<PAGE>
As filed with the Securities and Exchange Commission on December 7, 2000
Registration No. 333-
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--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM F-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
The News Corporation Limited
(Exact Name of the Registrant as Specified in its Charter)
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<CAPTION>
<S> <C> <C>
South Australia, Australia 4833 Not Applicable
(State or Other (Primary Standard (I.R.S.
Jurisdiction of Industrial Employer
Incorporation or Classification Code Identification
Organization) Number) Number)
</TABLE>
2 Holt Street
Sydney, New South Wales 2010, Australia
(Country Code 61) 2-9-288-3000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Arthur M. Siskind, Esq.
The News Corporation Limited
c/o News America Incorporated
1211 Avenue of the Americas
New York, New York 10036
(212) 852-7000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
With Copies to:
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<CAPTION>
<S> <C> <C>
Jeffrey W. Rubin, Esq. Lou R. Kling, Esq. Lynn Toby Fisher, Esq.
Stephen H. Kay, Esq. Howard L. Ellin, Esq. Kaye, Scholer, Fierman, Hays &
Squadron, Ellenoff, Plesent & Skadden, Arps, Slate, Meagher Handler, LLP
Sheinfeld, LLP & Flom LLP 425 Park Avenue
551 Fifth Avenue Four Times Square New York, New York 10022
New York, New York 10176 New York, New York 10036 (212) 836-8000
(212) 661-6500 (212) 735-3000
</TABLE>
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the closing of the mergers as described herein.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
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--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed Proposed
Title of each Class of Amount Maximum Maximum Amount of
Securities to be to be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Limited Voting
Ordinary
Shares (the "News
Corporation
Preferred Ordinary
Shares")
(1)(2)................ 242,688,279(5) Not applicable $1,716,452,407(8) $453,143
--------------------------------------------------------------------------------------
News Corporation
Preferred
Ordinary
Shares(1)(3).......... 210,636,586(6) Not applicable $296,835,834(9) $78,365
--------------------------------------------------------------------------------------
News Corporation
Preferred
Ordinary
Shares(1)(4).......... 84,129,597(7) Not applicable $284,360,825(10) $75,071
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</TABLE>
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(footnotes on the following page)
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
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--------------------------------------------------------------------------------
<PAGE>
(continued from previous page)
--------
(1) News Corporation's American Depositary Shares ("News Corporation Preferred
ADSs"), evidenced by American Depositary Receipts issuable upon deposit of
News Corporation Preferred Ordinary Shares, will be registered under a
separate registration statement on Form F-6. Each News Corporation
Preferred ADS represents four News Corporation Preferred Ordinary Shares.
(2) These News Corporation Preferred Ordinary Shares are being registered by
News Corporation on this Registration Statement in connection with the
proposed merger transaction with Chris-Craft Industries, Inc. ("Chris-
Craft").
(3) These News Corporation Preferred Ordinary Shares are being registered by
News Corporation on this Registration Statement in connection with the
proposed merger transaction with BHC Communications, Inc. ("BHC").
(4) These News Corporation Preferred Ordinary Shares are being registered by
News Corporation on this Registration Statement in connection with the
proposed merger transaction with United Television, Inc. ("United
Television").
(5) News Corporation is registering a total of 242,688,279 News Corporation
Preferred Ordinary Shares in connection with a proposed merger transaction
with Chris-Craft. This number is based on (A) (i) (a) 27,151,893 shares of
Chris-Craft Common Stock outstanding as of October 31, 2000, (b) 7,845,639
shares of Chris-Craft Common Stock issuable upon conversion of the
7,845,639 shares of Chris-Craft Class B Common Stock outstanding as of
October 31, 2000 and (c) 8,365,884 shares of Chris-Craft Common Stock
issuable upon conversion of the Chris-Craft Convertible Preferred Stock,
outstanding as of October 31, 2000; and (ii) an exchange ratio of 1.2273,
which is the exchange ratio applicable if the merger is effected as a
reverse merger, and represents the higher of two possible exchange ratios
under the Chris-Craft merger agreement, multiplied by 4, which is the
number of News Corporation Preferred Ordinary Shares underlying each News
Corporation Preferred ADS; and (B) (i) 3,643,192 shares of Chris-Craft
Common Stock issuable upon exercise of options to purchase Chris-Craft
Common Stock ("Chris-Craft Options") outstanding as of October 31, 2000
and Chris-Craft Options that may be issued prior to the merger, and (ii)
an exchange ratio of 2.0455, which is the exchange ratio applicable to the
Chris-Craft Options if the merger is effected as a reverse merger, and
represents the higher of two possible exchange ratios under the Chris-
Craft merger agreement, multiplied by 4, which is the number of News
Corporation Preferred Ordinary Shares underlying each News Corporation
Preferred ADS.
(6) News Corporation is registering a total of 210,636,586 News Corporation
Preferred Ordinary Shares in connection with a proposed merger transaction
with BHC. This number is based on (i) (a) 4,511,605 shares of BHC Class A
Common Stock outstanding as of October 31, 2000 and (b) 18,000,000 shares
of BHC Class A Common Stock issuable upon conversion of the 18,000,000
shares of BHC Class B Common Stock outstanding as of October 31, 2000 and
(ii) an exchange ratio of 2.3392, which is the exchange ratio applicable
if the merger is effected as a reverse merger, and represents the higher
of two possible exchange ratios under the BHC merger agreement, multiplied
by 4, which is the number of News Corporation Preferred Ordinary Shares
underlying each News Corporation Preferred ADS.
(7) News Corporation is registering a total of 84,129,597 News Corporation
Preferred Ordinary Shares in connection with a proposed merger transaction
with United Television. This number is based on (A)(i) 9,520,753 shares of
United Television Common Stock outstanding as of October 31, 2000, and
(ii) an exchange ratio of 2.1266, which is the exchange ratio applicable
if the merger is effected as a reverse merger, and represents the higher
of two possible exchange ratios under the United Television merger
agreement, multiplied by 4, which is the number of News Corporation
Preferred Ordinary Shares underlying each News Corporation Preferred ADS,
and (B) (i) 221,640 shares of United Television Common Stock issuable upon
exercise of options to purchase United Television Common Stock ("United
Television Options") outstanding as of October 31, 2000 and United
Television Options that may be issued prior to the merger, and (ii) an
exchange ratio of 3.5443, which is the exchange ratio applicable to the
United Television Options if the merger is effected as a reverse merger,
and represents the higher of two possible exchange ratios under the United
Television merger agreement, multiplied by 4, which is the number of News
Corporation Preferred Ordinary Shares underlying each News Corporation
Preferred ADS.
(8) The proposed maximum aggregate offering price of all of the News
Corporation Preferred Ordinary Shares being registered by News Corporation
in connection with the Chris-Craft merger is $1,716,452,407. Pursuant to
Rules 457(c), 457(f)(1) and 457(f)(3) under the Securities Act and solely
for the purpose of calculating the registration fee, the proposed maximum
aggregate offering price is equal to: (i) the aggregate market value of
the approximate number of shares of Chris-Craft stock to be cancelled in
the Chris-Craft merger (as set forth in note (5) above) based upon a
market value of $67.88 per share of Chris-Craft Common Stock, the average
of the high and low sale prices per share of Chris-Craft Common Stock on
the New York Stock Exchange on December 1, 2000; less (ii) the estimated
amount of cash to be paid by News Corporation in the Chris-Craft merger
equal to the product of (a) the approximate number of shares of Chris-
Craft stock to be cancelled in the Chris-Craft merger (as set forth in
note (5) above), net of shares of Chris-Craft Common Stock underlying
Chris-Craft Options for which no cash will be paid, and (b) $34,
representing the lower of two possible per share cash portions of the
merger consideration, in accordance with the Chris-Craft merger agreement.
(9) The proposed maximum aggregate offering price of all of the News
Corporation Preferred Ordinary Shares being registered by News Corporation
in connection with the BHC merger is $296,835,834. Pursuant to Rules
457(c), 457(f)(1) and 457(f)(3) under the Securities Act and solely for
the purpose of calculating the registration fee, the proposed maximum
aggregate offering price is equal to (i) the aggregate market value of the
approximate number of shares of BHC stock to be cancelled in the BHC
merger (as set forth in note (6) above, but excluding the 18,010,000
shares of BHC stock that are held by Chris-Craft) based upon a market
value of $131.94 per share of BHC Class A Common Stock, the average of the
high and low sale prices per share of BHC Class A Common Stock on the
American Stock Exchange on December 1, 2000; less (ii) the estimated
amount of cash to be paid by News Corporation in the BHC merger equal to
the product of (a) the approximate number of shares of BHC stock to be
cancelled in the BHC merger (as set forth in note (6) above) and (b) $66,
representing the lower of two possible per share cash portions of the
merger consideration in accordance with the BHC merger agreement.
(10) The proposed maximum aggregate offering price of all of the News
Corporation Preferred Ordinary Shares being registered by News Corporation
in connection with the United Television merger is $284,360,825. Pursuant
to Rules 457(c), 457(f)(1) and 457(f)(3) under the Securities Act and
solely for the purpose of calculating the registration fee, the proposed
maximum aggregate offering price is equal to: (i) the aggregate market
value of the approximate number of shares of United Television stock to be
cancelled in the United Television merger (as set forth in note (7) above,
but excluding the 5,509,027 shares of United Television stock that are
held by BHC) based upon a market value of $124.03 per share of United
Television Common Stock, the average of the high and low sale prices per
share of United Television Common Stock on the Nasdaq National Market on
December 1, 2000; less (ii) the estimated amount of cash to be paid by the
Registrant in the United Television merger equal to the product of (a) the
approximate number of shares of United Television stock to be cancelled in
the United Television merger (as set forth in note (7) above), net of
shares of United Television Common Stock underlying United Television
Options for which no cash will be paid, and (b) $60, representing the
lower of two possible per share cash portions of the merger consideration
in accordance with the United Television merger agreement.
<PAGE>
PRELIMINARY DRAFT DATED DECEMBER 7, 2000--SUBJECT TO COMPLETION
CHRIS-CRAFT INDUSTRIES, INC.
767 Fifth Avenue, 46th Floor
New York, NY 10153
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
Dear Chris-Craft Stockholder:
Chris-Craft Industries, Inc., BHC Communications, Inc. and United
Television, Inc. have each agreed to merge with a subsidiary of The News
Corporation Limited under three separate merger agreements, each dated as of
August 13, 2000. Chris-Craft owns approximately 80% of BHC (representing
approximately 97% of the voting power) and BHC owns approximately 58% of United
Television.
To complete the proposed mergers, Chris-Craft, BHC and United Television
must each obtain the approval of their stockholders. Accordingly, we have
scheduled a special meeting of Chris-Craft stockholders on [month, day], 2001
at [time], local time, at [location] at which we will ask you to vote to
approve and adopt the Chris-Craft merger agreement. BHC and United Television
have scheduled similar meetings on the same date.
In the Chris-Craft merger, you will receive cash and/or News Corporation
Preferred ADSs in the amounts and in accordance with the election procedures
described in this joint proxy statement/prospectus. News Corporation Preferred
ADSs are American depositary shares of News Corporation, which are traded on
the New York Stock Exchange under the symbol "NWS.A". Each News Corporation
Preferred ADS represents four preferred limited voting ordinary shares of News
Corporation, which are traded on the Australian Stock Exchange under the symbol
"NCPDP".
This joint proxy statement/prospectus provides you with detailed information
regarding the mergers. We urge you to read it carefully and in its entirety. In
particular, you should read the "Risk Factors" section beginning on page [ . ]
for a description of the various risks you should consider in evaluating the
Chris-Craft merger.
Your board of directors has approved the Chris-Craft merger and unanimously
recommends that Chris-Craft stockholders vote FOR the Chris-Craft merger
proposal described in this joint proxy statement/prospectus.
Your vote is important, regardless of the number of shares you own. Please
vote your shares as soon as possible so that your shares are represented at the
special meeting. To vote your shares, please complete, sign, date and return
the enclosed proxy card. This will not limit your right to vote in person or to
attend the special meeting.
Very truly yours,
Herbert J. Siegel
Chairman of the Board
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the securities to be issued under
this joint proxy statement/prospectus, or determined if this joint proxy
statement/prospectus is accurate or complete. Any representation to the
contrary is a criminal offense.
This joint proxy statement/prospectus is dated [month, day], 2000,
and is first being mailed to stockholders on or about [month, day], 2000.
<PAGE>
PRELIMINARY DRAFT DATED DECEMBER 7, 2000--SUBJECT TO COMPLETION
BHC COMMUNICATIONS, INC.
767 Fifth Avenue, 46th Floor
New York, NY 10153
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
Dear BHC Stockholder:
BHC Communications, Inc., Chris-Craft Industries, Inc. and United
Television, Inc. have each agreed to merge with a subsidiary of The News
Corporation Limited under three separate merger agreements, each dated as of
August 13, 2000. Chris-Craft owns approximately 80% (representing approximately
97% of the voting power) of BHC and BHC owns approximately 58% of United
Television.
To complete the proposed mergers, BHC, Chris-Craft and United Television
must each obtain the approval of their stockholders. Accordingly, we have
scheduled a special meeting of BHC stockholders on [month, day], 2001 at
[time], local time, at [location] at which we will ask you to vote to approve
and adopt the BHC merger agreement. Chris-Craft and United Television have
scheduled similar meetings on the same date. Chris-Craft, which owns sufficient
shares of BHC to approve the BHC merger proposal, has agreed to vote its shares
in favor of the BHC merger proposal.
In the BHC merger, you will receive cash and/or News Corporation Preferred
ADSs in the amounts and in accordance with the election procedures described in
this joint proxy statement/prospectus. News Corporation Preferred ADSs are
American depositary shares of News Corporation, which are traded on the New
York Stock Exchange under the symbol "NWS.A". Each News Corporation Preferred
ADS represents four preferred limited voting ordinary shares of News
Corporation, which are traded on the Australian Stock Exchange under the symbol
"NCPDP".
This joint proxy statement/prospectus provides you with detailed information
regarding the mergers. We urge you to read it carefully and in its entirety. In
particular, you should read the "Risk Factors" section beginning on page [ . ]
for a description of the various risks you should consider in evaluating the
BHC merger.
Your board of directors has approved the BHC merger and unanimously
recommends that BHC stockholders vote FOR the BHC merger proposal described in
this joint proxy statement/prospectus.
Your vote is important, regardless of the number of shares you own. Please
vote your shares as soon as possible so that your shares are represented at the
special meeting. To vote your shares, please complete, sign, date and return
the enclosed proxy card. This will not limit your right to vote in person or to
attend the special meeting.
Very truly yours,
William D. Siegel
President and Chief Executive
Officer
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the securities to be issued under
this joint proxy statement/prospectus, or determined if this joint proxy
statement/prospectus is accurate or complete. Any representation to the
contrary is a criminal offense.
This joint proxy statement/prospectus is dated [month, day], 2000,
and is first being mailed to stockholders on or about [month, day], 2000.
<PAGE>
PRELIMINARY DRAFT DATED DECEMBER 7, 2000--SUBJECT TO COMPLETION
UNITED TELEVISION, INC.
132 South Rodeo Drive, 4th Floor
Beverly Hills, California 90212
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
Dear United Television Stockholder:
United Television, Inc., Chris-Craft Industries, Inc. and BHC
Communications, Inc. have each agreed to merge with a subsidiary of The News
Corporation Limited under three separate merger agreements, each dated as of
August 13, 2000. Chris-Craft owns approximately 80% (representing approximately
97% of the voting power) of BHC and BHC owns approximately 58% of United
Television.
To complete the proposed mergers, United Television, Chris-Craft and BHC
must each obtain the approval of their stockholders. Accordingly, we have
scheduled a special meeting of United Television stockholders on [month, day],
2001 at [time], local time, at [location] at which we will ask you to vote to
approve and adopt the United Television merger agreement. Chris-Craft and BHC
have scheduled similar meetings on the same date. BHC, which owns sufficient
shares of United Television to approve the United Television merger proposal,
has agreed to vote its shares in favor of the United Television merger
proposal.
In the United Television merger, you will receive cash and/or News
Corporation Preferred ADSs in the amounts and in accordance with the election
procedures described in this joint proxy statement/prospectus. News Corporation
Preferred ADSs are American depositary shares of News Corporation, which are
traded on the New York Stock Exchange under the symbol "NWS.A". Each News
Corporation Preferred ADS represents four preferred limited voting ordinary
shares of News Corporation, which are traded on the Australian Stock Exchange
under the symbol "NCPDP".
This joint proxy statement/prospectus provides you with detailed information
regarding the mergers. We urge you to read it carefully and in its entirety. In
particular, you should read the "Risk Factors" section beginning on page [ . ]
for a description of the various risks you should consider in evaluating the
United Television merger.
Your board of directors has approved the United Television merger and
unanimously recommends that United Television stockholders vote FOR the United
Television merger proposal described in this joint proxy statement/prospectus.
Your vote is important, regardless of the number of shares you own. Please
vote your shares as soon as possible so that your shares are represented at the
special meeting. To vote your shares, please complete, sign, date and return
the enclosed proxy card. This will not limit your right to vote in person or to
attend the special meeting.
Very truly yours,
John C. Siegel
Chairman of the Board
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the securities to be issued under
this joint proxy statement/prospectus, or determined if this joint proxy
statement/prospectus is accurate or complete. Any representation to the
contrary is a criminal offense.
This joint proxy statement/prospectus is dated [month, day], 2000,
and is first being mailed to stockholders on or about [month, day], 2000.
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC.
767 Fifth Avenue, 46th Floor
New York, NY 10153
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
----------------
To the Stockholders of Chris-Craft Industries, Inc.:
A special meeting of stockholders of Chris-Craft Industries, Inc. will be
held at [time], local time, on [month, day], 2001 at [location] for the
following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of August 13, 2000, as amended,
among Chris-Craft Industries, Inc., The News Corporation Limited, News
Publishing Australia Limited and Fox Television Holdings, Inc. We have
attached a copy of the merger agreement as Annex A to the joint proxy
statement/prospectus that accompanies this notice.
2. To transact such other business as may properly come before the
Chris-Craft special meeting or any adjournment or postponement of the
meeting.
As described in the joint proxy statement/prospectus that accompanies this
notice, the Agreement and Plan of Merger contemplates two alternative mergers
(a forward merger and a reverse merger). A vote in favor of the approval and
adoption of the Agreement and Plan of Merger constitutes the approval of both
alternative mergers.
Only stockholders of record at the close of business on [ . ], 2000, the
record date for the special meeting, are entitled to vote at the special
meeting. A list of stockholders entitled to vote at the special meeting will be
available for examination at the special meeting and for ten days before the
special meeting, during ordinary business hours, at Chris-Craft's principal
place of business, 767 Fifth Avenue, 46th Floor, New York, NY 10153. To vote
your shares, please complete, sign, date and return the enclosed proxy card. If
you attend the special meeting, you may vote in person if you wish, even if you
have previously returned your proxy card.
By order of the Board of Directors,
Brian C. Kelly
Secretary
New York, New York
[ . ], 2000
IMPORTANT
Whether or not you expect to be present at the special meeting, please
promptly complete, sign, date and return the enclosed proxy card. This
will not limit your right to vote in person or to attend the special
meeting.
<PAGE>
BHC COMMUNICATIONS, INC.
767 Fifth Avenue, 46th Floor
New York, NY 10153
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
----------------
To the Stockholders of BHC Communications, Inc.:
A special meeting of stockholders of BHC Communications, Inc. will be held
at [time], local time, on [month, day], 2001 at [location] for the following
purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of August 13, 2000, as amended,
among BHC Communications, Inc., The News Corporation Limited, News
Publishing Australia Limited and Fox Television Holdings, Inc. We have
attached a copy of the merger agreement as Annex B to the joint proxy
statement/prospectus that accompanies this notice.
2. To transact such other business as may properly come before the BHC
special meeting or any adjournment or postponement of the meeting.
As described in the joint proxy statement/prospectus that accompanies this
notice, the Agreement and Plan of Merger contemplates two alternative mergers
(a forward merger and a reverse merger). A vote in favor of the approval and
adoption of the Agreement and Plan of Merger constitutes the approval of both
alternative mergers.
Only stockholders of record at the close of business on [ . ], 2000, the
record date for the special meeting, are entitled to vote at the special
meeting. A list of stockholders entitled to vote at the special meeting will be
available for examination at the special meeting and for the ten days before
the special meeting, during ordinary business hours, at BHC's principal place
of business, 767 Fifth Avenue, 46th Floor, New York, NY 10153. To vote your
shares, please complete, sign, date and return the enclosed proxy card. If you
attend the special meeting, you may vote in person if you wish, even if you
have previously returned your proxy card.
By order of the Board of Directors,
Brian C. Kelly
Secretary
New York, New York
[ . ], 2000
IMPORTANT
Whether or not you expect to be present at the special meeting, please
promptly complete, sign, date and return the enclosed proxy card. This
will not limit your right to vote in person or to attend the special
meeting.
<PAGE>
UNITED TELEVISION, INC.
132 South Rodeo Drive, 4th Floor
Beverly Hills, California 90212
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
----------------
To the Stockholders of United Television, Inc.:
A special meeting of stockholders of United Television, Inc. will be held at
[time], local time, on [month, day], 2001 at [location] for the following
purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of August 13, 2000, as amended,
among United Television, Inc., The News Corporation Limited, News
Publishing Australia Limited and Fox Television Holdings, Inc. We have
attached a copy of the merger agreement as Annex C to the joint proxy
statement/prospectus that accompanies this notice.
2. To transact such other business as may properly come before the
United Television special meeting or any adjournment or postponement of the
meeting.
As described in the joint proxy statement/prospectus that accompanies this
notice, the Agreement and Plan of Merger contemplates two alternative mergers
(a forward merger and a reverse merger). A vote in favor of the approval and
adoption of the Agreement and Plan of Merger constitutes the approval of both
alternative mergers.
Only stockholders of record at the close of business on [ . ], 2000, the
record date for the special meeting, are entitled to vote at the special
meeting. A list of stockholders entitled to vote at the special meeting will be
available for examination at the special meeting and for the ten days before
the special meeting, during ordinary business hours, at United Television's
principal place of business, 132 South Rodeo Drive, 4th Floor, Beverly Hills,
California 90212. To vote your shares, please complete, sign, date and return
the enclosed proxy card. If you attend the special meeting, you may vote in
person if you wish, even if you have previously returned your proxy card.
By order of the Board of Directors,
Garth S. Lindsey
Secretary
Beverly Hills, California
[ . ], 2000
IMPORTANT
Whether or not you expect to be present at the special meeting, please
promptly complete, sign, date and return the enclosed proxy card. This
will not limit your right to vote in person or to attend the special
meeting.
<PAGE>
ADDITIONAL INFORMATION
This joint proxy statement/prospectus incorporates important business and
financial information about News Corporation, Chris-Craft, BHC and United
Television from documents filed with the Securities and Exchange Commission
that are not included in or delivered with this joint proxy
statement/prospectus. News Corporation will provide you with copies of this
information relating to News Corporation, without charge, upon written or oral
request to:
Investor Relations
The News Corporation Limited
c/o News America Incorporated
1211 Avenue of the Americas
New York, NY 10036
Tel: (212) 852-7000
Chris-Craft, BHC and United Television will provide you with copies of this
information relating to their respective company, without charge, upon written
or oral request to:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Tel: (212) 750-5833 (for banks and brokers)
(888) 750-5834 (toll-free for stockholders)
In order to receive timely delivery of the documents in advance of the
Chris-Craft special meeting, BHC special meeting or United Television special
meeting, as applicable, you should make your request no later than [ . ] ,
2000.
In addition, if you have questions about the Chris-Craft merger, BHC merger
or United Television merger, as applicable, you may contact Innisfree M&A
Incorporated at the address and telephone number set forth above.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGERS AND THE SPECIAL MEETINGS........... 1
SUMMARY.................................................................... 4
The Companies............................................................ 4
The Mergers.............................................................. 5
Overview and Structure of the Mergers.................................... 5
What You Will Receive in the Mergers..................................... 6
Election Procedures...................................................... 17
Preferred ADSs........................................................... 18
Our Recommendations to Stockholders...................................... 18
Votes Required to Approve the Proposals.................................. 18
Possibility of BHC and United Television Mergers Without Chris-Craft
Merger.................................................................. 19
Opinions of Financial Advisors........................................... 20
Additional Interests of our Executive Officers and Boards of Directors as
a Result of the Mergers................................................. 20
Conditions to the Mergers................................................ 21
Restrictions on Alternate Transactions................................... 22
Termination of the Merger Agreements..................................... 22
Termination Fees......................................................... 24
Related Transactions..................................................... 24
Regulatory Matters....................................................... 24
Material U.S. Federal Income Tax Consequences of the Mergers............. 25
Accounting Treatment..................................................... 25
Appraisal Rights......................................................... 25
Comparative Market Price Data............................................ 26
Currencies and Exchange Rates............................................ 26
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA......................... 27
UNAUDITED COMPARATIVE PER SHARE INFORMATION.............................. 34
RISK FACTORS............................................................... 35
The value of the merger consideration to be received may fluctuate
considerably............................................................ 35
Stockholders may receive a form of consideration different from what they
elect................................................................... 35
The form of consideration received by, and the U.S. federal income tax
consequences to, Chris-Craft, BHC and United Television stockholders
vary based on the structure of the mergers and each stockholder's
election, variables which will not be known prior to the time of the
special meetings........................................................ 35
News Corporation is controlled by one principal stockholder.............. 36
Members of the management and boards of directors of Chris-Craft, BHC and
United Television have interests in the mergers that may differ from the
interests of their stockholders......................................... 36
Obtaining required regulatory approvals may delay completion of the
mergers................................................................. 36
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS................. 37
THE CHRIS-CRAFT SPECIAL MEETING............................................ 38
Where and when the Chris-Craft special meeting will be held.............. 38
What will be voted upon.................................................. 38
Only Chris-Craft holders of record are entitled to vote.................. 38
Quorum................................................................... 39
Vote required to adopt the Chris-Craft merger proposal................... 39
Voting your shares and changing your vote by revoking your proxy......... 39
How proxies are counted.................................................. 40
Cost of solicitation..................................................... 40
THE BHC SPECIAL MEETING.................................................... 41
Where and when the BHC special meeting will be held...................... 41
What will be voted upon.................................................. 41
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Only BHC holders of record are entitled to vote.......................... 41
Quorum................................................................... 41
Vote required to adopt the BHC merger proposal........................... 42
Voting your shares and changing your vote by revoking your proxy......... 42
How proxies are counted.................................................. 42
Cost of solicitation..................................................... 43
THE UNITED TELEVISION SPECIAL MEETING...................................... 44
Where and when the United Television special meeting will be held........ 44
What will be voted upon.................................................. 44
Only United Television holders of record are entitled to vote............ 44
Quorum................................................................... 44
Vote required to adopt the United Television merger proposal............. 44
Voting your shares and changing your vote by revoking your proxy......... 45
How proxies are counted.................................................. 45
Cost of solicitation..................................................... 46
THE MERGERS................................................................ 47
The Background of the Mergers............................................ 47
News Corporation's Reasons for the Mergers............................... 57
Chris-Craft's, BHC's and United Television's Reasons for the Mergers;
Recommendations of the Special Committees and Boards of Directors....... 57
Financial Advisor Fairness Opinions...................................... 64
Accounting Treatment..................................................... 81
Material Income Tax Consequences......................................... 81
Stock Exchange Listing................................................... 87
Restrictions on Sales of Preferred ADSs by Affiliates of Chris-Craft, BHC
and United Television................................................... 88
Delisting and Deregistration of Stock after Mergers...................... 88
Regulatory Matters Relating to the Mergers............................... 88
Stockholder Litigation................................................... 92
APPRAISAL RIGHTS........................................................... 93
Appraisal Rights of Chris-Craft Stockholders............................. 93
Appraisal Rights of BHC Stockholders..................................... 94
Appraisal Rights of United Television Stockholders....................... 95
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS............ 97
INTERESTS OF CERTAIN DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANIES IN
THE MERGERS............................................................... 114
Chris-Craft Executive Officers........................................... 114
Bonus Pool............................................................... 116
Directors' and Officers' Insurance; Indemnification...................... 116
BHC Executive Officers................................................... 116
United Television Executive Officers..................................... 116
SUMMARY OF THE TRANSACTION DOCUMENTS....................................... 118
The Chris-Craft Merger Agreement......................................... 118
The BHC Merger Agreement................................................. 138
The BHC Voting Agreement and Proxy....................................... 156
The United Television Merger Agreement................................... 157
The United Television Voting Agreement and Proxy......................... 175
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
THE COMPANIES.............................................................. 176
News Corporation......................................................... 176
Chris-Craft.............................................................. 178
BHC...................................................................... 180
United Television........................................................ 180
COMPARISON OF STOCKHOLDERS' RIGHTS......................................... 181
DESCRIPTION OF NEWS CORPORATION CAPITAL STOCK.............................. 211
The Preferred American Depositary Shares................................. 211
The Preferred Ordinary Shares............................................ 219
Australian exchange controls and other limitations affecting holders..... 225
Limitations on foreign acquisitions and investment in Australian
companies............................................................... 225
RELATED TRANSACTIONS....................................................... 229
MARKET PRICE DATA.......................................................... 230
News Corporation Preferred ADSs.......................................... 230
Chris-Craft Common Stock................................................. 231
BHC Common Stock......................................................... 232
United Television Common Stock........................................... 233
DIVIDEND DATA.............................................................. 234
News Corporation Preferred Ordinary Shares............................... 234
Chris-Craft Common Stock................................................. 234
BHC Common Stock......................................................... 234
United Television Common Stock........................................... 235
DEADLINE FOR STOCKHOLDER PROPOSALS......................................... 236
Chris-Craft.............................................................. 236
BHC...................................................................... 236
United Television........................................................ 236
CURRENCY OF PRESENTATION, EXCHANGE RATES AND CERTAIN DEFINITIONS........... 237
EXCHANGE CONTROLS AND OTHER LIMITATIONS.................................... 238
ENFORCEMENT OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS................... 239
ENFORCEABILITY OF JUDGMENTS................................................ 240
LEGAL MATTERS.............................................................. 242
EXPERTS.................................................................... 242
WHERE YOU CAN FIND MORE INFORMATION........................................ 243
ANNEXES
ANNEX A: Agreement and Plan of Merger (Chris-Craft)...................... A-1
ANNEX B: Agreement and Plan of Merger (BHC).............................. B-1
ANNEX C: Agreement and Plan of Merger (United Television)................ C-1
ANNEX D: Opinion of Allen & Company Incorporated......................... D-1
ANNEX E: Opinion of Wasserstein Perella & Co., Inc. ..................... E-1
ANNEX F: Opinion of Bear, Stearns & Co. Inc.............................. F-1
ANNEX G: Section 262 of the Delaware General Corporation Law............. G-1
</TABLE>
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGERS AND THE SPECIAL MEETINGS
Q: What are the proposed transactions?
A: News Corporation is proposing to acquire Chris-Craft, BHC and United
Television in three separate merger transactions.
If possible, the mergers will be completed as "forward mergers", which
means that Chris-Craft, BHC and United Television will each merge into a
subsidiary of News Corporation, and the News Corporation subsidiary will
continue as the surviving corporation in each of the mergers. For each
merger to be effected as a forward merger, the parties to that merger must
receive a favorable tax ruling from the Internal Revenue Service and a
related tax opinion from their respective legal counsel. In addition, the
Federal Communications Commission must consent to the structure proposed by
the parties for the ownership of Chris-Craft's, BHC's and United
Television's television stations following each merger.
If those tax and regulatory conditions are not met with respect to a
particular merger, that merger will be restructured as a "reverse merger".
In a reverse merger, a subsidiary of Fox Entertainment Group, Inc., a
publicly-held company in which News Corporation holds an 82.76% equity
interest (representing a 97.79% voting interest), will merge into Chris-
Craft, BHC or United Television, as applicable, with Chris-Craft, BHC or
United Television, as applicable, continuing as the surviving corporation
in the merger.
Because each merger is a separate transaction, it is possible that one or
more of the mergers may be effected as a forward merger, with the other
mergers being effected as reverse mergers.
Q: What is the difference between a forward merger and a reverse merger?
A: The principal difference to stockholders between a forward merger and a
reverse merger is that, in a forward merger, the receipt of Preferred
American Depositary Shares of News Corporation (Preferred ADSs), but not
cash, by Chris-Craft, BHC or United Television stockholders will generally
be tax-free for U.S. federal income tax purposes and, in a reverse merger,
the receipt of Preferred ADSs by Chris-Craft, BHC and United Television
stockholders will be taxable for U.S. federal income tax purposes. In the
reverse mergers, Chris-Craft, BHC and United Television stockholders will
receive more consideration than they would otherwise receive in the forward
mergers. In addition, in the forward mergers, Chris-Craft, BHC and United
Television stockholders will be able to make elections to receive cash
and/or Preferred ADSs; however, in the reverse mergers, the stockholders
will not have the right to elect the type of merger consideration they will
receive.
Q: What will I receive in these mergers?
A: The consideration you will receive and detailed information about your
ability to elect cash and/or Preferred ADSs, and about potential proration,
adjustments and other factors that may affect what you receive, are
described beginning on page [ . ] of the Summary.
Q: Will the final structure of the mergers be announced prior to the special
meetings?
A: No. However, each company will issue a press release announcing whether its
merger will proceed as a forward merger or reverse merger promptly after it
is determined.
Q: When do the companies expect to complete the mergers?
A: We anticipate completing the mergers by June 30, 2001, or as soon as
practicable following receipt of all required stockholder and regulatory
approvals. Because all three mergers are subject to regulatory approvals
and other factors outside the control of the parties, we cannot predict the
exact timing of their completion.
Q: What vote is required to approve the mergers?
A: The Chris-Craft merger
For the Chris-Craft merger to occur, the Chris-Craft merger agreement must
be approved and
1
<PAGE>
adopted by a majority of the votes entitled to be cast by stockholders at
the Chris-Craft special meeting (including the Chris-Craft convertible
preferred stockholders), voting together as a single class, and a majority
of the votes entitled to be cast by holders of Chris-Craft convertible
preferred stock at the Chris-Craft special meeting, voting as a separate
class.
As of the record date, Chris-Craft directors and executive officers and
their affiliates (none of whom have entered into agreements as to how they
will vote with respect to the Chris-Craft merger proposal) owned common
stock, class B common stock and convertible preferred stock entitling them
to cast approximately [ . ]% of the votes entitled to be cast by
stockholders voting together as a single class at the Chris-Craft special
meeting, and convertible preferred stock entitling them to cast
approximately [ . ]% of the votes entitled to be cast by holders of
convertible preferred stock at the Chris-Craft special meeting.
The BHC merger
For the BHC merger to occur, the BHC merger agreement must be approved and
adopted by a majority of the votes entitled to be cast by holders of BHC's
class A and class B common stock at the BHC special meeting, voting together
as a single class. Chris-Craft, which holds shares representing
approximately 97% of the voting power of BHC, and, accordingly, holds
sufficient shares to approve the BHC merger proposal, has agreed to vote its
BHC shares in favor of the BHC merger proposal.
The United Television merger
For the United Television merger to occur, the United Television merger
agreement must be approved and adopted by a majority of the votes entitled
to be cast by stockholders at the United Television special meeting. BHC,
which holds shares representing approximately 58% of the voting power of
United Television and, accordingly, holds sufficient shares to approve the
United Television merger proposal, has agreed to vote its United Television
shares in favor of the United Television merger proposal.
Q: Is it possible that some but not all of the mergers will occur?
A: Yes. It is possible for the BHC and United Television mergers to occur
without the occurrence of the Chris-Craft merger. The completion of the
Chris-Craft merger, however, is conditioned on satisfaction of the
conditions for the completion of the BHC and United Television mergers. The
conditions to the mergers are described beginning on page [ . ] of the
Summary.
Q: What do I need to do now?
A: First, carefully read and consider the information
contained in this joint proxy statement/prospectus. Then, please vote your
shares as soon as possible, so that your shares may be represented at your
special meeting.
Q: How do I vote?
A: You may choose one of the following ways to cast your vote:
. by completing, signing and dating the accompanying proxy card and
returning it in the enclosed postage paid envelope; or
. by appearing and voting in person at the Chris-Craft special meeting if
you are a Chris-Craft stockholder, at the BHC special meeting if you are
a BHC stockholder, or at the United Television special meeting if you are
a United Television stockholder.
If you sign, date and send in your proxy and do not indicate how you wish to
vote, we will count your proxy as a vote in favor of approval and adoption
of the applicable merger agreement on which you are entitled to vote.
If you send in your proxy but abstain from voting or if you do not send in
your proxy or vote at the meetings, it will have the same effect as a vote
against the approval and adoption of the applicable merger agreement on
which you are entitled to vote.
The Chris-Craft, BHC and United Television special meetings will each take
place on [ . ], 2001. You may attend your special meeting and vote your
shares in person rather than voting by proxy.
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<PAGE>
Q: Can I change my vote after I have mailed in my proxy card?
A: Yes. You may revoke your proxy or change your vote at any time before the
vote is taken at your special meeting. You can do this in one of three
ways:
. delivering notice in writing to your company's corporate secretary that
you have revoked your proxy;
. properly submitting a later-dated proxy before your special meeting; or
. appearing and voting in person at your special meeting.
Q: If my broker holds my shares in "street name', will my broker vote my
shares for me?
A: Your broker will vote your shares only if you provide instructions on how
to vote. You should follow the directions provided by your broker regarding
how to instruct your broker to vote your shares. If you do not provide your
broker with instructions on how to vote your shares, it will have the same
effect as a vote against the approval and adoption of your merger
agreement.
Q: When should I send in my stock certificates? How do I make elections as to
the form of consideration I prefer to receive?
A: Please DO NOT send in your stock certificates with your proxy card.
We are sending you a letter of transmittal to surrender your stock
certificates and a form of election with instructions for making your
election as to the form of consideration you prefer to receive in the event
of a forward merger. You should follow the instructions in the letter of
transmittal and form of election regarding how and when to surrender your
stock certificates. The available elections, election procedures and
deadline for making elections are described beginning on page [ . ] of the
Summary. You will only be permitted to make an election if your merger is
structured as a forward merger. To make an election, you will need to
deliver the form of election, the letter of transmittal and your stock
certificates (or a properly completed notice of guaranteed delivery)
according to the instructions set forth in the letter of transmittal and
the form of election to the exchange agent before the election deadline.
Prior to the closing of the mergers, we will publicly announce the
structure of the mergers and, if applicable, the election deadline, which
will be 10:00 a.m. New York time on the date of the closing of the mergers.
Additional copies of the form of election and letter of transmittal can be
obtained by contacting Innisfree M&A Incorporated at the address and
telephone number set forth below. Copies will also be available at
Innisfree M&A Incorporated until 5:00 p.m. New York City time on the last
business day prior to the effective time of the merger.
If your merger is structured as a reverse merger or if you have not sent in
a letter of transmittal and form of election prior to the deadline, after
your merger is completed, we will send you a letter of transmittal and
instructions explaining how to exchange your stock certificates for the
merger consideration.
Q: Am I entitled to appraisal rights?
A: Yes. Under Delaware law, Chris-Craft, BHC and United Television
stockholders are entitled to exercise appraisal rights in connection with
their mergers. Stockholders wishing to exercise appraisal rights who follow
the procedures and satisfy the requirements of Delaware law will have the
right to receive an appraisal of the fair value of their shares. We
describe the procedures for exercising appraisal rights in this joint proxy
statement/prospectus in "Appraisal Rights" on page [ . ], and we have
attached the provisions of Delaware law that govern appraisal rights as
Annex G.
Q: Whom should I call if I have any questions?
A: If you have any questions about the mergers or how to submit your proxy, or
if you need additional copies of this joint proxy statement/prospectus, the
enclosed proxy card or voting instructions, or the form of election and
letter of transmittal you should contact:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Tel: (212) 750-5833 (for banks and brokers)
(888) 750-5834 (toll-free for stockholders)
3
<PAGE>
SUMMARY
This summary highlights selected information about the Chris-Craft, BHC and
United Television mergers from this joint proxy statement/prospectus and may
not contain all of the information that is important to you. To understand the
mergers fully, and for a more complete description of the terms of the mergers,
you should read carefully this entire joint proxy statement/prospectus and the
documents to which we have referred you. For more information, see "Where You
Can Find More Information" beginning on page [ . ].
The Companies
(See page [ . ])
The News Corporation Limited
2 Holt Street
Sydney, New South Wales, 2010
Australia
Telephone: 2-9-288-3000
The News Corporation Limited, together with its subsidiaries, is a
diversified international communications company principally engaged in the
production and distribution of motion pictures and television programming;
television, satellite and cable broadcasting; the publication of newspapers,
magazines and books; the production and distribution of promotional and
advertising products and services; the development and distribution of
conditional access systems, interactive television applications and broadcast
control software systems; and the creation and distribution of on-line
programming. The activities of News Corporation are conducted principally in
the United States, the United Kingdom and Australia and the Pacific Basin. News
Corporation has also entered into joint ventures to provide direct-to-home
(DTH) television services in Italy and Latin America.
News Corporation holds an 82.76% equity interest (representing a 97.79%
voting interest) in Fox Entertainment Group, Inc. Fox Entertainment Group is
principally engaged in the development, production and worldwide distribution
of feature films and television programs, television broadcasting and cable
network programming.
Chris-Craft Industries, Inc.
767 Fifth Avenue, 46th Floor
New York, New York 10153
Telephone: (212) 421-0200
Chris-Craft is primarily engaged in television broadcasting, conducted
through its majority-owned (80% at November 30, 2000) subsidiary, BHC
Communications, Inc., which owns 100% of Chris-Craft Television, Inc., 100% of
Pinelands, Inc. and, as of November 30, 2000, 58% of United Television, Inc.
BHC and United Television together operate six very high frequency (VHF)
television stations and four ultra high frequency (UHF) television stations,
together constituting Chris-Craft's Television Division. Chris-Craft Industrial
Products, Inc., a wholly-owned subsidiary of Chris-Craft that constitutes its
Industrial Division, is primarily engaged in manufacturing plastic flexible
films and distributing containment systems to the healthcare industry.
BHC Communications, Inc.
767 Fifth Avenue, 46th Floor
New York, New York 10153
Telephone: (212) 421-0200
BHC is the majority-owned television broadcasting subsidiary of Chris-Craft.
BHC's principal business is television broadcasting, conducted through its
wholly-owned subsidiaries, Chris-Craft Television, Inc. and
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<PAGE>
Pinelands, Inc., and its majority-owned subsidiary, United Television. BHC and
United Television together operate six VHF television stations and four UHF
television stations. Eight stations are affiliates of United Paramount Network
(UPN), one is affiliated with ABC, and one is affiliated with NBC.
United Television, Inc.
132 South Rodeo Drive, 4th Floor
Beverly Hills, California 90212
Telephone: (310) 281-4844
United Television is the majority-owned subsidiary of BHC Communications,
Inc. United Television owns and operates seven of BHC's ten television stations
that comprise Chris-Craft's Television Division. United Television operates
three VHF television stations and four UHF television stations. Five stations
are affiliates of UPN, one is affiliated with ABC, and one is affiliated with
NBC.
The Mergers
(See page [ . ])
Overview and Structure of the Mergers
News Corporation is proposing to acquire Chris-Craft, BHC and United
Television in three separate merger transactions. The mergers are structured
initially as "forward mergers" as described below. For each merger to be
effected as a forward merger, the parties to that merger must obtain a
favorable tax ruling from the Internal Revenue Service regarding the merger and
a related tax opinion from their respective legal counsel. In addition, the
Federal Communications Commission must consent to the mergers and
reorganization transactions and the structure proposed by the parties for the
ownership and operation of Chris-Craft's, BHC's and United Television's
television stations following the mergers. If those tax and regulatory
conditions are not met with respect to a particular merger, that merger will be
restructured as a "reverse merger" as described below.
If a merger is effected as a forward merger, Chris-Craft, BHC and United
Television, as applicable, simultaneously with the closing of the merger, will
merge into News Publishing Australia Limited, a subsidiary of News Corporation.
News Publishing will survive each of the forward mergers and transfer the
television assets formerly held by Chris-Craft, BHC and United Television, as
applicable, to a subsidiary of Fox Entertainment Group. The Fox Entertainment
Group subsidiary will simultaneously transfer the title to all of the FCC
licenses to Fox Television Stations, Inc. The ownership of Fox Television
Stations is described under "Related Transactions" on page [ . ].
If a merger is restructured as a reverse merger, a wholly-owned subsidiary
of Fox Entertainment Group will merge into Chris-Craft, BHC or United
Television, as applicable, and Chris-Craft, BHC or United Television, as
applicable, will be the surviving corporation in the merger. The mergers will
occur in order such that the Chris-Craft merger occurs first, followed by the
BHC merger and then the United Television merger. Because each merger is a
separate transaction, it is possible that one or more of the mergers may be
effected as a forward merger, with the other mergers being effected as reverse
mergers.
The principal difference to stockholders between the forward mergers and the
reverse mergers is that, in the forward mergers, the receipt of Preferred ADSs,
but not cash, by Chris-Craft, BHC or United Television stockholders will
generally be tax-free for U.S. federal income tax purposes and, in the reverse
mergers, the receipt of Preferred ADSs by Chris-Craft, BHC or United Television
stockholders will be taxable for U.S. federal income tax purposes. In the
reverse mergers, Chris-Craft, BHC and United Television stockholders will
receive more consideration than they would otherwise receive in the forward
mergers. However, in the reverse
5
<PAGE>
mergers, stockholders will not be able to make any election as to the type of
merger consideration they will receive.
The Chris-Craft Merger
In a forward merger, Chris-Craft will merge into News Publishing and, as a
result, Chris-Craft will cease to exist and News Publishing will be the
surviving corporation in the merger. In a reverse merger, a wholly-owned
subsidiary of Fox Entertainment Group will merge into Chris-Craft and, as a
result, Chris-Craft will be the surviving corporation in the merger and become
a wholly-owned subsidiary of Fox Entertainment Group. The terms and conditions
of the Chris-Craft merger are contained in a merger agreement, dated as of
August 13, 2000, as amended, which is attached as Annex A to this joint proxy
statement/prospectus. We encourage you to read the Chris-Craft merger agreement
as it is the legal document that governs the Chris-Craft merger.
The BHC Merger
In a forward merger, BHC will merge into News Publishing and, as a result,
BHC will cease to exist and News Publishing will be the surviving corporation
in the merger. In a reverse merger, a wholly-owned subsidiary of Fox
Entertainment Group will merge into BHC and, as a result, BHC will be the
surviving corporation in the merger and will become a wholly-owned subsidiary
of Fox Entertainment Group. The terms and conditions of the BHC merger are
contained in a merger agreement, dated as of August 13, 2000, as amended, which
is attached as Annex B to this joint proxy statement/prospectus. We encourage
you to read the BHC merger agreement as it is the legal document that governs
the BHC merger.
In a voting agreement entered into with News Corporation, Chris-Craft agreed
to vote its approximate 97% voting interest in BHC in favor of the BHC merger
proposal. Approval and adoption of the BHC merger agreement is assured,
provided that Chris-Craft votes its shares of BHC in accordance with the terms
of this voting agreement.
The United Television Merger
In a forward merger, United Television will merge into News Publishing and,
as a result, United Television will cease to exist and News Publishing will be
the surviving corporation in the merger. In a reverse merger, a wholly-owned
subsidiary of Fox Entertainment Group will merge into United Television and, as
a result, United Television will be the surviving corporation in the merger and
become a wholly-owned subsidiary of Fox Entertainment Group. The terms and
conditions of the United Television merger are contained in a merger agreement,
dated as of August 13, 2000, as amended, which is attached as Annex C to this
joint proxy statement/prospectus. We encourage you to read the United
Television merger agreement as it is the legal document that governs the United
Television merger.
In a voting agreement entered into with News Corporation, BHC agreed to vote
its approximate 58% voting interest in United Television in favor of the United
Television merger proposal. Approval and adoption of the United Television
merger agreement is assured, provided that BHC votes its shares of United
Television in accordance with the terms of this voting agreement.
What You Will Receive in the Mergers
Chris-Craft Stockholders
(See page [ . ])
The consideration to be received by Chris-Craft stockholders in the Chris-
Craft merger depends on whether the Chris-Craft merger is effected as a forward
merger or a reverse merger. In both the forward merger
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<PAGE>
and the reverse merger, shares of Chris-Craft convertible preferred stock will
be treated as if they had been fully converted into shares of Chris-Craft
common stock immediately prior to the merger.
The Chris-Craft Forward Merger
In a forward merger, Chris-Craft stockholders will have the right to make
one of the following elections for each of their Chris-Craft shares. The
elections are subject to proration and adjustment in some circumstances as
described below.
<TABLE>
<CAPTION>
Consideration to be Received per
Type of Election Chris-Craft Common Share
---------------- --------------------------------
<C> <S>
. Mixed Election...................... $34 in cash (or $35 if the merger is
completed after August 13, 2001) and
1.1591 Preferred ADSs of News
Corporation
. All Cash Election................... An amount in cash equivalent in value
to the per share consideration
received by a stockholder who made a
mixed election
. All Stock Election.................. A number of Preferred ADSs equivalent
in value to the per share
consideration received by a
stockholder who made a mixed election
</TABLE>
We can approximate the value of the per share consideration to be received
by a stockholder who makes a mixed election as the sum of (1) $34 (or $35 if
the merger is completed after August 13, 2001) and (2) the value of 1.1591
Preferred ADSs based on the volume weighted average trading price for all
trades of Preferred ADSs reported on the New York Stock Exchange for each day
of the five trading days prior to the closing date of the Chris-Craft merger.
We illustrate this methodology in the examples below, which show you one way of
approximating what you will receive under the different election alternatives.
However, we will compute the actual amount of cash and number of Preferred ADSs
you will receive in the merger using a complex formula contained in the Chris-
Craft merger agreement. This complex formula produces substantially the same
result as the methodology used in the examples set forth below except for
differences due to rounding. For a summary of the formula contained in the
Chris-Craft merger agreement, see "Summary of the Transaction Documents--The
Chris-Craft Merger Agreement--Merger Consideration" on page [ . ].
The consideration to be paid to stockholders who make all cash or all stock
elections cannot be determined until the close of trading on the business day
immediately prior to the closing of the merger. We intend to announce these
amounts when known.
Chris-Craft stockholders who fail to make an election may be paid in cash,
Preferred ADSs or a mixture of cash and Preferred ADSs depending on the types
of elections of the other Chris-Craft stockholders.
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Examples. Assuming, solely for purposes of the all cash election and all
stock election examples below, that the weighted average trading price for
Preferred ADSs is $40, then, subject to proration and adjustment, you can
approximate what you will receive in the manner illustrated below:
<TABLE>
<C> <S>
. Mixed Election...................... If you own 100 shares of Chris-Craft
common stock and you make a mixed
election, you will receive $34
multiplied by 100, or $3,400, in cash
(or $35 multiplied by 100, or $3,500,
in cash if the merger is completed
after August 13, 2001) and 1.1591
multiplied by 100, or 115.91,
Preferred ADSs. The amount of cash and
number of Preferred ADSs you receive
in a mixed election is unaffected by
the assumed weighted average trading
price of Preferred ADSs of $40.
. All Cash Election................... If you own 100 shares of Chris-Craft
common stock and you make an all cash
election, you will receive
approximately $8,036.40 in cash (or
approximately $8,136.40 if the merger
is completed after August 13, 2001).
This amount is the sum of:
. $34 multiplied by 100, or $3,400
($35 multiplied by 100, or $3,500,
if the merger occurs after August
13, 2001), plus
. 1.1591 multiplied by 100, or 115.91,
Preferred ADSs, multiplied by the
assumed weighted average trading
price of Preferred ADSs of $40, or
$4,636.40.
. All Stock Election.................. If you own 100 shares of Chris-Craft
common stock and you make an all stock
election, you will receive
approximately 200.91 Preferred ADSs
(or approximately 203.41 Preferred
ADSs if the merger is completed after
August 13, 2001). This amount is the
result of dividing the cash amount
obtained in the all cash election
example above for 100 shares of Chris-
Craft common stock, by the assumed
weighted average trading price of
Preferred ADSs of $40.
