEREOF, the parties have executed this First Amended and
Restated Agreement Regarding Ownership Interests as of the date first written
above.
LIBERTY MEDIA CORPORATION NEWS AMERICA HOLDINGS
INCORPORATED
By: By:
--------------- --------------------------
Its: Its:
-------------- -------------------------
FOX REGIONAL SPORTS HOLDINGS, LMC NEWCO U.S., INC.
INC.
By: By:
-------------------------- --------------------------
Its: Its:
------------------------- -------------------------
LIBERTY/FOX SPORTS FINANCING
LLC
By: LMC NEWCO U.S., INC., a member
By:
--------------------------
Its:
-------------------------
By: NEWS AMERICA HOLDINGS
INCORPORATED, a member
By:
--------------------------
Its:
-------------------------
21