</TABLE>
Stockholders receiving any Preferred ADSs as consideration in the merger
will receive cash in lieu of any fractional Preferred ADSs. For example, if you
were entitled to receive 200.91 Preferred ADSs, as in the above example, you
would instead receive 200 Preferred ADSs and cash representing the value of .91
Preferred ADSs. This value will be derived from your proportionate share of the
proceeds from the sale of the aggregate fractional Preferred ADSs that would
otherwise have been issued to Chris-Craft stockholders.
8
<PAGE>
Set forth below is a table showing a range of prices for Preferred ADSs,
along with entries showing the corresponding consideration that a Chris-Craft
stockholder would receive in a mixed election, an all cash election and an all
stock election, as well as the value of the consideration a Chris-Craft
stockholder would receive (regardless of the election the stockholder makes).
The table does not reflect the additional $1 per share of consideration payable
to Chris-Craft stockholders if the merger closes after August 13, 2001, the
fact that cash will be paid in lieu of fractional shares or the effects of
proration or adjustment. Because the entries in the following table have been
derived using the complex formula contained in the Chris-Craft merger
agreement, the table entries may differ slightly from the results you would
obtain using the methodology illustrated above as a result of differences due
to rounding.
<TABLE>
<CAPTION>
Weighted Average Value of
Trading Price of All Cash All Stock Consideration
News Corporation Mixed Election Election Election (regardless
Preferred ADSs (Cash and Preferred ADSs) (Cash) (Preferred ADSs) of election)
---------------- ------------------------- -------- ---------------- -------------
<S> <C> <C> <C> <C>
$50.00 $34 + 1.1591 ADSs $91.95 1.839 ADSs $91.95
48.00 34 + 1.1591 89.64 1.867 89.64
46.00 34 + 1.1591 87.32 1.898 87.32
44.00 34 + 1.1591 85.00 1.932 85.00
42.00 34 + 1.1591 82.68 1.969 82.68
40.00 34 + 1.1591 80.36 2.009 80.36
38.00 34 + 1.1591 78.05 2.054 78.05
36.00 34 + 1.1591 75.73 2.104 75.73
34.00 34 + 1.1591 73.41 2.159 73.41
32.00 34 + 1.1591 71.09 2.222 71.09
30.00 34 + 1.1591 68.77 2.292 68.77
</TABLE>
As illustrated in the above table and examples, whether you make a mixed
election, an all cash election or an all stock election, the value of the
consideration that you will receive as of the closing date will be the same.
Although the value of the consideration you receive will not be altered,
under some circumstances, even if you make an all cash election, you may
receive some Preferred ADSs in lieu of cash and, even if you make an all stock
election, you may receive some cash in lieu of Preferred ADSs. For a discussion
of these circumstances, see "Proration" on page [ . ] of this Summary and
"Adjustment" on page [ . ] of this Summary. In addition, if you make an all
cash election or a mixed election in a forward merger, you may receive less
cash per share and more Preferred ADSs under the circumstances described under
"Adjustment" on page [ . ] of this Summary.
The Chris-Craft Reverse Merger
In a reverse merger, each Chris-Craft share will be converted into $36 in
cash (or $37 if the merger is completed after August 13, 2001) and 1.2273
Preferred ADSs. Unlike the forward merger, Chris-Craft stockholders have no
right to make elections in the reverse merger and the merger consideration is
only subject to adjustment in limited circumstances (such as to give effect to
stock splits).
9
<PAGE>
Set forth below is a table showing a range of prices for Preferred ADSs,
along with entries showing the corresponding consideration that a Chris-Craft
stockholder would receive in the reverse merger and the value of this
consideration. The table does not reflect the additional $1 per share of
consideration payable to Chris-Craft stockholders if the merger closes after
August 13, 2001, or the fact that cash will be paid in lieu of fractional
shares.
<TABLE>
<CAPTION>
Weighted Average
Trading Price of Consideration Received in
News Corporation Reverse Merger Value of
Preferred ADSs (Cash and Preferred ADSs) Consideration
---------------- ------------------------- -------------
<S> <C> <C>
$50.00 $36 + 1.2273 ADSs $97.37
48.00 36 + 1.2273 94.91
46.00 36 + 1.2273 92.46
44.00 36 + 1.2273 90.00
42.00 36 + 1.2273 87.55
40.00 36 + 1.2273 85.09
38.00 36 + 1.2273 82.64
36.00 36 + 1.2273 80.18
34.00 36 + 1.2273 77.73
32.00 36 + 1.2273 75.27
30.00 36 + 1.2273 72.82
</TABLE>
For example, a stockholder holding 100 shares of Chris-Craft stock would
receive $3,600 in cash and 122.73 Preferred ADSs in the reverse merger. Because
cash will be paid in lieu of fractional Preferred ADSs, the Chris-Craft
stockholder would receive, in lieu of the 122.73 Preferred ADSs, 122 Preferred
ADSs and cash representing the value of .73 Preferred ADSs. This value will be
derived from that stockholder's proportionate share of the proceeds from the
sale of the aggregate fractional Preferred ADSs that would have otherwise been
issued to Chris-Craft stockholders.
BHC Stockholders
(See page [ . ])
The consideration to be received by BHC stockholders in the BHC merger
depends on whether the BHC merger is effected as a forward merger or a reverse
merger.
The BHC Forward Merger
In a forward merger, BHC stockholders will have the right to make one of the
following elections for each of their BHC shares. The elections are subject to
proration and adjustment in some circumstances as described below.
<TABLE>
<CAPTION>
Consideration to be Received per BHC
Type of Election Common Share
---------------- ------------------------------------
<C> <S>
. Mixed Election...................... $66 in cash and 2.2278 Preferred ADSs
of News Corporation
. All Cash Election................... An amount in cash equivalent in value
to the per share consideration
received by a stockholder who made a
mixed election
. All Stock Election.................. A number of Preferred ADSs equivalent
in value to the per share
consideration received by a
stockholder who made a mixed election
</TABLE>
10
<PAGE>
We can approximate the value of the per share consideration to be received
by a stockholder who makes a mixed election as the sum of (1) $66 and (2) the
value of 2.2278 Preferred ADSs based on the volume weighted average trading
price for all trades of Preferred ADSs reported on the NYSE for each day of the
five trading days prior to the closing date of the BHC merger. We illustrate
this methodology in the examples below, which show you one way of approximating
what you will receive under the different election alternatives. However, we
will compute the actual amount of cash and number of Preferred ADSs you will
receive in the merger using a complex formula contained in the BHC merger
agreement. This complex formula produces substantially the same result as the
methodology used in the examples set forth below except for differences due to
rounding. For a summary of the formula contained in the BHC merger agreement,
see "Summary of the Transaction Documents--The BHC Merger Agreement--Merger
Consideration" on page [ . ].
The consideration to be paid to stockholders who make all cash or all stock
elections cannot be determined until the close of trading on the business day
immediately prior to the closing of the merger. We intend to announce these
amounts when known.
BHC stockholders who fail to make an election may be paid in cash, Preferred
ADSs, or a mixture of cash and Preferred ADSs, depending on the types of
elections of the other BHC stockholders.
Examples. Assuming, solely for purposes of the all cash election and all
stock election examples below, that the weighted average trading price for
Preferred ADSs is $40, then, subject to proration and adjustment, you can
approximate what you will receive in the manner illustrated below:
<TABLE>
<C> <S>
. Mixed Election...................... If you own 100 shares of BHC common
stock and you make a mixed election,
you will receive $66 multiplied by
100, or $6,600, in cash and 2.2278
multiplied by 100, or 222.78,
Preferred ADSs. The amount of cash and
number of Preferred ADSs you receive
in a mixed election is unaffected by
the assumed weighted average trading
price of Preferred ADSs of $40.
. All Cash Election................... If you own 100 shares of BHC common
stock and you make an all cash
election, you will receive
approximately $15,511.20 in cash. This
amount is the sum of:
. $66 multiplied by 100, or $6,600,
. plus 2.2278 multiplied by 100, or
222.78, Preferred ADSs, multiplied
by the assumed weighted average
trading price of Preferred ADSs of
$40, or $8,911.20.
. All Stock Election.................. If you own 100 shares of BHC common
stock and you make an all stock
election, you will receive
approximately 387.78 Preferred ADSs.
This amount is the result of dividing
the cash amount obtained in the all
cash election example above for 100
shares of BHC common stock, by the
assumed weighted average trading price
of Preferred ADSs of $40.
</TABLE>
Stockholders receiving any Preferred ADSs as consideration in the merger
will receive cash in lieu of any fractional Preferred ADSs. For example, if you
were entitled to receive 387.78 Preferred ADSs, as in the above example, you
would instead receive 387 Preferred ADSs and cash representing the value of .78
Preferred ADSs. This value will be derived from your proportionate share of the
proceeds from the sale of the aggregate fractional Preferred ADSs that would
otherwise have been issued to BHC stockholders.
11
<PAGE>
Set forth below is a table showing a range of prices for Preferred ADSs,
along with entries showing the corresponding consideration that a BHC
stockholder would receive in a mixed election, an all cash election and an all
stock election, as well as the value of the consideration a BHC stockholder
would receive (regardless of the election the stockholder makes). The table
does not reflect the fact that cash will be paid in lieu of fractional shares
or the effects of proration or adjustment. Because the entries in the following
table have been derived using the complex formula contained in the BHC merger
agreement, the table entries may differ slightly from the results you would
obtain using the methodology illustrated above as a result of differences due
to rounding.
<TABLE>
<CAPTION>
Weighted Average Value of
Trading Price of All Cash All Stock Consideration
News Corporation Mixed Election Election Election (regardless
Preferred ADSs (Cash and Preferred ADSs) (Cash) (Preferred ADSs) of election)
---------------- ------------------------- -------- ---------------- -------------
<S> <C> <C> <C> <C>
$50.00 $66 + 2.2278 ADSs $177.39 3.548 ADSs $177.39
48.00 66 + 2.2278 172.94 3.603 172.94
46.00 66 + 2.2278 168.48 3.663 168.48
44.00 66 + 2.2278 164.03 3.728 164.03
42.00 66 + 2.2278 159.57 3.799 159.57
40.00 66 + 2.2278 155.11 3.878 155.11
38.00 66 + 2.2278 150.66 3.965 150.66
36.00 66 + 2.2278 146.20 4.061 146.20
34.00 66 + 2.2278 141.75 4.169 141.75
32.00 66 + 2.2278 137.29 4.290 137.29
30.00 66 + 2.2278 132.83 4.428 132.83
</TABLE>
As illustrated in the above table and examples, whether you make a mixed
election, an all cash election or an all stock election, the value of the
consideration that you will receive as of the closing date will be the same.
Although the value of the consideration you receive will not be altered,
under some circumstances, even if you make an all cash election, you may
receive some Preferred ADSs in lieu of cash and, even if you make an all stock
election, you may receive some cash in lieu of Preferred ADSs. For a discussion
of these circumstances, see "Proration" on page [ . ] of this Summary and
"Adjustment" on page [ . ] of this Summary. In addition, if you make an all
cash election or a mixed election in a forward merger, you may receive less
cash per share and more Preferred ADSs under the circumstances described under
"Adjustment" on page [ . ] of this Summary.
12
<PAGE>
The BHC Reverse Merger
In a reverse merger, each BHC share will be converted into $69.30 in cash
and 2.3392 Preferred ADSs. Unlike the forward merger, BHC stockholders have no
right to make elections in the reverse merger and the merger consideration is
only subject to adjustments in limited circumstances (such as to give effect to
stock splits).
Set forth below is a table showing a range of prices for Preferred ADSs,
along with entries showing the corresponding consideration that a BHC
stockholder would receive in the reverse merger and the value of this
consideration. The table does not reflect the fact that cash will be paid in
lieu of fractional shares.
<TABLE>
<CAPTION>
Weighted Average
Trading Price of Consideration Received in
News Corporation Reverse Merger Value of
Preferred ADSs (Cash and Preferred ADSs) Consideration
---------------- ------------------------- -------------
<S> <C> <C>
$50.00 $69.30 + 2.3392 ADSs $186.26
48.00 69.30 + 2.3392 181.58
46.00 69.30 + 2.3392 176.90
44.00 69.30 + 2.3392 172.22
42.00 69.30 + 2.3392 167.55
40.00 69.30 + 2.3392 162.87
38.00 69.30 + 2.3392 158.19
36.00 69.30 + 2.3392 153.51
34.00 69.30 + 2.3392 148.83
32.00 69.30 + 2.3392 144.15
30.00 69.30 + 2.3392 139.48
</TABLE>
For example, a stockholder holding 100 shares of BHC stock would receive in
the reverse merger $6,930 in cash and 233.92 Preferred ADSs. Because cash will
be paid in lieu of fractional Preferred ADSs, the BHC stockholder would
receive, in lieu of the 233.92 Preferred ADSs, 233 Preferred ADSs and cash
representing the value of .92 Preferred ADSs. This value will be derived from
that stockholder's proportionate share of the proceeds from the sale of the
aggregate fractional Preferred ADSs that would have otherwise been issued to
BHC stockholders.
United Television Stockholders
(See page [ . ]
The consideration to be received by United Television stockholders in the
United Television merger depends on whether the United Television merger is
effected as a forward merger or a reverse merger.
The United Television Forward Merger
In a forward merger, United Television stockholders will have the right to
make one of the following elections for each of their United Television shares.
The elections are subject to proration and adjustment in some circumstances as
described below.
<TABLE>
<CAPTION>
Consideration to be Received per
Type of Election United Television Common Share
---------------- --------------------------------
<C> <S>
. Mixed Election...................... $60 in cash and 2.0253 Preferred ADSs
of News Corporation
. All Cash Election................... An amount in cash equivalent in value
to the per share consideration
received by a stockholder who made a
mixed election
. All Stock Election.................. A number of Preferred ADSs equivalent
in value to the per share
consideration received by a
stockholder who made a mixed election
</TABLE>
13
<PAGE>
We can approximate the value of the per share consideration to be received
by a stockholder who makes a mixed election as the sum of (1) $60 and (2) the
value of 2.0253 Preferred ADSs based on the volume weighted average trading
price for all trades of Preferred ADSs reported on the NYSE for each day of the
five trading days prior to the closing date of the United Television merger. We
illustrate this methodology in the examples below, which show you one way of
approximating what you will receive under the different election alternatives.
However, we will compute the actual amount of cash and number of Preferred ADSs
you will receive in the merger using a complex formula contained in the United
Television merger agreement. This complex formula produces substantially the
same result as the methodology used in the examples set forth below except for
differences due to rounding. For a summary of the formula contained in the
United Television merger agreement, see "Summary of the Transaction Documents--
The United Television Merger Agreement--Merger Consideration" on page [ . ].
The consideration to be paid to stockholders who make all cash or all stock
elections cannot be determined until the close of trading on the business day
immediately prior to the closing of the merger. We intend to announce these
amounts when known.
United Television stockholders who fail to make an election may be paid in
cash, Preferred ADSs or a mixture of cash and Preferred ADSs, depending on the
type of elections of the other United Television stockholders.
Examples. Assuming, solely for purposes of the all cash election and all
stock election examples below, that the weighted average trading price for
Preferred ADSs is $40, then, subject to proration and adjustment, you can
approximate what you will receive in the manner illustrated below:
<TABLE>
<C> <S>
. Mixed Election...................... If you own 100 shares of United
Television common stock and you make a
mixed election, you will receive $60
multiplied by 100, or $6,000, in cash
and 2.0253 multiplied by 100, or
202.53 Preferred ADSs. The amount of
cash and number of Preferred ADSs you
receive in a mixed election is
unaffected by the assumed weighted
average trading price of Preferred
ADSs of $40.
. All Cash Election................... If you own 100 shares of United
Television common stock and you make
an all cash election, you will receive
approximately $14,101.20 in cash. This
amount is the sum of:
. $60 multiplied by 100, or $6,000,
plus
. 2.0253 multiplied by 100, or 202.53,
Preferred ADSs, multiplied by the
assumed weighted average trading
price of Preferred ADSs of $40, or
$8,101.20.
. All Stock Election.................. If you own 100 shares of United
Television common stock and you make
an all stock election, you will
receive approximately 352.53 Preferred
ADSs. This amount is the result of
dividing the cash amount obtained in
the all cash election example above
for 100 shares of United Television
common stock by the assumed weighted
average trading price of Preferred
ADSs of $40.
</TABLE>
Stockholders receiving any Preferred ADSs as consideration in the merger
will receive cash in lieu of any fractional Preferred ADSs. For example, if you
were entitled to receive 352.53 Preferred ADSs, as in the above
14
<PAGE>
example, you would instead receive 352 Preferred ADSs and cash representing the
value of .53 Preferred ADSs. This value will be derived from your proportionate
share of the proceeds from the sale of the aggregate fractional Preferred ADSs
that would otherwise have been issued to United Television stockholders.
Set forth below is a table showing a range of prices for Preferred ADSs,
along with entries showing the corresponding consideration that a United
Television stockholder would receive in a mixed election, an all cash election
and an all stock election, as well as the value of the consideration a United
Television stockholder would receive (regardless of the election the
stockholder makes). The table does not reflect the fact that cash will be paid
in lieu of fractional shares or the effects of proration or adjustment. Because
the entries in the following table have been derived using the complex formula
contained in the United Television merger agreement, the table entries may
differ slightly from the results you would obtain using the methodology
illustrated above as a result of differences due to rounding.
<TABLE>
<CAPTION>
Weighted Average All Stock Value of
Trading Price of Mixed Election All Cash Election Consideration
News Corporation (Cash and Election (Preferred (regardless
Preferred ADSs Preferred ADSs) (Cash) ADSs) of election)
---------------- --------------- -------- ---------- -------------
<S> <C> <C> <C> <C>
$50.00 $60 + 2.0253 ADSs $161.27 3.225 ADSs $161.27
48.00 60 + 2.0253 157.21 3.275 157.21
46.00 60 + 2.0253 153.16 3.330 153.16
44.00 60 + 2.0253 149.11 3.389 149.11
42.00 60 + 2.0253 145.06 3.454 145.06
40.00 60 + 2.0253 141.01 3.525 141.01
38.00 60 + 2.0253 136.96 3.604 136.96
36.00 60 + 2.0253 132.91 3.692 132.91
34.00 60 + 2.0253 128.86 3.790 128.86
32.00 60 + 2.0253 124.81 3.900 124.81
30.00 60 + 2.0253 120.76 4.025 120.76
</TABLE>
As illustrated in the above table and examples, whether you make a mixed
election, an all cash election or an all stock election, the value of the
consideration that you will receive as of the closing date will be the same.
Although the value of the consideration you receive will not be altered,
under some circumstances, even if you make an all cash election, you may
receive some Preferred ADSs in lieu of cash and, even if you make an all stock
election, you may receive some cash in lieu of Preferred ADSs. For a discussion
of these circumstances, see "Proration" on page [ . ] of this Summary and
"Adjustment" on page [ . ] of this Summary. In addition, if you make an all
cash election or a mixed election in a forward merger, you may receive less
cash per share and more Preferred ADSs under the circumstances described under
"Adjustment" on page [ . ] of this Summary.
15
<PAGE>
The United Television Reverse Merger
In a reverse merger, each United Television share will be converted into $63
in cash and 2.1266 Preferred ADSs. Unlike the forward merger, United Television
stockholders have no right to make elections in the reverse merger and the
merger consideration is only subject to adjustments in limited circumstances
(such as to give effect to stock splits).
Set forth below is a table showing a range of prices for Preferred ADSs,
along with entries showing the corresponding consideration that a United
Television stockholder would receive in the reverse merger and the value of
this consideration. This table does not reflect the fact that cash will be paid
in lieu of fractional shares.
<TABLE>
<CAPTION>
Weighted Average
Trading Price of Consideration Received in
News Corporation Reverse Merger Value of
Preferred ADSs (Cash and Preferred ADSs) Consideration
---------------- ------------------------- -------------
<S> <C> <C>
$50.00 $63 + 2.1266 ADSs $169.33
48.00 63 + 2.1266 165.08
46.00 63 + 2.1266 160.82
44.00 63 + 2.1266 156.57
42.00 63 + 2.1266 152.32
40.00 63 + 2.1266 148.06
38.00 63 + 2.1266 143.81
36.00 63 + 2.1266 139.56
34.00 63 + 2.1266 135.30
32.00 63 + 2.1266 131.05
30.00 63 + 2.1266 126.80
</TABLE>
For example, a stockholder holding 100 shares of United Television stock
would receive in the reverse merger $6,300 in cash and 212.66 Preferred ADSs.
Because cash will be paid in lieu of fractional Preferred ADSs, the United
Television stockholder would receive, in lieu of the 212.66 Preferred ADSs, 212
Preferred ADSs and cash representing the value of .66 Preferred ADSs. This
value will be derived from that stockholder's proportionate share of the
proceeds from the sale of the aggregate fractional Preferred ADSs that would
have otherwise been issued to United Television stockholders.
Proration
(See pages [ . ] (Chris-Craft), [ . ] (BHC) and [ . ] (United Television))
The aggregate amount of cash and the aggregate number of Preferred ADSs
which will be paid as merger consideration in each of the three mergers is
fixed. The aggregate number of Preferred ADSs that will be issued and the
aggregate amount of cash that will be paid in the Chris-Craft forward merger is
1.15908 and $34 (or $35 if the merger is completed after August 13, 2001),
respectively, multiplied by the total number of Chris-Craft shares outstanding
immediately prior to the completion of the Chris-Craft merger. The aggregate
number of Preferred ADSs that will be issued and the aggregate amount of cash
that will be paid in the BHC forward merger is 2.22786 and $66, respectively,
multiplied by the total number of BHC shares outstanding immediately prior to
the completion of the BHC merger. The aggregate number of Preferred ADSs that
will be issued and the aggregate amount of cash that will be paid in the United
Television forward merger is 2.02530 and $60, respectively, multiplied by the
total number of United Television shares outstanding immediately prior to the
completion of the United Television merger.
The all cash elections and the all stock elections in each of the three
forward mergers are subject to proration to preserve these fixed limitations on
the amount of cash to be paid and number of Preferred ADSs to be issued in each
merger. As a result, even if you make the all cash election or the all stock
election, you may nevertheless receive a mix of cash and stock. Holders who
make a mixed election will not be subject to this proration.
16
<PAGE>
Example 1. If too many stockholders in your merger have made the all cash
election, then all stockholders making all stock elections and stockholders
failing to make an election will receive only Preferred ADSs, and stockholders
making all cash elections will receive as much cash as is available for this
group (after honoring the cash portion to be paid to all stockholders making
mixed elections), on a proportionate basis, and will receive the rest of their
consideration in Preferred ADSs.
Example 2. If too many stockholders in your merger have made the all stock
election, then all stockholders making all cash elections and stockholders
failing to make an election will receive only cash, and the stockholders making
all stock elections will receive as many Preferred ADSs as are available for
this group (after honoring the stock portion to be paid to all stockholders
making mixed elections), on a proportionate basis, and will receive the rest of
their consideration in cash.
Adjustment
(See pages [ . ] (Chris-Craft), [ . ] (BHC) and [ . ] (United Television))
In a forward merger, an all cash election and a mixed election are subject
to an adjustment to the extent required to preserve the tax-free treatment of
the receipt of Preferred ADSs by Chris-Craft, BHC and United Television
stockholders, as applicable, for U.S. federal income tax purposes.
This adjustment could occur in your merger if the amount of cash to be paid
as consideration in your merger would exceed 55% of the aggregate value of cash
and Preferred ADSs paid as consideration in your merger based on the closing
price of Preferred ADSs reported on the NYSE on the trading day immediately
prior to the closing of the merger. If this type of adjustment is made with
respect to your merger, you may receive more Preferred ADSs and less cash than
you elected, even after giving effect to proration and even if you have made a
mixed election.
This adjustment will be made in each merger if the closing price of
Preferred ADSs on the trading day immediately prior to the closing of the
merger is less than approximately $24.
Election Procedures
(See pages [ . ] (Chris-Craft), [ . ] (BHC) and [ . ] (United Television))
Concurrently with the mailing of this joint proxy statement/prospectus, we
will mail you a form with instructions for making the mixed election, the all
cash election or the all stock election, and a letter of transmittal that you
must properly complete and deliver to the exchange agent along with your stock
certificates (or a properly completed notice of guaranteed delivery). Do not
send your stock certificates or letter of transmittal and form of election with
your proxy card. Letters of transmittal and forms of election and stock
certificates (or a properly completed notice of guaranteed delivery) must be
received by the exchange agent by the election deadline, which will be 10:00
a.m. New York City time on the date of the closing of your merger. Since we do
not know the closing date, we intend to publicly announce the proposed closing
date for each of the mergers three to five business days prior to the proposed
date. If you fail to submit a properly completed letter of transmittal and form
of election, together with your stock certificates (or a properly completed
notice of guaranteed delivery), prior to the deadline, you will be deemed to
have made a non-election. As a non-electing holder, you will be paid an
equivalent value per share to the amount paid per share to holders making
elections, but you may be paid all in cash, all in Preferred ADSs, or in part
cash and in part Preferred ADSs, depending on the pool of cash and Preferred
ADSs available for paying merger consideration after honoring the all cash
elections, all stock elections and mixed elections that other stockholders have
made. If you own Chris-Craft, BHC or United Television shares in a "street
name' through a bank, broker or other financial institution, and you wish to
make an election, you should seek instructions from the financial institution
holding your shares concerning how to make your election.
17
<PAGE>
Elections are applicable only to forward mergers. If your merger is effected
as a reverse merger, the amount of cash and Preferred ADSs you receive will be
fixed as described above.
Preferred ADSs
(See page [ . ])
Preferred ADSs are American depositary shares of News Corporation which are
traded on the New York Stock Exchange under the symbol "NWS.A". Each Preferred
ADS represents four preferred limited voting ordinary shares of News
Corporation, which are traded on the Australian Stock Exchange under the symbol
"NCPDP".
Our Recommendations to Stockholders
(See pages [ . ] (Chris-Craft), [ . ] (BHC) and [ . ] (United Television))
To Chris-Craft Stockholders
The Chris-Craft board of directors believes that the Chris-Craft merger
agreement and the Chris-Craft merger are fair to and in the best interests of
Chris-Craft and its stockholders and has approved and declared advisable the
Chris-Craft merger agreement and the Chris-Craft merger. The Chris-Craft board
of directors recommends that Chris-Craft stockholders vote FOR the Chris-Craft
merger proposal.
To BHC Stockholders
The BHC board of directors believes that the BHC merger agreement and the
BHC merger are fair to and in the best interests of BHC and its stockholders
and has approved and declared advisable the BHC merger agreement and the BHC
merger. The BHC board of directors recommends that BHC stockholders vote FOR
the BHC merger proposal.
To United Television Stockholders
The United Television board of directors believes that the United Television
merger agreement and the United Television merger are fair to and in the best
interests of United Television and its stockholders and has approved and
declared advisable the United Television merger agreement and the United
Television merger. The United Television board of directors recommends that
United Television stockholders vote FOR the United Television merger proposal.
Votes Required to Approve the Proposals
(See pages [ . ] (Chris-Craft), [ . ] (BHC) and [ . ] (United Television))
Chris-Craft Stockholders
Chris-Craft stockholders will vote on a proposal to approve and adopt the
Chris-Craft merger agreement. The vote required for approval and adoption is
the affirmative vote of:
. a majority of the votes entitled to be cast by stockholders at the Chris-
Craft special meeting (including the Chris-Craft convertible preferred
stockholders), voting together as a single class; and
. a majority of the votes entitled to be cast by holders of Chris-Craft
convertible preferred stock at the Chris-Craft special meeting, voting as
a separate class.
18
<PAGE>
As of the record date, Chris-Craft directors and executive officers and
their affiliates (none of whom have entered into agreements as to how they will
vote with respect to the Chris-Craft merger proposal) owned common stock, class
B common stock and convertible preferred stock entitling them to cast
approximately [ . ]% of the votes entitled to be cast by stockholders voting
together as a single class at the Chris-Craft special meeting, and convertible
preferred stock entitling them to cast approximately [ . ]% of the votes
entitled to be cast by holders of convertible preferred stock at the Chris-
Craft special meeting.
BHC Stockholders
BHC stockholders will vote on a proposal to approve and adopt the BHC merger
agreement. The vote required for approval and adoption is the affirmative vote
of a majority of the votes entitled to be cast by holders of BHC's class A and
class B common stock at the BHC special meeting, voting together as a single
class.
Chris-Craft owns approximately 80% of the common stock, which shares
represent approximately 97% of the voting power, of BHC. Accordingly, Chris-
Craft owns sufficient shares to approve the BHC merger proposal. Chris-Craft
has agreed with News Corporation in the BHC voting agreement to vote Chris-
Craft's BHC shares in favor of the BHC merger proposal.
As of the record date, BHC directors and executive officers and their
affiliates (none of whom have entered into agreements as to how they will vote
with respect to the BHC merger proposal) owned class A common stock and class B
common stock entitling them to cast approximately [ . ]% of the votes entitled
to be cast at the BHC special meeting. This number does not include the BHC
common stock that is owned by Chris-Craft.
United Television Stockholders
United Television stockholders will vote on a proposal to approve and adopt
the United Television merger agreement. The vote required for approval and
adoption is the affirmative vote of a majority of the votes entitled to be cast
by stockholders at the United Television special meeting.
BHC owns approximately 58% of United Television's voting shares and,
accordingly, sufficient shares to approve the United Television merger
proposal. BHC has agreed with News Corporation in the United Television voting
agreement to vote BHC's United Television shares in favor of the United
Television merger proposal.
As of the record date, United Television directors and executive officers
and their affiliates (none of whom have entered into agreements as to how they
will vote with respect to the United Television merger proposal), excluding
BHC, owned United Television common stock entitling them to cast approximately
[ . ]% of the votes entitled to be cast at the United Television special
meeting.
Possibility of BHC and United Television Mergers Without Chris-Craft Merger
It is possible that the BHC and United Television mergers could occur
without the Chris-Craft merger occurring if the requisite vote to approve the
Chris-Craft merger proposal was not obtained and the other conditions to the
completion of the BHC and United Television mergers were satisfied. This is
possible because BHC and United Television stockholders owning sufficient
shares to approve the BHC and United Television mergers have entered into the
voting agreements described above, but no Chris-Craft stockholders have entered
into voting agreements with respect to the Chris-Craft merger proposal. If the
BHC and United Television mergers were to occur without the Chris-Craft merger,
Chris-Craft would receive the same consideration, in respect of the
approximately 18,010,000 BHC shares it owns (as of November 30, 2000), as BHC's
other stockholders, which consideration would be less than the aggregate value
of the consideration received by Chris-Craft stockholders in the Chris-Craft
merger. In this event, any cash received by Chris-Craft in a forward merger
would be taxable to Chris-Craft and both cash and Preferred ADSs received by
Chris-Craft in a reverse merger would be taxable to Chris-Craft.
19
<PAGE>
Opinions of Financial Advisors
(See pages [ . ] (Chris-Craft), [ . ] (BHC) and [ . ] (United Television))
In deciding to approve and declare advisable the merger agreements, the
board of directors of Chris-Craft and the special committees of the boards of
directors of BHC and United Television each received an opinion from its
financial advisor. These opinions are addressed to the board of directors or
special committees and do not constitute recommendations to any stockholder as
to the form of consideration to be elected in the mergers or any other matters
relating to the mergers.
Opinion to the board of directors of Chris-Craft
On August 13, 2000, the board of directors of Chris-Craft received a written
opinion from its financial advisor, Allen & Company Incorporated, substantially
to the effect that, based upon and subject to the matters set forth in the
opinion, as of the date of the opinion, the merger consideration to be received
by Chris-Craft stockholders in connection with the Chris-Craft merger was fair
from a financial point of view. We have included this opinion in this joint
proxy statement/prospectus as Annex D. Chris-Craft urges its stockholders to
read the opinion of Allen & Company in its entirety for a description of the
procedures followed, assumptions made, matters considered and limitations on
the review undertaken by Allen & Company.
Opinion to the special committee of the board of directors of BHC
On August 13, 2000, the special committee of the board of directors of BHC
received an oral opinion from its financial advisor, Wasserstein Perella & Co.,
Inc., subsequently confirmed in writing, substantially to the effect that,
based upon and subject to the matters set forth in the opinion, as of the date
of the opinion, the merger consideration to be received by BHC stockholders
(other than Chris-Craft) in connection with the BHC merger was fair from a
financial point of view. We have included this opinion in this joint proxy
statement/prospectus as Annex E. BHC urges its stockholders to read the opinion
of Wasserstein Perella in its entirety for a description of the procedures
followed, assumptions made, matters considered and limitations on the review
undertaken by Wasserstein Perella.
Opinion to the special committee of the board of directors of United
Television
On August 13, 2000, the special committee of the board of directors of
United Television received an oral opinion from its financial advisor, Bear,
Stearns & Co. Inc., subsequently confirmed in writing, substantially to the
effect that, based upon and subject to the matters set forth in the opinion, as
of the date of the opinion, the merger consideration to be received by United
Television's public stockholders in connection with the United Television
merger was fair from a financial point of view. We have included this opinion
in this joint proxy statement/prospectus as Annex F. United Television urges
its stockholders to read the opinion of Bear Stearns in its entirety for a
description of the procedures followed, assumptions made, matters considered
and limitations on the review undertaken by Bear Stearns.
Additional Interests of our Executive Officers and Boards of Directors as a
Result of the Mergers
(See page [ . ])
Some of the directors and executive officers of Chris-Craft, BHC and United
Television have interests in the mergers that are different from, or are in
addition to, the interests of their company's stockholders. You should be aware
of these interests because they might conflict with yours. These interests
include the potential for employment with a surviving entity, special bonuses
and severance payments.
20
<PAGE>
Conditions to the Mergers
(See pages [ . ] (Chris-Craft), [ . ] (BHC) and [ . ] (United Television))
The completion of each merger depends on the satisfaction of a number of
conditions, including those set forth below. Because the three mergers have a
number of conditions in common, we have described those conditions first,
followed by conditions that are particular to each merger.
Conditions common to the Chris-Craft, BHC and United Television mergers
We may not complete the Chris-Craft, BHC or United Television mergers unless
a number of conditions are satisfied or waived. Conditions that are common to
all three mergers include:
. the absence of any law, order or injunction preventing that merger;
. the clearance of that merger under antitrust laws and the receipt of
required regulatory approvals, including the approval of the FCC;
. the material accuracy as of the closing of the parties' representations
and warranties contained in the applicable merger agreement;
. the performance by each party of its obligations under the applicable
merger agreement; and
. as to each merger structured as a forward merger, the receipt by the
parties to the merger of:
. legal opinions from their respective tax counsel as to the tax-free
receipt of Preferred ADSs in the merger; and
. a favorable private letter ruling from the IRS to the effect that the
merger will satisfy the continuity of business enterprise requirement
described in section 1.368-1(d) of the Treasury Regulations.
Additional conditions to the Chris-Craft merger
We may not complete the Chris-Craft merger unless a number of conditions are
satisfied or waived in addition to the common conditions listed above. These
include:
. adoption of the Chris-Craft merger agreement by the required stockholder
vote; and
. satisfaction or waiver of all conditions to the parties' obligations to
complete the BHC merger and the United Television merger, except the
completion of the Chris-Craft merger, and in the case of the United
Television merger, the completion of the BHC merger; provided that this
condition may not be enforced by Chris-Craft because of any failure of
BHC or United Television stockholders to approve their merger at a duly
held meeting.
Additional conditions to the BHC merger
We may not complete the BHC merger unless a number of conditions are
satisfied or waived in addition to the common conditions listed above. These
include:
. completion of the Chris-Craft merger, or the failure of the stockholders
of Chris-Craft to approve the Chris-Craft merger at a duly held
stockholders' meeting;
. adoption of the BHC merger agreement by the required stockholder vote;
and
. satisfaction or waiver of all conditions to the parties' obligations to
complete the United Television merger; provided, however, that a party
may not enforce this condition if that party prevented the satisfaction
of those conditions; and, provided further, that BHC may not enforce this
condition to the BHC merger because of the failure of the United
Television stockholders to approve their merger at a duly held meeting.
21
<PAGE>
Additional conditions to the United Television merger
We may not complete the United Television merger unless a number of
additional conditions are satisfied or waived in addition to the common
conditions listed above. These include:
. completion of the Chris-Craft merger, or the failure of the stockholders
of Chris-Craft to approve the Chris-Craft merger at a duly held
stockholders' meeting;
. adoption of the United Television merger agreement by the required
stockholder vote; and
. satisfaction or waiver of all conditions to the parties' obligations to
complete the BHC merger; provided, however, that a party may not enforce
this condition if that party prevented the satisfaction of those
conditions.
Restrictions on Alternate Transactions
(See pages [ . ] (Chris-Craft), [ . ] (BHC) and [ . ] (United Television))
The merger agreements limit the ability of Chris-Craft, BHC and United
Television to endorse, initiate, solicit, enter into or continue discussions
with any third parties about any potentially competing business combinations or
transactions; provided, however, that each of Chris-Craft, BHC and United
Television may, prior to receiving stockholder approval of its merger,
participate in discussions and negotiations with a third party making an
unsolicited proposal regarding the acquisition of more than 50% of the voting
power of its capital stock or all or substantially all of its assets for
consideration which its board of directors concludes in good faith would be
more favorable to its stockholders than the applicable merger with News
Corporation. However, the foregoing activities would not affect the obligations
of the parties under the two voting agreements.
Termination of the Merger Agreements
(See pages [ . ] (Chris-Craft), [ . ] (BHC) and [ . ] (United Television))
Termination of the Chris-Craft merger agreement
News Corporation and Chris-Craft may agree to terminate the Chris-Craft
merger agreement at any time prior to completing the Chris-Craft merger. In
addition, either company may terminate the Chris-Craft merger agreement prior
to completing the Chris-Craft merger if specified events occur. These include:
. if Chris-Craft stockholders fail to approve and adopt the Chris-Craft
merger at a duly held stockholders' meeting;
. if the Chris-Craft merger is not completed on or prior to November 13,
2001;
. if any governmental authority issues a final and non-appealable order or
takes any other action permanently restraining, enjoining or otherwise
prohibiting completion of the Chris-Craft merger;
. if the BHC or United Television merger agreement is terminated; provided
that a party may not terminate the Chris-Craft merger agreement if it
prevented the completion of the BHC or United Television merger; and
provided further that Chris-Craft may not terminate the Chris-Craft
merger agreement because the BHC or United Television stockholders fail
to approve their respective company's merger agreement; or
. if the other party breaches, and cannot timely cure, its representations,
warranties or covenants in the Chris-Craft merger agreement.
22
<PAGE>
Termination of the BHC merger agreement
News Corporation and BHC may agree to terminate the BHC merger agreement at
any time prior to completing the BHC merger. In addition, either company may
terminate the BHC merger agreement prior to completing the BHC merger if
specified events occur. These include:
. if BHC stockholders fail to approve and adopt the BHC merger at a duly
held stockholders' meeting; provided that BHC may not terminate the BHC
merger agreement if the reason for this failure is Chris-Craft's breach
of its voting agreement with News Corporation;
. if the BHC merger is not completed on or prior to November 13, 2001;
. if any governmental authority issues a final and non-appealable order or
takes any other action permanently restraining, enjoining or otherwise
prohibiting completion of the BHC merger;
. if the Chris-Craft merger agreement is terminated; provided that neither
party may terminate the BHC merger agreement if it prevented the
completion of the Chris-Craft merger; and provided further that BHC may
not terminate the BHC merger agreement because Chris-Craft stockholders
fail to approve the Chris-Craft merger agreement;
. if the United Television merger agreement is terminated; provided that
neither party may terminate the BHC merger agreement if it prevented the
completion of the United Television merger; and provided further that BHC
may not terminate the BHC merger agreement because United Television
stockholders fail to approve the United Television merger agreement; or
. if the other party breaches, and cannot timely cure, its representations,
warranties or covenants in the BHC merger agreement.
Termination of the United Television merger agreement
News Corporation and United Television may agree to terminate the United
Television merger agreement at any time prior to completing the United
Television merger. In addition, either company may terminate the United
Television merger agreement prior to completing the United Television merger if
specified events occur. These include:
. if United Television stockholders fail to approve and adopt the United
Television merger at a duly held stockholders' meeting; provided that
United Television may not terminate the United Television merger
agreement if the reason for this failure is BHC's breach of its voting
agreement with News Corporation;
. if the United Television merger is not completed on or prior to November
13, 2001;
. if any governmental authority issues a final and non-appealable order or
takes any other action permanently restraining, enjoining or otherwise
prohibiting the completion of the United Television merger;
. if the Chris-Craft merger agreement is terminated; provided that neither
party may terminate the United Television merger agreement if it
prevented the completion of the Chris-Craft merger; and provided further
that United Television may not terminate the United Television merger
agreement because Chris-Craft stockholders fail to approve the Chris-
Craft merger agreement;
. if the BHC merger agreement is terminated; provided that neither party
may terminate the United Television merger agreement if it prevented the
completion of the BHC merger; or
. if the other party breaches, and cannot timely cure, its representations,
warranties or covenants in the United Television merger agreement.
23
<PAGE>
Termination Fees
None of the parties is required to pay a "termination" or "break-up" fee or
make any similar payment to another party if any merger agreement is
terminated.
Related Transactions
(See page [ . ])
Simultaneously with the closing of the forward mergers, News Publishing (the
News Corporation subsidiary that Chris-Craft, BHC and United Television would
merge into in a forward merger) will contribute substantially all of the
television assets and liabilities of Chris-Craft, BHC and United Television to
a newly-formed subsidiary of Fox Entertainment Group in exchange for shares of
Fox Entertainment Group's class A common stock. The remaining assets and
liabilities (including Chris-Craft's industrial business) will remain with News
Publishing. As a result, News Corporation's indirect equity interest in Fox
Entertainment Group will increase from approximately 82.76% to approximately
85.25%, and its indirect voting interest will increase from approximately
97.79% to approximately 97.84%. Upon receipt of these Chris-Craft, BHC and
United Television assets and liabilities, the newly-formed subsidiary of Fox
Entertainment Group will simultaneously transfer title to all of the FCC
licenses of the ten television stations historically owned and operated by
Chris-Craft, BHC and United Television to Fox Television Stations, Inc., the
ownership structure of which is described under "Related Transactions" on page
[ . ]. In connection with the license transfer, the newly formed Fox
Entertainment Group subsidiary will enter into an operating agreement with Fox
Television Stations which will provide that Fox Television Stations will own
the licenses and control the management and operation of the acquired
television stations. The proposed transfer of these assets and liabilities,
including the licenses, and the operating agreement with Fox Television
Stations are subject to approval by the FCC.
If the mergers are effected as reverse mergers, simultaneously with the
closing, the Preferred ADSs to be issued in the mergers will be contributed to
Fox Entertainment Group in exchange for Fox Entertainment Group class A common
stock. As a result of this contribution, News Corporation's indirect equity
interest in Fox Entertainment Group will increase from approximately 82.76% to
approximately 85.45%, and its indirect voting interest will increase from
approximately 97.79% to approximately 97.84%. Following the reverse mergers,
Fox Entertainment Group will transfer the non-television operating assets and
liabilities acquired in the mergers, including Chris-Craft's industrial
business, to a subsidiary of News Corporation. The television assets and
liabilities, or the ownership interests in Chris-Craft and its subsidiaries,
will be transferred simultaneously with the closing of the reverse mergers to
Fox Television Stations, subject to approval by the FCC.
Regulatory Matters
(See pages [ . ] and [ . ])
Each of the three mergers is subject to the receipt of regulatory approvals,
including the approval of the FCC and the expiration of applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (HSR Act).
The parties have agreed to use their reasonable best efforts to obtain all
regulatory and other required approvals, and to do so as expeditiously as
possible. Premerger Notification and Report Forms were filed with the Federal
Trade Commission and the Department of Justice under the HSR Act, by News
Corporation on October 12, 2000 and by Chris-Craft (the latter on its own
behalf and on behalf of BHC and United Television) on October 11, 2000. On
November 9, 2000, the Antitrust Division of the Department of Justice issued a
request to News Corporation and Chris-Craft for additional information.
An application with the FCC was filed on September 18, 2000. On October 27,
2000, a coalition of advocacy and community groups filed a Petition to Deny and
Motion to Dismiss the FCC application, and Fox
24
<PAGE>
Television Stations and Chris-Craft (for itself and BHC and United Television)
filed a Joint Opposition on November 9, 2000. The Petitioners filed a reply on
November 22, 2000.
The parties to each of the merger agreements have agreed that they will not
be required to make divestitures, or accept substantial limitations on the
operations, of specified television assets held by each of them.
Material U.S. Federal Income Tax Consequences
(See page [ . ])
With respect to each merger effected as a forward merger, the parties to the
merger will obtain an opinion from their respective legal counsel substantially
to the effect that, for U.S. federal income tax purposes, (1) the merger will
qualify as a reorganization within the meaning of section 368(a) of the
Internal Revenue Code, (2) no income, gain or loss will be recognized by the
parties to the merger as a result of the merger, and (3) no income, gain or
loss will be recognized by any stockholder of the acquired corporation as a
result of the merger (except to the extent cash is received by a stockholder in
connection with the merger). The tax opinions issued in connection with each
forward merger will rely in part on a ruling by the IRS that each merger
satisfies the continuity of business requirement described in section 1.368-
1(d) of the Treasury Regulations. If a merger is restructured as a reverse
merger under the circumstances described in this joint proxy
statement/prospectus, then the merger will not qualify as a reorganization
within the meaning of section 368(a) of the Internal Revenue Code, and each
stockholder in that merger will be treated for U.S. federal income tax purposes
as having sold their stock in that merger in a fully taxable transaction.
Accounting Treatment
(See page [ . ])
News Corporation will account for each of the mergers as a purchase, and
Chris-Craft, BHC and United Television will become controlled entities in
accordance with Australian and U.S. generally accepted accounting principles.
Appraisal Rights
(See page [ . ])
Under the laws of the State of Delaware, where Chris-Craft, BHC and United
Television are incorporated, stockholders of Chris-Craft, BHC and United
Television who comply with the applicable requirements of Delaware law will
have the right to receive an appraisal of the fair value of their shares. We
have included a copy of the provisions of Delaware law that govern appraisal
rights as Annex G to this joint proxy statement/prospectus.
25
<PAGE>
Comparative Market Price Data
(See page [ . ])
We present below the per share closing prices for Preferred ADSs of News
Corporation (symbol: NWS.A) and Chris-Craft common stock (symbol: CCN), each as
quoted on the NYSE, BHC class A common stock (symbol: BHC) as quoted on the
AMEX and United Television common stock (symbol: UTVI) as quoted on NASDAQ.
These prices are presented on the following dates:
. August 11, 2000, the last trading day before the public announcement of
the signing of the Chris-Craft, BHC and United Television merger
agreements and the day on which Viacom Inc. issued a press release to the
effect that it had terminated discussions with Chris-Craft regarding an
acquisition; and
. [ . ], the latest practicable date before the printing of this joint
proxy statement/prospectus.
<TABLE>
<CAPTION>
News Corporation Chris-Craft BHC Class A United Television
Preferred ADS Price Common Stock Price Common Stock Price Common Stock Price
------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
August 11, 2000......... $44 1/8 $62 $141 3/4 $136
[ . ] , 2000............ $[ . ] $[ . ] $[ . ] $[ . ]
</TABLE>
Chris-Craft stockholders are urged to obtain current market quotations for
Preferred ADSs and Chris-Craft common stock before making a decision with
respect to the Chris-Craft merger. BHC stockholders are urged to obtain current
market quotations for Preferred ADSs and BHC class A common stock before making
a decision with respect to the BHC merger. United Television stockholders are
urged to obtain current market quotations for Preferred ADSs and United
Television common stock before making a decision with respect to the United
Television merger.
Currencies and Exchange Rates
(See page [ . ])
Unless otherwise stated or the context otherwise requires, all references in
this joint proxy statement/prospectus to "A$" are to Australian dollars and
references to "$" or "US$" are to U.S. dollars.
For your convenience, this joint proxy statement/prospectus contains
translations of certain A$ amounts into US$ amounts at specified exchange
rates. These translations of A$ into US$ and of US$ into A$ have been made at
the indicated Noon Buying Rate in New York City for cable transfers in
Australian dollars as certified for customs purposes by The Federal Reserve
Bank of New York. On [ . ], 2000, the latest practicable date for which
exchange rate information was available before the printing of this joint proxy
statement/prospectus, the Noon Buying Rate was US$ [ . ] per A$1.00. These
translations should not be construed as representations that the A$ amounts
actually represent such US$ amounts or could be converted to US$ at the rates
indicated.
For a five-year history of relevant exchange rates, see "Currency of
Presentation, Exchange Rates and Certain Definitions" on page [ . ].
26
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
NEWS CORPORATION
Selected Historical Financial Data
The selected historical financial data of News Corporation has been derived
from the audited historical consolidated financial statements and related notes
of News Corporation for each of the years in the five-year period ended June
30, 2000 and from the unaudited consolidated financial statements of News
Corporation for the three months ended September 30, 2000 and 1999. The
historical data is only a summary, and should be read in conjunction with the
historical consolidated financial statements and related notes contained in the
annual reports of News Corporation, its Report on Form 6-K filed on November 1,
2000 and its Report on Form 6-K filed on November 10, 2000 which have been
filed with the SEC and incorporated by reference into this joint proxy
statement/prospectus. To obtain copies of these documents, see "Where You Can
Find More Information" on page [ . ]. The selected historical financial data is
set forth in Australian dollars with a translation of amounts for the three
months ended September 30, 2000 (A-GAAP) and the fiscal year ended June 30,
2000 (US-GAAP) into U.S. dollars at A$1.00 = US$0.5372, the Noon Buying Rate on
December 1, 2000, solely for your convenience.
The audited consolidated financial statements of News Corporation contained
in its Report on Form 6-K filed on November 1, 2000 have been prepared in
accordance with Australian generally accepted accounting principles (A-GAAP).
A-GAAP differs significantly in certain respects from U.S. generally accepted
accounting principles (US-GAAP). A discussion of these significant differences
is found in Note 18 of News Corporation's audited consolidated financial
statements.
<TABLE>
<CAPTION>
Three months ended
Fiscal Years Ended June 30(1), September 30,
-------------------------------------------------- ------------------------------
1996 1997 1998 1999 2000 1999 2000 2000
--------- --------- --------- --------- --------- -------- ----------- --------
(unaudited) (In US$)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Amounts in Accordance
with A-GAAP
Income statement data:
Revenues................ A$13,088 A$14,389 A$18,949 A$21,774 A$22,443 A$ 4,852 A$ 5,620 US$3,019
Operating income........ 1,593 1,700 2,646 2,752 2,742 606 676 363
Equity in net earnings
(losses) of associated
companies.............. 351 393 259 (66) (125) (33) (32) (17)
Interest expense, net... 605 634 770 775 822 204 216 116
Other income............ 23 15 7 2 8 -- -- --
Income before abnormal
items.................. 1,263 1,295 1,800 1,471 1,259 251 259 139
Net income (loss)....... 1,020 720 1,682 1,088 1,921 251 (439) (236)
Income before abnormal
items
per share.............. A$ 0.40 A$ 0.38 A$ 0.46 A$ 0.37 A$ 0.30 A$0.061 A$ 0.061 US$0.033
Net income (loss) per
share.................. 0.32 0.20 0.43 0.27 0.47 0.061 (0.111) (0.060)
Dividends per preferred
ordinary share......... 0.075 0.075 0.075 0.075 0.075 -- -- --
Dividends per preferred
ordinary share in U.S.
dollars................ US$ 0.057 US$ 0.058 US$ 0.051 US$ 0.047 US$ 0.047 US$ -- US$ -- US$ --
Balance sheet data at
period end:
Cash.................... A$ 2,298 A$ 3,616 A$ 4,314 A$ 7,483 A$ 4,638 A$ 4,068 A$4,409 US$2,369
Total assets............ 30,763 41,358 54,484 53,972 65,585 58,974 70,435 37,838
Total debt.............. 8,542 11,339 14,422 13,167 15,431 14,698 16,859 9,057
Total stockholders'
equity................. 17,166 22,234 27,211 27,109 32,660 29,603 34,563 18,567
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Fiscal Years Ended June 30(1),
----------------------------------------------------------------
1996 1997 1998 1999 2000 2000
--------- --------- --------- --------- --------- ---------
(in US$)
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Amounts in Accordance
with US-GAAP(2)
Income Statement data:
Revenues................ A$13,088 A$14,389 A$18,949 A$21,774 A$22,451 US$12,061
Operating income........ 1,318 541 1,921 2,012 1,509 811
Equity in net earnings
(losses) of associated
companies.............. 267 284 (116) (509) (936) (503)
Interest expense, net... 613 642 778 783 829 445
Other income............ (380) (185) (111) (506) 1,070 575
Income (loss) before
extraordinary item..... 483 (184) 555 963 (329) (177)
Net income (loss)....... 483 (199) 555 963 (329) (177)
Income (loss) before
extraordinary item per
share.................. A$ 0.15 A$ (0.08) A$ 0.14 A$ 0.24 A$ (0.10) US$ (0.05)
Net income (loss) per
share.................. 0.15 (0.08) 0.14 0.24 (0.10) (0.05)
Dividends per preferred
ordinary share......... 0.075 0.075 0.075 0.075 0.075 0.040
Dividends per preferred
ordinary share in U.S.
dollars................ US$ 0.057 US$ 0.058 US$ 0.051 US$ 0.047 US$ 0.047 US$ 0.040
Balance sheet data at
period end:
Cash.................... A$ 2,298 A$ 3,616 A$ 4,314 A$ 7,483 A$ 4,638 US$ 2,492
Total assets............ 25,451 35,991 48,094 47,094 57,986 31,150
Total debt.............. 8,542 11,339 14,422 13,167 15,431 8,290
Total stockholders'
equity................. 8,841 11,292 15,713 14,044 18,443 9,908
</TABLE>
--------
(/1/) See Note 2 to the audited consolidated financial statements of News
Corporation for information on significant acquisitions and dispositions
occurring during fiscal 1998, 1999 and 2000. In fiscal 1996, News
Corporation acquired six television stations for an aggregate purchase
price of US$643 million, an additional 36.4% interest in STAR TV for
approximately US$345 million and the Advanced Products Division of
National Transcommunications, Ltd. (DigiMedia Vision) for US$142 million.
During fiscal 1996, News Corporation sold HarperCollins' Scott Foresman
and College divisions for US$585 million. During fiscal 1997, News
Corporation acquired New World Communications Group, Inc. for an
aggregate consideration of approximately US$3.4 billion plus the
assumption of debt.
(/2/) News Corporation's reports under the Securities Exchange Act of 1934, as
amended, contain reconciliations of its A-GAAP financial information to
US-GAAP information on a semi-annual basis only.
28
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC.
Selected Historical Financial Data
The selected historical financial data of Chris-Craft has been derived from
audited consolidated financial statements of Chris-Craft as of and for the
years ended December 31, 1995 through 1999 and unaudited consolidated financial
statements as of and for the nine months ended September 30, 1999 and 2000. The
historical data is only a summary, and should be read in conjunction with the
historical consolidated financial statements and related notes contained in the
annual reports, quarterly reports and other information that Chris-Craft has
filed with the SEC and incorporated by reference into this joint proxy
statement/prospectus. To obtain copies of these documents, see "Where You Can
Find More Information" on page [ . ].
<TABLE>
<CAPTION>
For the Nine Months
For the Fiscal Years Ended December 31, Ended September 30,
---------------------------------------------------------- ----------------------
1995 1996 1997 1998 1999 1999 2000
---------- ---------- ---------- ---------- ---------- ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data
Operating revenue....... $ 472,081 $ 465,695 $ 464,646 $ 467,093 $ 491,547 $ 355,089 $ 390,542
Operating income........ 110,633 103,268 95,525 94,670 94,197 71,604 84,045
Interest and other
income, net............ 83,949 81,879 80,556 80,337 106,183 61,330 71,864
Equity in UPN (loss).... (129,303) (146,313) (87,430) (88,597) (97,344) (74,238) (35,696)
Gain on change of
ownership in UPN....... -- -- 153,933 -- -- -- --
Income taxes............ (17,600) (19,500) (99,600) (32,500) (32,300) (25,200) (52,900)
Minority interest....... (25,714) (18,522) (49,483) (24,440) (28,303) (18,265) (24,723)
Net income.............. 21,965 812 93,501 29,470 42,433 15,231 42,590
Earnings per share
(diluted).............. 0.49 0.01 2.13 0.67 0.97 0.35 0.96
Common dividends
declared per share(1).. -- -- -- -- -- -- --
Balance Sheet Data (at
period end)
Cash and marketable
securities............. $1,523,438 $1,395,179 $1,501,929 $1,415,543 $1,359,668 $1,353,506 $1,439,422
Working capital......... 1,531,416 1,418,085 1,486,556 1,387,978 1,353,942 1,332,491 1,420,273
Total assets............ 2,203,853 2,137,259 2,226,429 2,245,423 2,345,985 2,323,415 2,390,662
Minority interest....... 560,326 506,260 484,268 479,820 503,447 492,966 518,830
Shareholders'
investment............. 1,319,020 1,288,918 1,383,180 1,408,469 1,441,803 1,416,141 1,488,869
</TABLE>
--------
(1) Chris-Craft has not declared cash dividends on its common stock during the
periods presented; however, Chris-Craft has declared a 3% stock dividend on
its common stock with respect to each of the calendar years presented.
29
<PAGE>
BHC COMMUNICATIONS, INC.
Selected Historical Financial Data
The selected historical financial data of BHC has been derived from audited
consolidated financial statements of BHC as of and for the years ended December
31, 1995 through 1999 and unaudited consolidated financial statements as of and
for the nine months ended September 30, 1999 and 2000. The historical data is
only a summary, and should be read in conjunction with the historical
consolidated financial statements and related notes contained in the annual
reports, quarterly reports and other information that BHC has filed with the
SEC and incorporated by reference into this joint proxy statement/prospectus.
To obtain copies of these documents, see "Where You Can Find More Information"
on page [ . ].
<TABLE>
<CAPTION>
For the Nine
Months Ended
For the Fiscal Years Ended December 31, September 30,
---------------------------------------------------------- ----------------------
1995 1996 1997 1998 1999 1999 2000
---------- ---------- ---------- ---------- ---------- ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data
Operating revenue....... $ 454,702 $ 446,292 $ 443,499 $ 445,850 $ 469,347 $ 339,157 $ 373,355
Operating income........ 118,579 107,148 101,338 96,729 102,156 75,868 86,072
Interest and other
income................. 82,483 81,849 82,809 79,366 105,805 61,276 65,386
Equity in UPN (loss).... (129,303) (146,313) (87,430) (88,597) (97,344) (74,238) (35,696)
Gain on change of
ownership in UPN....... -- -- 153,933 -- -- -- --
Income taxes............ (18,800) (21,000) (101,000) (31,500) (41,900) (25,100) (50,400)
Minority interest....... (15,902) (17,448) (18,473) (16,425) (18,184) (13,366) (14,564)
Net income.............. 37,057 4,236 131,177 39,573 50,533 24,440 50,798
Earnings per share
(diluted).............. 1.50 0.17 5.61 1.75 2.24 1.08 2.25
Dividends declared per
share.................. 1.00 -- 1.00 1.00 1.00 1.00 2.00
Balance Sheet Data (at
period end)
Cash and marketable
securities............. $1,499,365 $1,391,992 $1,487,280 $1,403,245 $1,336,328 $1,332,760 $1,356,525
Total assets............ 2,159,010 2,097,263 2,142,488 2,142,601 2,224,448 2,211,598 2,210,032
Shareholders'
investment............. 1,781,893 1,705,533 1,724,954 1,696,327 1,714,482 1,699,220 1,721,030
</TABLE>
30
<PAGE>
UNITED TELEVISION, INC.
Selected Historical Financial Data
The selected historical financial data of United Television has been derived
from audited consolidated financial statements of United Television as of and
for the years ended December 31, 1995 through 1999 and unaudited consolidated
financial statements as of and for the nine months ended September 30, 1999 and
2000. The historical data is only a summary, and should be read in conjunction
with the historical consolidated financial statements and related notes
contained in the annual reports, quarterly reports and other information that
United Television has filed with the SEC and incorporated by reference into
this joint proxy statement/prospectus. To obtain copies of these documents, see
"Where You Can Find More Information" on page [.].
<TABLE>
<CAPTION>
For the Nine
At or For the Fiscal Years Ended December Months Ended
31, September 30,
------------------------------------------------ ------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data
Net revenue............. $165,559 $174,339 $170,963 $182,849 $209,746 $149,778 $168,180
Operating income........ 50,882 59,076 62,412 54,932 61,276 43,692 46,830
Gain on sale of BHC
common stock........... -- -- -- 19,932 -- -- --
Interest and other
income, net............ 10,290 10,163 12,317 11,587 12,028 9,520 10,854
Income taxes............ (24,300) (27,500) (29,750) (33,625) (29,575) (21,025) (23,075)
Net income.............. 36,872 41,739 44,979 52,826 43,729 32,187 34,609
Earnings per share
(diluted).............. 3.74 4.36 4.76 5.59 4.62 3.41 3.63
Dividends declared per
share.................. 0.50 0.50 0.50 0.50 0.50 0.50 0.50
Balance Sheet Data (at
period end)
Cash and current
marketable securities.. $199,500 $194,866 $270,581 $216,827 $186,197 $173,184 $222,464
Total assets............ 330,987 335,598 387,986 437,641 504,681 492,713 540,812
Working capital......... 216,198 205,170 280,828 228,982 199,897 188,768 227,328
Shareholders'
investment............. 240,469 250,441 300,740 337,447 382,939 366,120 414,427
</TABLE>
31
<PAGE>
NEWS CORPORATION
Selected Unaudited Pro Forma Consolidated Condensed Financial Data
The selected unaudited pro forma consolidated condensed financial data of
News Corporation has been derived from the unaudited pro forma consolidated
condensed financial statements included in this joint proxy
statement/prospectus under "Unaudited Pro Forma Consolidated Condensed
Financial Statements" on page [ . ]. The unaudited pro forma consolidated
condensed financial statements give effect to:
. the Chris-Craft, BHC and United Television mergers (assuming that each
merger is effected as a forward merger and without giving effect to the
additional US$1 per share in cash increase in the Chris-Craft merger
consideration if the Chris-Craft merger closes after August 13, 2001);
. the increase of News Corporation's equity investment in Gemstar - TV
Guide International, Inc., a global technology and media company focused
on consumer entertainment, to approximately 43% as a result of the
pending acquisition by News Corporation of Liberty Media Corporation's
approximate 21% investment in Gemstar - TV Guide pursuant to an agreement
entered into on September 27, 2000, and certain related transactions; and
. the increase of News Corporation's equity investment in Stream S.p.A., an
Italian pay television service provider, from 35% to 50%.
The unaudited pro forma consolidated condensed statements of operations were
prepared as if the transactions had occurred as of the first day of the periods
presented. The unaudited pro forma consolidated condensed balance sheets were
prepared as if the above transactions had occurred as of September 30, 2000 (A-
GAAP) and June 30, 2000 (A-GAAP and US-GAAP). The pro forma results are not
necessarily indicative of actual results that would have been achieved by News
Corporation had such transactions been consummated on such dates. For
additional information, see "Unaudited Pro Forma Consolidated Condensed
Financial Statements" on page [ . ] and the historical consolidated financial
statements of News Corporation contained in the News Corporation Reports on
Form 6-K filed November 1, 2000 and November 10, 2000, which are filed with the
SEC and incorporated by reference into this joint proxy statement/prospectus.
32
<PAGE>
The following unaudited pro forma consolidated condensed financial data is
set forth in Australian dollars with a translation of amounts to U.S. dollars
at A$1.00=US$0.5372, the Noon Buying Rate on December 1, 2000, solely for your
convenience.
<TABLE>
<CAPTION>
Fiscal Year Ended Three Months Ended
June 30, 2000 September 30, 2000
--------------------- -------------------
(in millions, except per share data)
(in A$) (in US$) (in A$) (in US$)
<S> <C> <C> <C> <C>
Amounts in accordance with A-GAAP
Income statement data:
Revenues......................... A$ 23,271 US$12,501 A$ 5,837 US$3,136
Operating income................. 2,943 1,581 722 388
Equity (losses) net earnings of
associated companies............ (146) (78) 2 1
Interest expense, net............ (649) (349) (171) (92)
Other expense.................... (79) (42) (21) (11)
Income before abnormal items..... 1,655 890 385 207
Net income (loss)................ 2,180 1,172 (354) (190)
Net income (loss) per share...... A$ 0.45 US$ 0.24 A$ (0.07) US$(0.04)
Dividends per preferred ordinary
share........................... A$ 0.075 0.040 -- --
Dividend per preferred ordinary
share (in U.S. dollars)......... US$ 0.047 US$ 0.040 US$ -- US$ --
Balance sheet data at period end:
Cash............................. A$ 1,503 US$ 807 A$ 1,315 US$ 706
Total assets..................... 82,573 44,358 87,584 47,050
Total debt....................... 15,431 8,290 16,859 9,057
Total shareholders' equity....... 46,247 24,844 47,995 25,783
Amounts in accordance with US-
GAAP(1)
Income statement data:
Revenue.......................... A$ 23,279 US$12,505
Operating income................. 1,478 794
Equity losses of associated
companies....................... (1,486) (798)
Interest expense, net............ (656) (352)
Other income..................... 1,924 1,034
Income before minority interest.. 486 262
Net loss......................... (738) (396)
Net loss per share............... A$ (0.15) US$ (0.08)
Dividends per preferred ordinary
share........................... A$ 0.075 0.040
Dividend per preferred ordinary
share (in U.S. dollars)......... US$ 0.047 0.040
Balance sheet data at period end:
Cash............................. A$ 1,503 US$ 807
Total assets..................... 77,442 41,601
Total debt....................... 15,431 8,290
Total shareholders' equity....... 34,811 18,700
</TABLE>
--------
(1) News Corporation's reports under the Securities Exchange Act of 1934, as
amended, contain reconciliations of its A-GAAP financial information to US-
GAAP information on a semi-annual basis only.
33
<PAGE>
UNAUDITED COMPARATIVE PER SHARE INFORMATION
We present below per share data regarding the income, cash dividends
declared and book value of News Corporation, Chris-Craft, BHC and United
Television on both an historical and unaudited equivalent pro forma
consolidated basis. We have derived the unaudited pro forma consolidated per
share information from the unaudited pro forma consolidated condensed financial
statements presented in this joint proxy statement/prospectus on page [ . ]
under the heading "Unaudited Pro Forma Consolidated Condensed Financial
Statements". The unaudited comparative per share data is being shown as of and
for the twelve months ended June 30, 2000, which is the fiscal year end of News
Corporation and the combined company after the mergers, and as of and for the
three months ended September 30, 2000 (A-GAAP only). You should read the
information below in conjunction with the financial statements and accompanying
notes that are incorporated by reference in this joint proxy
statement/prospectus and with the unaudited pro forma consolidated condensed
financial information included under "Unaudited Pro Forma Consolidated
Condensed Financial Statements" on page [ . ].
<TABLE>
<CAPTION>
As of and for the
Twelve Months As of and for the
Ended Three Months Ended
June 30, 2000 September 30, 2000
------------------ ------------------
US-
GAAP(/1/) A-GAAP A-GAAP
--------- ------- ------------------
<S> <C> <C> <C>
News Corporation Historical Per Share
Data:
Net income (loss) per share:
Basic and diluted..................... A$ (0.10) A$ 0.47 A$ (0.11)
Cash dividends per preferred ordinary
share.................................. $ 0.075 $ 0.075 $ --
Book value per preferred ordinary
share.................................. A$ 2.20 A$ 3.60 A$ 3.81
Net income per share (in US$):
Basic and diluted..................... US$(0.05) US$0.25 US$(0.06)
Cash dividends per preferred ordinary
share.................................. $ 0.040 $ 0.040 $ --
Book value per preferred ordinary share
(in US$)............................... US$ 1.18 US$1.94 US$ 2.05
News Corporation Pro Forma Per Share Data:
Net income (loss) per share:
Basic and diluted..................... $ (0.08) $ 0.24 $ (0.04)
Cash dividends per preferred ordinary
share.................................. $ 0.040 $ 0.040 $ --
Book value per preferred ordinary
share.................................. $ 2.18 $ 2.90 $ 3.00
Chris-Craft Historical Per Share Data:
Net income per common share:
Basic................................. $ 1.67 -- $ --
Diluted............................... $ 1.32 -- $ --
Cash dividends per common share......... $ -- -- $ --
Book value per common share............. $ 33.87 -- $
Chris-Craft Equivalent Per Share
Data:(/2/)
Net income (loss) per common share:
Basic and diluted..................... $ (0.37) 1.12 $ (0.18)
Cash dividends per common share......... $ 0.19 0.19 $ --
Book value per common share............. $ 10.10 13.45 $ 13.91
BHC Historical Per Share Data:
Net income per common share:
Basic................................. $ 3.08 -- $ --
Diluted............................... $ 3.08 -- $ --
Cash dividends per common share......... $ 2.00 -- $ --
Book value per common share............. $ 75.57 -- $ --
BHC Equivalent Per Share Data:(/2/)
Net income (loss) per common share:
Basic and diluted..................... $ (0.72) 2.14 $ (0.35)
Cash dividends per common share......... $ 0.36 0.36 $ --
Book value per common share............. $ 19.42 25.84 $ 26.74
United Television Historical Per Share
Data:
Net income per common share:
Basic................................. $ 4.94 -- $ --
Diluted............................... $ 4.92 -- $ --
Cash dividends per common share......... $ 0.50 -- $ --
Book value per common share............. $ 42.41 -- $ --
United Television Equivalent Per Share
Data:(/2/)
Net income (loss) per common share:
Basic and diluted..................... $ (0.65) 1.95 $ (0.32)
Cash dividends per common share......... $ 0.33 0.33 $ --
Book value per common share............. $ 17.66 23.49 $ 24.30
</TABLE>
--------
(/1/) News Corporation's reports under the Securities Exchange Act of 1934, as
amended, contain reconciliations of its A-GAAP financial information to
its US-GAAP information on a semi-annual basis only.
(/2/) The Chris-Craft, BHC and United Television equivalent per share data was
computed by multiplying the News Corporation Pro Forma Per Share Data
above by a ratio of 1.1591, 2.2278 and 2.0253, respectively, and then by
multiplying that result by four, as four preferred ordinary shares
underlie each Preferred ADS. These ratios represent the number of
Preferred ADSs a Chris-Craft, BHC and United Television stockholder would
receive for each share owned in a mixed election in a forward merger.
Assuming an all stock election, the Chris-Craft, BHC and United
Television equivalent per share data would be computed by multiplying the
News Corporation Pro Forma Per Share Data above by a ratio of 2.265,
4.374 and 3.977, respectively, multiplied by four. These ratios are based
on US$30.75, the volume weighted average trading price for all trades of
Preferred ADSs for the five trading days ending on December 1, 2000. All
calculations assume a forward merger and no proration, adjustment or US$1
increase in the Chris-Craft merger consideration in the event the Chris-
Craft merger closes after August 13, 2001.
34
<PAGE>
RISK FACTORS
In addition to the other information included or incorporated by reference
in this joint proxy statement/prospectus (including the matters addressed in
"Cautionary Statement Concerning Forward-Looking Statements" on page [ . ]),
you should consider the following in determining whether to vote in favor of
your merger. In this "Risk Factors" section, the terms "we", "our", "us" and
similar terms refer to News Corporation either before or after the mergers.
The value of the merger consideration to be received may fluctuate
considerably.
The value of the consideration Chris-Craft, BHC and United Television
stockholders receive in the mergers may fluctuate considerably. Because a
portion of the aggregate merger consideration in each merger consists of a
fixed number of Preferred ADSs, the value of the aggregate merger consideration
will fluctuate based on changes in the market price of Preferred ADSs,
regardless of how the mergers are structured and regardless of any elections
you make in a forward merger. None of the Chris-Craft, BHC or United Television
merger agreements contain a provision to adjust the exchange ratios with
respect to per share consideration in the event that the market price of
Preferred ADSs declines. In addition, none of the merger agreements permit
Chris-Craft, BHC or United Television to "walk away" from the completion of the
mergers if the market price of Preferred ADSs declines.
The mergers will not be completed until a significant period of time has
passed from the date of the special meetings because of the lengthy regulatory
review process. Therefore, at the time of the special meetings, Chris-Craft,
BHC and United Television stockholders will not know the value of the
consideration they will receive in the mergers. Factors which could affect the
market price of Preferred ADSs, and thus the value of the merger consideration
in each merger, include those we discuss under "Cautionary Statement Concerning
Forward-Looking Statements" on page [ . ].
Stockholders may receive a form of consideration different from what they
elect.
The consideration to be received by Chris-Craft, BHC and United Television
stockholders in the forward mergers is subject to proration to preserve the
contractual limitations on the maximum amount of cash and Preferred ADSs to be
issued in each forward merger. If a stockholder elects all cash and the
available cash is oversubscribed, then the stockholder will receive a portion
of the merger consideration in Preferred ADSs. If a stockholder elects all
stock and the available stock is oversubscribed, then the stockholder will
receive a portion of the merger consideration in cash. Further, the total
amount of cash to be paid in each forward merger may be reduced and replaced
with Preferred ADSs, if necessary to preserve beneficial U.S. federal income
tax treatment. In other words, if the amount of cash is reduced in a forward
merger as a result of the tax adjustment, stockholders making an all cash
election and, in some cases, a mixed election may receive more Preferred ADSs
and less cash than they elected even after accounting for proration.
Accordingly, in the event of a forward merger, Chris-Craft, BHC and United
Television stockholders may not receive the type of consideration they elect to
receive in the mergers.
The form of consideration received by, and the U.S. federal income tax
consequences to, Chris-Craft, BHC and United Television stockholders vary based
on the structure of the mergers and each stockholder's election, variables
which will not be known prior to the time of the special meetings.
The U.S. federal income tax consequences of the acquisition to each Chris-
Craft, BHC and United Television stockholder will vary depending on whether the
mergers are completed through the use of the forward merger structure or the
reverse merger structure. These tax consequences will also vary in a forward
merger depending on whether a Chris-Craft, BHC or United Television stockholder
receives cash, stock, or a combination of cash and stock in exchange for the
stockholder's shares. At the time that a Chris-Craft, BHC or United Television
stockholder makes an election as to the form of the consideration to be
received in the applicable forward merger and at the time that the stockholder
votes on the applicable merger, the stockholder
35
<PAGE>
will not know if, or to what extent, the stockholder's elected consideration
will be subject to proration or adjustment. Therefore, a Chris-Craft, BHC or
United Television stockholder will not know at those times the extent to which
the stockholder's elected form of merger consideration will be given effect.
Additionally, at the time of voting on the applicable merger, the Chris-Craft,
BHC and United Television stockholders will not know which of the two
alternative structures, forward or reverse, will be used to complete the
applicable merger. Accordingly, although the form of consideration and the U.S.
federal income tax treatment of both of these alternative structures are
described in this joint proxy statement/prospectus, the actual form of
consideration and the U.S. federal income tax consequences to each Chris-Craft,
BHC and United Television stockholder will not be known at that time.
News Corporation is controlled by one principal stockholder.
Approximately 30% of the ordinary shares of News Corporation are owned by
(1) K. Rupert Murdoch; (2) Cruden Investments Pty. Limited, a private
Australian investment company owned by Mr. Murdoch, members of his family and
various corporations and trusts, the beneficiaries of which include Mr.
Murdoch, members of his family and certain charities; and (3) corporations
which are controlled by trustees of settlements and trusts set up for the
benefit of the Murdoch family, various charities and other persons. By virtue
of the shares of News Corporation owned by Mr. Murdoch and these entities, and
Mr. Murdoch's position as chairman and chief executive of News Corporation, Mr.
Murdoch may be deemed to control the operations of News Corporation.
Members of the management and boards of directors of Chris-Craft, BHC and
United Television have interests in the mergers that may differ from the
interests of their stockholders.
Members of Chris-Craft's, BHC's and United Television's management and
boards of directors have interests in the mergers that may be different from
the interests of Chris-Craft, BHC and United Television stockholders. The
mergers will give rise to entitlements and benefits to some members of
management and the boards of directors of Chris-Craft, BHC and United
Television that are not provided to other Chris-Craft, BHC and United
Television stockholders.
Obtaining required regulatory approvals may delay completion of the mergers.
Various regulatory approvals must be obtained from, or notifications
submitted to, regulatory authorities, including competition authorities in the
U.S. and the Federal Communications Commission before the mergers may be
completed. No assurance can be given, however, that these approvals will be
obtained, or, if they are obtained, as to the terms, conditions and timing of
these approvals. The requirement for these approvals could delay the completion
of the mergers for a significant period of time after Chris-Craft, BHC and
United Television stockholders have approved the proposals relating to the
mergers at their respective special meetings. If regulators require material
divestitures or operating restrictions of the types specified in the merger
agreements, News Corporation will have the right to terminate any of the Chris-
Craft, BHC and United Television merger agreements. There is a risk that News
Corporation will terminate the merger agreements if these conditions are
imposed by regulators.
36
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus and the documents that are
incorporated by reference contain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 that are
subject to risks and uncertainties. These forward-looking statements are based
on the beliefs and assumptions of each company's management and may include
statements regarding the period following the completion of the mergers. Words
like "anticipates", "believes", "estimates", "expects", "hopes", "intends",
"plans" and similar expressions are used to identify these forward-looking
statements.
These forward-looking statements are subject to risks, uncertainties and
assumptions about us and our businesses and are not guarantees of performance.
Important factors that could affect the future results of News Corporation and
cause those results or other outcomes to differ materially from those expressed
or implied in the forward-looking statements include:
. the risks and other factors described in "Risk Factors" above and
elsewhere in this joint proxy statement/prospectus and in the documents
which are incorporated by reference in this joint proxy
statement/prospectus;
. those factors we discuss or identify in our public filings with the
Securities and Exchange Commission;
. worldwide economic and business conditions;
. changing technology and our businesses' ability to adapt successfully;
. exposure to exchange rate fluctuations;
. our assumptions about customer acceptance, overall market penetration
and competition from providers of alternative products and services;
. regulatory developments; and
. changes in our business strategy or development plans.
In light of these risks, uncertainties and assumptions, the results or
outcomes expressed in these forward-looking statements might not occur. Because
the above factors could cause actual results or outcomes to differ materially
from those expressed in any forward-looking statement made by us, you should
not place undue reliance on any forward-looking statement. Further, any
forward-looking statement speaks only as of the date on which it is made, and
we undertake no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which the forward-looking statement
is made or to reflect the occurrence of unanticipated events. New factors
emerge from time to time, and it is not possible for us to predict which will
arise. In addition, we cannot assess the impact of each factor on our
businesses or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any forward-
looking statement.
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THE CHRIS-CRAFT SPECIAL MEETING
This joint proxy statement/prospectus is being furnished in connection with
the solicitation of proxies from the holders of Chris-Craft common stock, class
B common stock and convertible preferred stock by the Chris-Craft board of
directors with regard to the Chris-Craft merger proposal and other matters to
be voted upon at the Chris-Craft special meeting and at any adjournment or
postponement of the meeting. This joint proxy statement/prospectus is also a
prospectus for the Preferred ADSs of News Corporation to be issued in the
Chris-Craft, BHC and United Television mergers. We mailed this joint proxy
statement/prospectus to stockholders beginning [month, day], 2000. You should
read this joint proxy statement/prospectus carefully before voting your shares.
Where and when the Chris-Craft special meeting will be held
The Chris-Craft special meeting will be held at [location, city, state], on
[month, day], 2001 starting at [time], local time.
What will be voted upon
At the Chris-Craft special meeting, you will be asked to consider and vote
upon the following items:
. to approve and adopt the Agreement and Plan of Merger, dated as of
August 13, 2000, as amended, among Chris-Craft Industries, Inc., The
News Corporation Limited, News Publishing Australia Limited and Fox
Television Holdings, Inc.; and
. such other business as may properly come before the Chris-Craft special
meeting or any adjournment or postponement of the special meeting.
The Agreement and Plan of Merger contemplates two alternative mergers (a
forward merger and a reverse merger). A vote in favor of the approval and
adoption of the Agreement and Plan of Merger constitutes the approval of both
alternative mergers.
Only Chris-Craft holders of record are entitled to vote
Chris-Craft stockholders who hold their shares of record as of the close of
business on [month, day], 2000 are entitled to notice of and to vote at the
Chris-Craft special meeting. On the record date, there were outstanding
approximately:
. [ . ] shares of Chris-Craft common stock, each carrying one vote per
share;
. [ . ] shares of Chris-Craft class B common stock, each carrying ten
votes per share; and
. [ . ] shares of Chris-Craft convertible preferred stock, each carrying
35.9 votes per share, or 252 votes per share if held by the person
owning the shares on November 10, 1986 or a permitted transferee of that
person under Chris-Craft's restated certificate of incorporation.
Notwithstanding the foregoing, if the holder of record of a share of class B
common stock or convertible preferred stock is a broker or dealer in
securities, a bank or voting trustee or nominee of any of the foregoing, or if
a share is otherwise held of record by a nominee of the beneficial owner of the
share, then the share of class B common stock instead entitles its record
holder to one vote and the share of convertible preferred stock entitles its
record holder to 35.9 votes, except to the extent that such record holder
establishes to Chris-Craft's satisfaction, pursuant to procedures set forth in
Chris-Craft's restated certificate of incorporation, that the share has been
held continuously since November 10, 1986 or its later issuance by a named
beneficial owner or permitted transferee (whose address must also be
specified).
On the record date, there were approximately [ . ] holders of record of
Chris-Craft common stock, [ . ] holders of record of Chris-Craft class B common
stock and [ . ] holders of record of Chris-Craft convertible preferred stock.
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Quorum
A quorum of Chris-Craft stockholders is necessary to have a valid meeting of
stockholders. The required quorum for the transaction of business at the Chris-
Craft special meeting is:
. with respect to all matters, including approval and adoption of the
Chris-Craft merger agreement, the presence, in person or by proxy, of the
holders of shares representing a majority of the votes entitled to be
cast by all stockholders of Chris-Craft (including holders of Chris-Craft
convertible preferred stock), voting together as a single class; and
. in addition to the above requirement, with respect to the approval and
adoption of the Chris-Craft merger agreement, the presence, in person or
by proxy, of the holders of shares representing a majority of the votes
entitled to be cast by Chris-Craft convertible preferred stockholders.
If a quorum is not present, the holders of shares representing a majority of
the votes entitled to be cast by the stockholders present or represented by
proxy at the Chris-Craft special meeting may adjourn the Chris-Craft meeting.
Vote required to adopt the Chris-Craft merger proposal
The Chris-Craft merger proposal must be approved and adopted by the
affirmative vote of:
. a majority of the votes entitled to be cast by stockholders at the
Chris-Craft special meeting (including the Chris-Craft convertible
preferred stockholders), voting together as a single class; and
. a majority of the votes entitled to be cast by holders of Chris-Craft
convertible preferred stock at the Chris-Craft special meeting, voting
as a separate class.
As of the record date, Chris-Craft directors and executive officers and
their affiliates (none of whom have entered into agreements as to how they will
vote with respect to the Chris-Craft merger proposal) owned common stock, class
B common stock and convertible preferred stock entitling them to cast
approximately [ . ] votes or [ . ]% of the votes entitled to be cast by
stockholders voting together as a single class at the Chris-Craft special
meeting and convertible preferred stock entitling them to cast approximately
[ . ] votes or [ . ]% of the votes entitled to be cast by holders of
convertible preferred stock at the Chris-Craft special meeting.
Voting your shares and changing your vote by revoking your proxy
Voting Your Shares
The Chris-Craft board of directors is soliciting proxies from the
stockholders of Chris-Craft. This will give you the opportunity to vote at the
Chris-Craft special meeting. When you deliver a valid proxy, the shares
represented by that proxy will be voted in accordance with your instructions.
To grant your proxy by mail, please complete your proxy card and sign, date
and return it in the enclosed envelope. To be valid, a returned proxy card must
be signed, dated and received by the time the vote is taken at the Chris-Craft
special meeting. If you attend the Chris-Craft special meeting in person, you
may vote your shares by completing a ballot at the meeting.
Changing Your Vote by Revoking Your Proxy
You may revoke your proxy at any time before the polls close at the Chris-
Craft special meeting. You can do this in one of three ways:
. by delivering notice in writing to the Secretary of Chris-Craft that you
have revoked your proxy;
. by properly submitting a later-dated proxy; or
. by appearing in person and voting at the Chris-Craft special meeting.
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You will not revoke your proxy by simply attending the Chris-Craft special
meeting unless you complete a ballot at the meeting. If you have instructed
your broker or nominee to vote your shares, you must follow directions from
them to change those instructions.
How proxies are counted
If you return a signed and dated proxy card but do not indicate how the
shares are to be voted, those shares represented by your proxy card will be
voted FOR the Chris-Craft merger proposal. A valid proxy also gives the
individuals named as proxies authority to vote in their discretion when voting
the shares on any other matters that are properly presented for action at the
Chris-Craft special meeting.
A properly executed proxy marked "ABSTAIN" will not be voted with respect to
the merger proposal. However, it may be counted to determine whether there is a
quorum present at the Chris-Craft special meeting, and it may be voted in the
proxies' discretion on any other matter properly presented for action at the
Chris-Craft special meeting. If your shares are held in "street name' by a
broker, your broker will vote your shares only if you provide instructions to
the broker on how to vote. Broker non-votes (i.e., shares held by brokers or
nominees which are represented at a meeting but with respect to which the
broker or nominee is not instructed as to how to vote on a particular proposal)
will be counted for purposes of determining whether there is a quorum present
at the Chris-Craft special meeting. Abstentions and broker non-votes, however,
will have the same effect as voting AGAINST the Chris-Craft merger proposal.
Similarly, if you fail to vote in person or by proxy, it will have the same
effect as voting AGAINST the Chris-Craft merger proposal.
Cost of solicitation
Chris-Craft (together with BHC and United Television) and News Corporation
will share equally the cost of printing, filing and mailing this joint proxy
statement/prospectus. In addition to solicitation by mail, telephone or other
means, Chris-Craft will make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send proxy material to beneficial
owners. Chris-Craft will, upon request, reimburse these institutions for their
reasonable expenses. Chris-Craft has retained, for a fee of $8,000 plus
expenses, Innisfree M&A Incorporated to aid in the solicitation of proxies.
Chris-Craft stockholders should NOT send in their stock certificates with
the proxy cards.
40
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THE BHC SPECIAL MEETING
This joint proxy statement/prospectus is being furnished in connection with
the solicitation of proxies from the holders of BHC class A common stock and
class B common stock by the BHC board of directors with regard to the BHC
merger proposal and other matters to be voted upon at the BHC special meeting
and at any adjournment or postponement of the meeting. This joint proxy
statement/prospectus is also a prospectus for the Preferred ADSs of News
Corporation to be issued in the BHC, Chris-Craft and United Television mergers.
We mailed this joint proxy statement/prospectus to stockholders beginning
[month, day], 2000. You should read this joint proxy statement/prospectus
carefully before voting your shares.
Where and when the BHC special meeting will be held
The BHC special meeting will be held at [location, city, state], on [month,
day], 2001 starting at [time], local time.
What will be voted upon
At the BHC special meeting, you will be asked to consider and vote upon the
following items:
. to approve and adopt the Agreement and Plan of Merger, dated as of August
13, 2000, as amended, among BHC Communications, Inc., The News
Corporation Limited, News Publishing Australia Limited and Fox Television
Holdings Inc.; and
. such other business as may properly come before the BHC special meeting
or any adjournment or postponement of the special meeting.
The Agreement and Plan of Merger contemplates two alternative mergers (a
forward merger and a reverse merger). A vote in favor of the approval and
adoption of the Agreement and Plan of Merger constitutes the approval of both
alternative mergers.
Only BHC holders of record are entitled to vote
BHC stockholders who hold their shares of record as of the close of business
on [month, day], 2000 are entitled to notice of and to vote at the BHC special
meeting. On the record date, there were outstanding approximately:
. [ . ] shares of BHC class A common stock, each carrying one vote per
share; and
. [ . ] shares of BHC class B common stock, each carrying ten votes per
share.
On the record date, there were approximately [ . ] holders of record of BHC
class A common stock and one holder of record of BHC class B common stock.
Quorum
A quorum of BHC stockholders is necessary to have a valid meeting of
stockholders. The required quorum for the transaction of business at the BHC
special meeting is the presence, in person or by proxy, of the holders of
shares representing a majority of the votes entitled to be cast by all
stockholders of BHC, voting together as a single class. Chris-Craft, which owns
BHC common stock representing approximately 97% of the outstanding voting
power, has agreed to vote all of its shares of BHC class A common stock and
class B common stock in favor of the BHC merger proposal at the BHC special
meeting. Accordingly, Chris-Craft's vote, either in person or by proxy, at the
BHC special meeting will constitute a quorum of BHC stockholders.
If a quorum is not present, the holders of shares representing a majority of
the votes entitled to be cast by the stockholders present or represented by
proxy may adjourn the BHC special meeting.
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Vote required to adopt the BHC merger proposal
The BHC merger proposal must be approved and adopted by the affirmative vote
of a majority of the votes entitled to be cast by holders of BHC's class A and
class B common stock at the BHC special meeting, voting together as a single
class.
As of the record date, BHC directors and executive officers and their
affiliates (none of whom have entered into agreements as to how they will vote
with respect to the BHC merger proposal), excluding Chris-Craft, owned class A
common stock and class B common stock entitling them to cast approximately [ .
] votes, or [ . ]% of the votes entitled to be cast at the BHC special meeting.
This does not include the BHC common stock that is owned by Chris-Craft,
although certain directors and executive officers may be deemed to be
affiliates of Chris-Craft. Chris-Craft, which owns approximately 80% of the
common stock and approximately 97% of the outstanding voting power of BHC and,
accordingly, sufficient shares to approve the BHC merger proposal, has entered
into a voting agreement with News Corporation in which it has agreed to vote
all of its shares of BHC class A common stock and class B common stock in favor
of the BHC merger proposal. Approval and adoption of the BHC merger agreement
is assured, provided that Chris-Craft votes its shares of BHC in accordance
with the terms of this voting agreement.
Voting your shares and changing your vote by revoking your proxy
Voting Your Shares
The BHC board of directors is soliciting proxies from the stockholders of
BHC. This will give you the opportunity to vote at the BHC special meeting.
When you deliver a valid proxy, the shares represented by that proxy will be
voted in accordance with your instructions.
To grant your proxy by mail, please complete your proxy card and sign, date
and return it in the enclosed envelope. To be valid, a returned proxy card must
be signed, dated and received by the time the vote is taken at the BHC special
meeting. If you attend the BHC special meeting in person, you may vote your
shares by completing a ballot at the meeting.
Changing Your Vote by Revoking Your Proxy
You may revoke your proxy at any time before the polls close at the BHC
special meeting. You can do this in one of three ways:
. by delivering notice in writing to the Secretary of BHC that you have
revoked your proxy;
. by properly submitting a later-dated proxy; or
. by appearing in person and voting at the BHC special meeting.
You will not revoke your proxy by simply attending the BHC special meeting
unless you complete a ballot at the meeting. If you have instructed your broker
or nominee to vote your shares, you must follow directions from them to change
those instructions.
How proxies are counted
If you return a signed and dated proxy card but do not indicate how the
shares are to be voted, those shares represented by your proxy card will be
voted FOR the BHC merger proposal. A valid proxy also gives the individuals
named as proxies authority to vote in their discretion when voting the shares
on any other matters that are properly presented for action at the BHC special
meeting.
A properly executed proxy marked "ABSTAIN" will not be voted with respect to
the merger proposal. However, it may be counted to determine whether there is a
quorum present at the BHC special meeting, and it may be voted in the proxies'
discretion on any other matter properly presented for action at the BHC special
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meeting. If your shares are held in "street name' by a broker, your broker will
vote your shares only if you provide instructions to the broker on how to vote.
Broker non-votes (i.e., shares held by brokers or nominees which are
represented at a meeting but with respect to which the broker or nominee is not
instructed as to how to vote on a particular proposal) will be counted for
purposes of determining whether there is a quorum present at the BHC special
meeting. Abstentions and broker non-votes, however, will have the same effect
as voting AGAINST the BHC merger proposal. Similarly, if you fail to vote in
person or by proxy, it will have the same effect as voting AGAINST the BHC
merger proposal.
Cost of solicitation
BHC (together with Chris-Craft and United Television) and News Corporation
will share equally the cost of printing, filing and mailing this joint proxy
statement/prospectus. In addition to solicitation by mail, telephone or other
means, BHC will make arrangements with brokerage houses and other custodians,
nominees and fiduciaries to send proxy material to beneficial owners. BHC will,
upon request, reimburse these institutions for their reasonable expenses. BHC
has retained, for a fee of $8,000 plus expenses, Innisfree M&A Incorporated to
aid in the solicitation of proxies.
BHC stockholders should NOT send in their stock certificates with the proxy
cards.
43
<PAGE>
THE UNITED TELEVISION SPECIAL MEETING
This joint proxy statement/prospectus is being furnished in connection with
the solicitation of proxies from the holders of United Television common stock
by the United Television board of directors with regard to the United
Television merger proposal and other matters to be voted upon at the United
Television special meeting and at any adjournment or postponement of the
meeting. This joint proxy statement/prospectus is also a prospectus for the
Preferred ADSs of News Corporation to be issued in the United Television,
Chris-Craft and BHC mergers. We mailed this joint proxy statement/prospectus to
stockholders beginning [month, day], 2000. You should read this joint proxy
statement/prospectus carefully before voting your shares.
Where and when the United Television special meeting will be held
The United Television special meeting will be held at [location, city,
state], on [month, day], 2001 starting at [time], local time.
What will be voted upon
At the United Television special meeting, you will be asked to consider and
vote upon the following items:
. to approve and adopt the Agreement and Plan of Merger, dated as of August
13, 2000, as amended, among United Television, Inc., The News Corporation
Limited, News Publishing Australia Limited and Fox Television Holdings,
Inc.; and
. such other business as may properly come before the United Television
special meeting or any adjournment or postponement of the special
meeting.
The Agreement and Plan of Merger contemplates two alternative mergers (a
forward merger and a reverse merger). A vote in favor of the approval and
adoption of the Agreement and Plan of Merger constitutes the approval of both
alternative mergers.
Only United Television holders of record are entitled to vote
United Television stockholders who hold their shares of record as of the
close of business on [month, day], 2000 are entitled to notice of and to vote
at the United Television special meeting. On the record date, there were
outstanding approximately [ . ] shares of United Television common stock, each
carrying one vote per share. On the record date, there were approximately [ . ]
holders of record of United Television common stock.
Quorum
A quorum of United Television stockholders is necessary to have a valid
meeting of stockholders. The required quorum for the transaction of business at
the United Television special meeting is the presence, in person or by proxy,
of the holders of shares representing a majority of the shares of stock
entitled to vote. BHC, which owns approximately 58% of the outstanding voting
power, has agreed to vote all of its shares of United Television common stock
in favor of the United Television merger proposal at the United Television
special meeting. Accordingly, BHC's vote, either in person or by proxy, at the
United Television special meeting will constitute a quorum of United Television
stockholders.
If a quorum is not present, the holders of shares representing a majority of
the votes entitled to be cast by the stockholders present or represented by
proxy may adjourn the United Television special meeting.
Vote required to adopt the United Television merger proposal
The United Television merger proposal must be approved and adopted by the
affirmative vote of a majority of the votes entitled to be cast by stockholders
at the United Television special meeting.
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As of the record date, United Television directors and executive officers
and their affiliates (none of whom have entered into agreements as to how they
will vote with respect to the United Television merger proposal), excluding BHC
and Chris-Craft, owned United Television common stock entitling them to cast
approximately [ . ] votes or [ . ]% of the votes entitled to be cast at the
United Television special meeting. Certain directors and executive officers may
be deemed to be affiliates of BHC and Chris-Craft. BHC, which owns
approximately 58% of United Television's shares and, accordingly, sufficient
shares to approve the United Television merger proposal, has entered into a
voting agreement with News Corporation in which it has agreed to vote all of
its shares of United Television common stock in favor of the United Television
merger proposal. Approval and adoption of the United Television merger
agreement is assured, provided that BHC votes its shares of United Television
in accordance with the terms of this voting agreement.
Voting your shares and changing your vote by revoking your proxy
Voting Your Shares
The United Television board of directors is soliciting proxies from the
stockholders of United Television. This will give you the opportunity to vote
at the United Television special meeting. When you deliver a valid proxy, the
shares represented by that proxy will be voted in accordance with your
instructions.
To grant your proxy by mail, please complete your proxy card and sign, date
and return it in the enclosed envelope. To be valid, a returned proxy card must
be signed, dated and received by the time the vote is taken at the United
Television special meeting. If you attend the United Television special meeting
in person, you may vote your shares by completing a ballot at the meeting.
Changing Your Vote by Revoking Your Proxy
You may revoke your proxy at any time before the polls close at the United
Television special meeting. You can do this in one of three ways:
. by delivering notice in writing to the Secretary of United Television
that you have revoked your proxy;
. by properly submitting a later-dated proxy; or
. by appearing in person and voting at the United Television special
meeting.
You will not revoke your proxy by simply attending the United Television
special meeting unless you complete a ballot at the meeting. If you have
instructed your broker or nominee to vote your shares, you must follow
directions from them to change those instructions.
How proxies are counted
If you return a signed and dated proxy card but do not indicate how the
shares are to be voted, those shares represented by your proxy card will be
voted FOR the United Television merger proposal. A valid proxy also gives the
individuals named as proxies authority to vote in their discretion when voting
the shares on any other matters that are properly presented for action at the
United Television special meeting.
A properly executed proxy marked "ABSTAIN" will not be voted with respect to
the merger proposal. However, it may be counted to determine whether there is a
quorum present at the United Television special meeting, and it may be voted in
the proxies' discretion on any other matter properly presented for action at
the United Television special meeting. If your shares are held in "street name'
by a broker, your broker will vote your shares only if you provide instructions
to the broker on how to vote. Broker non-votes (i.e., shares held by brokers or
nominees which are represented at a meeting but with respect to which the
broker or nominee is not instructed as to how to vote on a particular proposal)
will be counted for purposes of determining whether there is a quorum present
at the United Television special meeting. Abstentions and broker non-votes,
however, will have the same effect as voting AGAINST the United Television
merger proposal. Similarly, if you fail to vote in person or by proxy, it will
have the same effect as voting AGAINST the United Television merger proposal.
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Cost of solicitation
United Television (together with Chris-Craft and BHC) and News Corporation
will share equally the cost of printing, filing and mailing this joint proxy
statement/prospectus. In addition to solicitation by mail, telephone or other
means, United Television will make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send proxy material to beneficial
owners. United Television will, upon request, reimburse these institutions for
their reasonable expenses. United Television has retained, for a fee of $5,000
plus expenses, Innisfree M&A Incorporated to aid in the solicitation of
proxies.
United Television stockholders should NOT send in their stock certificates
with the proxy cards.
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THE MERGERS
The Background of the Mergers
On August 5, 1999, the FCC amended its local market television ownership
rules, commonly known as its duopoly rules, to permit an entity to own up to
two television stations in the same market so long as specific conditions are
satisfied. Soon after the FCC rule change, several companies contacted Chris-
Craft and expressed their general interest in a variety of possible
transactions. Chris-Craft began discussions with a number of these parties,
including CBS Corporation and Viacom Inc.
On September 7, 1999, CBS and Viacom announced that they had signed a
definitive merger agreement under which Viacom would acquire CBS. Shortly
thereafter, representatives of both Viacom and CBS contacted representatives of
Chris-Craft to reiterate their interest regarding a possible transaction. After
the announcement of the Viacom/CBS merger, BHC began to consider its potential
claims against Viacom as BHC believed that the pending Viacom/CBS merger raised
issues relating to Viacom's contractual obligations with respect to the United
Paramount Network (UPN), which was a joint venture between Viacom's Paramount
Television Group and BHC. As described below, BHC eventually filed a lawsuit
against Viacom relating to those issues.
In September 1999, Chris-Craft hired Allen & Company as its financial
advisor, and authorized it to explore and evaluate strategic alternatives
available to Chris-Craft in light of the FCC rule change. Chris-Craft publicly
announced the engagement of Allen & Company in November 1999. Following the
engagement of Allen & Company, Stanley S. Shuman, executive vice president and
managing director of Allen & Company, contacted several parties that he
believed might be interested in pursuing a transaction with Chris-Craft,
including representatives of News Corporation, of which Mr. Shuman is a
director.
On September 13, 1999, K. Rupert Murdoch, chairman and chief executive of
News Corporation and chairman and chief operating officer of Fox Television
Holdings, Inc., and David F. DeVoe, chief financial officer of News Corporation
and a director of Fox Television Holdings, met with representatives of Chris-
Craft and expressed News Corporation's interest in acquiring Chris-Craft. News
Corporation declined to make an acquisition proposal at that time in large
part, according to representatives of News Corporation, as a result of their
view that News Corporation's stock price was substantially undervalued. From
September 1999 through July 2000, however, representatives of News Corporation
continued to have intermittent discussions with representatives of Allen &
Company regarding a transaction involving Chris-Craft.
Over the next several months, representatives of Chris-Craft and Allen &
Company had discussions with thirteen other parties in addition to News
Corporation. As a result of this process, eight parties, including News
Corporation, Viacom, CBS and one other party (which we refer to as the "Third
Party"), entered into confidentiality agreements with Chris-Craft.
During October and November 1999, Chris-Craft continued its discussions with
interested parties and, together with Allen & Company, Skadden, Arps, Slate,
Meagher & Flom LLP, Chris-Craft's outside legal counsel, and Marvin J. Diamond,
Chris-Craft's outside regulatory counsel, worked to develop structures for
potential business combinations in light of applicable Internal Revenue Service
and FCC rules.
In October 1999, given the number of interested parties and the possibility
that a transaction might occur involving Chris-Craft, BHC and United
Television, and given the fact that Chris-Craft owned a majority of the shares
of BHC and that BHC owned a majority of the shares of United Television, Chris-
Craft suggested to the board of directors of each of BHC and United Television
that they each form a special committee of independent directors to monitor
industry developments in light of the FCC rule change and to be prepared to
evaluate any possible transactions which could affect BHC or United Television.
As a result, in October 1999, the board of directors of BHC formed a special
committee of independent directors consisting of Morgan L. Miller and John
Eastman, and the board of directors of United Television
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formed a special committee of independent directors consisting of James D.
Hodgson and Howard F. Roycroft. In October 1999 and December 1999,
respectively, the BHC special committee retained Kaye, Scholer, Fierman, Hays &
Handler, LLP and Morris, James, Hitchens & Williams, LLP to advise it of the
role and duties of a special committee if an acquisition transaction were
proposed, as well as in connection with potential claims against Viacom
relating to UPN. The BHC special committee met with Kaye Scholer and Morris
James in December 1999 and January and February 2000. In November 1999, the
United Television special committee retained Kramer Levin Naftalis & Frankel
LLP as its counsel to advise it of the role and duties of a special committee.
By late November 1999, Chris-Craft believed that the most likely transaction
would be an acquisition of Chris-Craft and that CBS and the Third Party were,
at that point, the most likely potential acquirers of Chris-Craft.
In mid-December 1999, Skadden distributed a draft merger agreement to CBS
and its outside legal counsel, Cravath, Swaine & Moore, and to the Third Party
and its outside legal counsel. The draft merger agreement contemplated the
execution of an agreement between the buyer and Chris-Craft, with the buyer to
enter into separate independent negotiations with BHC and United Television
afterwards. Further, the draft agreement contemplated a transaction with Chris-
Craft that was not conditioned on the buyer entering into an agreement with BHC
and United Television, but contained various procedural safeguards related to
BHC and United Television, including the concept of minimum prices that the
buyer would have to offer to BHC and United Television. In addition, the draft
agreement contemplated the formation of a new company (referred to as "newco"),
the transfer of television stations and/or other assets to newco and the grant
to Chris-Craft stockholders of rights to acquire, at their option, high vote or
low vote stock in newco, pro rata based on the stock they held in Chris-Craft.
Shortly after CBS received the draft merger agreement, representatives of
CBS indicated to representatives of Chris-Craft that Viacom and CBS were
opposed to Chris-Craft's proposed structure and draft merger agreement. In a
letter from Cravath to Skadden, dated January 5, 2000, CBS responded to that
effect. In lieu of Chris-Craft's proposed structure, CBS proposed, subject to
the results of its due diligence investigation of Chris-Craft and its
subsidiaries, to acquire simultaneously Chris-Craft, BHC and United Television
at a price of $82 in a combination of cash and CBS stock for each Chris-Craft
share, $180 in CBS stock for each BHC share and $150 in CBS stock for each
United Television share. The letter enclosed a proposed form of merger
agreement that reflected the terms being proposed by CBS, including the
simultaneous acquisition of Chris-Craft, BHC and United Television, and did not
involve the "newco" structure originally proposed by Chris-Craft.
Chris-Craft had a number of concerns with CBS's proposal. Among other
things, CBS's proposal contained a number of significant contingencies,
including being conditioned on the completion of CBS's due diligence
investigation (which prior to that time CBS had elected not to commence), and
required a 30 day exclusivity period during which Chris-Craft would not have
been able to negotiate with other potential acquirers. Finally, the merger
agreement proposed by CBS contained various provisions that resulted in a
transaction structure with a risk of non-consummation that, in Chris-Craft's
view, was significantly greater than that in the draft originally proposed by
Chris-Craft and, in any event, greater than Chris-Craft was willing to accept.
In mid-January 2000, representatives of Chris-Craft, Skadden, CBS and
Cravath met to discuss both CBS's proposal in the January 5, 2000 letter and
potential claims by BHC against Viacom regarding UPN. At the meeting,
representatives of Chris-Craft rejected CBS's January 5, 2000 proposal and
indicated that Chris-Craft would not be prepared to discuss any proposal
further until Viacom and BHC resolved their dispute over UPN. Nonetheless, the
meeting concluded with representatives of CBS indicating that, unless Chris-
Craft was willing to accept CBS's proposal in the January 5, 2000 letter,
Viacom would exercise the "buy-sell" provision (as described in the paragraph
beginning "On February 3, 2000" below) in their agreement governing UPN. During
the last week of January 2000, Mr. Eastman, on behalf of BHC, met with a
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representative of Cravath to discuss the issues between BHC and Viacom over
UPN; however, Mr. Eastman and this representative were unable to resolve those
issues.
On January 28, 2000, the United Television special committee held a meeting
at which representatives of Kramer Levin advised the United Television special
committee of its role and duties under Delaware law and described the
procedures typically followed by special committees.
On February 3, 2000, Viacom delivered to BHC a buy-sell notice under the UPN
agreement, with a trigger price of $5 million. Viacom's delivery of the buy-
sell notice obligated BHC to make a decision by March 20, 2000 either to buy
Viacom's interest in UPN for $5 million or to sell its own interest in UPN to
Viacom for $5 million. Five days later, on February 8, 2000, BHC filed a
lawsuit in New York State Supreme Court seeking to enjoin the CBS/Viacom merger
and to toll the operation of the buy-sell notice. As a result of the lawsuit
and Chris-Craft's rejection of CBS's proposal at the end of January,
discussions among Chris-Craft, Viacom and CBS regarding a transaction ceased.
Throughout the first quarter of 2000, Chris-Craft and representatives of
Skadden continued extensive discussions and negotiations with the Third Party
regarding a possible transaction. During the course of discussions, the parties
agreed that the Third Party would execute a merger agreement with Chris-Craft
only that did not include the "newco" structure, with the Third Party to
approach BHC and United Television regarding a potential transaction
thereafter. By early March 2000, representatives of Chris-Craft were confident
that the parties were close to reaching agreement on all material issues other
than price; however, because of the market price of the Third Party's stock at
the time, the parties were not able to reach agreement on an acceptable price.
Over the course of discussions, the Third Party's highest indication of price,
based on the market price of the Third Party's stock in early March 2000,
implied a price per Chris-Craft share in the mid to high $70s. Although
discussions between Chris-Craft and the Third Party continued for several
weeks, the Third Party subsequently entered into a transaction with another
party. Chris-Craft and the Third Party continued to have discussions for
several months after the Third Party announced its other transaction. However,
due to regulatory issues created by the Third Party's other transaction, and
the fact that the Third Party was never able to offer Chris-Craft sufficient
consideration due to the Third Party's low stock price, Chris-Craft and the
Third Party never reached agreement on a transaction.
On March 16, 2000, the New York State Supreme Court ruled against BHC in its
suit against Viacom. At a meeting on March 20, 2000, BHC notified CBS that BHC
would sell its interest in UPN to Viacom for $5 million under the buy-sell
provision exercised by Viacom. CBS then indicated to Chris-Craft that Viacom
and CBS were still interested in pursuing a transaction with Chris-Craft. CBS
commenced its due diligence investigation and, over the next few months, Chris-
Craft, Viacom and CBS had a number of discussions.
On May 4, 2000, Viacom announced that it had completed its acquisition of
CBS.
As discussions with Viacom progressed, Chris-Craft contacted the BHC and
United Television special committees and suggested that they prepare themselves
to evaluate a possible transaction in which the minority interest in such
companies would be acquired by a third party or possibly by Chris-Craft. Chris-
Craft also suggested that the special committees hire any necessary legal and
financial advisors, to the extent that they had not already done so.
In May 2000, the BHC special committee retained Swidler Berlin Shereff
Friedman, LLP as its legal counsel. In June 2000, the BHC special committee
engaged Wasserstein Perella as its financial advisor.
On May 15, 2000, the BHC board voted to expand the role of the BHC special
committee to include receiving and evaluating the terms of any potential
acquisition transaction, determining if such transaction is fair to, and in the
best interests of, BHC and its stockholders, and recommending to the full BHC
board what action, if any, BHC should take.
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On June 12, 2000, the United Television board voted to expand the role of
the United Television special committee to include receiving and evaluating the
terms of any potential acquisition transaction, determining if such transaction
is fair to, and in the best interests of, United Television and its
stockholders, and recommending to the full United Television board what action,
if any, United Television should take.
On June 21, 2000, the United Television special committee engaged Bear
Stearns, and representatives of Bear Stearns commenced their financial review
of United Television, BHC and Chris-Craft. On June 26, 2000, Bear Stearns held
a meeting with United Television management to review financial and other
information concerning United Television.
Beginning in mid-June 2000, representatives of Wasserstein Perella conducted
a due diligence review of Chris-Craft, BHC and United Television. On June 28,
2000, representatives of Wasserstein Perella met with management of Chris-
Craft, BHC and United Television to review financial and industry-wide
information regarding BHC and United Television.
Throughout June and July 2000, representatives of Chris-Craft and Viacom,
and their respective legal counsel, met on several occasions to negotiate the
terms of a transaction and exchange drafts of a merger agreement. Toward the
end of July 2000, the parties had reached agreement on most material business
and legal issues and scheduled a meeting to discuss price, remaining issues and
process.
On July 24, 2000, representatives of Viacom, Shearman & Sterling (counsel to
Viacom), Morgan Stanley Dean Witter & Co. (financial advisor to Viacom), Chris-
Craft, Skadden and Allen & Company met at the offices of Skadden. At the
meeting, the parties discussed the remaining business and legal issues and
representatives of Viacom indicated that, upon completion of remaining due
diligence and resolution of the open business and legal issues, Viacom was
prepared to offer a purchase price for Chris-Craft of $77 per share. The
parties discussed Viacom's indication of price and, based on additional
information discussed at the meeting that Chris-Craft believed would represent
additional value to Viacom, Chris-Craft believed that Viacom might be willing
to offer up to $80 per share, although Viacom did not make such an offer at the
time. The parties also discussed, but did not reach agreement on, the valuation
of Viacom's stock for purposes of calculating an exchange ratio. Despite the
lack of agreement on price at the meeting and the few remaining open issues,
representatives of Chris-Craft believed that it was appropriate for Viacom to
commence independent negotiations with the BHC and United Television special
committees.
Later that day, representatives of Skadden and Allen & Company contacted the
special committees' respective legal and financial advisors to inform them that
Chris-Craft was in discussions with Viacom regarding the acquisition of Chris-
Craft by Viacom and that they should each expect to be contacted by Viacom in
the next few days with an acquisition proposal.
During the week of July 24, 2000, representatives of Morgan Stanley
contacted representatives of Wasserstein Perella and Bear Stearns to discuss
preliminarily a possible transaction whereby Viacom would purchase, through a
merger, Chris-Craft, BHC and United Television. During that week,
representatives of Skadden spoke with representatives of Swidler Berlin and
Kramer Levin to update them on the discussions between Viacom and Chris-Craft.
Also during this period, BHC and United Television retained Kaye Scholer as
outside legal counsel to aid in negotiating the terms of the merger agreement.
On several occasions during this period, representatives of Skadden and
Allen & Company emphasized to the special committees' legal and financial
advisors that the special committees' respective negotiations with Viacom were
to be conducted directly between the special committees and Viacom.
Representatives of Skadden further emphasized that Chris-Craft would not
participate in or interfere with their negotiations regarding the amount or
form of consideration that BHC and United Television stockholders were to
receive in a possible transaction, and that Chris-Craft viewed their
negotiations as being independent from the negotiations taking place between
Chris-Craft and Viacom. These representatives also explained that, in terms of
process, Viacom was to enter into agreements with Chris-Craft, BHC and United
Television simultaneously
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and that it was Chris-Craft's understanding that Viacom would not execute a
merger agreement with Chris-Craft unless Viacom simultaneously entered into
agreements with BHC and United Television that had been recommended to the BHC
and United Television boards by their respective special committees.
On July 27, 2000, Mr. Murdoch contacted Mr. Shuman and indicated to Mr.
Shuman that News Corporation remained interested in acquiring Chris-Craft, BHC
and United Television. Mr. Murdoch indicated that he was very familiar with the
three companies and that, given the increase in News Corporation's stock price
since September 1999 and subject to News Corporation completing due diligence
and negotiating the terms of a definitive merger agreement acceptable to News
Corporation, News Corporation was prepared to offer $85 for each Chris-Craft
share. Mr. Shuman indicated to Mr. Murdoch that, if News Corporation were
seriously interested, it had to act expeditiously as a transaction with Chris-
Craft might soon no longer be an option. Mr. Murdoch indicated that he was
prepared to act as expeditiously as possible. During the next two weeks, Mr.
Shuman had a number of discussions with Mr. Murdoch and several other senior
News Corporation executives regarding a potential transaction. Also during that
period, News Corporation began to conduct its due diligence investigation and
was provided with a draft merger agreement.
On July 31, 2000, representatives of Morgan Stanley met with representatives
of Wasserstein Perella and Swidler Berlin and set forth the terms of a proposal
by Viacom to acquire all of the outstanding capital stock of BHC through a
merger at a price of $155 per share in a combination of cash and stock. In
addition, these representatives outlined the terms of the proposed transaction
for Chris-Craft. The representatives of Morgan Stanley also stated that they
would inform the BHC special committee of the terms of the United Television
proposal after they met with representatives of United Television. Later that
day, representatives of Morgan Stanley met with representatives of Bear Stearns
and Kramer Levin and set forth the terms of a proposal by Viacom to acquire all
of the capital stock of United Television through a merger at a price of $137
per share in a combination of cash and stock. In addition, these
representatives outlined the general terms of the proposed transactions for
Chris-Craft and BHC. Also on July 31, 2000, the United Television special
committee met to receive its legal and financial advisors' reports of the
proposed financial and legal terms and the structure of Viacom's proposal and
to receive a report on the progress of Bear Stearns' due diligence and analysis
of United Television. Bear Stearns advised the United Television special
committee that Bear Stearns would begin to conduct a financial review of Viacom
and its proposed transaction.
During the next two weeks, representatives of Viacom and Chris-Craft and
each of their respective legal advisors negotiated most of the remaining issues
in the proposed transaction with Chris-Craft. At the same time, representatives
of Viacom negotiated the terms of potential transactions with each of the
special committees and their respective legal and financial advisors.
On August 1, 2000, representatives of Wasserstein Perella and Swidler Berlin
met with the BHC special committee. At that time, representatives of Swidler
Berlin reviewed with the BHC special committee its fiduciary duties and
obligations under Delaware law. In addition, representatives of Wasserstein
Perella and Swidler Berlin reviewed with the BHC special committee the
financial and other principal terms of Viacom's proposal. Also on August 1,
2000, representatives of Morgan Stanley communicated to Bear Stearns the
respective purchase prices offered to stockholders of Chris-Craft and BHC.
On August 2, 2000, Shearman & Sterling, on behalf of Viacom, delivered a
draft merger agreement for BHC and related documents to Swidler Berlin and a
draft merger agreement for United Television and related documents to Kramer
Levin.
On August 3, 2000, representatives of Wasserstein Perella and Swidler Berlin
met with the BHC special committee to further discuss the proposed transaction.
Representatives of Swidler Berlin discussed the terms of the merger agreement
and related documents. Representatives of Swidler Berlin also informed the BHC
special committee that they had been informed by representatives of Skadden
that Chris-Craft, as a majority stockholder of BHC, would not approve a
transaction other than a transaction that included the sale of Chris-Craft in
its entirety and, accordingly, the BHC special committee was not authorized to
solicit third
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parties regarding an acquisition of BHC alone. Representatives of Wasserstein
Perella presented a preliminary description to the BHC special committee of the
financial analyses related to the proposed transaction and the results of its
due diligence review. The BHC special committee directed Wasserstein Perella to
seek an increase in the $155 price per BHC share offered by Viacom. Later that
day, representatives of Skadden acting on behalf of Chris-Craft conveyed to
representatives of Kramer Levin the substance of their discussion with Swidler
Berlin regarding the solicitation of third-party proposals.
On August 4, 2000, representatives of Bear Stearns and Kramer Levin met with
the United Television special committee to further discuss the proposed
transaction with Viacom. Representatives of Kramer Levin discussed the terms of
the merger agreement and related documents. Representatives of Bear Stearns
presented their preliminary analysis of the proposed acquisition by Viacom of
United Television and their due diligence to date. At the meeting, the United
Television special committee directed Bear Stearns to seek an increase in the
$137 price per United Television share offered by Viacom.
During the week of August 6, 2000, representatives of Wasserstein Perella
had discussions with representatives of Morgan Stanley to seek an increase in
Viacom's proposed purchase price for BHC. Also during that week,
representatives of the United Television special committee and Bear Stearns
conducted additional due diligence, reviewed additional information from United
Television management in response to the United Television special committee's
requests and discussed with Viacom's financial advisors the valuation of United
Television in an attempt to induce Viacom to increase its offer. At the same
time, representatives of Kramer Levin and Kaye Scholer began negotiating the
United Television merger agreement and related documents with Shearman &
Sterling and representatives of Swidler Berlin and Kaye Scholer began
negotiating the BHC merger agreement and related documents with Shearman &
Sterling. On August 10, 2000, the United Television special committee met with
Bear Stearns and Kramer Levin. At the meeting, Kramer Levin reported on the
draft legal documentation for the proposed transaction. Bear Stearns presented
its update and advised the United Television special committee that Viacom had
indicated a willingness to negotiate a small increase in the value of its
proposal. The United Television special committee directed Bear Stearns to
continue to seek an increase in the price per share offered by Viacom.
Also during that week, at the request of Viacom, the boards of directors of
Chris-Craft, BHC and United Television and the BHC and United Television
special committees tentatively scheduled meetings for the weekend of August 12,
2000 to consider any proposals that Viacom was prepared to make by such time,
with a view that, if the special committees and the boards determined to
approve their respective transactions, the merger agreements could be executed
promptly thereafter and, if the boards determined not to approve the
transactions at that time, they would, if appropriate, meet again at a later
date.
Discussions between Chris-Craft and News Corporation intensified during this
period and, on August 7, 2000, Arthur M. Siskind, senior executive vice
president and group general counsel of News Corporation, and Lawrence A.
Jacobs, senior vice president and deputy general counsel of News Corporation,
met with representatives of Skadden to discuss material issues, the draft
merger agreement and the process going forward. Over the next few days, the
parties continued discussions and News Corporation continued its due diligence
investigation.
By August 10, 2000, representatives of Chris-Craft, News Corporation and Fox
Television Holdings had developed a transaction structure that the parties
believed could both satisfy FCC regulations and result in the tax-free receipt
of Preferred ADSs of News Corporation by Chris-Craft, BHC and United Television
stockholders. The parties also agreed that they would restructure the
transaction in a manner that would be taxable to Chris-Craft stockholders if
FCC approval and an IRS ruling relating to one of the requirements for a tax
free reorganization were not obtained. The parties tentatively agreed that if
the transaction were restructured to be taxable to the Chris-Craft
stockholders, News Corporation would increase its proposed $85 per share
purchase price by an amount which the parties discussed as being $5 per Chris-
Craft share. To address Chris-Craft's concern that the FCC and IRS processes
and the alternative transaction structures could substantially
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delay the consummation of the transaction, News Corporation agreed that it
would increase the purchase price per Chris-Craft share by $1 in the event that
the merger took longer than one year to be completed.
On the evening of August 10, 2000, Mr. Shuman contacted Mel Karmazin,
president and chief operating officer of Viacom, by telephone and notified him
that Chris-Craft had received a proposal from a third party that was
substantially more favorable to Chris-Craft stockholders than the transaction
Chris-Craft had been negotiating with Viacom. Mr. Shuman acknowledged that Mr.
Karmazin had indicated in previous discussions that Viacom would not be willing
to increase its purchase price beyond that previously discussed between the
parties, but Mr. Shuman indicated that Chris-Craft wanted to apprise Mr.
Karmazin of the recent development nonetheless. Mr. Karmazin stated that he was
not willing to increase the purchase price and that he was terminating further
discussions with Chris-Craft regarding the proposed transaction. Mr. Shuman
indicated that Chris-Craft was willing to, and would like to, continue
discussions with Viacom as its other transaction was not yet finalized. Mr.
Karmazin declined this offer and reiterated that he was terminating discussions
with Chris-Craft.
Later that evening, Chris-Craft's financial and legal advisors contacted the
special committees' respective legal and financial advisors and advised them
that representatives of News Corporation would be contacting them with a
proposal. The following morning, representatives of Wasserstein Perella and
Swidler Berlin spoke with representatives of Donaldson, Lufkin & Jenrette, Inc.
(DLJ), News Corporation's financial advisor with respect to its potential
acquisition of Chris-Craft, BHC and United Television, concerning the proposed
transactions involving News Corporation, Chris-Craft, BHC and United
Television. At the time, representatives of DLJ spoke generally about the
material non-financial terms of the Chris-Craft transaction and of News
Corporation's proposal with respect to BHC. Also that day, DLJ had similar
discussions with Bear Stearns with respect to United Television.
On August 11, 2000, Mr. Shuman spoke with Paul Taubman, a managing director
of Morgan Stanley. Mr. Taubman indicated that Viacom would be willing to engage
in a transaction if Chris-Craft were willing to execute a merger agreement that
day and that, if Chris-Craft were not willing to do so, Viacom would issue a
press release after the financial markets closed that day to the effect that
Viacom was terminating discussions with Chris-Craft regarding an acquisition.
Representatives of Shearman & Sterling delivered the same message to
representatives of Skadden. Mr. Shuman subsequently communicated to Mr. Taubman
that, as the parties had previously discussed, the special committees and
boards were scheduled to meet on Saturday, August 12, 2000 and Sunday, August
13, 2000 to consider and, if appropriate, approve a transaction, and that
Chris-Craft, BHC and United Television were still willing to consider a
proposal from Viacom over the weekend as previously scheduled. Representatives
of Skadden simultaneously communicated to representatives of Shearman &
Sterling that Chris-Craft was not willing to comply with Viacom's deadline and
that, even if Chris-Craft wished to do so, Chris-Craft physically could not
execute a merger agreement by Viacom's deadline as many of the three companies'
directors were traveling in anticipation of the next days' meetings, which had
been scheduled at the request of Viacom. Representatives of Skadden also
indicated that Viacom should not assume that Chris-Craft would have been
willing to execute a merger agreement by Viacom's deadline even if Chris-Craft
physically were able to do so, but that, in any event and as previously
scheduled, Skadden and Chris-Craft were prepared to work expeditiously over the
weekend to resolve any remaining legal and contractual issues so that the
parties would be in a position to execute a merger agreement should they wish
to do so. Mr. Taubman and representatives of Shearman & Sterling indicated that
Viacom was not willing to continue discussions over the weekend and, as a
result, at 2:54 p.m. Eastern Time, prior to the close of the financial markets,
Viacom issued a press release to the effect that it had terminated discussions
with Chris-Craft and its subsidiaries regarding an acquisition. At 5:27 p.m.
Eastern Time, Chris-Craft, in response to Viacom's announcement, issued a press
release to the effect that Chris-Craft, BHC and United Television were in
intensive negotiations with another major media company with respect to a
merger.
That same day, representatives of DLJ formally proposed to representatives
of Wasserstein Perella that News Corporation was prepared to purchase BHC's
outstanding capital stock in a merger at a price of $165 per share in a
combination of cash and stock. In addition, representatives of DLJ informed
representatives of
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Wasserstein Perella of the terms of News Corporation's proposals for Chris-
Craft and United Television. Later that day, representatives of Wasserstein
Perella met with the BHC special committee to discuss News Corporation's
proposal. Representatives of Wasserstein Perella informed the BHC special
committee that Viacom had formally rescinded its proposal and issued a press
release indicating that it was no longer in talks to acquire Chris-Craft, BHC
and United Television. To facilitate the process with News Corporation, Skadden
distributed to Kaye Scholer, Swidler Berlin, News Corporation and Squadron,
Ellenoff, Plesent & Sheinfeld, LLP, outside legal counsel for News Corporation
and Fox Television Holdings, a draft merger agreement for use by those parties
as a base from which, independent of Chris-Craft and Skadden, they could
negotiate the terms of a merger agreement. The draft distributed was
substantially the same as the latest draft of the merger agreement being
negotiated between Chris-Craft and News Corporation, with conforming changes
having been made for BHC based on the latest draft that BHC had been
negotiating with Viacom. Representatives of Swidler Berlin discussed the terms
of the merger agreement with the BHC special committee and once again reviewed
the fiduciary duties and obligations of the BHC special committee. Further on
August 11, 2000, representatives of Wasserstein Perella conducted a financial
due diligence review of News Corporation and the proposed transaction.
Also on August 11, 2000, representatives of DLJ formally proposed to
representatives of Bear Stearns that News Corporation was prepared to purchase
United Television's outstanding capital stock in a merger at a price of $150
per share in a combination of cash and stock. In addition, representatives of
DLJ informed representatives of Bear Stearns of the terms of News Corporation's
proposals for Chris-Craft and BHC. That same day, representatives of Swidler
Berlin, Kramer Levin, Kaye Scholer, News Corporation and Squadron Ellenoff had
a series of conference calls to discuss the regulatory and tax issues involved
in the proposed transaction. Later that day, representatives of Bear Stearns
and Kramer Levin met with the United Television special committee for a meeting
that was originally scheduled to discuss the proposed transaction with Viacom.
At the meeting, representatives of Bear Stearns described the proposal from
News Corporation and informed the United Television special committee that
Viacom had rescinded its proposal and issued a press release indicating that it
was no longer in discussions to acquire Chris-Craft, BHC and United Television.
As with BHC, to facilitate the process, Skadden distributed to Kaye Scholer,
Kramer Levin, News Corporation and Squadron Ellenoff a draft merger agreement
for use by those parties as a base from which, independent of Chris-Craft and
Skadden, they could negotiate the terms of a merger agreement. As with BHC,
this draft was substantially the same as the latest draft of the merger
agreement being negotiated between Chris-Craft and News Corporation, with
conforming changes having been made for United Television based on the latest
draft that United Television had been negotiating with Viacom. Later that day,
representatives of Kramer Levin discussed the structure and terms of the merger
agreement with the United Television special committee. The United Television
special committee directed Bear Stearns to seek improvements in the financial
terms of News Corporation's offer, including an increase in the price per share
offered by News Corporation, which representatives of Bear Stearns did
following the meeting. Also, following Skadden's distribution of the draft BHC
and United Television merger agreements, Kaye Scholer and Swidler Berlin, in
the case of BHC, and Kaye Scholer and Kramer Levin, in the case of United
Television, negotiated those documents directly with News Corporation and
Squadron Ellenoff.
During the weekend of August 12, 2000, Chris-Craft, BHC and the BHC special
committee and United Television and the United Television special committee,
and each of their respective legal and financial advisors, independently
negotiated with News Corporation to finalize the financial and other terms of
their respective merger agreements and proposed transactions with News
Corporation. During the course of discussions, both representatives of News
Corporation and Chris-Craft indicated that, while the parties preferred to
adhere to the tentative schedule of executing merger agreements over the
weekend, they strongly felt that if the special committees and boards needed
more time to consider News Corporation's proposals, the schedule would be
delayed to permit them to do so.
On the morning of August 12, 2000, the full Chris-Craft, BHC and United
Television boards met together. At the meeting, the special committees and
boards and Chris-Craft's, BHC's and United Television's advisors
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reviewed and discussed the terms of the proposed merger agreements and the tax
and regulatory aspects of the transactions, and representatives of Chris-Craft
and its advisors described the history of the process that Chris-Craft and its
advisors had gone through concerning the proposed sale of Chris-Craft,
including the discussions with the Third Party, CBS, Viacom and News
Corporation. After further discussions and questions from directors, the
meeting concluded. After that meeting, and throughout the course of the day,
the BHC special committee, the United Television special committee, the board
of directors of Chris-Craft, the board of directors of BHC and the board of
directors of United Television each separately met to consider News
Corporation's proposals.
At the BHC special committee meeting, representatives of Swidler Berlin
summarized the chronology of events that had led to News Corporation's
proposal. These representatives then discussed in detail the BHC special
committee's fiduciary duties in considering News Corporation's proposal and
further discussed the terms of the merger agreement and related documents and
related regulatory and tax matters. Representatives of Swidler Berlin and
Wasserstein Perella also described to the BHC special committee the financial
and other terms of the proposals that News Corporation was making to each of
Chris-Craft and United Television. Representatives of Wasserstein Perella then
presented to the BHC special committee their financial analyses related to News
Corporation's proposal to acquire BHC. These representatives indicated that
Wasserstein Perella was prepared to render its opinion concerning the fairness
of the News Corporation's proposal. At the conclusion of the presentations, the
BHC special committee directed Wasserstein Perella to seek improvements in the
financial terms of News Corporation's offer, including an increase in the price
per share offered by News Corporation, which representatives of Wasserstein
Perella did following the meeting.
Later on August 12, 2000, representatives of DLJ informed representatives of
Wasserstein Perella that News Corporation had rejected the BHC special
committee's requests.
At the United Television special committee meeting that morning, Kramer
Levin and Bear Stearns reviewed the developments to date and Kramer Levin
reviewed with the United Television special committee their fiduciary duties in
considering News Corporation's proposal to acquire United Television.
Representatives of Kramer Levin and Bear Stearns also described to the United
Television special committee the financial and other terms of the proposals
that News Corporation was making to each of Chris-Craft and BHC.
Representatives of Bear Stearns then reported that News Corporation rejected
their requests for improvements in the financial terms of News Corporation's
offer and then reviewed Bear Stearns' preparedness to deliver a fairness
opinion with respect to the transaction. Later that morning, the United
Television special committee met again and Kaye Scholer reported on the status
of the merger agreement negotiations relating to the transaction and the
differences between the proposed United Television merger agreement and the
proposed Chris-Craft and BHC merger agreements. The United Television special
committee then directed Bear Stearns to seek an increase in the consideration
to be paid to United Television stockholders in the event the merger is not
consummated by August 13, 2001, similar to the increase to be received in such
event by Chris-Craft stockholders.
Later on August 12, 2000, representatives of DLJ informed representatives of
Bear Stearns that News Corporation had rejected the United Television special
committee's request. Thereafter, the United Television special committee voted
unanimously to recommend to the United Television board of directors News
Corporation's proposal, subject to receipt of Bear Stearns' favorable fairness
opinion.
Later that day, the board of directors of Chris-Craft held a meeting. At
this meeting, representatives of Skadden discussed with the board its fiduciary
duties. Representatives of Chris-Craft and Skadden also reviewed with the board
the regulatory-driven structure of the transaction and discussed the FCC
consent and IRS ruling process. Representatives of Chris-Craft and Skadden then
reviewed the terms of the merger agreement and Allen & Company delivered a
financial presentation and stated that it was prepared to deliver a fairness
opinion with respect to the consideration to be received by Chris-Craft
stockholders. That same afternoon, the board of directors of each of BHC and
United Television independently held meetings at which Kaye Scholer reviewed
with the BHC and United Television boards their duty to apprise themselves of
all necessary information to reach their decision and their need to act in the
best interests of all of their
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stockholders. At the BHC meeting, representatives of BHC and representatives of
Kaye Scholer reviewed the terms of the BHC merger agreement and Wasserstein
Perella delivered a financial presentation summarizing its opinion to the BHC
special committee. At the United Television meeting, representatives of United
Television and representatives of Kaye Scholer reviewed the terms of the United
Television merger agreement and Bear Stearns delivered a financial presentation
with respect to the consideration to be received by United Television
stockholders. Members of each special committee also updated each board as to
the developments in their meetings and the preparedness of each of their
respective financial advisors reported to deliver their fairness opinions.
Over the course of the evening and again on the morning of August 13, 2000,
representatives of Skadden and Chris-Craft and representatives of Kaye Scholer,
BHC and United Television worked independently with News Corporation and
Squadron Ellenoff to finalize the three merger agreements and related
documentation.
On August 13, 2000, the BHC special committee met again to review the most
recent developments concerning the negotiations. At this time, Wasserstein
Perella formally delivered its opinion to the BHC special committee that the
consideration to be paid in the proposed transaction with News Corporation was
fair to the stockholders of BHC, other than Chris-Craft, from a financial point
of view. At the conclusion of the meeting, the BHC special committee
unanimously determined that the merger was advisable and fair to, and in the
best interests of, BHC and its stockholders and resolved to recommend that
BHC's board of directors approve the BHC merger agreement and the transactions
contemplated by the BHC merger agreement.
On August 13, 2000, the United Television special committee met to receive
an update on the proposed transaction and to receive Bear Stearns' fairness
opinion. At that time, Bear Stearns delivered its opinion to the United
Television special committee that the consideration to be paid in the proposed
transaction with News Corporation was fair to the stockholders of United
Television, other than BHC, from a financial point of view. At the conclusion
of the meeting, the United Television special committee unanimously determined
that the merger was advisable and fair to, and in the best interests of, United
Television and its stockholders and resolved to recommend that United
Television's board of directors approve the United Television merger agreement
and the transactions contemplated by the United Television merger agreement.
In the afternoon of August 13, 2000, the board of directors of BHC met and
reviewed the terms of the proposed BHC merger agreement and received the
recommendation of the BHC special committee. Based upon, among other things,
the report and recommendation of the BHC special committee, the BHC board of
directors, by unanimous vote of the eight directors present, constituting the
entire board, approved the BHC merger agreement and related transactions and
recommended that the BHC stockholders approve and adopt the BHC merger
agreement. On the same afternoon, the board of directors of United Television
met and reviewed the terms of the proposed United Television merger agreement
and received the recommendation of the United Television special committee.
Based upon, among other things, the report and recommendation of the United
Television special committee, the United Television board of directors, by
unanimous vote of the seven directors present, constituting the entire board,
approved the United Television merger agreement and related transactions and
recommended that the United Television stockholders approve and adopt the
United Television merger agreement. Following the meetings of the BHC and
United Television boards of directors, the board of directors of Chris-Craft
held a meeting, at which the board of directors, by unanimous vote of the ten
directors present, constituting the entire board, approved the Chris-Craft
merger agreement and related transactions and recommended that the Chris-Craft
stockholders approve and adopt the Chris-Craft merger agreement.
Thereafter, on August 13, 2000, Chris-Craft, BHC and United Television each
entered a merger agreement with News Corporation and its two affiliates, News
Publishing and Fox Television Holdings. In addition, Chris-Craft and BHC each
entered into a voting agreement and irrevocable proxy with respect to shares in
BHC and United Television, respectively, with News Corporation and a News
Corporation affiliate. For a discussion of the merger agreements and voting
agreements, see "Summary of the Transaction Documents" on page [ . ].
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On the morning of August 14, 2000, Chris-Craft, BHC and United Television
issued a joint press release, and News Corporation and Fox Television Stations
issued a separate press release, each of which announced the signing of the
Chris-Craft, BHC and United Television merger agreements.
News Corporation's Reasons for the Mergers
News Corporation has entered into the merger agreements in order to
strengthen its existing U.S. television station business through the
acquisition and operation by Fox Television Stations of the 10 stations
currently owned and operated by Chris-Craft, BHC and United Television.
Chris-Craft's, BHC's and United Television's Reasons for the Mergers;
Recommendations of the Special Committees and Boards of Directors
The Board of Directors of Chris-Craft
At its meeting on August 13, 2000, Chris-Craft's board of directors
unanimously:
. determined that the Chris-Craft merger agreement and the Chris-Craft
merger are advisable and fair to, and in the best interests of, Chris-
Craft and its stockholders;
. directed that the Chris-Craft merger proposal be submitted for
consideration by the Chris-Craft stockholders; and
. recommended that the Chris-Craft stockholders vote FOR the Chris-Craft
merger proposal.
In the course of reaching its decision to approve the merger agreement and
the Chris-Craft merger, Chris-Craft's board of directors consulted with Chris-
Craft's management, as well as its outside legal counsel and its financial
advisors, and considered the following material factors:
. the financial and other terms of the Chris-Craft merger and the Chris-
Craft merger agreement;
. the ability of Chris-Craft stockholders to make elections to receive
stock, cash or a combination thereof, subject to proration and the
rebalancing mechanism described in this joint proxy statement/prospectus;
. recent regulatory changes in the industry creating new opportunities for
Chris-Craft;
. the financial presentation of Allen & Company, including its opinion that
the consideration to be received by Chris-Craft stockholders under the
Chris-Craft merger agreement is fair, from a financial point of view, to
the Chris-Craft stockholders;
. that over a period of several months, Chris-Craft solicited and received
indications of interest from various potential purchasers interested in
acquiring Chris-Craft; that the transaction with News Corporation was the
only proposal at an acceptable price then outstanding; and that the
transaction with News Corporation provided greater value to Chris-Craft
stockholders than the previous transaction proposed by Viacom and
subsequently withdrawn;
. the views of senior management at the time that, in light of the
preceding factor, it was unlikely that any party would propose an
acquisition or strategic business combination that would be more
favorable to Chris-Craft and its stockholders;
. possible alternatives to the Chris-Craft merger including continuing to
operate Chris-Craft as an independent entity;
. the regulatory process and the regulatory approvals required to
consummate the mergers and the prospects for receiving those approvals;
. that News Corporation was to execute merger agreements simultaneously
with Chris-Craft, BHC and United Television;
. that the Chris-Craft merger is conditioned on the satisfaction or waiver
of conditions to the BHC and United Television mergers;
. that none of the mergers are conditioned on News Corporation's ability to
obtain financing or its completion of due diligence;
. that no termination fee would be payable to News Corporation in the event
the merger is terminated;
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. the belief that the terms and conditions of the Chris-Craft merger
agreement, including the parties' representations, warranties and
covenants, and the conditions to their respective obligations, are
reasonable;
. that the receipt of Preferred ADSs in the forward merger is intended to
be tax-free to Chris-Craft stockholders, and the increase in the
consideration to be received by Chris-Craft stockholders in the event the
transaction is restructured to be fully taxable;
. the increase in the consideration to be received by Chris-Craft
stockholders in the event the merger is not consummated by August 13,
2001;
. the financial and other terms of the BHC and United Television mergers
and the BHC and United Television merger agreements;
. information concerning the financial performance and condition, business
operations, capital levels, cash flows, asset quality and prospects of
Chris-Craft and News Corporation and conditions in the broadcast and
media industries generally;
. the historical market prices and trading information with respect to
Chris-Craft capital stock and Preferred ADSs;
. the liquidity of News Corporation's shares relative to the liquidity of
Chris-Craft shares;
. the interests of the directors and executive officers of Chris-Craft in
the Chris-Craft merger as described in "Interests of Certain Directors
and Executive Officers of the Companies in the Mergers" on page [ . ];
. the terms and conditions of the Chris-Craft voting agreement that require
Chris-Craft to vote its shares of BHC capital stock in favor of the BHC
merger and the terms and conditions of the Chris-Craft proxy that grants
the right to vote Chris-Craft's shares of BHC capital stock in the BHC
merger to executive officers of News Corporation;
. the concern that the consummation of the BHC merger without consummation
of the Chris-Craft merger would not only have adverse tax consequences to
Chris-Craft, but would result in Chris-Craft receiving less aggregate
consideration in the BHC merger than that to be received by Chris-Craft
stockholders in the Chris-Craft merger;
. that News Corporation will bear the financial risk of divesting any
Chris-Craft assets that may be required to be divested under FCC
regulations;
. that Chris-Craft stockholders may exercise appraisal rights under
Delaware law;
. that Chris-Craft stockholders receiving Preferred ADSs in the merger will
have an opportunity to benefit from potential operating efficiencies and
revenue generation that may result from the mergers, including News
Corporation's potential to own and operate multiple television stations
in major cities following consummation of the mergers; and
. with respect to Chris-Craft stockholders receiving Preferred ADSs in the
Chris-Craft merger, the risk that the operations of Chris-Craft
(including the operations of its subsidiaries) and News Corporation might
not be successfully integrated and the risk that the potential benefits
of the merger might not be fully realized.
In view of the variety of factors and the amount of information considered,
the Chris-Craft board did not find it practicable to, and did not, quantify,
rank or attach any particular relative or specific weight to the various
factors it considered in reaching its decision. Rather, the determination was
made after consideration of all the factors as a whole. In addition, individual
members of the Chris-Craft board may have given different weights to different
factors.
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The Special Committee and Board of Directors of BHC
Recommendation of the BHC special committee. The BHC special committee
(consisting of two independent directors), in connection with its determination
that the BHC merger was advisable and fair to, and in the best interests of,
BHC and its stockholders (other than Chris-Craft), carefully considered the
terms of the BHC merger agreement and the transactions contemplated by the BHC
merger agreement. The BHC special committee recommended that the BHC board of
directors approve the BHC merger agreement and recommend to BHC stockholders
the approval and adoption of the BHC merger agreement. The BHC board of
directors, by unanimous vote of its eight directors, has determined that the
terms of the BHC merger are advisable, fair to and in the best interests of BHC
stockholders (other than Chris-Craft) and has approved and adopted the BHC
merger agreement.
The BHC special committee considered a number of factors, including those
listed below, in the course of reaching its recommendations. The BHC special
committee also considered presentations by, and consulted with, representatives
of Wasserstein Perella and Swidler Berlin. The following list of factors is not
exhaustive but is believed to include all material factors considered by the
BHC special committee:
. the terms and conditions of the BHC merger agreement, including:
. the financial terms of the transaction, including the ability of BHC
stockholders to elect to receive the merger consideration in the form
of cash, Preferred ADSs, or a combination of cash and Preferred ADSs,
subject to proration; and
. the rebalancing mechanism which ensures that those stockholders of BHC
who elect to receive cash from News Corporation will share equally in
any changes in the price per share of Preferred ADSs from the date of
the signing of the BHC merger agreement to the closing of the merger;
. the financial presentation of Wasserstein Perella, including its opinion
delivered on August 13, 2000 as to the fairness, from a financial point
of view, of the merger consideration to the BHC stockholders, other than
Chris-Craft;
. the opportunity for BHC stockholders to hold capital stock of News
Corporation, which the BHC special committee believed would have greater
liquidity and less volatility than the capital stock of BHC;
. that the merger contemplated by the BHC merger agreement is not subject
to any financing contingencies;
. the likelihood that the BHC merger will be completed;
. that News Corporation will bear the financial risk of divesting any BHC
assets that may be required to be divested under FCC regulations;
. the views of senior members of BHC management that the duopoly rules made
advisable a sale of BHC to a company with diverse content and the ability
to create and maximize the efficiency of a duopoly in any of BHC's
markets and their views of the financial condition, operations and
businesses of BHC and News Corporation and conditions in the broadcast
industry generally;
. that the consideration to be paid to the stockholders in the BHC merger,
based on the Preferred ADS price of $44 7/16 as of August 10, 2000,
represented, in the case of a forward merger, a 16% premium over the
trading price of the shares on the last trading day prior to the
announcement of the transaction, a 10% premium over the trading price of
the shares four weeks prior to the announcement of the transaction, and a
25% premium over the trading price of the shares on August 22, 1999, the
trading day before rumors regarding the sale of BHC first appeared in the
press and, in each case, an even higher premium in the case of a reverse
merger;
. that stockholders of BHC may demand appraisal rights under the Delaware
General Corporation Law;
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. the potential adverse effects on BHC's stock price if the merger is not
consummated, coupled with the limited alternatives available to BHC after
Chris-Craft had made lengthy efforts to sell Chris-Craft and Viacom had
publicly announced that it had terminated acquisition discussions; and
. that if the merger does not qualify as a tax-free reorganization for
purposes of the Internal Revenue Code the consideration to be received by
the stockholders of BHC will be increased.
The BHC special committee also considered the potential adverse factors of
the proposed BHC merger including:
. that the consideration to be paid to BHC stockholders will not be
increased in the event the BHC merger is not consummated by August 13,
2001;
. that Chris-Craft stockholders were receiving a premium for their control
of BHC;
. that if the BHC forward merger could fail to qualify as a reorganization
for purposes of the Internal Revenue Code and the transaction is
restructured as a reverse merger, then the Preferred ADSs received as
merger consideration would be taxable to BHC stockholders for U.S.
federal income tax purposes;
. that BHC would be unable to engage in any other acquisition transaction
that might be proposed by any third-party while the BHC merger agreement
is in effect, since Chris-Craft, which holds BHC stock representing
approximately a 97% voting interest in BHC, intended to agree with News
Corporation to vote its BHC shares in favor of the BHC merger with News
Corporation;
. the regulatory approvals required by the FCC, the Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice to complete the BHC merger and the prospects for receiving those
approvals;
. the challenges of combining the businesses, assets and workforces of the
companies and the risks of not achieving the expected operating
efficiencies or growth;
. that the aggregate amount of cash and the number of Preferred ADSs to be
paid at the closing of the merger were fixed at the signing of the BHC
merger agreement;
. that the BHC merger is not conditioned upon approval of a majority of the
stockholders of BHC who are not affiliated with Chris-Craft;
. the risk of diverting management focus and resources from other strategic
opportunities and from operational matters while working to implement the
merger; and
. the risk that the BHC merger is not completed.
In addition, in considering the proposed BHC merger, the members of the BHC
special committee were aware of the interests of certain officers and directors
of BHC in the transaction, as described under "Interests of Certain Directors
and Executive Officers of the Companies in the Mergers" on page [ . ], and were
informed as to the financial and other terms of the Chris-Craft and United
Television mergers and the Chris-Craft and United Television merger agreements.
This information included revenue, EBITDA and broadcast cash flow multiples per
share being paid to stockholders in the Chris-Craft and United Television
mergers.
In view of the variety of factors considered in reaching its determination,
the BHC special committee did not find it practicable to, and did not, quantify
or otherwise assign relative weights to the specific factors considered in
reaching its recommendations. In addition, the individual members of the BHC
special committee may have given different weight to different factors.
Recommendation of the BHC board of directors. The BHC board of directors
consists of eight directors, two of whom served on the BHC special committee.
At the August 12 and 13, 2000 meetings of the BHC board of directors, the BHC
special committee, with its legal and financial advisors participating,
reported to the BHC board of directors on the BHC special committee's review of
the BHC merger agreement and the
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financial terms of the proposed BHC merger and the factors taken into account
by the BHC special committee in reaching its determination to recommend that
the board of directors approve the BHC merger agreement. The same factors
considered by the BHC special committee were taken into account by the BHC
board of directors. In addition, the BHC board of directors considered the
conclusions and recommendations of the BHC special committee and believes that
these factors supported the BHC board of directors' determination to approve
and recommend the BHC merger agreement. The BHC board of directors also
considered that Chris-Craft, which holds 80% of the equity of BHC and
approximately a 97% voting interest in BHC, intended to enter into an agreement
to merge with News Corporation if BHC and United Television were able to reach
agreement with News Corporation.
Fairness of the Merger. The BHC board of directors, including the members of
the BHC special committee, also believes that the BHC merger is procedurally
fair because, among other things:
. the BHC special committee consisted of two independent directors who were
appointed to represent the interests of BHC's stockholders other than
Chris-Craft and its subsidiaries, officers and directors;
. the BHC special committee retained and received advice from independent
legal and financial advisors; and
. the BHC special committee negotiated certain terms of the BHC merger
agreement with News Corporation, including those described under the
"Recommendation of the BHC special committee" section above.
The Special Committee and Board of Directors of United Television
Recommendation of the United Television special committee. The United
Television special committee (consisting of two independent directors)
unanimously determined that the terms of the United Television merger are
advisable, fair to and in the best interests of United Television stockholders
other than BHC, Chris-Craft and their respective subsidiaries, officers and
directors, and recommended that the United Television board of directors
approve the United Television merger agreement and recommend to United
Television stockholders the approval and adoption of the merger agreement. The
United Television board of directors, by unanimous vote of its seven directors,
has determined that the terms of the United Television merger are advisable,
fair to and in the best interests of United Television stockholders and has
approved and adopted the United Television merger agreement.
In the course of reaching its decision to recommend that the United
Television board of directors approve the United Television merger agreement
and recommend its adoption to United Television stockholders, the United
Television special committee consulted with United Television's management and
with independent legal and financial advisors. The following list of factors is
not exhaustive, but is believed to include or incorporate all of the material
factors considered by the United Television special committee:
. the financial terms of the transaction, including the United Television
stockholders' right to elect to receive the consideration payable to them
solely in cash or solely in Preferred ADSs, subject to proration;
. the rebalancing mechanism which ensures that United Television
stockholders who elect to receive the consideration payable to them
solely in cash will share equally in any changes in the price per share
of Preferred ADSs from the date of the signing of the United Television
merger agreement to the closing of the merger;
. the financial presentation of Bear Stearns, including its opinion dated
August 13, 2000 as to the fairness, from a financial point of view, of
the United Television merger consideration to United Television's public
stockholders;
. the superior liquidity of Preferred ADSs relative to the liquidity of
United Television shares;
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. the lack of a financing condition to the Chris-Craft, BHC and United
Television mergers and the relatively small number of conditions to the
completion of the United Television merger;
. that News Corporation bears the financial risks of divesting any United
Television assets that may be required to be divested in connection with
the United Television merger under the FCC rules;
. the views of senior members of United Television management that the
duopoly rules made advisable a sale of United Television to a company
with diverse content and the ability to create and maximize the
efficiency of a duopoly in some of United Television's markets and their
views of the financial condition, operations and businesses of United
Television and News Corporation and conditions in the broadcast industry
generally;
. that the consideration to be paid to the stockholders in the United
Television merger, based on the Preferred ADS price of $44 7/16 as of
August 10, 2000, represented, in the case of a forward merger, a 13.2%
premium over the average trading price of the United Television shares
during the month preceding announcement of the transaction, a 5.8%
premium over their all-time high trading price and a 41.5% premium over
their closing price on August 2, 1999, the day before the FCC issued a
press release indicating that the FCC would consider modifying its
broadcast ownership rules at its meeting on August 5, 1999 and, in each
case, an even higher premium in the case of a reverse merger;
. the anticipation of a drop in United Television's stock price if a
transaction is not completed, coupled with few, if any, alternatives to
the merger with News Corporation once Viacom withdrew its proposal, and
after Chris-Craft's lengthy efforts to sell Chris-Craft;
. that the United Television forward merger is expected to qualify as a
tax-free reorganization for purposes of the Internal Revenue Code and
that the portion of the merger consideration received in the form of
Preferred ADSs would not be taxable to United Television's stockholders
for U.S. income tax purposes (other than tax on gain to the extent cash
is received by a stockholder in connection with the merger), and that if
the merger might not qualify as a tax-free reorganization, the
transaction would be restructured as a fully taxable reverse merger and
the aggregate consideration to be received by the United Television
stockholders would be increased; and
. the ability of stockholders who object to the United Television merger to
obtain "fair value" for their shares if they exercise and perfect their
dissenters' rights of appraisal under the Delaware General Corporation
Law.
The United Television special committee also considered the potential
adverse factors of the proposed merger including:
. the risk that the United Television merger will not be approved by the
FCC, the Federal Trade Commission or the Antitrust Division of the United
States Justice Department, or that such approval will be delayed;
. the risk that the United Television merger will not be completed;
. that the aggregate amount of cash and the number of Preferred ADSs
payable were fixed at the signing of the United Television merger
agreement;
. that stockholders of Chris-Craft will receive a larger premium for their
stock relative to the Chris-Craft stock prices as of August 2, 1999 and
August 10, 2000 than will the United Television stockholders relative to
the United Television stock prices as of the same dates;
. that the consideration to be paid to United Television stockholders will
not be increased in the event the United Television merger is not
consummated by August 13, 2001;
. the risk of diverting management focus and resources from other strategic
opportunities and from operational matters while working to implement the
United Television merger;
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. that BHC, United Television's controlling stockholder, has agreed with
News Corporation to vote its shares in favor of the United Television
merger, rendering United Television unable to engage in any other
acquisition transaction that could be proposed by any third party while
the United Television merger agreement is in effect;
. that the United Television merger is not conditioned upon approval of a
majority of United Television stockholders who are not affiliated with
BHC;
. the risk that the United Television forward merger could fail to qualify
as a reorganization for purposes of the Internal Revenue Code and, if the
transaction is restructured as a reverse merger, then the additional
consideration to be paid by News Corporation in that event may not
adequately compensate the stockholders for their additional tax
liability; and
. the challenges of combining the businesses, assets and workforces of two
major companies and the risks of News Corporation not achieving any
expected operating efficiencies or growth.
In addition, in considering the proposed merger with News Corporation, the
members of the United Television special committee were aware of the interests
of certain officers and directors of United Television in the transaction, as
described under "Interests of Certain Directors and Executive Officers of the
Companies in the Mergers" on page [ . ], and were informed as to the financial
and other terms of the Chris-Craft and BHC mergers and the Chris-Craft and BHC
merger agreements.
The foregoing discussion of the information and factors considered by the
United Television special committee includes all of the material factors
considered by the United Television special committee in reaching its
conclusions and recommendations but is not meant to be exhaustive. In view of
the variety of factors considered in its reaching its determination, the United
Television special committee did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors
considered in reaching its conclusions and recommendations. In addition, the
individual members of the United Television special committee may have given
different weights to different factors.
Recommendation of the United Television board of directors. The United
Television board of directors consists of seven directors, two of whom served
on the United Television special committee. At the August 12 and 13, 2000
meetings of the United Television board of directors, the United Television
special committee, with its legal and financial advisors participating,
reported to the United Television board of directors on its review of the
United Television merger agreement and the financial terms of the proposed
United Television merger and the factors taken into account by the United
Television special committee in reaching its determination to recommend that
the board of directors approve the United Television merger agreement and
recommend it to the United Television stockholders. Accordingly, the same
factors considered by the United Television special committee were taken into
account by the United Television board of directors. In addition, the United
Television board of directors considered the conclusions and recommendations of
the United Television special committee and believes that these factors
supported the United Television board of directors' determination to approve
and recommend the United Television merger agreement. The United Television
board of directors also considered that BHC, which holds approximately 58% of
United Television's voting stock, intended to enter into an agreement to merge
with News Corporation if Chris-Craft and United Television were able to reach
agreement with News Corporation.
Fairness of the Merger. The United Television board of directors, including
the members of the United Television special committee, also believes that the
United Television merger is procedurally fair because, among other things:
. The United Television special committee consisted of two independent
directors who were appointed to represent the interests of United
Television's stockholders other than Chris-Craft and BHC, and their
respective subsidiaries, officers and directors;
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. The United Television special committee retained and received advice from
independent legal and financial advisors; and
. The United Television special committee negotiated certain terms of the
United Television merger agreement with News Corporation, including those
described above under "Recommendation of the United Television special
committee".
Financial Advisor Fairness Opinions
Opinion of Chris-Craft's financial advisor
Chris-Craft retained Allen & Company to act as financial advisor to Chris-
Craft and to render an opinion as to the fairness, from a financial point of
view, of the consideration to be received by Chris-Craft stockholders in
connection with the Chris-Craft merger. On August 13, 2000, Allen delivered its
oral and written opinions to the Chris-Craft board of directors that the
consideration to be received by Chris-Craft stockholders in connection with the
proposed Chris-Craft merger was fair from a financial point of view.
The full text of Allen & Company's written opinion is set forth as Annex D
to this joint proxy statement/prospectus and describes the assumptions made,
general procedures followed, matters considered and limits on the review
undertaken. Allen & Company's opinion is directed only to whether the
consideration to be received in the proposed transaction is fair from a
financial point of view to Chris-Craft stockholders and does not constitute a
recommendation to Chris-Craft stockholders as to how they should vote or what
action they should take in connection with the Chris-Craft merger. The summary
of Allen & Company's opinion set forth in this joint proxy statement/prospectus
is qualified in its entirety by reference to the full text of such opinion.
Chris-Craft stockholders are urged to read the opinion carefully and in its
entirety.
In arriving at its conclusion, Allen & Company considered, among other
factors deemed relevant:
. the terms of the draft Chris-Craft merger agreement and related
documentation;
. the nature of the operations, assets and financial history of each of
Chris-Craft and News Corporation, including discussions with senior
management of each regarding their respective businesses and prospects,
including their respective operating budgets and financial outlooks;
. filings with the SEC;
. historical trading information for the equity securities of each of
Chris-Craft and News Corporation;
. publicly available equity research reports published by nationally
recognized brokerage houses, covering News Corporation and other
companies in businesses related to those of News Corporation;
. financial and stock market information for other companies in businesses
related to those of each of Chris-Craft and News Corporation;
. financial information relating to merger and acquisition transactions
involving companies in businesses related to those of Chris-Craft; and
. publicly available information relating to premiums paid in selected
merger and acquisition transactions.
In addition to reviewing and analyzing the specific information listed
above, Allen & Company assessed general economic, monetary, market and industry
conditions existing as of the date of its opinion as they may affect the
business and prospects of Chris-Craft.
In preparing its opinion, Allen & Company relied on information relating to
Chris-Craft and News Corporation that Allen & Company acquired during the
course of its assignment, including information provided by senior management
in the course of a number of discussions. Allen & Company did not, however,
conduct an independent appraisal of either Chris-Craft's or News Corporation's
assets, or independently verify
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the information concerning either Chris-Craft's or News Corporation's
operations or other data which Allen & Company considered in its review, and
for the purpose of expressing its opinion, Allen & Company assumed that all
such information was accurate, complete and current.
In connection with a presentation to the Chris-Craft board of directors on
August 12, 2000, Allen & Company advised Chris-Craft's board of directors that,
in evaluating the consideration to be received by Chris-Craft stockholders,
Allen & Company had performed a variety of financial analyses with respect to
Chris-Craft and News Corporation. The material financial analyses are
summarized below:
Chris-Craft Analysis--Comparable Companies Analysis. Allen & Company
compared selected financial, market and operating information of Chris-Craft
with corresponding data of selected publicly traded companies in the television
broadcasting industry to compare the valuation implied by the proposed Chris-
Craft merger to public market valuations of companies with similar operations.
Allen & Company compared Chris-Craft's multiples of enterprise value to
estimated 2000 attributable revenue and broadcast cash flow to those of
selected television broadcasting companies. Allen & Company performed its
analysis of Chris-Craft on a basis attributing to Chris-Craft its share of the
operating results of BHC and United Television. Allen & Company defined
"enterprise value" as the public market value of the company's equity
securities calculated on a fully diluted basis plus total debt less cash and
cash equivalents. Allen & Company defined "broadcast cash flow" as reported
operating income plus depreciation, amortization of goodwill, corporate
overhead expense and amortization of programming costs, less cash expenditures
for programming. The selected television broadcasting companies used in Allen &
Company's comparable company analysis were:
. Granite Broadcasting Corporation
. Hearst-Argyle Television, Inc.
. Sinclair Broadcasting Group, Inc.
. Paxson Communications Corporation
. Univision Communications Inc.
. Young Broadcasting, Inc.
Allen & Company selected these television broadcasting companies because
Allen & Company considered them to have operations similar to the operations of
Chris-Craft. Allen & Company calculated multiples for these selected television
broadcasting companies based on the closing prices of their publicly traded
capital stock on August 11, 2000 and based its revenue and broadcast cash flow
projections on publicly available research estimates. Allen & Company noted
that with an $85.00 per share purchase price, the implied value of the Chris-
Craft merger consideration on the date of the Chris-Craft merger agreement
represented a multiple of enterprise value to each of revenue and broadcast
cash flow that exceeded the average and median found for the selected
television broadcasting companies. To illustrate, Allen & Company highlighted
the following multiples of enterprise value to Chris-Craft attributable
estimated 2000 revenue and broadcast cash flow:
<TABLE>
<CAPTION>
Enterprise Value to 2000E
---------------------------
Revenue Broadcast Cash Flow
------- -------------------
<S> <C> <C>
Chris-Craft Attributable......................... 7.6x 22.0x
Selected Television Broadcasting Companies
Average........................................ 6.0x 13.6x
Average excluding High and Low................. 5.0x 9.7x
Median......................................... 4.4x 9.3x
High........................................... 12.5x 30.2x
Low............................................ 3.8x 8.8x
</TABLE>
No company used in the comparable company analyses summarized above is
identical to Chris-Craft. Accordingly, any analysis of the fairness of the
consideration to be received by the Chris-Craft stockholders in
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the proposed Chris-Craft merger involves complex considerations and judgments
concerning the differences in the potential financial and operating
characteristics of the comparable companies and other factors in relation to
the trading values of the comparable companies.
Chris-Craft Analysis--Comparable Transactions Analysis. Allen & Company
reviewed the implied transaction multiples paid in selected comparable merger
and acquisition transactions and compared these multiples to the multiples
implied by the consideration to be paid to Chris-Craft stockholders in the
Chris-Craft merger. Allen & Company analyzed the enterprise value of Chris-
Craft as a multiple of broadcast cash flow and compared this multiple to
multiples of broadcast cash flow paid in selected mergers and acquisitions of
television broadcasting companies, in each case, using the projected broadcast
cash flow for the calendar year in which the transaction took place. The
following transactions were used in Allen & Company's analysis:
. Chronicle (KRON-TV)/Young Broadcasting
. CBS/Viacom
. Gaylord (KTVT-TV)/CBS
. Kelly (KCRA-TV)/Hearst-Argyle
. Pulitzer/Hearst-Argyle
. Sullivan/Sinclair
. Telemundo/Apollo, Sony, Liberty, et al
. LIN Television/Hicks Muse
. Heritage/Sinclair
. Argyle/Hearst
. First Media (four stations)/Meredith
Allen & Company selected these transactions because they involved companies
in businesses similar to the operations of Chris-Craft. Allen & Company noted
that the multiple implied by an $85 per share purchase price is within the
range of multiples implied in comparable transactions.
<TABLE>
<CAPTION>
Enterprise Value to
Annual Yr. Forecast
Broadcast Cash Flow
-------------------
<S> <C>
Chris-Craft............................................ 22.0x
Television Broadcasting Comparable Transactions
Average.............................................. 15.8x
Average excluding High and Low....................... 15.3x
Median............................................... 14.5x
High................................................. 24.3x
Low.................................................. 12.3x
</TABLE>
No transaction used in the comparable transaction analysis summarized above
is identical to the Chris-Craft merger. Accordingly, any analysis of the
fairness of the consideration to be received by the stockholders of Chris-Craft
in the Chris-Craft merger involves complex considerations and judgments
concerning differences in the potential financial and operating characteristics
of the comparable transactions and other factors in relation to the acquisition
values in the comparable companies.
Chris-Craft Analysis--Discounted Cash Flow Analysis. Allen & Company
estimated the present value of the future stand-alone, unlevered free cash
flows that could be produced by Chris-Craft's operating assets. Such analysis
is performed to determine the value that a current share might be worth based
on various assumptions as set forth below. Since Chris-Craft does not project
operating results beyond one year, Allen & Company
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<PAGE>
constructed four years of projections based on discussions with management as
to how the stations' performance was expected to improve over the next four
years. Allen & Company estimated the net present value ranges by applying
terminal value multiples ranging from 15.0x to 17.0x estimated 2004 broadcast
cash flow and discount rates ranging from 10.0% to 12.0%. Terminal value
multiples were determined based on both current public and private market-based
valuations. The discount rates were determined based on the weighted average
cost of capital formulation, which utilizes the cost of both debt and equity
for a company/investment. Allen & Company's analysis indicated a value per
share of Chris-Craft common stock ranging from approximately $66.82 to $74.30,
as compared to an assumed per share purchase price of $85.00 for Chris-Craft
common stock.
Chris-Craft Analysis--Mergers & Acquisitions Premiums Analysis. Allen &
Company analyzed the premiums paid over pre-announcement prices in public
market merger and acquisition transactions between $1.0 billion and $8.0
billion in equity value between January 1, 1997 and August 11, 2000. Allen &
Company compiled the premiums represented by acquisition prices for 427 target
companies for which data was available relative to those target companies'
share prices one day, one week, and four weeks prior to the announcement that
the target company was to be acquired. The following table summarizes Allen &
Company's results and compares them to the premiums represented by the proposed
Chris-Craft merger, assuming an $85 per share purchase price:
<TABLE>
<CAPTION>
Premium to Closing Price
Prior to Announcement
---------------------------
One Day One Week Four Weeks
------- -------- ----------
<S> <C> <C> <C>
427 Precedent Transactions
Average...................................... 31.4% 37.1% 43.2%
Median....................................... 24.2% 31.1% 36.5%
Chris-Craft.................................... 37.1% 19.5% 19.5%
</TABLE>
Allen & Company also analyzed the premium represented by the proposed Chris-
Craft merger, assuming an $85 per share purchase price, over Chris-Craft's
closing price on October 12, 1999, the last date before rumors of Chris-Craft's
sale appeared in the media. The premium of 49.7% compares favorably to the
premiums shown in the precedent transactions. Finally, Allen & Company analyzed
the premium represented by the proposed Chris-Craft merger, assuming an $85 per
share purchase price, over Chris-Craft's October 12, 1999 stock price after
adjusting the proposed purchase price and October 12, 1999 stock price for
Chris-Craft's cash position. Since Chris-Craft's cash balance is large relative
to its enterprise value, Allen & Company considered this analysis relevant
since it isolates the premium being put on Chris-Craft's operating assets as
opposed to its operating assets and its cash position. The premium of 88.9%
compares favorably to the premiums shown in the precedent transactions, but it
should be noted that the premiums in the precedent transactions are not
adjusted for the respective cash positions of the targets.
News Corporation Analysis--Diversified Media Comparable Companies
Analysis. Allen & Company also compared selected financial, market and
operating information of News Corporation with corresponding data of other
selected publicly traded companies in the diversified media industry to compare
News Corporation's public market valuation to public market valuations of
companies with similar operations. Allen & Company compared News Corporation's
multiple of adjusted enterprise value to adjusted earnings before interest,
taxes, depreciation and amortization, commonly referred to as EBITDA, to those
of the diversified media comparable companies. Allen & Company defined adjusted
enterprise value for a given company as total enterprise value, which is the
public market value of the company's equity securities calculated on a fully
diluted basis plus total debt, less cash and cash equivalents, less the value
of unconsolidated stakes in other companies, plus the value of any minority
stakes in consolidated businesses. The diversified media comparable companies
used in Allen & Company's analysis were:
. Viacom Inc.
. The Walt Disney Company
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<PAGE>
. America Online, Inc. pro forma for its proposed merger with Time Warner
Inc.
. Time Warner Inc.
. USA Networks, Inc.
. Fox Entertainment Group, Inc.
. The Seagram Company Ltd.
Allen & Company selected these diversified companies because Allen & Company
considered them to have operations similar to the operations of News
Corporation. Allen & Company calculated all multiples for these companies based
on the closing prices of their publicly traded capital stock on August 11, 2000
and based its adjusted EBITDA projections for News Corporation on guidance
provided by News Corporation and for the comparable companies on publicly
available research estimates. Allen & Company noted that the closing prices per
share of News Corporation's Ordinary American Depositary Shares (Ordinary ADSs)
and Preferred ADSs of $49.75 and $44.13, respectively, represented a multiple
of adjusted enterprise value to adjusted EBITDA toward the low end of the range
found for the diversified media comparable companies. To illustrate,
Allen & Company highlighted the following multiples of enterprise value to News
Corporation estimated calendar year 2001 revenue and adjusted EBITDA:
<TABLE>
<CAPTION>
Enterprise
Value to 2001E
--------------
Revenue EBITDA
------- ------
<S> <C> <C>
News Corporation.............................................. 2.2x 12.5x
Diversified Media Comparable Companies
Average..................................................... 3.6x 17.1x
Average excluding High and Low.............................. 3.7x 17.1x
Median...................................................... 3.8x 16.9x
High........................................................ 5.5x 21.7x
Low......................................................... 1.5x 12.2x
</TABLE>
Allen & Company also highlighted each company's estimated calendar year 2001
adjusted EBITDA multiple as a multiple of its projected five-year growth rate:
<TABLE>
<CAPTION>
EBITDA Multiple to
EBITDA Growth Rate
------------------
<S> <C>
News Corporation.......................................... 0.8x
Diversified Media Comparable Companies
Average................................................. 1.1x
Average excluding High and Low.......................... 1.0x
Median.................................................. 1.0x
High.................................................... 1.7x
Low..................................................... 0.9x
</TABLE>
News Corporation's ratio of EBITDA multiple to EBITDA growth rate fell below
the range found for the diversified media comparable companies, indicating that
its EBITDA multiple was low relative to its projected EBITDA growth when
compared to the diversified media comparable companies. Allen & Company
considered a review of the diversified media comparable companies' ratios of
EBITDA multiple to projected EBITDA growth rate to be a meaningful way to look
at each company's valuation relative to the growth rate of its EBITDA, as
projected by equity research analysts.
News Corporation Analysis--Television Broadcasting Comparable Companies
Analysis. Allen & Company also compared selected financial, market and
operating information of News Corporation with corresponding data of other
selected publicly traded companies in the television broadcasting industry to
compare News Corporation's public market valuation to public market valuations
of companies with similar
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<PAGE>
operations. Allen & Company compared News Corporation's adjusted enterprise
value to adjusted EBITDA multiple to those of the television broadcasting
comparable companies. The television broadcasting comparable companies used in
Allen & Company's analysis were:
. Granite Broadcasting Corporation
. Hearst-Argyle Television, Inc.
. Sinclair Broadcasting Group, Inc.
. Paxson Communications Corporation
. Univision Communications Inc.
. Young Broadcasting, Inc.
Allen & Company selected these companies because Allen & Company considered
them to have operations similar to the television broadcasting operations of
News Corporation. Allen & Company calculated all multiples for these companies
based on the closing prices of their publicly traded capital stock on
August 11, 2000 and based its adjusted EBITDA projections for the comparable
companies on publicly available research estimates. Allen & Company noted that
the closing prices per share of News Corporation's Ordinary ADS and Preferred
ADS of $49.75 and $44.13, respectively, represented a multiple of enterprise
value to adjusted EBITDA that was within the range found for the television
broadcasting comparable companies. To illustrate, Allen & Company highlighted
the following multiples of enterprise value to News Corporation estimated
calendar year 2001 revenue and adjusted EBITDA:
<TABLE>
<CAPTION>
Enterprise
Value to 2001E
--------------
Revenue EBITDA
------- ------
<S> <C> <C>
News Corporation................................................. 2.2x 12.5x
Television Broadcasting Comparable Companies
Average........................................................ 5.6x 14.2x
Average excluding High and Low................................. 4.6x 11.2x
Median......................................................... 4.4x 10.9x
High........................................................... 11.3x 27.6x
Low............................................................ 3.6x 9.6x
</TABLE>
Allen & Company also highlighted each company's estimated calendar year 2001
adjusted EBITDA multiple as a multiple of its projected three-year growth rate:
<TABLE>
<CAPTION>
EBITDA Multiple to
EBITDA Growth Rate
------------------
<S> <C>
News Corporation............................................. 0.8x
Television Broadcasting Comparable Companies
Average.................................................... 1.2x
Average excluding High and Low............................. 1.2x
Median..................................................... 1.2x
High....................................................... 1.3x
Low........................................................ 1.1x
</TABLE>
News Corporation's ratio of EBITDA multiple to EBITDA growth rate fell below
the range found for the television broadcasting comparable companies,
indicating that its EBITDA multiple was low relative to its projected EBITDA
growth when compared to the television broadcasting comparable companies.
News Corporation Analysis--Broadcasting and Publishing Comparable Companies
Analysis. Allen & Company also compared selected financial, market and
operating information of News Corporation with corresponding data of other
selected publicly traded companies in the broadcasting and publishing industry
to
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<PAGE>
compare News Corporation's public market valuation to public market valuations
of companies with similar operations. Allen & Company compared News
Corporation's multiple of adjusted enterprise value to adjusted EBITDA to those
of the broadcasting/publishing comparable companies. The
broadcasting/publishing comparable companies used in Allen & Company's analysis
were:
. E. W. Scripps
. Tribune
. Washington Post
. A. H. Belo
. Lee Enterprises
Allen & Company selected these companies because Allen & Company considered
them to have operations similar to the broadcasting and publishing operations
of News Corporation. Allen & Company calculated all multiples for these
companies based on the closing prices of their publicly traded capital stock on
August 11, 2000 and based its adjusted EBITDA projections for the comparable
companies on publicly available research estimates. Allen & Company noted that
the closing prices per share of News Corporation's Ordinary ADS and Preferred
ADS of $49.75 and $44.13, respectively, represented a multiple of enterprise
value to adjusted EBITDA that was above the range found for the
broadcasting/publishing comparable companies. To illustrate, Allen & Company
highlighted the following multiples of enterprise value to News Corporation
estimated calendar year 2001 revenue and adjusted EBITDA:
<TABLE>
<CAPTION>
Enterprise
Value to 2001E
--------------
Revenue EBITDA
------- ------
<S> <C> <C>
News Corporation.............................................. 2.2x 12.5x
Broadcasting/Publishing Comparable Companies..................
Average..................................................... 2.3x 8.1x
Average excluding High and Low.............................. 2.4x 8.1x
Median...................................................... 2.4x 8.9x
High........................................................ 2.9x 9.4x
Low......................................................... 1.5x 5.8x
</TABLE>
News Corporation Analysis--Newspaper Comparable Companies Analysis. Allen &
Company also compared selected financial, market and operating information of
News Corporation with corresponding data of other selected publicly traded
companies in the newspaper industry to compare News Corporation's public market
valuation to public market valuations of companies with similar operations.
Allen & Company compared News Corporation's multiple of adjusted enterprise
value to adjusted EBITDA to those of the newspaper comparable companies. The
newspaper comparable companies used in this analysis were:
. Dow Jones
. Gannett
. Knight-Ridder
. The New York Times
Allen & Company selected these companies because Allen & Company considered
them to have operations similar to the newspaper operations of News
Corporation. Allen & Company calculated all multiples for these companies based
on the closing prices of their publicly traded capital stock on August 11, 2000
and based its adjusted EBITDA projections for the comparable companies on
publicly available research estimates. Allen & Company noted that the closing
prices per share of News Corporation's Ordinary ADS and Preferred ADS of $49.75
and $44.13, respectively, represented a multiple of enterprise value to
adjusted EBITDA that
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was above the range found for the newspaper comparable companies. To
illustrate, Allen & Company highlighted the following multiples of enterprise
value to News Corporation estimated calendar year 2001 revenue and adjusted
EBITDA:
<TABLE>
<CAPTION>
Enterprise
Value to 2001E
--------------
Revenue EBITDA
------- ------
<S> <C> <C>
News Corporation.............................................. 2.2x 12.5x
Broadcasting/Publishing Comparable Companies..................
Average..................................................... 2.3x 8.1x
Average excluding High and Low.............................. 2.3x 8.2x
Median...................................................... 2.3x 8.2x
High........................................................ 2.7x 8.9x
Low......................................................... 1.7x 7.2x
</TABLE>
No company used in the comparable company analyses summarized above is
identical to News Corporation. Accordingly, any analysis of the fairness of the
consideration to be received by Chris-Craft stockholders in the proposed Chris-
Craft merger involves complex considerations and judgments concerning the
differences in the potential financial and operating characteristics of the
comparable companies and other factors in relation to the trading values of the
comparable companies.
General Information. The foregoing summary does not purport to be a complete
description of the analyses performed by Allen & Company or of its presentation
to Chris-Craft's board of directors. The preparation of financial analyses and
a fairness opinion is a complex process and is not susceptible to partial
analysis or summary description. Allen & Company believes that its analysis and
the summary set forth above must be considered as a whole and that selecting
portions of its analyses and the factors considered by it, without considering
all analyses and factors, could create an incomplete view of the processes
underlying the analysis conducted by Allen & Company and its opinion. Allen &
Company has not indicated that any of the analyses which it performed had a
greater significance than any other.
In determining the appropriate analyses to conduct, and when performing
those analyses, Allen & Company made numerous assumptions with respect to
industry performance, general business, financial, market and economic
conditions and other matters, many of which are beyond the control of Chris-
Craft or News Corporation. The analyses which Allen & Company performed are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by the analyses. The
analyses were prepared solely as part of Allen & Company's analysis as to
whether the consideration to be received by Chris-Craft stockholders under the
terms of the proposed Chris-Craft merger is fair, from a financial point of
view. The analyses are not appraisals, and the estimates of values of companies
do not reflect the prices at which a company might actually be sold or the
prices at which any securities may trade at the present time or at any time in
the future.
Allen & Company, as part of its investment banking business, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, private placements and related financings, bankruptcy
reorganizations and similar recapitalizations, negotiated underwritings,
secondary distributions of listed and unlisted securities, and valuations for
corporate and other purposes. Allen & Company was engaged by Chris-Craft on
September 13, 1999, to render financial advisory services in connection with a
potential sale of Chris-Craft. In connection with such engagement, Allen &
Company was paid a retainer of $1,000,000 upon engagement and would receive a
fee of $29,000,000 upon completion of the proposed Chris-Craft merger. In the
past, Allen & Company has provided financial advisory services to each of
Chris-Craft and News Corporation and has received fees for the rendering of
such services. Stanley S. Shuman, who is a Managing Director of Allen &
Company, also serves as a director and is a shareholder of News Corporation. As
a non-executive director of News Corporation, Mr. Shuman received fees in the
amount of $120,000 in fiscal year 2000. News Corporation has acknowledged that
while Mr. Shuman is a member of News Corporation's board of directors, he has
acted solely on behalf of Chris-Craft with respect to the
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transaction and excused himself from News Corporation's deliberations with
respect to the transaction. In the course of its business as a broker-dealer,
Allen & Company may from time to time trade in the securities of Chris-Craft
and News Corporation for its own account, the accounts of investment funds
under management of Allen & Company and for the accounts of its customers and,
accordingly, may at any time hold a long or short position in their securities.
Opinion of BHC's special committee's financial advisor
Role of Wasserstein Perella. The BHC special committee engaged Wasserstein
Perella to act as its exclusive financial advisor in connection with a possible
sale of BHC. On August 13, 2000, Wasserstein Perella delivered its oral opinion
to the BHC special committee, subsequently confirmed in writing, to the effect
that, subject to the various assumptions and limitations set forth in the
opinion, as of the date of the opinion, the consideration payable under the BHC
merger agreement is fair to BHC's stockholders (other than Chris-Craft) from a
financial point of view. Under the terms of its engagement, Wasserstein Perella
was engaged and acted solely as an advisor to the BHC special committee and not
as an advisor to or agent of any other person. Wasserstein Perella's opinion is
for the benefit and use of the BHC special committee in its consideration of
the BHC merger and may not be used for any other purpose.
Wasserstein Perella Opinion. The full text of the written opinion of
Wasserstein Perella, dated August 13, 2000, which sets forth, among other
things, the opinion expressed, the assumptions made, procedures followed,
matters considered and limitations of the review undertaken by Wasserstein
Perella, is attached as Annex E to this joint proxy statement/prospectus. BHC
stockholders are urged to read the Wasserstein Perella opinion in its entirety.
The Wasserstein Perella opinion does not constitute a recommendation to any BHC
stockholder as to how the stockholder should vote or otherwise act in respect
of the merger agreement or the transactions contemplated by the BHC merger
agreement and should not be relied upon by any BHC stockholder in respect of
these matters. The discussion of the Wasserstein Perella opinion in this joint
proxy statement/prospectus is qualified in its entirety by reference to the
full text of the opinion attached as Annex E to this joint proxy
statement/prospectus.
Wasserstein Perella consented to the inclusion of the Wasserstein Perella
opinion in this joint proxy statement/prospectus and the discussion of the
opinion that follows. This joint proxy statement/prospectus was prepared by
News Corporation, Chris-Craft, BHC and United Television, and Wasserstein
Perella disclaims any responsibility for any other contents of this joint proxy
statement/prospectus.
Matters Reviewed. In connection with rendering its opinion, Wasserstein
Perella reviewed drafts of the BHC merger agreement and, for purposes of its
opinion, assumed that the final form of the merger agreement did not differ in
any material respect from the drafts provided to it for its review. Wasserstein
Perella also reviewed and analyzed:
. publicly available business and financial information relating to BHC,
Chris-Craft, United Television and News Corporation for recent years and
interim periods to date; and
. internal financial and operating information, including:
. prospective financial information for the calendar year 2000 prepared
by or on behalf of BHC, Chris-Craft and United Television; and
. estimates of third party research analysts of the earnings of News
Corporation for fiscal years 2000 and 2001.
In addition, Wasserstein Perella met with certain members of the respective
managements of BHC, Chris-Craft, United Television and News Corporation to
review and discuss, among other matters:
. the prospective financial information referred to above; and
. each of BHC's, Chris-Craft's, United Television's and News Corporation's
respective businesses, results of operations, assets, financial
conditions and future prospects.
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<PAGE>
Wasserstein Perella also reviewed and considered:
. financial and stock market data relating to BHC, Chris-Craft, United
Television and News Corporation and similar data for other publicly
traded companies that Wasserstein Perella selected as being possibly
relevant or comparable in certain respects to BHC, or one or more of its
respective businesses or assets; and
. the financial terms of recent acquisitions and business combination
transactions in the television broadcasting industry specifically, and in
other industries generally, that Wasserstein Perella selected as being
reasonably comparable to the BHC merger, or otherwise relevant to its
inquiry.
Wasserstein Perella also performed other financial studies, analyses and
investigations and reviewed other information as it considered appropriate for
purposes of its opinion.
Assumptions and Limitations. In its review and analysis and in formulating
its opinion, Wasserstein Perella assumed and relied without independent
verification upon various matters, including:
. The accuracy and completeness of all of the historical and other
information provided to or discussed with Wasserstein Perella or publicly
available;
. The reasonableness and accuracy of the prospective financial information
referred to above;
. That the prospective financial information referred to above was
reasonably prepared in good faith and on bases reflecting the best
currently available judgments and estimates of BHC's, Chris-Craft's and
United Television's respective managements;
. The reasonableness and accuracy of analysts' estimates;
. That obtaining regulatory and other approvals and third-party consents
required for completion of the BHC merger would not have a material
effect on BHC or News Corporation or on the anticipated benefits of the
BHC merger; and
. That the transactions described in the BHC merger agreement would be
completed without waiver or modification of any of the material terms or
conditions contained in the BHC merger agreement.
Wasserstein Perella's analysis and opinion were subject to additional
limitations, including:
. Wasserstein Perella expressed no opinion in its opinion, and expresses no
opinion in this document or otherwise, with respect to the prospective
financial information referred to above or the assumptions upon which it
or any portion of it is based;
. Wasserstein Perella did not review any of the books or records of BHC,
Chris-Craft, United Television or News Corporation;
. Wasserstein Perella did not conduct a physical inspection of the
properties or facilities of BHC, Chris-Craft, United Television or News
Corporation or obtain or make an independent valuation or appraisal of
the assets or liabilities of BHC, Chris-Craft, United Television or News
Corporation, and no such independent valuation or appraisal was provided
to it; and
. Wasserstein Perella was not authorized to and did not solicit third party
indications of interest in acquiring all or any part of BHC, or
investigate alternative transactions that may have been available to BHC.
Wasserstein Perella was advised that BHC does not prepare prospective
financial information for periods extending beyond fiscal year 2000, and
therefore, Wasserstein Perella did not perform a discounted cash flow analysis
in connection with rendering its opinion. Wasserstein Perella's opinion is
necessarily based on
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economic circumstances as they existed and could be evaluated by Wasserstein
Perella as of the date of its opinion.
In arriving at its opinion, Wasserstein Perella performed various
quantitative analyses and considered a number of factors. However, the
preparation of an opinion as to the fairness of a transaction from a financial
point of view involves various determinations as to the most appropriate and
relevant methods of financial and comparative analyses and the applications of
those methods to the particular circumstances. Therefore, such an opinion is
not easily summarized. Furthermore, in arriving at its opinion, Wasserstein
Perella did not attribute any relative weight to any analysis or factor
considered but rather made qualitative judgments as to the significance and
relevance of each analysis and factor. Accordingly, Wasserstein Perella
believes that its analyses must be considered as a whole and that considering
any portion of such analyses and of the factors considered, without considering
all analyses and factors, could create a misleading or incomplete view of the
process underlying the opinion.
Valuation Analyses. In performing its analysis, Wasserstein Perella used and
reviewed with the BHC special committee four principal valuation methodologies:
(1) public company trading analysis, (2) breakup analysis, (3) precedent merger
and acquisition transactions analysis and (4) premiums analysis. These
valuation analyses and other analyses performed by Wasserstein Perella are
summarized below.
Public Company Trading Analysis. Wasserstein Perella reviewed the stock
market trading multiples and certain other financial characteristics for
selected television broadcasting companies that Wasserstein Perella deemed
comparable to BHC. Using publicly available information, Wasserstein Perella
calculated and analyzed the enterprise value multiples of certain historical
and projected financial criteria, such as revenue and earnings before interest,
taxes, depreciation and amortization, commonly referred to as "EBITDA", and
reported operating income plus depreciation, amortization of goodwill,
corporate overhead expense and amortization of programming costs, less cash
expenditures for programming, commonly referred to as broadcast cash flow
(BCF), as of March 31, 2000 for the selected companies and as of June 30, 2000
for BHC.
The following table presents the preceding 12-month and calendar year 1999
and estimated 2000 revenue, EBITDA and BCF.
Comparable Companies
<TABLE>
<CAPTION>
Low High Median BHC
---- ----- ------ -----
<S> <C> <C> <C> <C>
Enterprise Value Multiples:
Revenue:
1999A*........................................... 3.8x 6.7x 4.5x 4.8x
LTM**............................................ 3.7x 6.2x 4.4x 4.5x
2000E***......................................... 2.8x 5.2x 4.1x 4.4x
EBITDA:
1999A............................................ 9.7x 36.6x 12.4x 20.1x
LTM.............................................. 9.4x 34.2x 11.7x 16.3x
2000E............................................ 6.2x 20.0x 10.3x 14.4x
BCF:
1999A............................................ 9.1x 27.9x 10.5x 15.6x
LTM.............................................. 8.8x 26.2x 10.7x 13.5x
2000E............................................ 5.8x 16.5x 9.3x 12.5x
</TABLE>
--------
* "A" indicates actual results.
** "LTM" indicates the latest twelve months.
*** "E" indicates estimate contained in prospective financial information
described above.
Based on the foregoing multiples, Wasserstein Perella derived an implied
equity valuation for BHC of between $2.701 billion and $3.264 billion and an
implied enterprise valuation range for BHC of between
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$1.343 billion and $1.906 billion. Wasserstein Perella defined "equity
valuation" as the public market value of a company's equity securities
calculated on a fully diluted basis and "enterprise valuation" as equity
valuation, plus debt, less cash and cash equivalents. Based on this analysis,
the implied value per share (excluding the effect of any taxes payable) would
be between $120 and $145.
Breakup Analysis. Wasserstein Perella reviewed and analyzed the enterprise
value of BHC in the event that each television station owned by BHC was to be
sold separately. Wasserstein Perella did so by applying a range of multiples to
the estimated 2000 BCF for each of BHC's stations as well as BHC's production
business to derive an implied enterprise value for BHC.
Based on its analysis, Wasserstein Perella derived an adjusted equity
valuation for BHC of between $3.477 billion and $3.932 billion and an adjusted
enterprise valuation range for BHC of $2.119 billion to $2.574 billion. Based
on this analysis, the implied value per share (excluding the effect of any
taxes payable) would be between $154 and $175.
Precedent M&A Transactions Analysis. Wasserstein Perella reviewed publicly
available information for selected television broadcasting company transactions
since 1997 to determine purchase price multiples in those transactions.
Wasserstein Perella calculated revenue and BCF multiples for those
transactions. The following table presents high, low, mean and median multiples
for the selected transactions and the multiples applied to BHC, assuming a $165
per share purchase price paid in the BHC merger:
Precedent M&A Transactions
<TABLE>
<CAPTION>
The
BHC
Low High Mean Median Merger
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Enterprise Value to:
Current Year Revenue..................... 3.6x 7.8x 6.3x 6.8x 6.2x
Forward Year Revenue..................... 3.5x 7.1x 5.6x 6.1x 5.6x
Current Year BCF......................... 10.8x 18.7x 14.1x 14.1x 20.1x
Forward Year BCF......................... 9.7x 15.4x 13.1x 13.3x 16.1x
</TABLE>
Based on the multiples of the precedent transactions, Wasserstein Perella
derived an implied equity valuation for BHC of between $3.264 billion and
$3.940 billion and an implied enterprise valuation range of $1.906 billion to
$2.581 billion. Based on this analysis, the implied value per share would be
between $145 and $175.
Premiums Analysis. Wasserstein Perella reviewed the stock market price and
volume trading history of BHC's class A common stock for specified periods
prior to announcement of the BHC merger and compared these results to the
premiums paid in a number of transactions involving the sale of minority
interests in related party closeout transactions since 1997. These premiums are
set forth below:
<TABLE>
<CAPTION>
Minimum Maximum Mean
Closing Stock Price for Transaction Transaction Transaction The BHC
Specified Period Premium Premium Premium Merger*
----------------------- ----------- ----------- ----------- -------
<S> <C> <C> <C> <C>
1-Day Prior to Announcement -5% 84% 23% 16%
1-Week Prior to Announcement -5% 58% 25% 11%
4-Weeks Prior to Announcement -10% 102% 36% 10%
</TABLE>
--------
* Assuming a $165 per share purchase price.
The closing price of $132.50 for BHC stock on August 20, 1999, the last
trading day before rumors of a sale transaction appeared in the press on August
22, 1999, implies an offer price premium of 25%, assuming a $165 per share
purchase price.
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Other Analyses. In addition to the analyses outlined above, Wasserstein
Perella conducted other financial studies, analyses and investigations and
considered other factors as it deemed appropriate for purposes of its opinion.
Wasserstein Perella also performed other analyses in connection with the
preparation of its opinion.
General Information. No company or transaction used in the foregoing
analyses is identical to BHC, Chris-Craft, United Television or News
Corporation or the BHC merger. The analyses described above were performed
solely as a part of the analytical process utilized by Wasserstein Perella in
connection with its analysis of the BHC merger and do not purport to be
appraisals or to reflect the prices at which a company might actually be sold.
In performing its analyses, Wasserstein Perella made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of BHC, Chris-Craft, United
Television and News Corporation.
Wasserstein Perella is an internationally recognized investment banking and
advisory firm. Wasserstein Perella, as part of its investment banking business,
is continuously engaged in the valuation of businesses and securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for corporate and other purposes. In the ordinary
course of its business, it may actively trade the debt and equity securities of
BHC, Chris-Craft, United Television or News Corporation for its own account and
for the accounts of customers and, accordingly, may at any time hold a long or
short position in their securities.
Wasserstein Perella has been engaged by the BHC special committee to act as
its exclusive financial advisor. BHC has agreed to pay Wasserstein Perella a
fee for providing financial advisory services in connection with the BHC
merger, including providing the opinion described above, of $1,750,000,
$100,000 of which was paid when Wasserstein Perella was retained, $775,000 of
which was paid upon the delivery of its opinion and $875,000 of which would
become payable upon completion of the BHC merger. BHC also agreed to reimburse
Wasserstein Perella for its reasonable out-of-pocket expenses related to its
engagement, including the reasonable fees and expenses of counsel, and to
indemnify Wasserstein Perella against various liabilities and expenses in
connection with its services, including various liabilities under federal
securities laws.
Opinion of United Television's special committee's financial advisor
In an engagement letter dated as of June 21, 2000, United Television engaged
Bear Stearns as its financial advisor based on Bear Stearns' experience and
expertise. Bear Stearns is an internationally recognized investment banking
firm that has substantial experience with a variety of transactions in the
television broadcasting industry, including business combinations. Bear
Stearns, as part of its investment banking business, is continuously engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, divestitures, negotiated underwritings, primary and secondary
distributions of listed and unlisted securities, and private placements.
At the August 13, 2000 meeting of the special committee of the United
Television board of directors, Bear Stearns delivered its oral opinion, which
was subsequently confirmed in a written opinion dated August 13, 2000, to the
effect that, as of that date, and subject to the assumptions, qualifications
and limitations set forth in the opinion, the consideration to be received was
fair, from a financial point of view, to United Television's public
stockholders.
We have attached as Annex F to this joint proxy statement/prospectus a copy
of Bear Stearns' written opinion and urge you to read the opinion in its
entirety. This opinion sets forth the assumptions made, some of the matters
considered and qualifications and limitations on the review undertaken by Bear
Stearns.
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In reading the discussion of the fairness opinion set forth below, United
Television stockholders should be aware that Bear Stearns' opinion:
. was provided to the United Television special committee of the board of
directors for its use and benefit in connection with its consideration as
to whether the consideration to be received in the United Television
merger was fair, from a financial point of view, to United Television's
public stockholders;
. does not address United Television's underlying business decision to
effect the United Television merger;
. does not constitute a recommendation to the United Television special
committee of the board of directors in connection with the United
Television merger;
. does not constitute a recommendation to United Television stockholders as
to how to vote in connection with the United Television merger proposal;
and
. does not express any opinion as to the price or range of prices at which
the securities of United Television and News Corporation would trade
subsequent to the announcement of the United Television merger or as to
the price or range of prices at which the securities of News Corporation
may trade subsequent to the completion of the United Television merger.
Although Bear Stearns evaluated the fairness of the consideration from a
financial point of view to United Television's public stockholders, the
consideration itself was determined by News Corporation and United Television
through negotiations. Other than discussing the possibility of increasing the
amount of consideration to be paid to United Television stockholders in the
United Television merger with News Corporation's financial advisor, Bear
Stearns did not provide advice to United Television during the course of these
negotiations.
In arriving at its opinion, Bear Stearns, among other things:
. reviewed the United Television merger agreement;
. reviewed United Television's annual reports to stockholders and annual
reports on Form 10-K for the years ended December 31, 1997 through 1999,
its quarterly reports on Form 10-Q for the periods ended March 31 and
June 30, 2000 and its report on Form 8-K dated July 7, 1999;
. reviewed BHC's annual reports to stockholders and annual reports on Form
10-K for the years ended December 31, 1997 through 1999, its quarterly
reports on Form 10-Q for the periods ended March 31 and June 30, 2000 and
its report on Form 8-K dated February 8, 2000;
. reviewed Chris-Craft's annual reports to stockholders and annual reports
on Form 10-K for the years ended December 31, 1997 through 1999 and its
quarterly reports on Form 10-Q for the periods ended March 31 and June
30, 2000;
. reviewed News Corporation's annual reports to stockholders and annual
reports on Form 20-F for the fiscal years ended June 30, 1997 through
1999 and its interim report on Form 6-K for the period ended March 31,
2000;
. reviewed operating and financial information, including a budget for the
year ended December 31, 2000, provided to Bear Stearns by United
Television's management relating to United Television's business and
prospects;
. reviewed operating and financial information, including a budget for the
year ended December 31, 2000, provided to Bear Stearns by Chris-Craft's
management relating to Chris-Craft's, BHC's and United Television's
business and prospects;
. met with members of United Television's senior management to discuss
United Television's business, operations, historical and budgeted
financial results and future prospects;
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. spoke with members of News Corporation's senior management to discuss
News Corporation's business, operations, historical and projected
financial results and future prospects and noted that News Corporation's
management expressed confidence that it would meet analyst expectations
for fiscal years 2000 and 2001;
. reviewed the historical prices, trading multiples and trading volumes of
the common shares of United Television, BHC and Chris-Craft and News
Corporation Ordinary ADSs and Preferred ADSs;
. reviewed publicly available financial data, stock market performance data
and trading multiples of companies which Bear Stearns deemed generally
comparable to United Television and News Corporation;
. reviewed the terms of recent mergers and acquisitions of companies which
Bear Stearns deemed generally comparable to the United Television merger
involving companies which Bear Stearns deemed generally comparable to
United Television;
. reviewed the pro forma results, financial condition and capitalization of
News Corporation giving effect to the United Television merger; and
. conducted other studies, analyses, inquiries and investigations that Bear
Stearns deemed appropriate.
In the course of its review, Bear Stearns has relied upon and assumed,
without independent verification, the accuracy and completeness of the
financial and other information provided to it by United Television. With
respect to projected financial results, Bear Stearns has assumed that they have
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the senior management of United Television as to the
expected future performance of United Television.
In arriving at its opinion, Bear Stearns did not perform or obtain any
independent appraisal of the assets or liabilities of United Television or News
Corporation, nor has Bear Stearns been furnished with any appraisals. In
connection with its engagement, Bear Stearns has not solicited, nor was Bear
Stearns asked to solicit, third party acquisition interest in United
Television. Bear Stearns has assumed that the United Television merger will be
completed in a timely manner and in accordance with the terms of the United
Television merger agreement without any regulatory limitations, restrictions,
conditions, amendments or modifications that collectively would have a material
effect on United Television and News Corporation.
Bear Stearns' opinion is necessarily based on economic, market and other
conditions, and the information made available to Bear Stearns, as of the date
of its opinion.
The following is a brief summary of the material valuation and financial and
comparative analyses which Bear Stearns considered in connection with rendering
its opinion.
In performing its analyses, Bear Stearns made a number of assumptions with
respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
Bear Stearns, United Television and News Corporation. Any estimates contained
in the analyses performed by Bear Stearns are not necessarily indicative of
actual values or future results, which may be significantly more or less
favorable than suggested by these analyses. Additionally, estimates of the
value of businesses or securities do not purport to be appraisals or to reflect
the prices at which these businesses or securities might actually be sold.
Accordingly, these analyses and estimates are inherently subject to substantial
uncertainty.
Consideration and historical stock trading analysis. Based on News
Corporation's Preferred ADS price of $44.44 as of August 10, 2000, a $150.00
per share purchase price, the implied value of the United Television merger
consideration on the date of the United Television merger agreement,
constitutes a 13.2% premium to United Television's stock price of $132.56 as of
August 10, 2000 and a 41.5% premium to United Television's stock price of
$106.00 as of August 2, 1999, the unaffected stock price prior to the public
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<PAGE>
announcement of the FCC's liberalization of broadcasting duopoly rules. A
$150.00 per share purchase price also reflects a premium to United Television's
average stock price during various time periods leading up to August 10, 2000,
as set forth in the table below:
<TABLE>
<CAPTION>
Avg. United Implied premium based on
Television NWS.A price as of 8/10/00 ($44.44)
stock price and purchase price of $150.00
----------- ----------------------------------
<S> <C> <C>
August 10, 2000............... $132.56 13.2%
1-Month....................... $132.54 13.2%
6-Month....................... $131.68 13.8%
1-Year........................ $128.39 16.9%
August 2, 1999................ $106.00 41.5%
</TABLE>
Bear Stearns also noted that between August 2, 1999 and August 10, 2000,
stock prices in the broadcasting sector declined significantly (compared to the
broader market, as measured by the S&P 400 and the Russell 2000 indices).
Therefore, Bear Stearns viewed the stock price as of August 2, 1999 as a
conservative measure of an unaffected stock price for United Television.
<TABLE>
<CAPTION>
Stock price increase (reduction)
between August 2, 1999 and
August 10, 2000
--------------------------------
<S> <C>
TV Broadcasting Companies
United Television, Inc.................. 25%
Acme Communications, Inc................ (65%)
A.H. Belo Corporation................... (5%)
Granite Broadcasting Corporation........ (52%)
Hearst-Argyle Television, Inc........... (22%)
Sinclair Broadcast Group, Inc........... (47%)
Young Broadcasting, Inc................. (39%)
Average (excluding United Televison,
Inc.).................................... (27%)
S&P 400................................... 24%
Russell 2000.............................. 13%
Comparable Company Analysis. Bear Stearns compared operating and financial
information for United Television to similar information for selected publicly
traded companies, which, in Bear Stearns' judgment, were generally comparable
to United Television for purposes of this analysis. Below is a summary of these
companies' ratios of (1) enterprise value, which is the public market value of
the respective company's equity securities calculated on a fully diluted basis,
plus debt, less cash to (2) 2000 expected broadcast cash flow, which includes
broadcast earnings before deduction of interest, taxes, depreciation,
amortization and corporate overhead, based on analysts' estimates.
<CAPTION>
Enterprise value (2) to
2000E broadcast cash flow
--------------------------------
<S> <C>
United Television, Inc.(1) 12.5x
Acme Communications, Inc.................. 14.7x
A.H. Belo Corporation..................... 7.4x
Granite Broadcasting Corporation.......... 11.2x
Hearst-Argyle Television, Inc............. 9.1x
Sinclair Broadcast Group, Inc............. 8.6x
Young Broadcasting, Inc................... 8.4x
</TABLE>
--------
(1) Based on $150.00 per share purchase price
(2) As of 8/10/00
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Bear Stearns noted that the ratio of enterprise value to 2000 expected
broadcast cash flow implied by the United Television merger consideration of
$150.00 per share was 12.5x. This ratio was within the range of the comparable
companies' ratios and represented a premium to the 2000 expected ratios of A.H.
Belo Corporation, Granite Broadcasting Corporation, Hearst-Argyle Television,
Inc., Sinclair Broadcast Group, Inc., and Young Broadcasting, Inc. Bear Stearns
also noted that none of the generally comparable companies compared is
identical to United Television and that, accordingly, any analysis of generally
comparable companies necessarily involves complex considerations and judgments
concerning differences in financial and operating characteristics and other
factors that would necessarily affect the relative trading value of United
Television versus the companies to which United Television was being compared.
Precedent transaction analysis. Bear Stearns reviewed and analyzed the
publicly available financial terms of eight announced broadcasting transactions
over $100 million in size since January 1, 1999. These transactions consist of:
<TABLE>
<CAPTION>
Date Acquired company Acquiring company
---- ---------------- -----------------
<S> <C> <C>
May 2000 Lee Enterprises, Inc.'s Station Group(1) Emmis Communications Corporation
Nov. 1999 KRON Young Broadcasting, Inc.
Dec. 1999 Spartan Communciations, Inc. Media General
Dec. 1999 DP Media, Inc. Paxson Communications Corporation
Jul. 1999 MAC America Communications, Inc.(2) A.H. Belo Corporation
Jun. 1999 WKCF (Press Communications) Emmis Communications Corporation
Apr. 1999 KEYE (Granite Broadcast Corporation) CBS Corporation
Apr. 1999 KTVT (Gaylord Entertainment Company) CBS Corporation
</TABLE>
--------
(1) Lee Enterprises, Inc.'s station group excludes KMAZ (Telemundo), El Paso,
Texas.
(2) Acquisition only includes KTVK-TV, the Phoenix, Arizona independent TV
station, the rights to operate KASW-TV, the Phoenix, Arizona WB affiliate
and a 50% interest in the Arizona News Channel, a cable news joint venture
with Cox Cable.
The precedent transactions that Bear Stearns considered, in its judgment, to
be the most comparable to the United Television merger are the two most recent
transactions: (1) the acquisition of the Lee Enterprises Station Group (Lee
Stations) by Emmis Communications Corporation dated May 8, 2000 and (2) the
acquisition of KRON from The Chronicle Publishing Co. by Young Broadcasting,
Inc. dated November 16, 1999. Bear Stearns examined the ratios of enterprise
value to 1999 and 2000 broadcast cash flow associated with the acquired
companies in these transactions, on both a reported basis and adjusted for
certain factors as described below. The ratios are shown below:
<TABLE>
<CAPTION>
Enterprise value to
---------------------------------------------
1999A 2000E
broadcast cash flow(4) broadcast cash flow(5)
---------------------- ----------------------
<S> <C> <C>
United Television, Inc.(1)... 13.6x 12.5x
Emmis Communications
Corporation/Lee Enterprises,
Inc. (as reported).......... Not Applicable 13.5x
Emmis Communications
Corporation/Lee Enterprises,
Inc. (adj. for 35% broadcast
cash flow margin)(2)........ Not Applicable 11.7x
Emmis Communications
Corporation/Lee Enterprises,
Inc. (adj. for 40% broadcast
cash flow margin)(2)........ Not Applicable 10.2x
Young Broadcasting, Inc./KRON
(as reported)............... 13.5x 11.3x
Young Broadcasting, Inc./KRON
(adj. for tax)(3)........... 11.7x 9.8x
</TABLE>
--------
(1) Based on $150.00 per share purchase price
(2) Lee Stations was reported to have estimated 2000 broadcast cash flow
margins of 30.4%, which is lower than many other broadcasting companies
(for example, Emmis Communications' 2000 broadcast cash flow margin was
estimated to be 41% prior to its acquisition of the Lee Stations). Bear
Stearns calculated a hypothetical adjusted broadcast cash flow multiple
assuming that the Lee Stations had 2000 broadcast cash flow margins of 35%
and 40%, respectively.
(3) Adjusted for estimated present value of tax benefits of $110 million as
disclosed to the investment community.
(4) "A" indicates actual results.
(5) "E" indicates estimated results.
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Bear Stearns noted that the ratio of 1999 enterprise value to broadcast cash
flow implied by the United Television merger consideration of $150.00 per share
(13.6x) was greater than the comparable ratio observed in the Young
transaction, on both a reported basis (13.5x) and adjusted basis (11.7x). Bear
Stearns further noted that the ratio of enterprise value to expected 2000
broadcast cash flow implied by the United Television merger consideration of
$150.00 per share (12.5x) was greater than the comparable ratio for the Young
transaction on both a reported basis (11.3x) and adjusted basis (9.8x). When
compared to the Lee Stations transaction, the ratio of enterprise value to
expected 2000 broadcast cash flow implied by the United Television merger
consideration of $150.00 per share was less than the comparable multiple on a
reported basis (13.5x) but greater than the comparable ratio on an adjusted
basis (11.7x based on 35% broadcast cash flow margin and 10.2x based on 40%
broadcast cash flow margin).
The preparation of a fairness opinion is a complex process and involves
various judgments and determinations as to the most appropriate and relevant
assumptions and financial analyses and the application of these methods to the
particular circumstances involved. Fairness opinions therefore are not readily
susceptible to partial analysis or summary description, and taking portions of
the analyses set forth above, without considering the analyses as a whole,
would, in the view of Bear Stearns, create an incomplete and misleading picture
of the processes underlying the analyses considered in rendering its opinion.
Bear Stearns did not form an opinion as to whether any individual analysis or
factor (positive or negative), considered in isolation, supported or failed to
support its opinion. In arriving at its opinion, Bear Stearns considered the
results of its separate analyses and did not attribute particular weight to any
one analysis or factor. The analyses performed by Bear Stearns, particularly
those based on estimates and projections, are not necessarily indicative of
actual values or actual future results, which may be significantly more or less
favorable than suggested by these analyses. These analyses were prepared solely
as part of the Bear Stearns analysis of the fairness, from a financial point of
view, of the consideration to be received by the public stockholders of United
Television.
Under the terms of its engagement letter with Bear Stearns, United
Television has agreed to pay Bear Stearns a total fee of $1,750,000, $100,000
of which was paid when Bear Stearns was retained, $775,000 of which was paid
upon the delivery of its opinion and $875,000 of which would become payable
upon completion of the United Television merger. In addition, United Television
has agreed to reimburse Bear Stearns for all reasonable out-of-pocket expenses
incurred by Bear Stearns in connection with the merger, including reasonable
fees and disbursements of its legal counsel. United Television has also agreed
to indemnify Bear Stearns against various liabilities in connection with its
engagement, including various liabilities under the federal securities laws.
Bear Stearns has not previously rendered investment banking and financial
advisory services to United Television. Bear Stearns may provide financial
advisory and financing services to the combined company and/or its affiliates
and may receive fees for the rendering of these services. In the ordinary
course of its business, Bear Stearns may actively trade the securities of
United Television and/or News Corporation for its own account and for the
accounts of its customers and, accordingly, Bear Stearns may at any time hold a
long or short position in these securities.
Accounting Treatment
Each merger will be accounted for as a purchase under generally accepted
accounting principles in Australia and the U.S. For additional information
about the accounting treatment of the mergers, see "Unaudited Pro Forma
Consolidated Condensed Financial Statements" on page [ . ].
Material Income Tax Consequences
The following is a discussion of the anticipated material U.S. federal and
Australian tax consequences to holders of Chris-Craft, BHC and United
Television common stock and Chris-Craft convertible preferred stock of (1) the
mergers and (2) owning Preferred ADSs.
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Material U.S. Federal Income Tax Consequences
The following is a discussion of the anticipated material U.S. federal
income tax consequences (1) of the mergers to U.S. Holders of Chris-Craft, BHC
and United Television common stock and Chris-Craft convertible preferred stock
and (2) to U.S. Holders of an investment in Preferred ADSs. For purposes of
this discussion, "U.S. Holder" means an owner of Chris-Craft, BHC or
United Television common stock or Chris-Craft convertible preferred stock or an
owner of Preferred ADSs that is:
. a U.S. citizen or resident, as determined for U.S. federal income tax
purposes;
. a corporation created or organized in or under the laws of the U.S. or
any political subdivision thereof;
. an estate whose income is includible in gross income for U.S. federal
income tax purposes regardless of its source; or
. a trust whose administration is subject to the primary supervision of a
U.S. court and which has one or more U.S. persons who have the authority
to control all substantial decisions of the trust.
This discussion assumes that each U.S. Holder of Chris-Craft, BHC or United
Television stock that exchanges its stock under a merger holds its stock and
will hold the Preferred ADSs as capital assets and does not address all of the
U.S. federal income tax consequences that may be relevant to particular
stockholders in light of their individual circumstances or to stockholders that
are subject to special rules, such as:
. banks or other financial institutions,
. mutual funds,
. tax-exempt organizations,
. insurance companies,
. dealers in securities or foreign currencies,
. traders in securities who elect to apply a mark-to-market method of
accounting,
. domestic stockholders that, immediately after the consummation of the
forward merger, own at least five percent of either the total voting
power or total value of News Corporation,
. stockholders that hold shares as a hedge against currency risk or as part
of a straddle, constructive sale or conversion transaction, and
. stockholders that acquired their shares upon the exercise of employee
stock options or otherwise as compensation or through a tax-qualified
retirement plan.
The following discussion is not binding on the IRS. It is for general
information only and does not address any tax consequences under state, local
or foreign laws. The discussion which follows is based on the Internal Revenue
Code, Treasury regulations promulgated thereunder, and judicial and
administrative interpretations thereof, all as in effect on the date of this
joint proxy statement/prospectus, all of which are subject to change, possibly
with retroactive effect. The following discussion does not purport to be a
complete analysis or discussion of all potential tax effects relevant to the
mergers or an investment in Preferred ADSs. Consequently, each stockholder of
Chris-Craft, BHC or United Television is urged to consult its own tax advisor
as to the particular tax consequences of the mergers and an investment in
Preferred ADSs, including tax reporting requirements, the applicability and
effect of any state, local or foreign tax laws and of changes in applicable tax
laws.
Forward Merger
Consummation of each forward merger is conditioned upon (1) the receipt of a
ruling from the IRS to the effect that the merger will satisfy the continuity
of business enterprise requirement described in section 1.368-1(d) of the
Treasury Regulations and (2) the receipt by each party to the merger of a tax
opinion of its legal
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counsel, substantially to the effect that, on the basis of the IRS ruling and
facts, representations and assumptions set forth or referred to in such
opinions:
. the merger will qualify as a reorganization within the meaning of section
368(a) of the Internal Revenue Code;
. for U.S. federal income tax purposes, no income, gain or loss will be
recognized by any of the corporations participating in the merger as a
result of the merger; and
. for U.S. federal income tax purposes, no income, gain or loss will be
recognized by the holders of common stock (or, in the case of Chris-
Craft, common stock or convertible preferred stock) as a result of the
merger except to the extent that holders receive cash in the merger.
News Corporation and its subsidiaries will receive its tax opinions from
Squadron Ellenoff, Chris-Craft will receive its tax opinion from Skadden and
BHC and United Television will receive their respective tax opinions from Kaye
Scholer. If any opinions from tax counsel cannot be obtained because of a
concern that a merger would not satisfy the "continuity of interest"
requirement for reorganization treatment, the number of Preferred ADSs to be
issued in that merger will be increased the minimum extent necessary to enable
such opinion(s) to be issued and the aggregate amount of cash consideration
will be reduced accordingly. For additional information about adjustments to
preserve the tax treatment of a forward merger, see "Summary of the Transaction
Documents--The Chris-Craft Merger Agreement--Adjustment to Preserve Tax
Treatment of Forward Merger" on page [ . ]; "Summary of the Transaction
Documents--The BHC Merger Agreement--Adjustment to Preserve Tax Treatment of
Forward Merger" on page [ . ]; "Summary of the Transaction Documents--The
United Television Merger Agreement--Adjustment to Preserve Tax Treatment of
Forward Merger" on page [ . ]. None of News Corporation, Chris-Craft, BHC and
United Television currently intends to waive the closing condition relating to
the receipt of the tax opinions in the case of a forward merger. In the
unlikely event that any of News Corporation, Chris-Craft, BHC or United
Television were to determine to waive such condition with respect to a forward
merger in which it is a party, the company doing so would mail additional
information to its stockholders describing any changes in the material
U.S. federal income tax consequences that will result from the merger and would
resolicit proxies from its stockholders if there are any material adverse
changes in the U.S. federal income tax consequences to such stockholders.
As discussed below, the U.S. federal income tax circumstances of the forward
merger to a U.S. Holder generally will depend on whether the holder exchanges
its common stock for cash, Preferred ADSs, or a combination of cash and
Preferred ADSs. For purposes of the discussion below, references to "common
stock" include, in the case of Chris-Craft, the outstanding convertible
preferred stock of Chris-Craft.
In general, provided that each forward merger qualifies as a reorganization
within the meaning of section 368(a) of the Internal Revenue Code and subject
to the assumptions and qualifications set forth herein:
Exchange Solely for Cash. In general, a U.S. Holder (including a U.S. Holder
that exercises its right to dissent and seek an appraisal) that exchanges all
of such U.S. Holder's shares of common stock actually owned by it solely for
cash in a forward merger will recognize gain or loss in an amount equal to the
difference between the cash received and such U.S. Holder's adjusted tax basis
in the shares surrendered. Any recognized gain will generally be long-term
capital gain if the U.S. Holder's holding period with respect to the stock is
more than one year, and otherwise will be short-term capital gain. If, however,
any such U.S. Holder constructively owns shares of the common stock that are
exchanged for Preferred ADSs in the merger or owns Preferred ADSs actually or
constructively after the merger, the consequences to such U.S. Holder may be
similar to the consequences described below under the heading "Exchange for
Preferred ADSs and Cash," except that the amount of consideration, if any,
treated as a dividend may not be limited to the amount of such U.S. Holder's
gain.
Exchange Solely for Preferred ADSs. A U.S. Holder that exchanges all of such
U.S. Holder's shares of common stock actually owned by it solely for Preferred
ADSs in a forward merger will not recognize any gain
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or loss as a result of the exchange, except in respect of cash received in lieu
of a fractional Preferred ADS (as described below). The aggregate adjusted tax
basis of the Preferred ADSs in the hands of the exchanging U.S. Holder will
equal the aggregate adjusted tax basis of the shares of common stock
surrendered in the exchange, reduced by the tax basis allocable to any
fractional shares of Preferred ADSs received in the merger. The exchanging U.S.
Holder will include the holding period of the common stock surrendered in the
transaction in the holding period of the Preferred ADSs received in the
transaction. If the U.S. Holder has differing bases or holding periods in
respect of its shares of common stock that it is surrendering, it should
consult its tax advisor prior to the exchange to identify the bases or holding
periods of the particular Preferred ADSs received in the exchange.
Exchange for Preferred ADSs and Cash. A U.S. Holder that exchanges all of
such U.S. Holder's shares of common stock for a combination of Preferred ADSs
and cash in a forward merger will recognize gain equal to the excess, if any,
of (i) the sum of cash and the fair market value of Preferred ADSs received in
the exchange over (ii) such U.S. Holder's adjusted tax basis in the common
stock surrendered. This gain will not exceed the amount of cash received in the
exchange. Moreover, such U.S. Holder will not recognize any loss on the
exchange. For this purpose, gain or loss must be calculated separately for each
identifiable block of shares surrendered in the exchange, and a loss realized
on one block of shares cannot be used to offset a gain realized on another
block of shares. Any recognized gain will generally be long-term capital gain
if the U.S. Holder's holding period with respect to the stock is more than one
year, and otherwise will be short-term capital gain. If, however, the cash
received has the effect of the distribution of a dividend, the gain would be
treated as a dividend to the extent of the holder's ratable share of the
acquired corporation's accumulated earnings and profits. For additional
information, see "Character of Recognized Gain" below. Any recognized gain will
be treated as capital gain or ordinary income based on the factors discussed in
"Character of Recognized Gain," below. The aggregate tax basis of the Preferred
ADSs received by the U.S. Holder will equal the adjusted tax basis of the
shares of common stock surrendered in the exchange, increased by any gain
recognized on the exchange (whether treated as capital gain or ordinary
income), and decreased by the amount of cash received in the exchange. The
exchanging U.S. Holder will include the holding period of the common stock
surrendered in the transaction in the holding period of the Preferred ADSs
received in the transaction. If the U.S. Holder has differing bases or holding
periods in respect of its shares of common stock that it is surrendering, it
should consult its tax advisor prior to the exchange to identify the bases or
holding periods of the particular Preferred ADSs received in the exchange.
Cash in Lieu of Fractional Preferred ADS. Cash received by a U.S. Holder in
lieu of a fractional Preferred ADS will be treated as received in redemption of
such fractional Preferred ADS and gain or loss will be recognized, equal to the
difference between the amount of cash received and the portion of the adjusted
tax basis of the share of common stock allocable to such fractional interest.
The gain or loss will be capital gain or loss, and will be long-term capital
gain or loss if the holding period for such share of common stock was greater
than one year as of the date of the exchange.
Character of Recognized Gain. For any U.S. Holder that receives cash in the
forward merger, the following discussion will determine whether recognized gain
or loss described above will be characterized as capital gain or ordinary
income.
A U.S. Holder determines the characterization of recognized gain as follows.
The stockholder must hypothesize that (i) instead of receiving cash in the
exchange, the U.S. Holder exchanged all of its shares of common stock solely
for Preferred ADSs; and (ii) immediately after the exchange, News Corporation
redeemed, for the amount of cash received by such U.S. Holder, a number of
Preferred ADSs with a fair market value equal to the amount of such cash.
The exchanging U.S. Holder will recognize capital gain rather than ordinary
dividend income with respect to the cash received if the hypothetical
redemption is either "substantially disproportionate" with respect to such
stockholder or "not essentially equivalent to a dividend" with respect to such
stockholder.
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(a) The deemed redemption should be "substantially disproportionate"
with respect to a U.S. Holder if the percentage of the voting power and
value of the Preferred ADSs actually or constructively owned by such U.S.
Holder immediately after the deemed redemption is less than 80% of both the
voting power and the value of the Preferred ADSs actually or constructively
owned by such stockholder immediately before the deemed redemption.
(b) The deemed redemption should be "not essentially equivalent to a
dividend" with respect to a U.S. Holder if it results in a "meaningful
reduction" in such U.S. Holder's deemed percentage ownership of News
Corporation. This determination requires that a U.S. Holder compare his or
her percentage ownership in News Corporation (including stock owned
constructively) before the deemed redemption with his or her percentage
ownership in News Corporation (including stock owned constructively) after
the deemed redemption. In this regard, the IRS has indicated in published
rulings that any reduction in the percentage interest of a public company
stockholder whose relative stock interest is minimal (an interest of less
than 1% of the outstanding News Corporation should satisfy this
requirement) and who exercises no control over corporate affairs should be
a meaningful reduction and, therefore, gain or loss should be characterized
as capital. Accordingly, in most circumstances, gain recognized by a U.S.
Holder should be long-term capital gain or loss if the U.S. Holder's
holding period with respect to the stock is more than one year, and
otherwise should be short-term capital gain.
If the tests above for capital gain treatment are not met, the recognized
gain will be treated as ordinary dividend income to the extent of the U.S.
Holder's ratable share of accumulated earnings and profits.
In applying the foregoing tests, the constructive ownership rules of section
318 of the Internal Revenue Code apply in comparing the stockholder's ownership
interest in News Corporation both immediately after the merger (but before the
hypothetical redemption) and after the hypothetical redemption. Under these
constructive ownership rules, a stockholder is deemed to own Preferred ADSs
that are actually owned (and in some cases constructively owned) by certain
related individuals and entities, and also is deemed to own Preferred ADSs that
may be acquired by such stockholder or such related individuals or entities by
exercising an option, including an employee stock option. Moreover, the tests
are applied after taking into account any related transactions undertaken by a
stockholder under a single, integrated plan. Thus, dispositions or acquisitions
by a holder of shares of News Corporation before or after the mergers which are
part of such holder's plan with respect to his or her ownership level of News
Corporation stock following the mergers may be taken into account. As these
rules are complex, each holder that may be subject to these rules should
consult its tax advisor.
Reverse Merger
If a merger is structured as a reverse merger, the merger will be a taxable
transaction to the U.S. Holders participating in the merger. Accordingly:
. A U.S. Holder that exchanges such U.S. Holder's Chris-Craft, BHC or
United Television common stock for Preferred ADSs and/or cash under the
reverse merger will recognize gain or loss in an amount equal to the
difference between (1) the amount of cash and the fair market value of
the Preferred ADSs received by such U.S. Holder and (2) such U.S.
Holder's adjusted tax basis in the shares surrendered. Any such
recognized gain will be treated as capital gain, and will be long-term
capital gain with respect to any U.S. Holder that has held its shares for
more than one year before the time the merger is consummated.
. The tax basis of the Preferred ADSs received in the reverse merger will
equal their fair market value as of the time the merger is consummated.
The holding period of such Preferred ADSs will start anew at the time the
merger is consummated.
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Holding Preferred ADSs
A U.S. Holder (as defined above) that receives Preferred ADSs pursuant to
one of the mergers will be treated as the owner of the underlying News
Corporation preferred ordinary shares for U.S. federal income tax purposes.
Accordingly, if Preferred ADSs are later exchanged for News Corporation
preferred ordinary shares, no gain or loss will be recognized upon the
exchange, a U.S. Holder's tax basis in the News Corporation preferred ordinary
shares will be the ratable portion of its tax basis in the Preferred ADSs
surrendered therefor, and the holding period in the News Corporation preferred
ordinary shares will include the period during which the U.S. Holder held the
surrendered Preferred ADSs. For a description of the tax basis and holding
period of such Preferred ADSs, see "Material Income Tax Consequences--Forward
Merger" and "--Reverse Merger", above.
Any cash distribution paid by News Corporation out of earnings and profits,
as determined under U.S. federal income tax law, will be subject to tax as
ordinary dividend income and will be includible in the gross income of a U.S.
Holder when such distribution is received by the Depositary. Cash distributions
paid by News Corporation in excess of its earnings and profits will be treated
as (i) a tax-free return of capital to the extent of the U.S. Holder's adjusted
basis in its Preferred ADSs (reducing such adjusted basis, but not below zero),
and (ii) thereafter as gain from the sale or exchange of a capital asset. Any
cash distribution that is treated as a dividend will be includible in the gross
income of such U.S. Holder, for U.S. federal income tax purposes, in an amount
equal to the gross amount (i.e., before Australian withholding tax) of the
dividend. A dividend paid in Australian dollars generally will be includible in
income in a United States dollar amount based on the prevailing United States
dollar/Australian dollar exchange rate at the time of receipt of such dividend
by the Depositary. Such dividend income generally will constitute foreign
source income for U.S. federal income tax purposes. Subject to certain complex
limitations, any Australian tax withheld from the cash dividend will be treated
as a foreign income tax that may be claimed as a credit against the U.S.
federal income tax liability of the U.S. Holder. Alternatively, the Australian
tax withheld may be deducted currently at the election of the U.S. Holder. The
dividend income generally will not be eligible for the dividends received
deduction allowed to corporations.
Upon the sale, exchange or other disposition of Preferred ADSs, a U.S.
Holder will recognize gain or loss for U.S. federal income tax purposes equal
to the difference between the amount realized upon the disposition and the U.S.
Holder's tax basis in such Preferred ADSs. Such gain or loss will be capital
gain or loss and will be long-term if the Preferred ADSs have been held for
more than one year. Any such capital gain generally will be treated as U.S.
source income.
Material Australian Tax Consequences
The Mergers
News Corporation has been advised by its special Australian counsel, Allen
Allen & Hemsley, that holders of Chris-Craft, BHC and United Television common
stock and Chris-Craft convertible preferred stock will realize no taxable gain
or loss and receive no taxable income for Australian tax purposes upon the
receipt of cash and/or Preferred ADSs to be issued in connection with the
mergers in exchange for the common stock or convertible preferred stock
provided that they are not residents of Australia for Australian tax purposes
and that they are not using, holding or acquiring the common stock or
convertible preferred stock for the purposes of any business carried on in
Australia.
Holding Preferred ADSs
The following discussion prepared by Allen Allen & Hemsley, special
Australian counsel to News Corporation, provides general information about the
consequences under Australian tax law of holding Preferred ADSs as a result of
the mergers and does not purport to be a complete technical analysis or listing
of
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all potential tax effects to U.S. holders of Preferred ADSs. In addition, this
discussion may not apply to certain classes of holders such as dealers.
Prospective recipients of Preferred ADSs pursuant to the merger agreements are
urged to consult their own tax advisor as to the tax consequences to them under
the laws of Australia of receiving Preferred ADSs in the mergers and of holding
those Preferred ADSs.
Under the Australian imputation system of taxation, dividends paid out of
the profits of News Corporation which have been subject to tax at the maximum
corporate rate then in effect are referred to as "fully franked dividends." The
imputation system imputes to an Australian resident individual shareholder
income equal to the amount of tax paid by News Corporation on the dividends
received by him or her (in addition to such dividends) and grants him or her a
tax credit of the imputed amount. In the case of fully franked dividends paid
to shareholders who are not residents of Australia, no dividend withholding tax
is payable and such dividends are not subject to Australian income tax in the
hands of such non-resident holders.
Dividends that are paid from profits on which no Australian corporate tax
has been paid are referred to as "unfranked dividends." Unfranked dividends are
subject to Australian income tax when received by shareholders who are
residents of Australia, i.e., such dividends do not carry a tax credit of the
imputed amount. Unfranked dividends, generally, are subject to withholding tax
at 30% when paid to shareholders who are non-residents of Australia except to
the extent that the dividend is paid out of certain foreign-source dividend
income and certain other conditions are satisfied. Under the tax treaty
currently in effect between Australia and the U.S., the withholding tax imposed
on dividend payments to a qualifying U.S. resident by a corporation resident in
Australia (such as News Corporation) is limited to 15% of the gross dividend.
If the profits out of which News Corporation pays a dividend have been taxed
at a rate that is less than the maximum Australian corporate tax rate then in
effect, the dividend received by its shareholders will be partially franked.
Dividends paid to News Corporation shareholders who are not residents of
Australia will be subject to withholding tax on the unfranked portion of the
dividend.
Non-residents of Australia will have no further Australian income tax
liability with respect to fully franked dividends nor in respect of dividends
that are not fully franked once the withholding tax in respect of the unfranked
portion thereof has been paid. Non-resident shareholders of News Corporation
with no other source of Australian income are not required to file an
Australian income tax return. News Corporation will send to holders of
Preferred ADSs and News Corporation preferred ordinary shares statements that
indicate the extent to which dividends are franked and the amounts of any taxes
withheld.
Upon the sale, exchange or other disposition of Preferred ADSs, a News
Corporation shareholder who (i) is not a resident of Australia for Australian
tax purposes; (ii) has not, either alone or in combination with associates (as
defined in the Income Tax Assessment Act 1997 (as amended)), held 10% or more
of the issued share capital of News Corporation at any time during the five
years preceding the disposition; and (iii) has not held or disposed of the
Preferred ADSs in, or in the course of activities conducted or carried on in,
Australia, generally, will not be subject to Australian income tax or capital
gains tax in respect of any gain or profit from the disposition. There is no
Australian stamp duty or other transfer tax on a transfer of Preferred ADSs.
Neither Australia nor any political subdivision of Australia imposes any gift,
estate or death tax or duty in respect of the gift, devise or bequest of
Preferred ADSs.
Stock Exchange Listing
News Corporation will apply for listing of the Preferred ADSs to be issued
in the mergers on the New York Stock Exchange and of the Preferred Ordinary
Shares represented by the Preferred ADSs on the Australian Stock Exchange. It
is a condition to the closing of the mergers that the Preferred ADSs to be
issued in the mergers be approved for listing on the NYSE, subject to official
notice of issuance.
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Restrictions on Sales of Preferred ADSs by Affiliates of Chris-Craft, BHC and
United Television
The Preferred ADSs to be issued in connection with the mergers will be
registered under the Securities Act of 1933, as amended, and will generally be
freely transferable under the Securities Act by stockholders of Chris-Craft,
BHC and United Television, except that:
. Preferred ADSs received by persons that are deemed to be "affiliates" of
Chris-Craft, BHC or United Television under the Securities Act at the
time of the Chris-Craft, BHC or United Television special meeting, as the
case may be, may be resold by them only in transactions permitted by Rule
145 under the Securities Act or as otherwise permitted under the
Securities Act. Persons that may be deemed to be affiliates of Chris-
Craft, BHC or United Television for purposes of Rule 145 generally
include individuals or entities that control, are controlled by or are
under common control with Chris-Craft, BHC or United Television, as the
case may be, and include directors and executive officers of Chris-Craft,
BHC or United Television. Each of the Chris-Craft, BHC and United
Television merger agreements requires each of Chris-Craft, BHC or United
Television, respectively, to use its reasonable best efforts to cause
each of its respective affiliates to deliver to News Corporation on or
prior to the completion of the applicable merger, a signed agreement to
the effect that the affiliate will not offer, sell or otherwise dispose
of any Preferred ADSs issued to the affiliate in the applicable merger in
violation of the Securities Act or the related SEC rules.
Delisting and Deregistration of Stock after Mergers
If the Chris-Craft merger is completed, the Chris-Craft common and
convertible preferred shares will be delisted from the NYSE and deregistered
under the Securities Exchange Act of 1934, as amended. If the BHC merger is
completed, the BHC class A common stock will be delisted from the American
Stock Exchange and deregistered under the Exchange Act. If the United
Television merger is completed, the United Television common stock will be
delisted from the Nasdaq National Market and deregistered under the Exchange
Act.
Regulatory Matters Relating to the Mergers
Consummation of the mergers is conditioned upon, among other things, the
absence of any order issued by any governmental authority or court of competent
jurisdiction which prohibits the consummation of the mergers.
Antitrust
News Corporation and Chris-Craft (the latter on its own behalf and on behalf
of BHC and United Television) have filed, with the Federal Trade Commission
(FTC) and the Antitrust Division of the United States Department of Justice,
Premerger Notification and Report Forms under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (HSR Act), as amended, with respect to News
Corporation's acquisition of Chris-Craft, BHC and United Television. BHC and
United Television were not required to make HSR filings because, under the HSR
Act, only the ultimate parent entity must file, and Chris-Craft is considered
to be the ultimate parent of both BHC and United Television. K. Rupert Murdoch,
the chairman and chief executive officer of News Corporation, on behalf of Fox
Television Stations, and Chris-Craft, on its own behalf and on behalf of BHC
and United Television, also filed Premerger Notification and Report Forms under
the HSR Act with respect to the acquisition by Fox Television Stations of the
television broadcasting licenses held by various subsidiaries of Chris-Craft,
BHC and United Television. Simultaneously with and contingent upon the closing
of the mergers, title to the television broadcasting licenses held by the ten
television stations owned and operated by Chris-Craft, BHC and United
Television will be transferred to Fox Television Stations. The HSR Act provides
for an initial 30 calendar day waiting period following the filing by the
parties of the Premerger Notification and Report Forms before the mergers may
be consummated. The initial 30 calendar day waiting periods began on October
12, 2000. The HSR Act further provides that if, within an initial 30 calendar
day waiting period, the FTC or the Antitrust Division issues a request for
additional information and documents, the waiting period will be extended until
11:59 p.m. on the twentieth day after the date of substantial compliance by
both filing parties with the request. On November 9, 2000, the Antitrust
Division issued a request for
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additional information to News Corporation and Chris-Craft with respect to
their HSR filings regarding the mergers. No request for additional information
was issued by the Antitrust Division or the FTC with respect to the HSR filings
made by Mr. Murdoch and Chris-Craft regarding the transfer of title of the
subject television stations' television broadcasting licenses to Fox Television
Stations. In addition, the Antitrust Division and the FTC continue to have the
authority to challenge the mergers and related transfers of television
broadcasting licenses on antitrust grounds before and after the mergers are
completed.
Federal Regulation of Television Broadcasting
General. Television broadcasting is subject to the jurisdiction of the FCC
under the Communications Act of 1934, most recently amended by the
Telecommunications Act of 1996. The Communications Act prohibits the operation
of broadcasting stations except under a license issued by the FCC and empowers
the FCC, among other actions, to issue, renew, revoke and modify broadcasting
licenses.
Under the Communications Act, the FCC also regulates certain aspects of the
operation of cable television systems and other electronic media that compete
with broadcast stations.
The Communications Act prohibits the assignment of a broadcast license or
the transfer of control of a licensee without prior approval of the FCC. As
described in this joint proxy statement/prospectus, the mergers are therefore
subject to FCC approval of the assignment of the licenses held by the various
licensee subsidiaries of Chris-Craft, BHC and United Television to Fox
Television Stations. The application for assignment of licenses must be placed
on public notice for a period of no less than 30 days during which time
petitions to deny the application may be filed by the public. On October 27,
2000, a Petition to Deny and Motion to Dismiss the application relating to the
mergers was filed by a coalition of advocacy and community groups. Fox
Television Stations and Chris-Craft (for itself and BHC and United Television)
filed a Joint Opposition on November 9, 2000 and the Petitioners filed a Reply
on November 22, 2000. Neither Fox Television Stations nor Chris-Craft can
predict how this Petition to Deny and Motion to Dismiss the application will
affect the FCC's determination with respect to the application. If the FCC
denies the petition and motion and grants the application, interested parties
would have 30 days from the date of public notice of the grant to seek
reconsideration or review of that grant by the full FCC if the grant was made
by the staff of the FCC, or, if the grant was made by the full FCC, by a court
of competent jurisdiction. The full FCC has an additional 10 days to set aside
on its own motion any action taken by the FCC's staff, if action on the
application were taken in the first instance by the staff of the FCC; if action
is taken in the first instance by the full FCC, the full FCC may set aside its
own action within 30 days of public notice of such action. When passing on an
assignment or transfer application, the FCC is prohibited from considering
whether the public interest might be served by an assignment or transfer to any
party other than the assignee or transferee specified in the application.
Ownership regulation. The Communications Act and FCC rules and regulations
also regulate broadcast ownership. The FCC has enacted rules that, among other
matters, limit the ability of individuals and entities to own or have an
official position or ownership interest, known as an attributable interest,
above a specific level in broadcast stations as well as other specified mass
media entities (the multiple ownership rules). As detailed below, in August
1999, the FCC substantially revised a number of its multiple ownership and
attribution rules, specifically its restrictions on television ownership,
radio-television cross-ownership, and attribution of broadcast ownership
interests. Although these revised rules became effective November 16, 1999,
they may still be stayed, modified or reconsidered in subsequent pending
proceedings. The FCC's applicable multiple ownership rules, inclusive of the
recent revisions, are summarized below:
Local television ownership. The FCC's new television duopoly rule permits an
individual or entity to own two television stations without regard to signal
contour overlap provided they are located in separate markets referred to as
designated market areas. In addition, the new rules permit an individual or
entity in larger designated market areas to own up to two television stations
in the same designated market area so long as at least eight independently
owned and operating television stations would remain in the market following
the acquisition and at least one of the two owned stations is not among the top
four-ranked stations in the market based on audience share.
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Following consummation of the mergers, and exclusive of other acquisitions,
Fox Television Stations could potentially have duopolies in the following three
television markets consistent with the new duopoly rule: Los Angeles, New York
and Phoenix. A fourth duopoly will be created in Salt Lake City. However, since
both of the current stations owned by Fox Television Stations and Chris-Craft
are among the top four ranked stations in the Salt Lake City market, one of the
stations will have to be divested to comply with the new duopoly rule. In their
application for FCC consent to assign the Chris-Craft, BHC and United
Television broadcast licenses, the companies requested a twelve month period
following consummation of the mergers to comply with the duopoly rule in Salt
Lake City. There can be no assurance that the FCC will grant the requested
twelve-month waiver. While Fox Television Stations will seek to maintain
ownership of the television stations in Los Angeles, New York and Phoenix under
the new television duopoly rules, there can be no assurance that Fox Television
Stations will be able to retain two television stations in each of the duopoly
markets.
Newspaper broadcast cross-ownership. The FCC's newspaper/broadcast cross-
ownership rule restricts common ownership or control of a daily newspaper and a
television broadcast station license with a Grade A contour that encompasses
the entire community in which the newspaper is published. In May 2000, the FCC
adopted a report in which it determined that the newspaper/broadcast cross-
ownership rule should be retained, but indicated that there may be
circumstances in which the rule may not be necessary to achieve its intended
public interest benefits. Accordingly, the FCC stated that it would initiate a
rulemaking proceeding to consider tailoring the rule.
In 1993 News Corporation applied for, and was granted by the FCC, a
permanent waiver of the newspaper/broadcast cross-ownership rule to permit the
acquisition of the New York Post. The FCC's duopoly rule now permits Fox
Television Stations to own or control the licenses of two television stations
that serve New York. In its application to the FCC, Fox Television Stations
submitted that creation of a permitted television duopoly in New York and
continued ownership of the New York Post requires no further FCC action.
Alternatively, in the event that the FCC disagrees and concludes that the
previously granted permanent waiver does not extend to the acquisition of a
second television station in New York, Fox Television Stations requested that
the FCC nevertheless permit common ownership of the two television stations and
the New York Post pending conclusion of the soon-to-be-initiated rulemaking
proceeding to consider relaxation of the newspaper/broadcast cross-ownership
restriction.
National television ownership cap. On the national level, the FCC imposes a
35 percent national audience reach cap for television ownership, under which
one party may not have an attributable interest in television stations which
reach more than 35 percent of all U.S. television households. The FCC discounts
the audience reach of a UHF station for this purpose by 50 percent.
Additionally, under the new FCC rules, for entities that have attributable
interests in two stations in the same market, the FCC counts the audience reach
of that market only once for national cap purposes. The FCC decided to retain
the national ownership cap and the "UHF discount" as part of the biennial
review of its broadcast ownership rules concluded in May 2000. However, the FCC
did state that when the transition to digital television, discussed below, is
complete, it would issue a notice of proposed rulemaking proposing elimination
of the "UHF discount".
The television stations currently attributable to Fox Television Stations,
Chris-Craft, BHC and United Television would have an aggregate national
audience reach for purposes of the national ownership cap of approximately
40.91%. As these stations would exceed the FCC's 35% national ownership cap, it
will be necessary, under the presently effective rules, to divest a sufficient
number of television stations in order to comply with the national ownership
cap. In their application for FCC consent to the assignment of the Chris-Craft,
BHC and United Television broadcast licenses, the companies requested a twelve
month period following consummation of the mergers to comply with the national
television ownership cap.
Alien ownership. The Communications Act limits the interests that foreign
entities or individuals may own or hold in broadcast licenses. As applicable to
the combined companies, non-U.S. citizens, collectively, may directly or
indirectly own or vote up to twenty percent of the capital stock of a corporate
licensee. In addition, a broadcast license may not be granted to or held by any
corporation that is controlled, directly or
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indirectly, by any other corporation more than one-fourth of whose capital
stock is owned or voted by non-U.S. citizens or their representatives, by
foreign governments or their representatives, or by non-U.S. corporations, if
the FCC finds that the public interest will be served by the refusal or
revocation of such license. The licenses acquired in the mergers will be held
by Fox Television Stations, and the FCC has previously ruled that the ownership
structure of Fox Television Stations is consistent with the public interest for
purposes of the Communications Act regulations with respect to alien ownership.
The similar structure being used to acquire the Chris-Craft, BHC and United
Television licenses will also be subject to review in the pending assignment
application. There can be no assurance that the proposed structure will be
approved by the FCC.
Other Regulations, Legislation and Recent Developments Affecting Broadcast
Stations
Digital Television Service. The FCC has taken a number of steps to implement
digital television broadcasting service in the U.S. The FCC has adopted a
digital television table of allotments that provides all authorized television
stations with a second channel on which to broadcast a digital television
signal. The FCC has attempted to provide digital television coverage areas that
are comparable to stations' existing service areas. The FCC has ruled that
television broadcast licensees may use their digital channels for a wide
variety of services such as high-definition television, multiple channels of
standard definition television programming, audio, data and other types of
communications, subject to the requirement that each broadcaster provide at
least one free video channel equal in quality to the current technical
standard.
Digital television channels will generally be located in the range of
channels from channel 2 through channel 51. The FCC required affiliates of ABC,
CBS, Fox and NBC in the top 10 television markets to begin digital broadcasting
by May 1, 1999. Many stations, including several owned and operated by Fox
Television Stations, BHC and United Television, have already begun digital
broadcasting. Affiliates of the four major networks in the top 30 markets were
required to begin digital broadcasting by November 1, 1999, and all other
commercial broadcasters must do so by May 1, 2002.
The FCC's plan calls for the digital television transition period to end in
the year 2006, at which time the FCC expects that television broadcasters will
cease non-digital broadcasting and return one of their two channels to the
government, allowing that spectrum to be recovered for other uses. Under the
Balanced Budget Act, however, the FCC is authorized to extend the December 31,
2006 deadline for reclamation of a television station's non-digital channel if,
in any given market one or more television stations affiliated with ABC, CBS,
NBC or Fox is not broadcasting digitally, and the FCC determines that such
stations have "exercised due diligence" in attempting to convert to digital
broadcasting; or less than 85% of the television households in the station's
market subscribe to a multichannel video service that carries at least one
digital channel from each of the local stations in that market, and less than
85% of the television households in the market can receive digital signals off
the air using either a set-top converter box for an analog television set or a
new digital television set.
The FCC currently is considering whether cable television system operators
should be required to carry stations' digital television signals in addition to
the currently required carriage of stations' analog signals. In July 1998, the
FCC issued a Notice of Proposed Rulemaking posing several different options for
the carriage of digital signals and solicited comments from all interested
parties. The FCC has yet to issue a decision on this matter.
The implementation of digital television will also impose substantial
additional costs on television stations because of the need to replace
equipment and because some stations will need to operate at higher utility
costs and there can be no assurance that the combined television stations of
Fox Television Stations, Chris-Craft, BHC and United Television will be able to
increase revenue to offset such costs. The FCC is also considering imposing new
public interest requirements on television licensees in exchange for their
receipt of digital television channels. In addition, the Communications Act
allows the FCC to charge a spectrum fee to the extent broadcasters use the
digital spectrum to offer subscription-based services. The FCC has adopted
rules that require broadcasters to pay a fee of 5% of gross revenues received
from ancillary or supplementary uses of the digital spectrum for which they
charge subscription fees, excluding revenues from the sale of commercial time.
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None of News Corporation, Fox Television Stations, Chris-Craft, BHC or United
Television can predict what future actions the FCC might take with respect to
digital television, nor can any company predict the effect of the FCC's present
digital television implementation plan or such future actions on News
Corporation's or Fox Television Stations' businesses. Fox Television Stations
will incur considerable expense in the conversion to digital television and is
unable to predict the extent or timing of consumer demand for any such digital
television services.
Stockholder Litigation
Between August 14 and 21, 2000, various purported stockholders of BHC filed
complaints in the Delaware Court of Chancery entitled Gissen v. BHC, et al.,
Civil Action No. 18209; Piven v. BHC, et al., Civil Action No. 18211; Voege v.
Siegel, et al., Civil Action No. 18210; Stubbe v. BHC, et al., Civil Action No.
18217; and Rand v. BHC, et al., Civil Action No. 18229 (which we collectively
refer to as the "BHC lawsuits"). During the same period, various purported
stockholders of United Television filed complaints in the Delaware Court of
Chancery entitled Pyenson v. UTV, et al., Civil Action No. 18222; Malamud v.
UTV, et al., Civil Action No. 18218; and Rand v. UTV, et al., Civil Action No.
18235 (which we collectively refer to as the "United Television lawsuits" and,
together with the BHC actions, as the "Delaware actions"). The Delaware actions
assert claims against Chris-Craft, United Television, BHC, and some of their
officers and directors, alleging, among other things, that Chris-Craft and/or
BHC and/or United Television and the individual defendants breached their
fiduciary duties to stockholders, and that some of the defendants engaged in
self-dealing, with respect to the BHC and/or United Television mergers. The
Delaware actions allege, among other things, that the consideration to be
received by BHC stockholders and United Television stockholders in the mergers
is unfair and inadequate by comparison to the consideration to be received by
Chris-Craft stockholders in the mergers. The Delaware actions seek class action
certification and injunctive relief against Chris-Craft, BHC and United
Television mergers, or, in the alternative, to obtain rescission of the mergers
or damages, and other relief.
On September 25, 2000, the court entered an order of consolidation,
consolidating the BHC lawsuits as In re BHC Communications, Inc. Shareholders
Litigation, Civil Action No. 18209 and directing the plaintiffs to file a
consolidated amended complaint. On October 2, 2000, the court entered an order
of consolidation, consolidating the United Television lawsuits as In re United
Television, Inc. Shareholders Litigation, Civil Action No. 18218 and directing
that the complaint filed in Malamud v. UTV, Civil Action No. 18218, be deemed
the operative complaint in the consolidated action.
Chris-Craft, BHC and United Television believe that the Delaware actions are
without merit and intend to defend them vigorously.
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APPRAISAL RIGHTS
Under Delaware law, holders of record of shares of Chris-Craft stock, BHC
stock and United Television stock who timely follow the procedures specified in
Section 262 of the Delaware General Corporation Law may have their shares
appraised by the Delaware Court of Chancery and receive the "fair value" of
their shares as of the effective time of the Chris-Craft merger, the BHC merger
or the United Television merger, as the case may be, as determined by the
court, in place of the consideration that the holder would otherwise receive in
the applicable merger. To exercise appraisal rights, a stockholder must demand
and perfect the rights in accordance with Section 262 of the Delaware General
Corporation Law. The following is a summary of Section 262 of the Delaware
General Corporation Law and is qualified in its entirety by reference to
Section 262 of the Delaware General Corporation Law, a copy of which is
attached to this joint proxy statement/prospectus as Annex G. Chris-Craft, BHC
and United Television stockholders should carefully review Section 262 of the
Delaware General Corporation Law as well as the information discussed below to
evaluate their rights to appraisal and to understand the procedures they must
follow to obtain appraisal.
Appraisal Rights of Chris-Craft Stockholders
If a holder of record of Chris-Craft stock elects to exercise the right to
an appraisal under Section 262 of the Delaware General Corporation Law, the
stockholder must:
. file with Chris-Craft at its main office in New York, New York, a written
demand for appraisal of the shares of Chris-Craft stock held by the
stockholder (which demand must identify the stockholder and reasonably
inform Chris-Craft that the stockholder intends to demand appraisal of
his or her shares) before the vote is taken on the Chris-Craft merger
agreement at the Chris-Craft special meeting;
. not vote in favor of the Chris-Craft merger proposal; and
. continuously hold the Chris-Craft shares through the effective time of
the Chris-Craft merger.
All written demands for appraisal should be addressed to: Brian C. Kelly,
Secretary, Chris-Craft Industries, Inc., 767 Fifth Avenue, 46th Floor, New
York, NY 10153, and delivered before the vote is taken on the Chris-Craft
merger agreement at the Chris-Craft special meeting and should be executed by,
or on behalf of, the holder of record.
Within 10 days after the effective time of the Chris-Craft merger, the
surviving company of the Chris-Craft merger will give written notice of the
effective time to each holder of Chris-Craft stock who has satisfied the
requirements of Section 262 of the Delaware General Corporation Law. Within 120
days after the effective time, the surviving company or any dissenting
stockholder may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the shares of Chris-Craft stock of all
dissenting stockholders. Any dissenting stockholder desiring to file a petition
is advised to file on a timely basis, unless the dissenting stockholder
receives notice that the petition has been filed by the surviving company or
another dissenting stockholder.
If a petition for appraisal is timely filed, the court will determine which
stockholders are entitled to appraisal rights and thereafter will determine the
fair value of the shares of Chris-Craft stock held by dissenting stockholders,
exclusive of any element of value arising from the accomplishment or
expectation of the Chris-Craft merger, but together with a fair rate of
interest, if any, to be paid on the amount determined to be fair value. In
determining the fair value, the court will take into account all relevant
factors. The court may determine the fair value to be more than, less than or
equal to the consideration that the dissenting stockholder would otherwise be
entitled to receive under the Chris-Craft merger agreement. If a petition for
appraisal is not timely filed, then the right to an appraisal ceases. The costs
of the appraisal proceeding will be determined by the court and taxed against
the parties as the court determines to be equitable under the circumstances.
Upon the application of any stockholder, the court may determine the amount of
interest, if any, to be paid upon the value of the stockholder's shares. Upon
application of a stockholder, the court may order all or a portion of the
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expenses incurred by any stockholder in connection with the appraisal
proceeding, including reasonable attorneys' fees and the fees and expenses of
experts, to be charged pro rata against the value of all shares entitled to
appraisal.
After the effective time of the Chris-Craft merger, no dissenting
stockholder will have any rights of a Chris-Craft stockholder with respect to
the dissenting stockholder's shares for any purpose, except to receive payment
to which Chris-Craft stockholders of record as of a date prior to the effective
time are entitled, if any. If a dissenting stockholder delivers to the
surviving company of the Chris-Craft merger a written withdrawal of the demand
for an appraisal within 60 days after the effective time of the Chris-Craft
merger or thereafter with the written approval of the surviving company of the
Chris-Craft merger, or if no petition for appraisal is filed within 120 days
after the effective time, then the right of the dissenting stockholder to an
appraisal will cease and the dissenting stockholder will be entitled to receive
only the merger consideration as provided in the Chris-Craft merger agreement.
Such merger consideration shall be paid, at News Corporation's discretion, in
cash, Preferred ADSs or a mixture of cash and Preferred ADSs depending on, and
after giving effect to, the merger consideration paid to Chris-Craft
stockholders (other than dissenting stockholders) that have made mixed
elections, all cash elections and all stock elections, and the form of the
merger consideration paid to Chris-Craft stockholders (other than dissenting
stockholders) that have made (or are deemed to have made) non-elections, as
well as taking into account any election which such dissenting stockholders may
have validly submitted.
The foregoing is only a summary of Section 262 of the Delaware General
Corporation Law and is qualified in its entirety by reference to the full text
of such provision, which is included as Annex G to this joint proxy
statement/prospectus.
Appraisal Rights of BHC Stockholders
If a holder of record of BHC stock elects to exercise the right to an
appraisal under Section 262 of the Delaware General Corporation Law, the
stockholder must:
. file with BHC at its main office in New York, New York, a written demand
for appraisal of the shares of BHC stock held by the stockholder (which
demand must identify the stockholder and reasonably inform BHC that the
stockholder intends to demand appraisal of his or her shares) before the
vote is taken on the BHC merger agreement at the BHC special meeting;
. not vote in favor of the BHC merger proposal; and
. continuously hold the BHC shares through the effective time of the BHC
merger.
All written demands for appraisal should be addressed to: Brian C. Kelly,
Secretary, BHC Communications, Inc., 767 Fifth Avenue, 46th Floor, New York, NY
10153, and delivered before the vote is taken on the BHC merger agreement at
the BHC special meeting and should be executed by, or on behalf of, the holder
of record.
Within 10 days after the effective time of the BHC merger, the surviving
company of the BHC merger will give written notice of the effective time to
each holder of BHC common stock who has satisfied the requirements of Section
262 of the Delaware General Corporation Law. Within 120 days after the
effective time, the surviving company or any dissenting stockholder may file a
petition in the Delaware Court of Chancery demanding a determination of the
fair value of the shares of BHC stock of all dissenting stockholders. Any
dissenting stockholder desiring to file a petition is advised to file on a
timely basis, unless the dissenting stockholder receives notice that the
petition has been filed by the surviving company or another dissenting
stockholder.
If a petition for appraisal is timely filed, the court will determine which
stockholders are entitled to appraisal rights and thereafter will determine the
fair value of the shares of BHC common stock held by dissenting stockholders,
exclusive of any element of value arising from the accomplishment or
expectation of
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the BHC merger, but together with a fair rate of interest, if any, to be paid
on the amount determined to be fair value. In determining fair value, the court
will take into account all relevant factors. The court may determine the fair
value to be more than, less than or equal to the consideration that the
dissenting stockholder would otherwise be entitled to receive under to the BHC
merger agreement. If a petition for appraisal is not timely filed, then the
right to an appraisal ceases. The costs of the appraisal proceeding will be
determined by the court and taxed against the parties as the court determines
to be equitable under the circumstances. Upon the application of any
stockholder, the court may determine the amount of interest, if any, to be paid
upon the value of the stockholder's shares. Upon application of a stockholder,
the court may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding, including reasonable
attorneys' fees and the fees and expenses of experts, to be charged pro rata
against the value of all shares entitled to appraisal.
After the effective time of the BHC merger, no dissenting stockholder will
have any rights of a BHC stockholder with respect to the dissenting
stockholder's shares for any purpose, except to receive payment to which BHC
stockholders of record as of a date prior to the effective time are entitled,
if any. If a dissenting stockholder delivers to the surviving company of the
BHC merger a written withdrawal of the demand for an appraisal within 60 days
after the effective time of the BHC merger or thereafter with the written
approval of the surviving company of the BHC merger, or if no petition for
appraisal is filed within 120 days after the effective time, then the right of
the dissenting stockholder to an appraisal will cease and the dissenting
stockholder will be entitled to receive only the merger consideration as
provided in the BHC merger agreement. Such merger consideration shall be paid,
at News Corporation's discretion, in cash, Preferred ADSs or a mixture of cash
and Preferred ADSs depending on, and after giving effect to, the merger
consideration paid to BHC stockholders (other than dissenting stockholders)
that have made mixed elections, all cash elections and all stock elections, and
the form of the merger consideration paid to BHC stockholders (other than
dissenting stockholders) that have made (or are deemed to have made) non-
elections, as well as taking into account any election which such dissenting
stockholders may have validly submitted.
The foregoing is only a summary of Section 262 of the Delaware General
Corporation Law and is qualified in its entirety by reference to the full text
of such provision, which is included as Annex G to this joint proxy
statement/prospectus.
Appraisal Rights of United Television Stockholders
If a holder of record of United Television stock elects to exercise the
right to an appraisal under Section 262 of the Delaware General Corporation
Law, the stockholder must:
. file with United Television at its main office in Beverly Hills,
California, a written demand for appraisal of the shares of United
Television stock held by the stockholder (which demand must identify the
stockholder and reasonably inform United Television that the stockholder
intends to demand appraisal of his or her shares) before the vote is
taken on the United Television merger agreement at the United Television
special meeting;
. not vote in favor of the United Television merger proposal; and
. continuously hold the United Television shares through the effective time
of the United Television merger.
All written demands for appraisal should be addressed to: Garth S. Lindsey,
Secretary, United Television, Inc., 132 South Rodeo Drive, 4th Floor, Beverly
Hills, CA 90212, and delivered before the vote is taken on the United
Television merger agreement at the United Television special meeting and should
be executed by, or on behalf of, the holder of record.
Within 10 days after the effective time of the United Television merger, the
surviving company of the United Television merger will give written notice of
the effective time to each holder of United Television common stock who has
satisfied the requirements of Section 262 of the Delaware General Corporation
Law.
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Within 120 days after the effective time, the surviving company or any
dissenting stockholder may file a petition in the Delaware Court of Chancery
demanding a determination of the fair value of the shares of United Television
stock of all dissenting stockholders. Any dissenting stockholder desiring to
file a petition is advised to file on a timely basis, unless the dissenting
stockholder receives notice that the petition has been filed by the surviving
company or another dissenting stockholder.
If a petition for appraisal is timely filed, the court will determine which
stockholders are entitled to appraisal rights and thereafter will determine the
fair value of the shares of United Television common stock held by dissenting
stockholders, exclusive of any element of value arising from the accomplishment
or expectation of the United Television merger, but together with a fair rate
of interest, if any, to be paid on the amount determined to be fair value. In
determining the fair value, the court will take into account all relevant
factors. The court may determine the fair value to be more than, less than or
equal to the consideration that the dissenting stockholder would otherwise be
entitled to receive under the United Television merger agreement. If a petition
for appraisal is not timely filed, then the right to an appraisal ceases. The
costs of the appraisal proceeding will be determined by the court and taxed
against the parties as the court determines to be equitable under the
circumstances. Upon the application of any stockholder, the court may determine
the amount of interest, if any, to be paid upon the value of the stockholder's
shares. Upon application of a stockholder, the court may order all or a portion
of the expenses incurred by any stockholder in connection with the appraisal
proceeding, including reasonable attorneys' fees and the fees and expenses of
experts, to be charged pro rata against the value of all shares entitled to
appraisal.
After the effective time of the United Television merger, no dissenting
stockholder will have any rights of a United Television stockholder with
respect to the dissenting stockholder shares for any purpose, except to receive
payment to which United Television stockholders of record as of a date prior to
the effective time are entitled, if any. If a dissenting stockholder delivers
to the surviving company of the United Television merger a written withdrawal
of the demand for an appraisal within 60 days after the effective time of the
United Television merger or thereafter with the written approval of the
surviving company of the United Television merger, or if no petition for
appraisal is filed within 120 days after the effective time, then the right of
the dissenting stockholder to an appraisal will cease and the dissenting
stockholder will be entitled to receive only the merger consideration as
provided in the United Television merger agreement. Such merger consideration
shall be paid, at News Corporation's discretion, in cash, Preferred ADSs or a
mixture of cash and Preferred ADSs depending on, and after giving effect to,
the merger consideration paid to United Television stockholders (other than
dissenting stockholders) that have made mixed elections, all cash elections and
all stock elections, and the form of the merger consideration paid to United
Television stockholders (other than dissenting stockholders) that have made (or
are deemed to have made) non-elections, as well as taking into account any
election which such dissenting stockholders may have validly submitted.
The foregoing is only a summary of Section 262 of the Delaware General
Corporation Law and is qualified in its entirety by reference to the full text
of such provision, which is included in Annex G to this joint proxy
statement/prospectus.
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UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated condensed balance sheet as of
September 30, 2000 and the unaudited pro forma consolidated condensed statement
of operations for the three months ended September 30, 2000 are presented under
Australian generally accepted accounting principles (A-GAAP). The following
unaudited pro forma consolidated condensed balance sheets as of June 30, 2000
are presented under A-GAAP and U.S. generally accepted accounting principles
(US-GAAP). The following unaudited pro forma consolidated condensed statements
of operations for News Corporation's fiscal year ended June 30, 2000 are
presented under A-GAAP and US-GAAP. The pro forma consolidated condensed
financial statements are presented to illustrate the effects of the Chris-
Craft, BHC and United Television mergers on the historical financial position
and operating results of News Corporation, assuming that each of these mergers
was effected as a forward merger. Prior to the mergers, Chris-Craft owns 80% of
BHC, which owns 58% of United Television. After the mergers, News Corporation
and its subsidiaries will own 100% of each of these entities.
The pro forma consolidated condensed financial statements have been derived
from, and should be read in conjunction with, the historical consolidated
financial statements, including the notes thereto, of each of News Corporation,
Chris-Craft, BHC and United Television. For News Corporation, those financial
statements are included in News Corporation's Reports on Form 6-K filed on
November 1, 2000 and on November 10, 2000, which are filed with the SEC and
incorporated in this joint proxy statement/prospectus by reference. For Chris-
Craft, those financial statements are included in Chris-Craft's Quarterly
Reports on Form 10-Q for the quarterly periods ended September 30, 2000 and
June 30, 2000 and its Annual Report on Form 10-K for the year ended December
31, 1999, which are filed with the SEC and incorporated in this joint proxy
statement/prospectus by reference. For BHC, those financial statements are
included in BHC's Quarterly Reports on Form 10-Q for the quarterly periods
ended September 30, 2000 and June 30, 2000 and its Annual Report on Form 10-K
for the year ended December 31, 1999, which are filed with the SEC and
incorporated in this joint proxy statement/prospectus by reference. For United
Television, those financial statements are included in United Television's
Quarterly Reports on Form 10-Q for the quarterly periods ended September 30,
2000 and June 30, 2000 and its Annual Report on Form 10-K for the year ended
December 31, 1999, which are filed with the SEC and incorporated in this joint
proxy statement/prospectus by reference. Because Chris-Craft, BHC and United
Television each report on a calendar year basis, their respective historical
consolidated operating results for the twelve months ended June 30, 2000 were
derived by adding their respective operating results for the six months ended
June 30, 2000 with their respective operating results for the year ended
December 31, 1999 and subtracting their respective operating results for the
six months ended June 30, 1999.
Pro forma adjustments for the mergers include:
. a decrease in cash of US$2.143 billion (A$3.578 billion), based on a
price per Preferred ADS of approximately US$44 (the approximate market
price of a Preferred ADS immediately prior to the announcement of the
mergers) and relating to cash payments in partial consideration for
approximately 47.0 million outstanding shares of Chris-Craft common stock
(on a fully diluted basis) at US$34 per share, approximately 4.5 million
outstanding shares of BHC common stock (on a fully diluted basis but not
including shares held by Chris-Craft) at US$66 per share and
approximately 4.1 million outstanding shares of United Television common
stock (on a fully diluted basis but not including shares held by BHC) at
US$60 per share. The pro forma balance sheets do not give effect to the
additional US$1 per share in cash increase in the Chris-Craft merger
consideration if the Chris-Craft merger closes after August 13, 2001, nor
do they give effect to any adjustment that may occur to preserve the tax
treatment of the transactions; and
. an increase in equity of US$3.212 billion (A$5.363 billion), based on a
price per Preferred ADS of approximately $44 (the approximate market
price of a Preferred ADS immediately prior to the announcement of the
mergers) and relating to (i) the exchange of approximately 47.0 million
outstanding shares of Chris-Craft common stock (on a fully diluted basis)
for approximately 54.5 million Preferred ADSs, based on an exchange ratio
of 1.1591 Preferred ADSs to one share of Chris-Craft common stock, (ii)
the exchange of approximately 4.5 million outstanding shares of BHC
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common stock (on a fully diluted basis but not including shares held by
Chris-Craft) for approximately 10.0 million Preferred ADSs, based on
exchange ratio of 2.2278 Preferred ADSs to one share of BHC common stock,
and (iii) the exchange of approximately 4.1 million shares of United
Television common stock (on a fully diluted basis but not including shares
held by BHC) for approximately 8.3 million Preferred ADSs, based on an
exchange ratio of 2.0253 Preferred ADSs to one share of United Television
common stock.
Each merger is being accounted for as a purchase under A-GAAP and US-GAAP.
The preliminary allocation of purchase price reflected in these pro forma
financial statements is based upon preliminary estimates of useful lives,
assets and liabilities. The final purchase price and its allocations may
differ from the preliminary allocation on which these pro forma financial
statements are based.
News Corporation pro forma adjustments include the impact of:
. the increase of News Corporation's equity investment in Gemstar - TV
Guide International, a global technology and media company focused on
consumer entertainment, to approximately 43% as a result of the pending
acquisition by News Corporation of Liberty Media Corporation's
approximate 21% investment in Gemstar - TV Guide pursuant to an agreement
entered into on September 27, 2000, and certain related transactions; and
. the increase of News Corporation's equity investment in Stream S.p.A., an
Italian pay television service provider, from 35% to 50%.
News Corporation's historical financial statements, on which certain of
these pro forma statements are based, were prepared in accordance with A-GAAP.
A-GAAP differs significantly in certain respects from accounting principles
accepted in the U.S. A discussion of these significant differences is found in
Note 18 of News Corporation's audited consolidated financial statements for
the year ended June 30, 2000 contained in News Corporation's Report on Form 6-
K filed on November 1, 2000 with the SEC and incorporated herein by reference.
The following unaudited pro forma consolidated condensed financial
statements are set forth in Australian dollars with a translation of amounts
to U.S. dollars at A$1.00 = US$0.5372, the Noon Buying Rate on December 1,
2000, solely for your convenience. The Chris-Craft historical financial
information has been translated into Australian dollars at A$1.00 = US$0.5458
and A$1.00 = US$0.5989 as of September 30 and June 30, 2000, respectively and
A$1.00 = US$0.5766 and A$1.00 = US$0.6305 for the three months ended September
30, 2000 and the fiscal year ended June 30, 2000, respectively.
The unaudited pro forma consolidated condensed statements of operations
were prepared as if the transactions had occurred as of the first day of the
periods presented. The unaudited pro forma consolidated condensed balance
sheets were prepared as if the above transactions had occurred as of September
30, 2000 (A-GAAP) and June 30, 2000 (A-GAAP and US-GAAP). The pro forma
consolidated condensed financial statements are presented for informational
purposes only and are not necessarily indicative of the financial position or
results of operations of News Corporation that would have occurred had the
mergers and other transactions referred to above been consummated as of the
dates indicated. In addition, the pro forma consolidated condensed financial
statements are not necessarily indicative of the future financial condition or
operating results of News Corporation.
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NEWS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(NEWS CORPORATION & CHRIS-CRAFT)
As of September 30, 2000
A-GAAP
(in millions)
<TABLE>
<CAPTION>
News
News Chris-Craft News Corporation Pro
Chris-Craft Corporation Pro Forma Corporation Forma News Corporation
Historical (a) Historical (b) Adjustments (c) Adjusted Adjustments (d) As Adjusted
-------------- -------------- --------------- ----------- --------------- ------------------
(In US$)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
------
Cash.................... A$ 484 A$ 4,409 A$(3,578) A$ 1,315 A$ -- A$ 1,315 US$ 706
Marketable securities... 2,155 -- -- 2,155 -- 2,155 1,158
Receivables............. 165 6,128 -- 6,293 -- 6,293 3,381
Inventories............. 196 2,618 -- 2,814 -- 2,814 1,512
Other................... 134 557 -- 691 -- 691 371
------- -------- -------- -------- -------- -------- ---------
Total Current Assets... 3,134 13,712 (3,578) 13,268 -- 13,268 7,128
Investments............. 181 15,160 -- 15,341 11,005 26,346 14,153
Inventories............. 55 3,678 -- 3,733 -- 3,733 2,005
Property, plant and
equipment............... 123 6,607 -- 6,730 -- 6,730 3,615
Publishing rights,
titles and television
licenses................ -- 29,299 6,191 35,490 -- 35,490 19,065
Other intangible
assets.................. 850 383 (850) 383 -- 383 206
Other................... 38 1,596 -- 1,634 -- 1,634 878
------- -------- -------- -------- -------- -------- ---------
Total Non-current
Assets................. 1,247 56,723 5,341 63,311 11,005 74,316 39,922
------- -------- -------- -------- -------- -------- ---------
Total Assets........... A$4,381 A$70,435 A$ 1,763 A$76,579 A$11,005 A$87,584 US$47,050
======= ======== ======== ======== ======== ======== =========
LIABILITIES &
SHAREHOLDERS' EQUITY
--------------------
Current maturities of
long term debt.......... A$ -- A$ 63 A$ -- A$ 63 A$ -- A$ 63 US$ 34
Accounts and other
payables................ 530 9,067 79 9,676 -- 9,676 5,198
------- -------- -------- -------- -------- -------- ---------
Total Current
Liabilities............ 530 9,130 79 9,739 -- 9,739 5,232
Long term debt.......... -- 16,796 -- 16,796 -- 16,796 9,023
Accounts and other
payables................ 172 6,614 -- 6,786 -- 6,786 3,645
------- -------- -------- -------- -------- -------- ---------
Total Non-current
Liabilities............ 172 23,410 -- 23,582 -- 23,582 12,668
Minority interest....... 951 2,936 (951) 2,936 -- 2,936 1,577
Exchangeable preferred
securities.............. -- 3,332 -- 3,332 -- 3,332 1,790
------- -------- -------- -------- -------- -------- ---------
Total Liabilities...... 1,653 38,808 (872) 39,589 -- 39,589 21,267
Total Shareholders'
Equity................. 2,728 31,627 2,635 36,990 11,005 47,995 25,783
------- -------- -------- -------- -------- -------- ---------
Total Liabilities and
Shareholders' Equity... A$4,381 A$70,435 A$ 1,763 A$76,579 A$11,005 A$87,584 US$47,050
======= ======== ======== ======== ======== ======== =========
</TABLE>
See the accompanying notes to these unaudited pro forma consolidated condensed
financial statements
99
<PAGE>
NEWS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(NEWS CORPORATION & CHRIS-CRAFT)
As of June 30, 2000
A-GAAP
(in millions)
<TABLE>
<CAPTION>
Chris- News Chris-Craft News News Corporation
Craft Corporation Pro Forma Corporation Pro Forma News Corporation
Historical(a) Historical(b) Adjustments(c) Adjusted Adjustments(d) As Adjusted
------------- ------------- -------------- ----------- ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS (In US$)
------
Cash.................... A$ 443 A$ 4,638 A$(3,578) A$ 1,503 A$ -- A$ 1,503 US$ 807
Marketable securities... 1,867 -- -- 1,867 -- 1,867 1,003
Receivables............. 175 5,331 -- 5,506 -- 5,506 2,958
Inventories............. 100 2,646 -- 2,746 -- 2,746 1,475
Other................... 125 512 -- 637 -- 637 343
-------- -------- -------- -------- -------- -------- ---------
Total Current Assets... 2,710 13,127 (3,578) 12,259 -- 12,259 6,586
Investments............. 164 13,806 -- 13,970 11,005 24,975 13,416
Inventories............. 42 4,027 -- 4,069 -- 4,069 2,186
Property, plant and
equipment............... 113 5,948 -- 6,061 -- 6,061 3,256
Publishing rights,
titles and television
licenses................ -- 26,884 6,495 33,379 -- 33,379 17,931
Other intangible
assets.................. 780 348 (780) 348 -- 348 187
Other................... 37 1,445 -- 1,482 -- 1,482 796
-------- -------- -------- -------- -------- -------- ---------
Total Non-current
Assets................. 1,136 52,458 5,715 59,309 11,005 70,314 37,772
-------- -------- -------- -------- -------- -------- ---------
Total Assets........... A$ 3,846 A$65,585 A$ 2,137 A$71,568 A$11,005 A$82,573 US$44,358
======== ======== ======== ======== ======== ======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current maturities of
long term debt.......... A$ -- A$ 50 A$ -- A$ 50 A$ -- A$ 50 US$ 27
Accounts and other
payables................ 414 8,958 79 9,451 -- 9,451 5,077
-------- -------- -------- -------- -------- -------- ---------
Total Current
Liabilities............ 414 9,008 79 9,501 -- 9,501 5,104
Long term debt.......... -- 15,381 -- 15,381 -- 15,381 8,263
Accounts and other
payables................ 127 5,521 -- 5,648 -- 5,648 3,034
-------- -------- -------- -------- -------- -------- ---------
Total Non-current
Liabilities............ 127 20,902 -- 21,029 -- 21,029 11,297
Minority interest....... 852 2,781 (852) 2,781 -- 2,781 1,494
Exchangeable preferred
securities.............. -- 3,015 -- 3,015 -- 3,015 1,619
-------- -------- -------- -------- -------- -------- ---------
Total Liabilities...... 1,393 35,706 (773) 36,326 -- 36,326 19,514
Total Shareholders'
Equity................. 2,453 29,879 2,910 35,242 11,005 46,247 24,844
-------- -------- -------- -------- -------- -------- ---------
Total Liabilities and
Shareholders' Equity... A$ 3,846 A$65,585 A$ 2,137 A$71,568 A$11,005 A$82,573 US$44,358
======== ======== ======== ======== ======== ======== =========
</TABLE>
See the accompanying notes to these unaudited pro forma consolidated condensed
financial statements
100
<PAGE>
NEWS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(NEWS CORPORATION & CHRIS-CRAFT)
As of June 30, 2000
US-GAAP
(in millions)
<TABLE>
<CAPTION>
Chris- News Chris-Craft News News Corporation News
Craft Corporation Pro Forma Corporation Pro Forma Corporation
Historical(a) Historical(b) Adjustments(c) Adjusted Adjustments(d) As Adjusted
------------- ------------- -------------- ----------- ---------------- ------------------
(In US$)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
------
Cash.................... A$ 443 A$ 4,638 A$(3,578) A$ 1,503 A$ -- A$ 1,503 US$ 807
Marketable securities... 1,867 -- -- 1,867 -- 1,867 1,003
Receivables............. 175 5,331 -- 5,506 -- 5,506 2,958
Inventories............. 100 2,646 -- 2,746 -- 2,746 1,475
Other................... 125 520 -- 645 -- 645 346
-------- -------- -------- -------- -------- -------- ---------
Total Current Assets... 2,710 13,135 (3,578) 12,267 -- 12,267 6,589
Investments............. 164 13,355 -- 13,519 11,005 24,524 13,175
Inventories............. 42 4,027 -- 4,069 -- 4,069 2,186
Property, plant and
equipment............... 113 5,813 -- 5,926 -- 5,926 3,183
Publishing rights,
titles and television
licenses................ -- 18,200 6,495 24,695 -- 24,695 13,266
Other intangible
assets.................. 780 2,101 1,688 4,569 -- 4,569 2,454
Other................... 37 1,355 -- 1,392 -- 1,392 748
-------- -------- -------- -------- -------- -------- ---------
Total Non-current
Assets................. 1,136 44,851 8,183 54,170 11,005 65,175 35,012
-------- -------- -------- -------- -------- -------- ---------
Total Assets........... A$ 3,846 A$57,986 A$ 4,605 A$66,437 A$11,005 A$77,442 US$41,601
======== ======== ======== ======== ======== ======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current maturities of
long term debt.......... A$ -- A$ 50 A$ -- A$ 50 A$ -- A$ 50 US$ 27
Accounts and other
payables................ 414 9,192 79 9,685 -- 9,685 5,202
-------- -------- -------- -------- -------- -------- ---------
Total Current
Liabilities............ 414 9,242 79 9,735 -- 9,735 5,229
Long term debt.......... -- 15,381 -- 15,381 -- 15,381 8,263
Accounts and other
payables................ 127 8,552 2,468 11,147 -- 11,147 5,988
-------- -------- -------- -------- -------- -------- ---------
Total Non-current
Liabilities............ 127 23,933 2,468 26,528 -- 26,528 14,251
Minority interest....... 852 6,368 (852) 6,368 -- 6,368 3,421
-------- -------- -------- -------- -------- -------- ---------
Total Liabilities...... 1,393 39,543 1,695 42,631 -- 42,631 22,901
Total Shareholders'
Equity................. 2,453 18,443 2,910 23,806 11,005 34,811 18,700
-------- -------- -------- -------- -------- -------- ---------
Total Liabilities and
Shareholders' Equity... A$ 3,846 A$57,986 A$ 4,605 A$66,437 A$11,005 A$77,442 US$41,601
======== ======== ======== ======== ======== ======== =========
</TABLE>
See the accompanying notes to these unaudited pro forma consolidated condensed
financial statements
101
<PAGE>
NEWS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(NEWS CORPORATION & CHRIS-CRAFT)
For the Three Months Ended September 30, 2000
A-GAAP
(in millions, except per share data)
<TABLE>
<CAPTION>
News
Chris- News Chris-Craft Pro News Corporation
Craft Corporation Forma Corporation Pro Forma News Corporation
Historical (e) Historical (f) Adjustments (g) Adjusted Adjustments (h) As Adjusted
-------------- -------------- --------------- ----------- --------------- -----------------
(In US$)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............... A$ 217 A$5,620 A$-- A$5,837 A$-- A$5,837 US$3,136
Cost & Expenses
Operating............ 104 4,790 -- 4,894 -- 4,894 2,629
Selling, general &
administrative....... 61 -- -- 61 -- 61 33
Depreciation &
amortization......... 12 154 (6) 160 -- 160 86
------ ------- ----- ------- ----- ------- --------
Total costs &
expenses............ 177 4,944 (6) 5,115 -- 5,115 2,748
Operating income....... 40 676 6 722 -- 722 388
Other income (expense)
Equity (losses) net
earnings of
associated
companies............ -- (32) -- (32) 34 2 1
Interest expense,
net.................. 45 (216) -- (171) -- (171) (92)
Other................ -- (21) -- (21) -- (21) (11)
------ ------- ----- ------- ----- ------- --------
Income (loss) before
income taxes, minority
interest & abnormal
items.................. 85 407 6 498 34 532 286
Income tax expense..... (38) (107) (2) (147) -- (147) (79)
------ ------- ----- ------- ----- ------- --------
Income (loss) before
minority interest &
abnormal items......... 47 300 4 351 34 385 207
Minority interest...... (14) (41) 14 (41) -- (41) (22)
Abnormal items, net.... -- (698) -- (698) -- (698) (375)
------ ------- ----- ------- ----- ------- --------
Net income (loss)...... A$ 33 A$ (439) A$ 18 A$ (388) A$ 34 A$ (354) US$ (190)
====== ======= ===== ======= ===== ======= ========
Net income (loss) per
share:
Basic................ A$0.95 A$(0.11) A$(0.09) A$(0.07) US$(0.04)
Diluted.............. 0.75 (0.11) (0.09) (0.07) (0.04)
Weighted average
shares:
Basic................ 35 4,062 4,353 4,954 4,954
Diluted.............. 44 4,062 4,353 4,954 4,954
</TABLE>
See the accompanying notes to these unaudited pro forma consolidated condensed
financial statements
102
<PAGE>
NEWS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(NEWS CORPORATION & CHRIS-CRAFT)
For the Fiscal Year Ended June 30, 2000
A-GAAP
(in millions, except per share data)
<TABLE>
<CAPTION>
News Chris-Craft News News Corporation
Chris-Craft Corporation Pro Forma Corporation Pro Forma News Corporation
Historical(e) Historical(f) Adjustments(g) Adjusted Adjustments(h) As Adjusted
------------- ------------- -------------- ----------- ---------------- -------------------
(In US$)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ A$ 828 A$22,443 A$-- A$23,271 A$ -- A$23,271 US$12,501
Cost & Expenses
Operating............. 393 19,131 -- 19,524 -- 19,524 10,488
Selling, general &
administrative........ 224 -- -- 224 -- 224 120
Depreciation &
amortization.......... 40 562 (22) 580 -- 580 312
------ -------- ----- -------- ------ -------- ---------
Total costs & expenses.. 657 19,693 (22) 20,328 -- 20,328 10,920
Operating income........ 171 2,750 22 2,943 -- 2,943 1,581
Other income (expense)
Equity (losses) net
earnings of associated
companies............. (121) (125) -- (246) 100 (146) (78)
Interest expense,
net................... 173 (822) -- (649) -- (649) (349)
Other................. -- (79) -- (79) -- (79) (42)
------ -------- ----- -------- ------ -------- ---------
Income before income
taxes, minority interest
& abnormal items........ 223 1,724 22 1,969 100 2,069 1,112
Income tax expense...... (78) (328) (8) (414) -- (414) (222)
------ -------- ----- -------- ------ -------- ---------
Income before minority
interest & abnormal
items................... 145 1,396 14 1,555 100 1,655 890
Minority interest....... (54) (137) 54 (137) -- (137) (74)
Abnormal items, net..... -- 662 -- 662 -- 662 356
------ -------- ----- -------- ------ -------- ---------
Net income.............. A$ 91 A$ 1,921 A$ 68 A$ 2,080 A$ 100 A$ 2,180 US$ 1,172
====== ======== ===== ======== ====== ======== =========
Net income per share:
Basic................. A$2.65 A$ 0.47 A$ 0.48 A$ 0.45 US$ 0.24
Diluted............... 2.10 0.47 0.48 0.45 0.24
Weighted average shares:
Basic................. 35 4,003 4,294 4,895 4,895
Diluted............... 44 4,003 4,294 4,895 4,895
</TABLE>
See the accompanying notes to these unaudited pro forma consolidated condensed
financial statements
103
<PAGE>
NEWS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(NEWS CORPORATION & CHRIS-CRAFT)
For the Fiscal Year Ended June 30, 2000
US-GAAP
(in millions, except per share data)
<TABLE>
<CAPTION>
News
News Chris-Craft News Corporation
Chris-Craft Corporation Pro Forma Corporation Pro Forma News Corporation
Historical(e) Historical(f) Adjustments(g) Adjusted Adjustments(h) As Adjusted
------------- ------------- -------------- ----------- -------------- -------------------
(In US$)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ A$ 828 A$22,451 A$ -- A$23,279 A$ -- A$23,279 US$12,505
Cost & Expenses
Operating............. 393 19,720 -- 20,113 -- 20,113 10,805
Selling, general &
administrative........ 224 -- -- 224 -- 224 120
Depreciation &
amortization.......... 40 1,222 202 1,464 -- 1,464 786
------ -------- ------ -------- ------ -------- ---------
Total costs & expenses.. 657 20,942 202 21,801 -- 21,801 11,711
Operating income 171 1,509 (202) 1,478 -- 1,478 794
Other income (expense)
Equity losses of
associated companies.. (121) (936) -- (1,057) (429) (1,486) (798)
Interest expense,
net................... 173 (829) -- (656) -- (656) (352)
Other................. -- 1,924 -- 1,924 -- 1,924 1,034
------ -------- ------ -------- ------ -------- ---------
Income (loss) before
income taxes and
minority interest....... 223 1,668 (202) 1,689 (429) 1,260 678
Income tax expense...... (78) (773) 77 (774) -- (774) (416)
------ -------- ------ -------- ------ -------- ---------
Income (loss) before
minority interest....... 145 895 (125) 915 (429) 486 262
Minority interest....... (54) (1,224) 54 (1,224) -- (1,224) (658)
------ -------- ------ -------- ------ -------- ---------
Net income (loss)....... A$ 91 A$ (329) A$ (71) A$ (309) A$(429) A$ (738) US$ (396)
====== ======== ====== ======== ====== ======== =========
Net income (loss) per
share:
Basic................. A$2.65 A$ (0.10) A$ (0.07) A$ (0.15) US$ (0.08)
Diluted............... 2.10 (0.10) (0.07) (0.15) (0.08)
Weighted average shares:
Basic................. 35 3,913 4,204 4,805 4,805
Diluted............... 44 4,084 4,375 4,976 4,976
</TABLE>
See the accompanying notes to these unaudited pro forma consolidated condensed
financial statements
104
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(a) Reflects the historical unaudited consolidated financial position of
Chris-Craft, BHC and United Television under US-GAAP as of September 30, 2000
and June 30, 2000, respectively, as translated into A$. The financial position
approximates Chris-Craft's A-GAAP financial position as of each balance sheet
date. The September 30, 2000 and June 30, 2000 balance sheet amounts have been
translated at the exchange rates of A$1.00 = US$0.5458 and A$1.00 = US$0.5989,
respectively.
(b) Reflects the historical consolidated financial position of News
Corporation as of September 30, and June 30, 2000, respectively.
(c) Pro forma adjustments to record the mergers reflect:
. a decrease in cash of US$2.143 billion (A$3.578 billion), based on a
price per Preferred ADS of approximately US$44 (the approximate market
price of a Preferred ADS immediately prior to the announcement of the
mergers) and relating to cash payments in partial consideration for
approximately 47.0 million outstanding shares of Chris-Craft common
stock (on a fully diluted basis) at US$34 per share, approximately 4.5
million outstanding shares of BHC common stock (on a fully diluted
basis but not including shares held by Chris-Craft) at US$66 per share
and approximately 4.1 million outstanding shares of United Television
common stock (on a fully diluted basis but not including shares held
by BHC) at US$60 per share. The pro forma balance sheets do not give
effect to the additional US$1 per share in cash increase in the
Chris-Craft merger consideration if the Chris-Craft merger closes
after August 13, 2001, nor do they give effect to any adjustment that
may occur to preserve the tax treatment of the transactions;
. an increase in equity of US$3.212 billion (A$5.363 billion), based on
a price per Preferred ADS of approximately $44 (the approximate market
price of a Preferred ADS immediately prior to the announcement of the
mergers) and relating to (i) the exchange of approximately 47.0
million outstanding shares of Chris-Craft common stock (on a fully
diluted basis) for approximately 54.5 million Preferred ADSs, based on
an exchange ratio of 1.1591 Preferred ADSs to one share of Chris-Craft
common stock, (ii) the exchange of approximately 4.5 million
outstanding shares of BHC common stock (on a fully diluted basis but
not including shares held by Chris-Craft) for approximately 10.0
million Preferred ADSs, based on an exchange ratio of 2.2278 Preferred
ADSs to one share of BHC common stock, and (iii) the exchange of
approximately 4.1 million shares of United Television common stock (on
a fully diluted basis but not including shares held by BHC) for
approximately 8.3 million Preferred ADSs, based on an exchange ratio
of 2.0253 Preferred ADSs to one share of United Television common
stock;
. the elimination of approximately A$850 million and A$780 million of
Chris-Craft's pre-existing intangible assets as of September 30, and
June 30, 2000, respectively;
. the elimination of approximately A$951 million and A$852 million of
Chris-Craft's pre-existing minority interest liability as of September
30, and June 30, 2000, respectively;
. a decrease in shareholders' equity of A$2.728 billion and A$2.453
billion relating to the elimination of Chris-Craft's historical
shareholders' equity as of September 30, and June 30, 2000,
respectively;
. the preliminary allocation, under A-GAAP, of the excess of the A$8.941
billion purchase price over the book value of the net assets acquired
to publishing rights, titles and television licenses in the amount of
A$6.191 billion as of September 30, 2000. Deferred taxes are not
provided for under A-GAAP. Under US-GAAP, as of June 30, 2000, the
excess is allocated to:
(i) publishing rights, titles and television licenses in the amount of
A$6.495 billion; and
(ii) other intangible assets in the amount of A$2.468 billion related
to deferred taxes as described below;
. accounts and other payables--current in the amount of A$79 million for
accrued transaction fees; and
105
<PAGE>
. accounts and other payables--non-current in the amount of A$2.468
billion for the deferred tax liability established for the book-tax
difference related to the increase in publishing rights, titles and
television licenses as of June 30, 2000.
The final allocation of the purchase price will be determined after the
completion of the mergers and will be based on a comprehensive final evaluation
of the fair value of Chris-Craft's tangible and identifiable intangible assets
acquired and liabilities assumed at the time of the mergers. The preliminary
allocation is summarized in the following table:
<TABLE>
<CAPTION>
September 30,
2000 June 30, 2000
------------- ----------------
A-GAAP A-GAAP US-GAAP
------------- ------- -------
(A$ in millions)
<S> <C> <C> <C>
Total Purchase Price:...................... A$8,941 A$8,941 A$8,941
======= ======= =======
Allocation of Purchase Price:
Assets:
Chris-Craft's tangible assets.......... 3,531 3,066 3,066
Publishing rights, titles and
television licenses................... 6,191 6,495 6,495
Other intangible assets................ -- -- 2,468
Liabilities:
Chris-Craft's liabilities.............. (702) (541) (541)
Accounts and other payables--current... (79) (79) (79)
Accounts and other payables--non-
current............................... -- -- (2,468)
------- ------- -------
Total purchase price................... A$8,941 A$8,941 A$8,941
======= ======= =======
</TABLE>
Detail of the above adjustments to reflect the mergers, under A-GAAP as of
September 30, 2000, is set forth below:
<TABLE>
<CAPTION>
Payment Elimination of Allocation Elimination of Elimination of
of Cash and Chris-Craft's of Excess Chris-Craft's Chris-Craft's Total Pro
Issuance of Historical Purchase Historical Historical Forma
Preferred ADSs Intangible Assets Price Minority Interest Equity Adjustments
-------------- ----------------- ---------- ----------------- -------------- -----------
(A$ in millions)
<S> <C> <C> <C> <C> <C> <C>
Cash.................... (3,578) -- -- -- -- (3,578)
Publishing rights,
titles and television --
licenses............... -- -- 6,191 -- 6,191
Other intangible
assets................. -- (850) -- -- -- (850)
Accounts and other
payables--current...... -- -- 79 -- -- 79
Minority interest....... -- -- -- (951) -- (951)
Shareholders' equity.... 5,363 -- -- -- (2,728) 2,635
</TABLE>
Detail of the above adjustments to reflect the mergers, under A-GAAP as of
June 30, 2000, is set forth below:
<TABLE>
<CAPTION>
Payment Elimination of Allocation Elimination of Elimination of
of Cash and Chris-Craft's of Excess Chris-Craft's Chris-Craft's Total Pro
Issuance of Historical Purchase Historical Historical Forma
Preferred ADSs Intangible Assets Price Minority Interest Equity Adjustments
-------------- ----------------- ---------- ----------------- -------------- -----------
(A$ in millions)
<S> <C> <C> <C> <C> <C> <C>
Cash.................... (3,578) -- -- -- -- (3,578)
Publishing rights,
titles and television
licenses............... -- -- 6,495 -- -- 6,495
Other intangible
assets................. -- (780) -- -- -- (780)
Accounts and other
payables--current...... -- -- 79 -- -- 79
Minority interest....... -- -- -- (852) -- (852)
Shareholders' equity.... 5,363 -- -- -- (2,453) 2,910
</TABLE>
106
<PAGE>
Detail of the above adjustments to reflect the mergers, under US-GAAP as of
June 30, 2000, is set forth below:
<TABLE>
<CAPTION>
Payment Elimination of Allocation Elimination of Elimination of
of Cash and Chris-Craft's of Excess Chris-Craft's Chris-Craft's Total Pro
Issuance of Historical Purchase Historical Historical Forma
Preferred ADSs Intangible Assets Price Minority Interest Equity Adjustments
-------------- ----------------- ---------- ----------------- -------------- -----------
(A$ in millions)
<S> <C> <C> <C> <C> <C> <C>
Cash.................... (3,578) -- -- -- -- (3,578)
Publishing rights,
titles and television
licenses............... -- -- 6,495 -- -- 6,495
Other intangible
assets................. -- (780) 2,468 -- -- 1,688
Accounts and other
payables--current...... -- -- 79 -- -- 79
Accounts and other
payables--non-current.. -- -- 2,468 -- -- 2,468
Minority interest....... -- -- -- (852) -- (852)
Shareholders' equity.... 5,363 -- -- -- (2,453) 2,910
</TABLE>
(d) Pro forma adjustment to record News Corporation's pending increased
equity investment in Gemstar-TV Guide from approximately 22% to approximately
43%, and certain related transactions.
(e) Reflects the historical unaudited consolidated financial position of
Chris-Craft, BHC and United Television under US-GAAP for the three months ended
September 30, 2000 and the twelve months ended June 30, 2000, as translated
into A$. These results approximate what Chris-Craft's A-GAAP results would have
been with the exception of the treatment of intangible amortization expense
(see (g) below). Because Chris-Craft, BHC and United Television each reports on
a calendar year basis, their respective historical unaudited consolidated
operating results for the twelve months ended June 30, 2000 were derived by
adding their respective operating results for the six months ended June 30,
2000 with their respective operating results for the year ended December 31,
1999 and subtracting their respective operating results for the six months
ended June 30, 1999. The income statement amounts for the three months ended
September 30, 2000 and for the twelve months ended June 30, 2000 have been
translated at the exchange rate of A$1.00 = US$0.5766 and A$1 = US$0.6305,
respectively.
(f) Reflects the historical operating results of News Corporation for the
three months ended September 30, 2000 unaudited and the fiscal year ended June
30, 2000.
(g) Pro forma adjustments to record the mergers:
. net increase of A$202 million, under US-GAAP, in amortization of
publishing rights, titles and television licenses relating to the
excess of the purchase price to acquire Chris-Craft over the book
value of its net assets acquired, amortized on a straight-line basis
over a 40-year period; under A-GAAP, there is no amortization of
publishing rights, titles and television licenses and, accordingly,
Chris-Craft's historical intangible amortization expense has been
reversed during each period presented under A-GAAP; and
. the elimination of A$14 million and A$54 million of Chris-Craft's
historical minority interest for the three months ended September 30,
2000 and the year ended June 30, 2000, respectively.
(h) Pro forma adjustments to record the following equity transactions as if
they were consummated on July 1, 1999:
. increase of approximately A$96 million (US-GAAP) in equity losses in
associated companies for the year ended June 30, 2000 due to the
increase in the equity investment from 35% to 50% in Stream; and
. increase of approximately A$333 million in equity losses in associated
companies for the year ended June 30, 2000 under US-GAAP and equity
gains of approximately A$34 and A$100 under A-GAAP for the three
months ended September 30, 2000 and the year ended June 30, 2000,
respectively, due to the increase in the equity investment in Gemstar-
TV Guide to approximately 43%, and certain related transactions.
107
<PAGE>
(i) Assuming each of the mergers is effected as a reverse merger, the
following would be the changes to the unaudited pro forma consolidated
condensed financial statements:
. a US$121 million (A$202 million) decrease in cash;
. a US$182 million (A$304 million) increase in shareholders' equity;
. a US$778 million (A$1,425 million) and US$303 million (A$506 million)
increase to publishing rights, titles and television licenses as of
September 30 (A-GAAP), and June 30, 2000 (US-GAAP), respectively;
. a US$115 million (A$192 million) increase to other intangible assets
as of June 30, 2000 under US-GAAP;
. a US$115 million (A$192 million) increase to accounts and other
payables--non-current as of June 30, 2000 under US-GAAP;
. a US$10 million (A$17 million) increase in depreciation and
amortization expense for the fiscal year ended June 30, 2000 under US-
GAAP;
. a US$10 million (A$17 million) decrease in operating income, income
before income taxes and minority interest and net income for the
fiscal year ended June 30, 2000 under US-GAAP; and
. a US$0.01 (A$0.01) decrease in basic and diluted earnings per share
for the fiscal year ended June 30, 2000 under US-GAAP.
(j) In a voting agreement entered into with News Corporation, Chris-Craft
has agreed to vote its approximate 97% voting interest in BHC in favor of the
BHC merger proposal. Approval of the BHC merger agreement is assured, provided
that Chris-Craft votes its shares in accordance with the terms of this voting
agreement. In a voting agreement entered into with News Corporation, BHC agreed
to vote its approximate 58% voting interest in United Television in favor of
the United Television merger proposal. Approval of the United Television merger
agreement is assured, provided that BHC votes its shares of United Television
in accordance with the terms of this voting agreement. Assuming these two
proposed mergers are consummated and the Chris-Craft merger is not consummated,
the following would be changes to the unaudited pro forma consolidated
condensed financial statements:
. a US$71 million (A$119 million) increase in cash;
. a US$129 million (A$215 million) decrease in shareholders' equity;
. a US$331 million (A$606 million) increase to publishing rights, titles
and television licenses as of September 30, 2000 (A-GAAP) and a US$148
million (A$247 million) decrease in publishing rights, titles and
television licenses as of June 30, 2000 (US-GAAP);
. a US$56 million (A$94 million) decrease to other intangible assets as
of June 30, 2000 under US-GAAP;
. a US$56 million (A$94 million) decrease to accounts and other
payables--non-current as of June 30, 2000 under US-GAAP;
. a US$5 million (A$9 million) decrease in depreciation and amortization
expense for the fiscal year ended June 30, 2000 under US-GAAP;
. a US$5 million (A$9 million) increase in operating income, income
before income taxes and minority interest and net income for the
fiscal year ended June 30, 2000 under US-GAAP; and
. a US$0.01 (A$0.01) decrease in basic and diluted earnings per share
for the fiscal year ended June 30, 2000 under US-GAAP.
(k) Assuming each of the BHC and United Television mergers is effected as a
reverse merger and the Chris-Craft merger is not consummated, the following
would be the changes to the unaudited pro forma consolidated condensed
financial statements:
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<PAGE>
. a US$33 million (A$55 million) decrease in cash;
. a US$25 million (A$42 million) increase in shareholders' equity;
. a US$589 million (A$1,079 million) and US$110 million (A$184 million)
increase to publishing rights, titles and television licenses as of
September 30, 2000 (A-GAAP) and June 30, 2000 (US-GAAP),
respectively;
. a US$42 million (A$70 million) increase to other intangible assets as
of June 30, 2000 under US-GAAP;
. a US$42 million (A$70 million) increase to accounts and other
payables--non-current as of June 30, 2000 under US-GAAP;
. a US$4 million (A$6 million) increase in depreciation and
amortization expense for the fiscal year ended June 30, 2000 under
US-GAAP;
. a US$4 million (A$6 million) decrease in operating income, income
before income taxes and minority interest and net income for the
fiscal year ended June 30, 2000 under US-GAAP; and
. a US$0.01 (A$0.01) decrease in basic and diluted earnings per share
for the fiscal year ended June 30, 2000 under US-GAAP.
(1) The historical unaudited consolidated financial statements of Chris-
Craft included in the unaudited pro forma consolidated condensed financial
statements are derived from the following (in US$). Because Chris-Craft, BHC
and United Television each reports on a calendar year basis, their respective
historical unaudited consolidated operating results for the twelve months ended
June 30, 2000 were derived by adding their respective operating results for the
six months ended June 30, 2000 with their respective operating results for the
year ended December 31, 1999 and subtracting their respective operating results
for the six months ended June 30, 1999. The income statement amounts for the
three months ended September 30, 2000 and for the twelve months ended June 30,
2000 have been translated at the exchange rate of A$1.00=US$0.5766 and
A$1=US$0.6305, respectively. The September 30, 2000 and June 30, 2000 balance
sheet amounts have been translated at the exchange rates of A$1.00 = US$0.5458
and A$1.00=US$0.5989, respectively.
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CHRIS-CRAFT UNAUDITED CONSOLIDATING BALANCE SHEET
As of September 30, 2000
(in millions)
<TABLE>
<CAPTION>
Chris-Craft
United BHC TV BHC Combined
Television Division Communications with the Industrial Chris-Craft A$
Consolidated Combined Eliminations Consolidated Division Eliminations Consolidated Translation
------------ -------- ------------ -------------- ------------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and cash
equivalents....... US$ 91 US$ 166 US$ -- US$ 257 US$ 7 US$ -- US$ 264 A$ 484
Marketable
securities........ 132 967 -- 1,099 76 -- 1,175 2,155
Accrued interest
receivable........ 2 14 -- 16 1 -- 17 31
Accounts
receivable, net... 42 46 (1) 87 3 -- 90 165
Film contract
rights............ 42 65 -- 107 -- -- 107 196
Deferred tax
asset............. 5 7 -- 12 18 -- 30 55
Prepaid expenses
and other current
assets............ 3 19 -- 22 4 -- 26 48
------ -------- ------- -------- -------- --------- -------- -------
Total Current
Assets.......... 317 1,284 (1) 1,600 109 -- 1,709 3,134
Investments....... 39 58 -- 97 2 -- 99 181
Film contract
rights, less
current portion... 12 18 -- 30 -- -- 30 55
Property, plant &
equipment, net.... 33 30 -- 63 3 -- 66 123
Intangible
assets............ 139 250 19 408 1 56 465 850
Other assets...... 1 268 (257) 12 1,441 (1,432) 21 38
------ -------- ------- -------- -------- --------- -------- -------
Total Non-
current Assets.. 224 624 (238) 610 1,447 (1,376) 681 1,247
------ -------- ------- -------- -------- --------- -------- -------
Total Assets.... US$541 US$1,908 US$(239) US$2,210 US$1,556 US$(1,376) US$2,390 A$4,381
====== ======== ======= ======== ======== ========= ======== =======
Film contracts
payable........... US$ 40 US$ 58 US$ -- US$ 98 US$ -- US$ -- US$ 98 A$ 181
Accounts & other
payable........... 2 3 (1) 4 1 -- 5 9
Accrued expenses.. 38 67 -- 105 46 -- 151 277
Income taxes
payable........... 10 14 -- 24 9 1 34 63
------ -------- ------- -------- -------- --------- -------- -------
Total Current
Liabilities..... 90 142 (1) 231 56 1 288 530
Film contracts
payable after one
year.............. 37 43 -- 80 -- -- 80 146
Other long-term
liabilities....... -- 3 -- 3 11 -- 14 26
Intercompany
payable
(receivable)...... -- -- -- -- (18) 18 -- --
------ -------- ------- -------- -------- --------- -------- -------
Total Non-
current
Liabilities..... 37 46 -- 83 (7) 18 94 172
------ -------- ------- -------- -------- --------- -------- -------
Total
Liabilities..... 127 188 (1) 314 49 19 382 702
Minority
interest.......... -- -- 175 175 -- 344 519 951
Shareholders'
Investment........ 414 1,720 (413) 1,721 1,507 (1,739) 1,489 2,728
------ -------- ------- -------- -------- --------- -------- -------
Total
Liabilities and
Shareholders'
Investment...... US$541 US$1,908 US$(239) US$2,210 US$1,556 US$(1,376) US$2,390 A$4,381
====== ======== ======= ======== ======== ========= ======== =======
</TABLE>
110
<PAGE>
CHRIS-CRAFT UNAUDITED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000
(in millions)
<TABLE>
<CAPTION>
Chris-Craft
United BHC BHC Combined
Television TV Division Communications with the Industrial Chris-Craft
Consolidated Combined Eliminations Consolidated Division Eliminations Consolidated
------------ ----------- ------------ -------------- ------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues....... US$54 US$65 US$-- US$119 US$6 US$-- US$125
Operating expenses
Television
expenses.......... 22 34 -- 56 -- -- 56
Cost of goods
sold.............. -- -- -- -- 4 -- 4
Selling, general
&
administrative.... 18 22 -- 40 2 -- 42
----- ----- ------ ------ ---- ------ ------
Total costs &
expenses........ 40 56 -- 96 6 -- 102
----- ----- ------ ------ ---- ------ ------
Operating income
(loss)............. 14 9 -- 23 -- -- 23
----- ----- ------ ------ ---- ------ ------
Interest and
other income,
net............... 3 15 -- 18 8 -- 26
Equity in
associated
companies......... -- 6 (6) -- -- -- --
----- ----- ------ ------ ---- ------ ------
3 21 (6) 18 8 -- 26
----- ----- ------ ------ ---- ------ ------
Income (loss)
before income taxes
& minority
interest........... 17 30 (6) 41 8 -- 49
Income tax
provision.......... 7 11 -- 18 -- 4 22
----- ----- ------ ------ ---- ------ ------
Income (loss)
before minority
interest........... 10 19 (6) 23 8 (4) 27
Minority interest.. -- -- 4 4 -- 4 8
----- ----- ------ ------ ---- ------ ------
Net income (loss).. US$10 US$19 US$(10) US$ 19 US$8 US$ (8) US$ 19
===== ===== ====== ====== ==== ====== ======
<CAPTION>
A$
Translation
-----------
<S> <C>
Net revenues....... A$217
Operating expenses
Television
expenses.......... 97
Cost of goods
sold.............. 7
Selling, general
&
administrative.... 73
-----------
Total costs &
expenses........ 177
-----------
Operating income
(loss)............. 40
-----------
Interest and
other income,
net............... 45
Equity in
associated
companies......... --
-----------
45
-----------
Income (loss)
before income taxes
& minority
interest........... 85
Income tax
provision.......... 38
-----------
Income (loss)
before minority
interest........... 47
Minority interest.. 14
-----------
Net income (loss).. A$ 33
===========
</TABLE>
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<PAGE>
CHRIS-CRAFT UNAUDITED CONSOLIDATING BALANCE SHEET
As of June 30, 2000
(in millions)
<TABLE>
<CAPTION>
Chris-
Craft
Combined
United BHC TV BHC with the
Television Division Communications Industrial Chris-Craft A$
Consolidated Combined Eliminations Consolidated Division Eliminations Consolidated Translation
------------ -------- ------------ -------------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and cash
equivalents.......... US$ 70 US$ 177 US$ -- US$ 247 US$ 17 US$ -- US$ 264 A$ 443
Marketable
securities........... 135 929 -- 1,064 54 -- 1,118 1,867
Accrued interest
receivable........... 2 11 -- 13 1 -- 14 23
Accounts receivable,
net.................. 49 54 (1) 102 3 -- 105 175
Film contract
rights............... 26 35 -- 61 -- -- 61 100
Deferred tax asset... 5 7 -- 12 18 -- 30 50
Prepaid expenses and
other current
assets............... 4 22 -- 26 4 1 31 52
------ -------- ------- -------- -------- --------- -------- -------
Total Current
Assets............. 291 1,235 (1) 1,525 97 1 1,623 2,710
Investments.......... 38 57 -- 95 3 98 164
Film contract rights,
less current
portion.............. 9 16 -- 25 -- 25 42
Property, plant &
equipment, net....... 33 31 -- 64 3 67 113
Intangible assets.... 140 252 19 411 1 56 468 780
Other assets......... 1 262 (251) 12 1,427 (1,417) 22 37
------ -------- ------- -------- -------- --------- -------- -------
Total Non-current
Assets............. 221 618 (232) 607 1,434 (1,361) 680 1,136
------ -------- ------- -------- -------- --------- -------- -------
Total Assets....... US$512 US$1,853 US$(233) US$2,132 US$1,531 US$(1,360) US$2,303 A$3,846
====== ======== ======= ======== ======== ========= ======== =======
Film contracts
payable.............. US$ 33 US$ 43 US$ -- US$ 76 US$ -- US$ -- US$ 76 A$ 126
Accounts & other
payable.............. 3 3 (1) 5 1 -- 6 10
Accrued expenses..... 34 57 -- 91 44 -- 135 225
Income taxes
payable.............. 12 12 -- 24 7 1 32 53
------ -------- ------- -------- -------- --------- -------- -------
Total Current
Liabilities........ 82 115 (1) 196 52 1 249 414
Film contracts
payable after one
year................. 27 35 -- 62 62 104
Other long-term
liabilities.......... -- 3 -- 3 11 -- 14 23
Intercompany payable
(receivable)......... -- -- -- -- (17) 17 -- --
------ -------- ------- -------- -------- --------- -------- -------
Total Non-current
Liabilities........ 27 38 -- 65 (6) 17 76 127
------ -------- ------- -------- -------- --------- -------- -------
Total Liabilities.. 109 153 (1) 261 46 18 325 541
Minority interest.... -- -- 170 170 340 510 852
Shareholders'
Investment........... 403 1,700 (402) 1,701 1,485 (1,718) 1,468 2,453
------ -------- ------- -------- -------- --------- -------- -------
Total Liabilities
and Shareholders'
Investment......... US$512 US$1,853 US$(233) US$2,132 US$1,531 US$(1,360) US$2,303 A$3,846
====== ======== ======= ======== ======== ========= ======== =======
</TABLE>
112
<PAGE>
CHRIS-CRAFT UNAUDITED CONSOLIDATING STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED JUNE 30, 2000
(in millions)
<TABLE>
<CAPTION>
Chris-Craft
Combined
United BHC BHC with
Television TV Division Communications Industrial Chris-Craft A$
Consolidated Combined Eliminations Consolidated Division Eliminations Consolidated Translation
------------ ----------- ------------ -------------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues....... US$226 US$274 US$-- US$500 US$23 US$-- US$523 A$828
Operating expenses
Television
expenses.......... 89 145 -- 234 -- 234 371
Cost of goods
sold.............. -- -- -- -- 14 -- 14 22
Selling, general
&
administrative.... 72 78 1 151 15 -- 166 264
------ ------ ------ ------ ----- ------ ------ -----
Total costs &
expenses........ 161 223 1 385 29 -- 414 657
------ ------ ------ ------ ----- ------ ------ -----
Operating income
(loss)............. 65 51 (1) 115 (6) -- 109 171
------ ------ ------ ------ ----- ------ ------ -----
Interest and
other income...... 14 96 -- 110 (1) 109 173
Equity in
associated
companies......... -- (50) (27) (77) -- (77) (121)
------ ------ ------ ------ ----- ------ ------ -----
14 46 (27) 33 (1) -- 32 52
------ ------ ------ ------ ----- ------ ------ -----
Income (loss)
before income
taxes & minority
interest.......... 79 97 (28) 148 (7) -- 141 223
Income tax
provision......... 32 28 -- 60 (9) -- 51 78
------ ------ ------ ------ ----- ------ ------ -----
Income (loss)
before minority
interest.......... 47 69 (28) 88 2 -- 90 145
Minority
interest.......... -- -- 19 19 -- 13 32 54
------ ------ ------ ------ ----- ------ ------ -----
Net income
(loss)............ US$ 47 US$ 69 US$(47) US$ 69 US$ 2 US$(13) US$ 58 A$ 91
====== ====== ====== ====== ===== ====== ====== =====
</TABLE>
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<PAGE>
INTERESTS OF CERTAIN DIRECTORS AND EXECUTIVE OFFICERS
OF THE COMPANIES IN THE MERGERS
The executive officers of Chris-Craft, BHC and United Television, some of
whom are also directors of Chris-Craft, BHC and/or United Television, have
interests in the mergers that are different from, or in addition to, the
interests of stockholders generally. The Chris-Craft, BHC and United Television
boards of directors were aware of and discussed these potentially conflicting
interests when they approved the mergers.
Chris-Craft Executive Officers
Each of Chris-Craft's executive officers is a party to an employment
agreement with Chris-Craft that provides certain benefits upon a qualifying
termination of employment after a change in control of Chris-Craft. The
approval of the Chris-Craft merger by Chris-Craft stockholders will constitute
a change in control of Chris-Craft.
Herbert J. Siegel
Herbert J. Siegel is Chris-Craft's chairman, president and chief executive
officer, as well as its largest stockholder. Mr. Siegel's existing employment
agreement with Chris-Craft was scheduled to expire on December 31, 2000. The
existing employment agreement (which is expected to be superseded as described
below) was amended on August 11, 2000 to extend the term of the agreement and
set the remuneration levels that would apply during the extended term. The
agreement was amended to provide for Mr. Siegel to continue his service as
chairman, president and chief executive officer until December 31, 2002 and to
continue his service as chairman until December 31, 2004. The agreement was
also amended to provide for Mr. Siegel's annual deferred compensation,
currently set at $634,662, to be set at $700,000 in years 2001 and 2002 and
$500,000 in years 2003 and 2004. Mr. Siegel's annual bonus, which entitles him
to 1% of the amount by which Chris-Craft pre-tax income exceeds $36,000,000,
was amended to provide that for each of years 2001 and 2002 he will be entitled
to 1% of the amount by which Chris-Craft pre-tax income exceeds $50,000,000,
and for each of years 2003 and 2004, he will be entitled to 1% of the amount by
which Chris-Craft pre-tax income exceeds $100,000,000. The agreement was also
amended to increase the amount of Mr. Siegel's cumulative annual charitable
contributions that Chris-Craft is required to match from $200,000 to $300,000.
In addition, the change in control provision, which provided for the term of
the agreement to be extended for three years after the occurrence of a change
in control, was deleted. The agreement now provides that, after a change in
control, Mr. Siegel is to be provided, for the duration of the employment and
consulting terms of the agreement, with the amenities and perquisites that
Chris-Craft provided to him before the occurrence of the change in control.
Effective as of the consummation of the Chris-Craft merger, Mr. Siegel is
expected to enter into a new employment agreement with News Corporation. This
agreement will supersede Mr. Siegel's existing employment agreement, as amended
as of August 11, 2000. Under the new agreement, it is expected that Mr. Siegel
will serve News Corporation in a senior advisory role until June 30, 2004, at
the same annual base salary and with similar benefits and perquisites as are
currently in effect under his existing employment agreement. During the
employment term, Mr. Siegel will be entitled to receive an annual bonus of
$2,000,000. After the expiration of the employment term, Mr. Siegel will
provide consulting services to News Corporation for a period of five years.
During the consulting term, he will be entitled to receive the same consulting
fees and similar perquisites and benefits as he would have been entitled to
receive as a consultant under his existing employment agreement. As is the case
under the existing agreement, the new agreement will provide for Mr. Siegel to
be made whole should any of the payments or benefits he receives under the
agreement be subject to the excise tax imposed on "golden parachutes" by
section 4999 of the Internal Revenue Code.
If Mr. Siegel's employment is terminated by News Corporation during the term
of the new agreement (other than for death, disability or cause), or if Mr.
Siegel terminates his employment as a result of a breach of the agreement by
News Corporation (each of which we refer to as a "qualifying termination"), he
will be
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<PAGE>
entitled to receive, in a lump sum, an amount equal to the base salary,
deferred compensation, bonus and consulting fees that would have been payable
through each of the employment and consulting terms. If a qualifying
termination were to occur on December 31, 2001, the cash amount payable to Mr.
Siegel under the new agreement, based on calculations as of the date of this
joint proxy statement/prospectus, would be approximately $14,400,000. In
addition, Mr. Siegel will be entitled to continued medical and health insurance
coverage on the same basis as News Corporation provides to its chief executive
officer.
Messrs. Thompson, John Siegel, William Siegel and Kelly and Mrs. Merkel
Evan C Thompson, executive vice president and a director of Chris-Craft and
president of Chris-Craft's television division, John C. Siegel and William D.
Siegel, each an executive vice president and a director of Chris-Craft, Brian
C. Kelly, the senior vice president and general counsel of Chris-Craft, and
Joelen K. Merkel, the senior vice president and treasurer of Chris-Craft, are
each a party to an employment agreement with Chris-Craft. Under their
respective employment agreements with Chris-Craft, Messrs. Thompson, John C.
Siegel, William D. Siegel and Kelly and Mrs. Merkel (each of whom we refer to
as an "executive" and which we collectively refer to as "executives") has the
right to terminate his or her employment after a change of control if his or
her authorities, duties and responsibilities are materially reduced thereafter,
or for any reason during the 90-day period commencing six months after the
consummation of the Chris-Craft merger. In addition, Mr. Thompson may terminate
his employment if Chris-Craft fails to pay him a minimum bonus as defined in
his employment agreement. In the event of a termination by an executive in the
circumstances described above, or in the event of a termination by Chris-Craft
(or a successor) other than for cause or the death or disability of the
executive (each of which we refer to as a "qualifying termination"),
(1) Mr. Thompson is entitled to receive a lump sum equal to three times
the sum of his (a) then current base salary and deferred compensation and
(b) highest performance bonus paid in the past five years; and
(2) each of the other executives is entitled to receive a lump sum equal
to three times the sum of the executive's (a) base salary plus (b) for John
Siegel and William Siegel, the maximum performance bonus for the year of
termination, and for Mr. Kelly and Mrs. Merkel, a bonus equal to 30% of
base salary.
If Mr. Thompson terminates his employment under the minimum bonus provision, he
is also entitled to receive an amount equal to the excess of the minimum bonus
over the bonus actually paid for each year from the change of control through
the year prior to termination.
Following a qualifying termination, each executive is also entitled to
receive in a lump sum all consulting fees (without a cost of living adjustment)
that would have been payable under the executive's agreement, and the
insurance, medical and health coverages that would have been provided over the
consulting term provided for in the executive's agreement. Alternatively, each
executive may elect to render consulting services over the consulting term, in
which case the executive will receive monthly payments (and not a lump sum
payment), the use of existing office space, secretarial and other office
support services and insurance and medical and health coverages, in each case,
over the consulting term. If a qualifying termination were to occur on December
31, 2001, Messrs. Thompson, John Siegel, William Siegel, Kelly and Mrs. Merkel
would be entitled to receive a cash payment, based on calculations as of the
date of this joint proxy statement/prospectus, of approximately $14,300,000,
$8,900,000, $8,900,000, $2,650,000 and $2,750,000, respectively.
Each executive's agreement also provides that, upon a qualifying
termination, all outstanding and unvested Chris-Craft stock options the
executive then holds shall immediately become vested and exercisable. News
Corporation has agreed to provide an aggregate of $2,000,000 to reimburse the
executives, collectively as a group, for any excise taxes imposed on "golden
parachutes" by section 4999 of the Internal Revenue Code arising from the
accelerated vesting of their Chris-Craft stock options that will occur in the
event of a qualifying termination. Messrs. Thompson, John Siegel, William
Siegel and Kelly and Mrs. Merkel each hold 429,232, 377,727, 377,727, 235,832
and 235,832 unvested options, respectively, with weighted average exercise
prices of $52.88, $52.53, $52.53, $52.20 and $52.20, respectively. These
options and the exercise price
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of such options will be converted in the Chris-Craft merger as described under
"Summary of the Transaction Documents--The Chris-Craft Merger Agreement--Stock
Options" on page [ . ].
Bonus Pool
News Corporation and Chris-Craft agreed that the compensation committee of
Chris-Craft's board of directors, composed of David Linowes and Norman
Perlmutter, will have the authority to award special bonuses to Chris-Craft
employees whose efforts were instrumental to the completion of the Chris-Craft
merger. A total of $10,000,000 in bonuses may be awarded by the compensation
committee, which bonuses will generally be paid at the consummation of the
Chris-Craft merger, except that the compensation committee may determine to pay
such bonus prior to the completion of the Chris-Craft merger, so long as any
bonus so paid is returned to Chris-Craft if the merger is not completed.
Directors' and Officers' Insurance; Indemnification
News Corporation has agreed to cause the surviving corporation in each of
the Chris-Craft, BHC and United Television mergers to maintain for a period of
six years after completion of each merger directors' and officers' liability
insurance covering those persons who are currently covered by Chris-Craft, BHC
and United Television's directors' and officers' liability insurance policies
on terms comparable to such existing insurance coverage. The surviving
corporation shall not be required to expend more than 300% of current annual
premiums paid by Chris-Craft, BHC and United Television, respectively. If the
premiums exceed such amount, News Corporation will obtain a policy with the
greatest coverage available for an annual cost not exceeding such amount.
News Corporation has also agreed to cause the surviving corporation to
indemnify, to the fullest extent permitted by law, present and former officers,
directors and employees of Chris-Craft, BHC and United Television and other
specified persons against various specified indemnifiable claims, including
against amounts paid in settlement of any threatened, pending or completed
claim based upon the fact that such person is or was a director, officer,
employee or stockholder of Chris-Craft or any of its current or former
subsidiaries.
BHC Executive Officers
Each executive officer of BHC--Herbert J. Siegel, chairman of the board,
William D. Siegel, president and chief executive officer, Brian C. Kelly,
senior vice president, general counsel and secretary, and Joelen K. Merkel,
senior vice president and treasurer,--as well as Evan C Thompson, who is not an
elected officer of BHC, but may be deemed a BHC executive officer under SEC
rules--is also an executive officer of Chris-Craft and receives no regular
compensation from BHC. William D. Siegel, Joelen K. Merkel and John C. Siegel
are also directors of BHC. None of the above named executive officers has any
interest in the BHC merger that is different from or in addition to those of
BHC stockholders generally. For a description of the interests of Chris-Craft
executive officers in the Chris-Craft merger, see "Chris-Craft Executive
Officers" above.
United Television Executive Officers
The executive officers of United Television are Evan C Thompson, John C.
Siegel, Laurey J. Barnett, Garth S. Lindsey and Thomas L. Muir. John C. Siegel
is the chairman of United Television and Evan C Thompson and Herbert J. Siegel
are directors of United Television. Ms. Barnett is United Television's vice
president and director of programming, Mr. Lindsey is United Television's
executive vice president, chief financial officer and secretary, and Mr. Muir
is United Television's treasurer and controller. None of Messrs. Evan C
Thompson, John C. Siegel or Herbert J. Siegel has an interest in the United
Television merger that is different from or in addition to those of United
Television stockholders generally. For a description of the interests of
Messrs. Evan C Thompson, John C. Siegel and Herbert J. Siegel in the Chris-
Craft merger, see "Chris-Craft Executive Officers" above, and for a description
of the interests of Messrs. Lindsey and Muir and Ms. Barnett in the United
Television merger, see below.
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United Television Severance Plan
On December 14, 1999, United Television adopted a cash-based employee
severance plan. Eligible employees are entitled to receive severance benefits
under the plan in the event of a qualifying termination of employment within a
certain period following a change in control of Chris-Craft. The amount of the
cash severance payment to which a participant will be entitled, upon a
qualifying termination, is a function of both the participant's length of
service and seniority of position. Each of Messrs. Lindsey and Muir and Ms.
Barnett is eligible to participate in the severance plan.
An eligible executive officer will incur a qualifying termination if, within
a certain period following the Chris-Craft, BHC or United Television merger,
his or her employment is terminated other than for cause, death or disability
or he or she terminates employment for good reason. An eligible executive
officer will have good reason to terminate employment if there is (1) a
material diminution in his or her duties or authority, (2) a change of his or
her place of employment by more than 50 miles or (3) a reduction in his or her
salary or bonus opportunity. The severance plan provides that an executive
officer's good faith determination of whether there has been a material
diminution in his or her duties or authority is determinative.
Upon a qualifying termination, a participant who has in excess of 20 years
of service with United Television will be entitled to receive a lump sum cash
severance payment equal to three times the sum of his or her (1) then current
base salary (without regard to any decrease in such salary constituting good
reason) and (2) average bonus received over the three years prior to the change
of control of Chris-Craft (or the three years prior to the year in which his or
her qualifying termination occurs). Upon a qualifying termination, a
participant who has fewer than 20 years of service but more than 15 years of
service will be entitled to receive a lump sum cash severance payment equal to
two and one-half times the sum of (1) and (2) above. Messrs. Lindsey and Muir
each has in excess of 20 years of service with United Television and Ms.
Barnett has 17 years of service with United Television. If a qualifying
termination were to occur on December 31, 2001, based on calculations as of the
date of this joint proxy statement/prospectus, Messrs. Lindsey and Muir and Ms.
Barnett would be entitled to receive lump sum cash severance payments of
approximately $1,117,000, $700,000, and $892,000, respectively.
Each eligible executive officer will also be entitled to receive continued
group health and life insurance benefits following a qualifying termination. A
participant who has in excess of 20 years of service will be entitled to 36
months of welfare benefits continuation and a participant with less than 20
years of service but greater than 15 years of service will be entitled to 30
months of welfare benefits continuation.
In addition, the severance plan provides that, upon a qualifying
termination, any stock options a participant then holds under any Chris-Craft
or United Television stock option plan will immediately become fully vested and
exercisable. Messrs. Lindsey and Muir and Ms. Barnett hold 6,200, 3,800 and
6,000 unvested United Television options, respectively, each with an exercise
price of $101.50. These options and the exercise price of such options will be
converted in the United Television merger as described under "Summary of the
Transaction Documents--The United Television Merger Agreement--Stock Options"
on page [ . ].
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SUMMARY OF THE TRANSACTION DOCUMENTS
The Chris-Craft Merger Agreement
The following summary describes the material terms of the Chris-Craft merger
agreement. We urge you to read carefully the complete Chris-Craft merger
agreement, to which the following is subject, a copy of which is attached as
Annex A to this joint proxy statement/prospectus and is incorporated herein by
reference.
Form of Merger
The Chris-Craft merger is structured initially as a forward merger. However,
in the event of a restructuring trigger (described below) the merger will be
restructured as a reverse merger.
The Forward Merger. If the Chris-Craft merger is effected as a forward
merger, Chris-Craft will merge into News Publishing, a subsidiary of News
Corporation, with News Publishing continuing as the surviving corporation in
the merger.
Restructuring. In the event a restructuring trigger has occurred and has not
been cured prior to the effective time of the Chris-Craft merger, the merger
will be restructured as a reverse merger. A restructuring trigger is defined in
the Chris-Craft merger agreement as either a ruling failure (described below)
or an FCC failure (described below).
. A "ruling failure" will occur if (within various time periods specified
in the merger agreement):
. News Corporation and Chris-Craft do not receive a private letter
ruling from the IRS to the effect that the forward merger will satisfy
the continuity of business enterprise requirement contained in
Treasury Regulations section 1.368-1(d);
. the IRS indicates to the parties that it is not likely to grant such a
ruling; or
. tax counsel to either News Corporation or Chris-Craft indicates that
it will be unable to deliver the tax opinion which is required as a
condition to effecting a forward merger.
. An "FCC failure" will occur if (within various time periods specified in
the merger agreement):
. the FCC does not consent to the assignment or transfer of control of
the FCC licenses (including the transfer of applicable authorizations,
licenses, permits and other FCC approvals) to Fox Television Holdings
or one of its subsidiaries, in the manner contemplated by the merger
agreement; or
. the FCC indicates to the parties that it will not so consent.
The Reverse Merger. If the merger is effected as a reverse merger, a wholly-
owned subsidiary of Fox Entertainment Group will merge with and into Chris-
Craft, and Chris-Craft will be the surviving corporation following the merger.
Closing Matters
Closing. Chris-Craft and News Corporation will announce the anticipated date
of the closing of the forward merger at least three but no more than five
business days prior to the proposed closing date. In both the forward and
reverse merger structures, unless the parties otherwise agree, the closing will
not take place earlier than the second business day following the day on which
all the conditions to closing are met (except for specified conditions relating
to compliance and representations and warranties, which may be met as of the
closing date).
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Effective Time. On the closing date, the merger will be effective upon
filing a certificate of merger with the Secretary of State of the State of
Delaware. The effective time of the merger is the time the certificate of
merger is filed with the Secretary of State of the State of Delaware or such
other date and time as Chris-Craft and News Corporation specify in the
certificate of merger.
Order of Mergers
If all of the conditions to closing the Chris-Craft merger and the BHC
merger are satisfied or waived, the mergers will occur in order such that the
BHC merger will occur after the Chris-Craft merger. If the conditions to
closing the United Television merger are satisfied or waived, the United
Television merger will occur after the BHC merger.
Merger Consideration
The consideration to be received by Chris-Craft stockholders in the Chris-
Craft merger depends on whether the merger is effected as a forward merger or a
reverse merger and is described below.
. In both the forward merger and the reverse merger, shares of convertible
preferred stock of Chris-Craft will be treated as if they had been fully
converted into shares of common stock of Chris-Craft immediately prior to
the merger.
. In both the forward merger and the reverse merger, the form of Preferred
ADSs to be issued are American depositary shares of News Corporation,
which are traded on the New York Stock Exchange under the symbol "NWS.A".
Each Preferred ADS represents four Preferred Ordinary Shares of News
Corporation, which are traded on the Australian Stock Exchange under the
symbol "NCPDP". For a description of the Preferred ADSs, see "Description
of News Corporation Capital Stock" beginning on page [ . ].
. In both the forward merger and the reverse merger, you will receive cash
in lieu of any fractional Preferred ADSs. For more information about
fractional shares, see "--No Fractional Shares" on page [ . ].
Forward Merger Consideration
If the merger is effected as a forward merger, Chris-Craft stockholders will
have the right, with respect to each of their Chris-Craft shares, to make one
of the following elections and to receive the consideration indicated below,
subject to proration and adjustment as described below.
<TABLE>
<CAPTION>
Consideration to be Received per Chris-Craft Common
Type of Election Share
---------------- ---------------------------------------------------
<C> <S>
. Mixed Election...... $34 in cash (or $35 if the merger is completed after
August 13, 2001) and 1.1591 Preferred ADSs
. All Cash Election... An amount in cash equivalent in value to the per
share consideration received by a stockholder who
made a mixed election (determined in the manner
described below)
. All Stock Election.. A number of Preferred ADSs equivalent in value to the
per share consideration received by a stockholder who
made a mixed election (determined in the manner
described below)
</TABLE>
The consideration to be paid for all stockholders who make all cash or all
stock elections cannot be determined until the close of trading on the business
day immediately prior to the closing of the merger. We intend to announce these
amounts when known.
Any Chris-Craft stockholder who does not make an election or otherwise
indicates no preference in his or her form of election will be deemed to have
made a non-election and will receive cash and/or stock
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based on what is available after giving effect to the elections made by other
stockholders, as well as the proration and adjustment described below. In
addition, Chris-Craft stockholders may specify different elections with respect
to different lots of their shares (for example, a stockholder with 100 shares
could make a mixed election with respect to 25 shares, an all cash election
with respect to 50 shares and an all stock election with respect to the
remaining 25 shares).
Mixed Election. The number of Preferred ADSs and the amount of cash to be
paid to stockholders who make mixed elections (unlike all cash elections and
all stock elections) will not be subject to proration, other than adjustment in
specified circumstances for tax purposes and to avoid dilution. For information
about adjustment in specific circumstances for tax purposes and to avoid
dilution, see "--Adjustment to Preserve Tax Treatment of Forward Merger" and
"--Anti-dilution Adjustments to Merger Consideration" on pages [ . ] and [ . ].
All Cash Election. Each Chris-Craft stockholder who makes a valid all cash
election will have the right to receive in exchange for each share of Chris-
Craft stock an amount in cash equivalent in value (as of the closing date of
the merger) to the value of the cash and Preferred ADSs received by a
stockholder who made a mixed election. The value of the cash to be received per
share in a valid all cash election is determined using a formula contained in
the merger agreement, which is summarized below. The formula contained in the
merger agreement is more complex than the computation method we used in the
examples contained under "Summary--What You Will Receive in the Mergers"
beginning on page [ . ]; however, in both cases, substantially the same result
is obtained, except for differences due to rounding.
The Chris-Craft merger agreement provides that each Chris-Craft stockholder
who makes a valid all cash election will have the right to receive, in exchange
for each share of Chris-Craft stock, an amount in cash equal to the "per share
amount".
The "per share amount" is the amount obtained by dividing the "closing
transaction value" by the number of "exchangeable shares".
. The "closing transaction value" is the dollar amount of the sum of (A)
the "aggregate cash amount" and (B) the product of the "aggregate buyer
share amount" and the "closing buyer share value".
. The "aggregate cash amount" is:
(1) the amount obtained by multiplying the number of shares of Chris-
Craft stock issued and outstanding immediately prior to the
effective time of the merger, less any shares cancelled in the
merger, by $34 (unless the effective time of the merger occurs
after August 13, 2001, in which case the amount will be $35), less
(2) the amount of cash to be paid in respect of shares of Chris-Craft
stock for which the holders have made mixed elections (other than
dissenting shares) (as described below).
. The "aggregate buyer share amount" is:
(1) 60% of the product of the amount obtained by multiplying the number
of shares of Chris-Craft stock issued and outstanding immediately
prior to the effective time of the merger, less any shares
cancelled in the merger, by 1.9318, less
(2) the number of Preferred ADSs to be issued in respect of shares of
Chris-Craft stock for which the holders have made mixed elections
(other than dissenting shares).
. The "closing buyer share value" is the volume weighted average trading
price for all trades of Preferred ADSs reported on the NYSE for each of
the five trading days preceding, but not including, the closing date of
the merger, unless an earlier date is required to comply with SEC
rules.
. The "exchangeable shares" are the shares of Chris-Craft stock issued and
outstanding immediately prior to the effective time of the merger, less
any shares to be cancelled in the merger (such as treasury stock) or
shares for which the holders have made mixed elections (other than
dissenting shares).
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. The "dissenting shares", for purposes of these and certain other
computations, are shares of Chris-Craft stock for which the holder has
taken all the necessary steps required to be taken by the applicable date
to exercise his or her appraisal rights under Delaware law. For more
information about appraisal rights, see "Appraisal Rights" on page [ . ].
All Stock Election. Each Chris-Craft stockholder who makes a valid all stock
election will receive in exchange for each share of Chris-Craft stock a number
of Preferred ADSs equivalent in value (as of the closing date of the merger) to
the value of the cash and Preferred ADSs received by a stockholder who made a
mixed election. The value of the Preferred ADSs to be received is determined
using a formula contained in the merger agreement, which is summarized below.
The formula contained in the merger agreement is more complex than the
computation method we used in the examples contained under "Summary--What You
Will Receive in the Mergers" beginning on page [ . ]; however, in both cases,
substantially the same result is obtained.
The Chris-Craft merger agreement provides that each Chris-Craft stockholder
who makes a valid all stock election will receive, in exchange for each share
of Chris-Craft stock, a number of Preferred ADSs equal to the "exchange ratio".
The "exchange ratio" is defined in the merger agreement as the number of
Preferred ADSs obtained by dividing the per share amount by the closing buyer
share value (each of which is described above).
Non-Election Shares. Chris-Craft stockholders who indicate that they have no
preference as to whether they receive cash or Preferred ADSs in the merger, and
Chris-Craft stockholders who do not make a valid election, will be deemed to
have made a "non-election". Stockholders making a non-election may be paid in
cash, Preferred ADSs or a mixture of cash and Preferred ADSs depending on, and
after giving effect to, the number of mixed elections, all cash elections and
all stock elections that have been made by other Chris-Craft stockholders
making elections using the proration adjustment described below.
Proration. The total number of Preferred ADSs that will be issued and the
total amount of cash that will be paid in the Chris-Craft merger is 1.15908 and
$34 (or $35 if the merger is completed after August 13, 2001), respectively,
multiplied by the total number of Chris-Craft shares outstanding immediately
prior to the completion of the Chris-Craft merger. Therefore, the all cash and
all stock elections are subject to proration to preserve these limitations on
the amount of cash to be paid and number of Preferred ADSs to be issued in the
Chris-Craft merger.
As a result, even if you make the all cash election or all stock election,
you may nevertheless receive a mix of cash and stock. Stockholders who make the
mixed election will not be subject to proration.
Proration if Too Much Cash is Elected. Preferred ADSs may be issued to
stockholders who make all cash elections if the all-cash election is
oversubscribed. We describe below how the proration mechanism will be used.
The maximum number of shares of Chris-Craft common stock that may be
converted into the right to receive cash in the merger (other than through
mixed elections or dissenting shares) is equal to the "all cash election
number".
The "all cash election number" is computed by dividing the aggregate cash
amount (as described above) by the per share amount (as described above) and
then subtracting the number of dissenting shares, if any.
If the all-cash election is oversubscribed, then Chris-Craft stockholders
making all cash elections will receive a combination of cash and Preferred ADSs
equal to the following for each share of Chris-Craft stock:
. an amount in cash equal to the product of (1) the per share amount (as
described above) and (2) the "cash fraction" (described below); and
. a number of Preferred ADSs equal to the product of (1) the exchange ratio
(as described above) and (2) a fraction equal to one minus the cash
fraction.
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In addition, if the all cash election is oversubscribed, stockholders making
all stock elections or making (or deemed to be making) non-elections for any of
their shares of Chris-Craft stock will receive Preferred ADSs for each of these
shares.
The "cash fraction" is a fraction with (1) a numerator equal to the all cash
election number and (2) a denominator equal to the total number of shares of
Chris-Craft common stock for which an all cash election has been made (other
than dissenting shares).
Proration if Too Much Stock is Elected. Cash may be paid to stockholders who
make all stock elections if the all stock election is oversubscribed. We
describe below how the proration mechanism will be used.
The maximum number of shares of Chris-Craft common stock that may be
converted into Preferred ADSs in the merger (other than through mixed elections
(other than dissenting shares)) is equal to the "stock election number".
The "stock election number" is computed by taking the number of shares of
Chris-Craft stock issued and outstanding immediately prior to the effective
time of the merger and subtracting from that amount (1) the all cash election
number (as described above), (2) any cancelled or dissenting shares and (3) any
shares for which the holders have made mixed elections (other than dissenting
shares).
If the all stock election is oversubscribed, then Chris-Craft stockholders
making an all stock election will receive a combination of cash and Preferred
ADSs equal to the following for each share of Chris-Craft stock:
. a number of Preferred ADSs equal to the product of (1) the exchange ratio
(as described above) and (2) the "stock fraction" (described below), and
. an amount in cash equal to the product of (1) the per share amount (as
described above) and (2) a fraction equal to one minus the stock
fraction.
In addition, if the all stock election is oversubscribed, stockholders
making all cash elections or making (or deemed to be making) non-elections for
any of their shares of Chris-Craft stock will receive cash for each of these
shares.
The "stock fraction" is a fraction with (1) a numerator equal to the stock
election number and (2) a denominator equal to the total number of shares of
Chris-Craft common stock for which a stock election has been made (other than
dissenting shares).
Proration of Non-Election Share Consideration. As described above, if too
many stockholders make all cash elections, stockholders making (or deemed to be
making) non-elections will receive only Preferred ADSs and if too many
stockholders make all stock elections, stockholders making (or deemed to be
making) non-elections will receive only cash. If both the all cash election and
all stock election are undersubscribed (after giving effect to all mixed
elections), the merger consideration received by stockholders making (or deemed
to be making) non-elections will be determined in accordance with the following
mechanism.
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If the aggregate number of shares of Chris-Craft stock covered by all cash
elections does not exceed the all cash election number (as described above) and
the number of shares of Chris-Craft stock covered by all stock elections does
not exceed the stock election number (described above), then Chris-Craft
stockholders having made (or deemed to have made) non-elections will receive
the following for each share of Chris-Craft stock:
. an amount in cash (if any) equal to the product of (1) the per share
amount (as described above) and (2) the "non-election fraction"
(described below); and
. a number of Preferred ADSs (if any) equal to the product of (1) the
exchange ratio (as described above) and (2) a fraction equal to one minus
the non-election fraction.
. The "non-election fraction" is a fraction with (1) a numerator equal to
(A) the all cash election number (as described above under "Proration
if Too Much Cash is Elected" on page [ . ]) less (B) the total number
of shares of Chris-Craft stock for which an all cash election has been
made (other than dissenting shares), and (2) a denominator equal to (A)
the number of exchangeable shares (as described above) less (B) any
dissenting shares and less (C) the total number of shares of Chris-
Craft stock for which either an all cash election or an all stock
election has been made (other than dissenting shares).
Reverse Merger Consideration
If the transaction is effected as a reverse merger, each Chris-Craft share
will be converted into $36 in cash (unless the effective time of the merger
occurs after August 13, 2001, in which event the amount will be $37) and 1.2273
Preferred ADSs. Unlike the forward merger, Chris-Craft stockholders have no
right to make elections in the reverse merger and, except for anti-dilution
protection, these amounts generally are not subject to adjustment.
Stock Options
Stock options for the purchase of Chris-Craft stock will be converted into
options to purchase Preferred ADSs. Each outstanding unexpired and unexercised
option to purchase shares of common stock of Chris-Craft will be automatically
converted at the effective time of the merger into an option to purchase a
number of Preferred ADSs equal to the number of shares of Chris-Craft common
stock that could have been purchased under the Chris-Craft option multiplied by
either (1) the exchange ratio (as described above) in the case of the forward
merger or (2) 2.0455 in the case of the reverse merger, in each case at a price
per Preferred ADS equal to the per-share option exercise price specified in the
Chris-Craft option divided by the exchange ratio in the case of the forward
merger and by 2.0455 in the case of the reverse merger. The substitute options
will be subject to the same terms and conditions as were applicable to the
Chris-Craft options, except as mandated by the requirements of the ASX or
Australian law. After the effective time of the merger, all references to
Chris-Craft in Chris-Craft's stock option agreements will be deemed to refer to
News Corporation.
News Corporation has agreed to file a Form S-8 or other appropriate
registration statement with the SEC covering the Preferred ADSs subject to the
substituted options, to the extent a registration is required under applicable
law, within two business days after the effective time of the merger and will
use its reasonable best efforts to obtain and maintain the effectiveness of the
registration statement.
Adjustment to Preserve Tax Treatment of Forward Merger
In the event that the closing price of Preferred ADSs on the NYSE on the
trading day immediately preceding the date of the closing is such that the
aggregate amount of cash paid as merger consideration exceeds 55% of the
combined value of all of the cash and the Preferred ADSs to be paid in the
merger, then, in order for the forward merger to qualify as a tax-free
reorganization, the amount of cash paid to Chris-Craft stockholders making all
cash elections and, in some circumstances, the amount of cash paid to Chris-
Craft
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stockholders making mixed elections may be adjusted so that, in lieu of cash,
these stockholders will receive Preferred ADSs in the amount of the adjustment.
To effect the adjustment, the merger agreement provides that if the "cash
amount" (described below) exceeds 55% of the total consideration, the
components of the merger consideration will be modified as follows:
. first, in the case of shares of Chris-Craft stock for which an all cash
election has been made, by reducing the cash portion of the merger
consideration by the minimum amount necessary to avoid this result, but
in no event below the amount of cash payable in exchange for shares for
which a mixed election has been made, and paying in lieu of this cash, a
number of Preferred ADSs equal to the amount of the per share cash
reduction divided by the closing price of Preferred ADSs referred to
above; and
. second, after making the above reduction, in the event that the cash
amount is still in excess of 55% of the total consideration to be paid in
the merger, by reducing the cash payable in exchange for shares of Chris-
Craft stock for which all cash elections or mixed elections have been
made to the extent necessary to avoid this result and paying, in lieu of
this cash, a number of Preferred ADSs equal to the amount of per share
cash reduction divided by the closing price of Preferred ADSs referred to
above.
The "cash amount" is defined in the merger agreement as the sum of (1) the
aggregate cash amount (as described above) and (2) the product of (A) $34 (or,
if the effective time of the merger occurs after August 13, 2001, $35) and (B)
the number of shares of Chris-Craft stock for which a mixed election has been
made.
The "total consideration" is defined in the merger agreement as the sum of
(1) the cash amount and (2) the product of (A) the closing price of Preferred
ADSs referred to above, (B) 1.9318 and (C) 60% of the number of shares of
Chris-Craft stock outstanding immediately prior to the effective time of the
merger (less any cancelled shares).
In a forward merger, if either Squadron Ellenoff or Skadden is unable to
render an opinion that the receipt of Preferred ADSs will be tax-free for U.S.
federal income tax purposes, News Corporation will make adjustments similar to
those described above, to the extent necessary, so that each tax advisor is
able to render its tax opinion.
Anti-dilution Adjustments to Merger Consideration
If, before the merger becomes effective, News Corporation declares or
effects a stock split, stock or cash dividend (other than ordinary cash
dividends declared and paid consistent with past practice) or other
reclassification, acquisition, exchange or distribution with respect to the
Preferred ADSs, there will be an appropriate adjustment to the merger
consideration unless such adjustment would:
. in a forward merger, prevent either Skadden or Squadron Ellenoff from
delivering an opinion that the merger will be a tax free reorganization;
. create a meaningful risk that the consideration paid in respect of the
adjustment would be taxable to or have an adverse tax consequence to
Chris-Craft stockholders; or
. change the tax treatment of the event giving rise to the adjustment.
If the adjustment would have any of the above consequences, News Corporation
will adjust the merger consideration in an appropriate manner:
. to convey value to the Chris-Craft stockholders in an amount equal to the
anti-dilution adjustment;
. in the case of a forward merger, to permit the tax opinions to be
rendered; and
. if Chris-Craft requests, to avoid the adverse tax consequences to holders
of Chris-Craft shares.
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Dividends
Chris-Craft stockholders will not have the right to receive any dividends or
other distributions payable by News Corporation with respect to the Preferred
ADSs unless and until they exchange their Chris-Craft stock certificates for
Preferred ADSs. After delivering their Chris-Craft stock certificates to the
exchange agent, those stockholders will receive, subject to applicable laws,
accumulated dividends and distributions with a record date after the effective
time of the merger, without interest.
No Fractional Shares
No fractional Preferred ADSs will be issued. In addition, no dividend or
other distribution of Preferred ADSs will relate to any fractional Preferred
ADSs, and no fractional Preferred ADSs will entitle the holder to any voting or
other rights of a holder of Preferred ADSs.
Chris-Craft stockholders otherwise entitled to fractional Preferred ADSs
will instead receive a cash payment equal to the amount of the stockholder's
proportionate interest in the net proceeds from the sale by the exchange agent,
on behalf of all Chris-Craft stockholders, of the aggregate fractions of
Preferred ADSs which would otherwise be issued in the merger, without interest.
No Interest
No interest will be paid on any portion of the merger consideration.
Withholding
News Corporation will be entitled to deduct and withhold from the merger
consideration payable to any stockholder the amounts it is required to deduct
and withhold under federal, state, local or foreign tax law. If News
Corporation withholds any amounts, these amounts will be treated for all
purposes of the merger as having been paid to the stockholders from whom they
were withheld.
Exchange of Certificates; Elections as to Form of Consideration
Exchange agent. News Corporation has selected [ . ] as exchange agent. The
exchange agent will exchange certificates representing shares of Chris-Craft
stock for merger consideration to be received in the merger. At the effective
time, News Corporation will:
. deposit with the exchange agent cash to the extent it constitutes merger
consideration; and
. deposit certificates representing Preferred Ordinary Shares with its
custodian, and instruct Citibank, N.A., as depositary under a depositary
agreement, to deposit the Preferred ADSs, each representing four fully
paid and non-assessable shares of Preferred Ordinary Shares, to be
exchanged as merger consideration in the merger with the exchange agent
for the benefit of holders exchanging Chris-Craft shares in the merger.
The Preferred Ordinary Shares underlying the Preferred ADSs to be issued as
consideration in the merger will rank pari passu with all of the Preferred
Ordinary Shares. The Preferred Ordinary Shares will receive the same dividend
entitlement of any previously issued Preferred Ordinary Shares outstanding as
of the date of the effective time of the merger.
Letter of transmittal and form of election. The merger agreement provides
that concurrent with the mailing of this joint proxy statement/prospectus, the
companies will mail to each stockholder a letter of transmittal that
stockholders must properly complete and deliver to the exchange agent with the
certificates they are surrendering and a form of election with instructions for
making the mixed election, all cash election or all stock election in a forward
merger. If a stockholder cannot deliver his or her stock certificates to the
exchange agent by the election deadline described below, a stockholder may
deliver an appropriate guarantee of delivery
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promising to deliver his or her stock certificates, as described in the letter
of transmittal and form of election, so long as (1) the guarantee of delivery
is from a firm which is a member of the NYSE or another registered national
securities exchange or a commercial bank or trust company having an office or
correspondent in the United States and (2) the actual stock certificates are in
fact delivered to the exchange agent within five NYSE trading days after the
election deadline.
The companies will use their reasonable best efforts to mail the letter of
transmittal and form of election to each holder who is a holder on the record
date for the special meeting or becomes a holder during the period between the
record date and seven calendar days prior to the effective time of the merger.
The companies will use their reasonable best efforts to make the letter of
transmittal and form of election available to all holders who become holders
subsequent to the seventh calendar day prior to the effective time of the
merger up until 5:00 pm New York City time on the last business day prior to
the effective time of the merger.
Holders of Chris-Craft stock who wish to elect the type of merger
consideration they will receive in the event of a forward merger should
carefully review and follow the instructions set forth in the letter of
transmittal and form of election. The form of election, accompanied by the
certificates to be exchanged or a pledge to deliver such certificates after the
closing, must be received by the exchange agent prior to the election deadline,
which is 10:00 am New York City time on the day of the closing of the merger.
News Corporation has the discretion to review the forms of election to
determine whether an election has been validly made.
An election may be revoked, but only by written notice received by the
exchange agent prior to the election deadline. Upon any revocation, unless a
duly completed letter of transmittal and form of election, accompanied by a
certificate, is thereafter submitted, such shares shall be deemed to be non-
election shares. If a letter of transmittal and form of election is revoked, or
the merger agreement is terminated, and any certificates have been transmitted
to the exchange agent, the exchange agent will promptly return those
certificates, without charge, to the person who submitted those certificates.
Shares of Chris-Craft stock as to which the holder has not made a valid
election prior to the election deadline, including as a result of revocation,
will be deemed non-electing shares. If News Corporation or the exchange agent
determines that any purported mixed election, all cash election, or all stock
election was not properly made, the purported election will be deemed to be of
no force or effect and the holder making the purported election will be deemed
to have made a non-election for these purposes.
News Corporation will have the discretion (which it may delegate in whole or
in part to the exchange agent) to determine whether letters of transmittal and
forms of election have been properly completed, signed and submitted or revoked
and to disregard immaterial defects in letters of transmittal and forms of
election. The decision of News Corporation (or the exchange agent) in such
matters, absent manifest error, shall be conclusive and binding. Neither News
Corporation nor the exchange agent will be under any obligation to notify any
person of any defect in a letter of transmittal and form of election submitted
to the exchange agent. The exchange agent and News Corporation shall also make
all computations related to elections, proration and adjustment and all such
computations shall be conclusive and binding on stockholders absent manifest
error. In addition, News Corporation reserves the right not to recalculate the
effects of proration and adjustment if, subsequent to such calculation,
stockholders withdraw any demands for dissenters' rights they may have made.
Soon after the completion of the Chris-Craft merger, the exchange agent will
send another letter of transmittal to each person who was a stockholder at the
effective time who has not previously and properly surrendered shares of Chris-
Craft stock to the exchange agent. This mailing will contain instructions on
how to surrender shares of Chris-Craft stock (if these shares have not already
been surrendered) in exchange for the merger consideration the holder is
entitled to receive under the merger agreement.
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Dissenting Shares
The merger agreement provides that, notwithstanding other provisions
contained in the merger agreement, to the extent that stockholders are entitled
to appraisal rights under Section 262 of the Delaware General Corporation Law,
shares of stock issued and outstanding immediately prior to closing and held by
stockholders who have properly exercised and perfected their demand for
appraisal rights under Section 262 of the Delaware General Corporation Law
(i.e., dissenting shares) will not be converted into the right to receive the
merger consideration. Instead, the holders of dissenting shares will be
entitled to receive the consideration determined by Section 262 of the Delaware
General Corporation Law; provided, however, that if any stockholder fails to
perfect, effectively withdraws or loses his or her right to appraisal and
payment under Delaware law, that stockholder's shares will be deemed to have
been converted as of the closing date into the right to receive the merger
consideration, without any interest, and those shares will not be deemed to be
dissenting shares. For a discussion of appraisal rights, see "Appraisal Rights"
on page [ . ].
Officers and Directors; Articles and By-laws
If a forward merger occurs, the officers and directors of News Publishing
will continue as the officers and directors following the merger. Also, the
articles and by-laws of News Publishing will continue as the articles and by-
laws of News Publishing after the merger. If a reverse merger occurs, the board
of directors and officers of the wholly owned subsidiary of Fox Entertainment
Group formed for the purpose of effecting the merger will become the officers
and directors of Chris-Craft and the certificate of incorporation and by-laws
of Chris-Craft will be amended and restated to conform to the certificate and
by-laws of such subsidiary.
Representations and Warranties of Chris-Craft and News Corporation
In the merger agreement, News Corporation and Chris-Craft make
representations and warranties to each other about their respective companies
and their respective subsidiaries. The representations and warranties of News
Corporation and Chris-Craft are subject to exceptions for disclosures made by
each of the companies and the representations and warranties of Chris-Craft are
made subject to an exception for specified environmental litigation and other
proceedings to which Chris-Craft, Montrose Chemical Corporation of California
or specified subsidiaries of Chris-Craft is a party. News Corporation and
Chris-Craft make representations and warranties to each other regarding, among
other things, the following:
. their corporate organization, good standing and qualification to do
business;
. validity and effectiveness of their charter and by-laws;
. capitalization of their companies;
. the authorization, execution, delivery and performance and the
enforceability of the merger agreement and related matters;
. absence of material defaults or violations under their certificates of
incorporation and bylaws and certain other agreements and laws as a
result of the contemplated transactions, except as disclosed;
. except as disclosed, the absence of any requirement of consents,
including consents of third parties, approvals, filings or other
authorizations to enter into the merger agreement and consummate the
merger;
. possession and effectiveness of all permits and licenses and contracts
necessary to carry on business as currently conducted;
. the absence of material violations of laws or government orders;
. filings with the SEC and the accuracy and completeness of the information
contained in these filings;
. accuracy of financial statements included in filings with the SEC;
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. the absence of certain material changes in their respective businesses
since December 31, 1999;
. the absence of actions, facts, agreements, plans or other circumstances
that would be reasonably likely to prevent the merger from qualifying as
a reorganization within the meaning of section 368(a) of the Internal
Revenue Code; and
. their use of brokers.
Chris-Craft makes additional representations and warranties in the merger
agreement with respect to Chris-Craft and its subsidiaries, as applicable,
regarding the following matters, except as disclosed in the Chris-Craft merger
agreement:
. material compliance with applicable rules and regulations of the FCC, and
the absence of material proceedings before the FCC;
. absence of conflict with permits and material obligations;
. absence of defaults under material contracts and licenses;
. ownership by Chris-Craft of its subsidiaries;
. nonexistence of contracts or agreements that restrict the ability of
Chris-Craft or its subsidiaries from competing in any line of business or
with any person and engaging in any business in any geographic area;
. absence of material litigation;
. absence of facts or circumstances that would prevent the construction and
operation of DTV stations by the relevant deadline established by the
FCC;
. material compliance of employee benefit plans with applicable laws,
benefit obligations of Chris-Craft and its subsidiaries and the effect of
the merger on such plans, and the absence of proceedings regarding such
plans;
. absence of pending labor actions and material compliance with labor
agreements;
. absence of knowingly false statements made by certain persons with
respect to environmental matters and absence of material environmental
liabilities;
. environmental matters;
. ownership of intellectual property;
. material compliance with applicable tax laws;
. title to properties and assets;
. Year 2000 compliance;
. opinion of Allen & Company, financial advisors to Chris-Craft;
. stockholder vote required to adopt the merger agreement;
. inapplicability of state anti-takeover provisions to the merger
agreement; and
. the capitalization of BHC and United Television.
News Corporation also makes representations and warranties in the merger
agreement with respect to News Corporation and its subsidiaries, as applicable,
regarding:
. authority of Fox Television Stations and a newly formed subsidiary of Fox
Entertainment Group to enter into the agreement under which Fox
Television Stations will operate the television stations acquired in the
merger as licensee;
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. conformity of Preferred ADSs to be issued as merger consideration in all
material respects to the description of such shares set forth in the
proxy statement dated July 10, 1997 of Heritage Media Corporation;
. due authorization, execution and delivery of the deposit agreement under
which News Corporation will deposit its Preferred ADSs with Citibank, NA,
acting as depositary;
. compliance with all applicable ASX filing requirements and accuracy and
completeness of such ASX filings;
. accuracy of financial statements contained in ASX filings;
. no conduct of business prior to the effective time of any subsidiary
formed for the purpose of merging into Chris-Craft, BHC or United
Television; and
. ownership of at least 80% of the voting and nonvoting stock of News
Publishing.
All representations and warranties made in the merger agreement expire at
the closing of the merger.
Conduct of Business by Chris-Craft
Chris-Craft has agreed that, until the merger is effected or the merger
agreement is terminated, it will not, subject to various exceptions and
fiduciary obligations to BHC, United Television and the respective boards of
directors of each, take specific actions without the consent of News
Corporation, unless expressly permitted by the merger agreement or in the BHC
or United Television merger agreements. Chris-Craft has agreed to the following
with respect to itself and, where applicable, its subsidiaries:
. Conduct of Operations. To conduct its businesses in the ordinary course
and in a manner consistent with past practice, including preserving
intact its business organizations and relationships.
. Governing Documents. Not to amend its charter or by-laws in any material
respect.
. Issuance of Stock. Not to issue, sell or otherwise dispose of shares of
its capital stock, except for the issuance of common stock upon the
exercise of outstanding options.
. Properties and Assets. Not to sell, encumber or otherwise dispose of any
assets except for sales of marketable securities and investment assets
for their fair value and except for sales of other assets in the ordinary
course of business consistent with past practice not in excess of
specified amounts.
. Dividends and Distributions. Not to declare, make or pay any dividend or
other distribution (other than regular cash dividends in respect of
Chris-Craft's convertible preferred stock or the prior preferred stock or
cash dividends payable by any wholly owned subsidiary with respect to
ordinary course dividends, including dividends designated as special
dividends, in a manner consistent with past practice). Chris-Craft may,
however, accept funds advanced by its subsidiaries on an as-needed basis,
including, without limitation, to pay merger expenses under short term
loans on arms-length terms, which loans must be repaid by Chris-Craft if
the Chris-Craft merger is not consummated no later than 30 days after
consummation of the BHC merger.
. Changes to Capital Stock. Not to reclassify, combine, split, subdivide or
redeem, purchase or otherwise acquire, directly or indirectly, any of its
or its subsidiaries' capital stock.
. Business Combinations; Assets; Indebtedness. Except in connection with
acquisitions or investments in the ordinary course of business consistent
with past practice and not in excess of specified amounts, not to (1)
invest in other companies or assets, or acquire any interest in any
broadcast radio or television station, daily English-language newspaper
or cable television system; or (2) incur any indebtedness except the
refinancing of existing indebtedness.
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. Material Contracts. Not to enter into or amend any material contracts
other than in the ordinary course of business and that would not be
reasonably likely to prevent or materially delay the consummation of the
merger.
. Capital Expenditures. Not to authorize any capital expenditures in excess
of specified amounts.
. Employee Compensation. Not to increase compensation to executive officers
or employees except as specified and except for special bonuses to reward
those employees whose efforts were instrumental to the successful
consummation of the merger. For additional information about special
bonuses, see "Interests of Certain Directors and Executive Officers of
the Companies in the Mergers--Bonus Pool" on page [ . ].
. Employee Benefits. Not to grant any severance or termination pay to any
director or executive officer or employee or take action to accelerate
any rights or benefits under any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement.
. Accounting. Not to change its accounting practices.
. New Contracts. Not to enter into any contract, agreement, lease, license,
permit, franchise or other instrument or obligation which, if in
existence and known prior to the execution of the merger agreement, would
have resulted in it breaching certain representation and warranties.
. Litigation; Liabilities. Not to make any material settlements or
compromises in connection with any material arbitration, action, suit,
investigation or proceeding (other than those related to tax matters), or
in connection with the merger or settle or discharge any material
liability except as specified.
. Related Party Agreements. Not to amend or waive any right under or enter
into any agreement with any affiliate of Chris-Craft or with any
stockholder or any of the stockholders' affiliates.
. Affiliation Agreements. Not to materially change or terminate any network
affiliation agreement, retransmission consent agreement or, subject to
specified exceptions, any agreement licensing or creating any obligations
with respect to the use of the digital data stream of any digital
television station.
. Licenses and Syndication Agreements. Not to enter into, amend or
terminate any film or program license or syndication agreement involving
aggregate payments beyond specified amounts.
. General Prohibition. Not to enter into or publicly announce an intention
to enter into any contract, agreement, commitment or arrangement to do
any of the items set forth above.
. Redemption of Prior Preferred Stock. To take all actions required under
its Restated Certificate of Incorporation to effectuate redemption of its
Prior Preferred Stock prior to the Chris-Craft special meeting record
date.
. FCC Matters. To:
. use its reasonable best efforts to comply with all applicable material
requirements of the FCC;
. deliver promptly to News Corporation copies of reports filed with the
FCC;
. notify promptly News Corporation of any inquiry, investigation or
proceeding initiated by the FCC;
. not make or revoke any material election with the FCC; and
. use its reasonable best efforts to take all actions necessary to
complete construction and initial operation of its digital television
stations.
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. Taxes. To:
. timely file all tax returns required to be filed by it, and prepare the
returns in a manner consistent with past practice;
. timely pay all taxes due;
. accrue a reserve in its books and records and financial statements in
accordance with past practice for all taxes payable by it for which a
tax return is not due prior to the time the merger is effective;
. promptly notify News Corporation of any tax or material suit, action or
audit with respect to it or any of its subsidiaries in respect of any
tax matter; and
. not make or revoke any material tax election or adopt or change a
material tax accounting method.
Covenants of Chris-Craft and News Corporation
News Corporation and Chris-Craft have agreed as follows:
. Securities Filings. Each company has agreed to cooperate to file the SEC
documents necessary to complete the merger.
. Special Meeting of Chris-Craft. Chris-Craft has agreed to call and hold a
stockholders' meeting to vote upon the adoption of the merger agreement
and approval of the merger.
. Proxy Solicitation by Chris-Craft. Chris-Craft has agreed to solicit
proxies in favor of the adoption of the merger agreement and approval of
the merger, unless it determines, after receiving advice from independent
legal counsel, that failure to do so is required in order for its
directors to comply with their fiduciary duties under applicable law.
. Approvals of News Corporation. News Corporation has agreed to obtain, and
cause its subsidiaries to obtain, all stockholder and other approvals
necessary to consummate the merger and the other transactions
contemplated thereby.
. Regulatory Filings. Each company has agreed to promptly make all
governmental filings necessary under the HSR Act and to promptly make all
filings with or applications to the FCC that are necessary to consummate
the merger and otherwise use reasonable best efforts to consummate the
merger, and will do so in a manner designed to obtain regulatory
clearance and the satisfaction of these conditions as expeditiously as
reasonably possible. Each company has agreed to promptly take any and all
steps necessary to avoid or eliminate each and every impediment and
obtain all consents or waivers under any antitrust, competition or
communications or broadcast law that may be validly required by any
governmental authority, so as to enable the companies to close the merger
as expeditiously as reasonably possible, subject to various specified
limitations. News Corporation and Fox Television Holdings will have the
right to make all decisions concerning any divestiture commitments
necessary to comply with the multiple ownership rules (See "The Mergers--
Regulatory Matters Relating to the Mergers" on page [ . ]), although they
have agreed to regularly consult with, and consider the views of, Chris-
Craft in good faith. News Corporation and Fox Television Holdings have
also agreed not to seek a waiver of section 73.3555 of the FCC's rules,
except for a temporary waiver of subsections (b) and (e) of that section,
for a period not to exceed 12 months for television divestitures required
to obtain FCC consent, and with respect to subsection (d) of that
section, in the application to the FCC requesting such consent, News
Corporation has agreed to maintain that no waiver is required to permit
it to own a newspaper and two television stations in the New York market,
and to request, in the alternative, if that position is rejected or a
permanent waiver is not issued by the FCC, a temporary waiver to hold a
newspaper and two television stations for a period not to extend beyond
the date which is the later to occur of (1) 12 months from the closing
date, and (2) the conclusion of any then pending FCC rulemaking
proceeding regarding 47 CFR Section 73.35555 (d). The parties will not be
obligated to take actions in order to comply with conditions which are
"adverse conditions". "Adverse conditions" include (1) any requirement
that News Corporation or Fox Television Holdings divest any material
assets or accept any material limitation on any of their respective
material businesses, other than divestitures or operational
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limitations of broadcast assets (i.e. newspaper and television stations)
as required to comply with the multiple ownership rules or a final order
of an antitrust or other similar governmental authority; or (2) any
requirement (including any requirement under the multiple ownership rules
or a final order of an antitrust or other similar governmental authority)
that would require News Corporation, Fox Television Holdings, Chris-Craft,
BHC or United Television to divest, hold separate, accept any material
operational limitation with respect to, or waive any rights with respect
to any of their respective television assets in San Francisco or Los
Angeles.
. Consents. Each company will use reasonable best efforts to obtain any
third party consents necessary, proper or advisable to consummate the
merger.
. Access to Information; Confidentiality. Each company has agreed to
continue to allow the other company reasonable access to its corporate
records and has agreed to comply with the Confidentiality Agreement dated
September 16, 1999 between News Corporation and Chris-Craft, as amended.
. Notification. Each company has agreed to promptly notify the other
company of (1) any event that would likely cause any representation or
warranty to be untrue or inaccurate, or any covenant or condition not to
be complied with or satisfied, or the forward merger not to be
consummated, and (2) any failure to comply with or satisfy any covenant
or condition or agreement to be complied with or satisfied.
. Tax and FCC Matters. The companies have agreed to cooperate in the
preparation of and submission of filings necessary to obtain a favorable
ruling from the IRS with the respect to the tax treatment of the merger
and consent of the FCC. The forward merger is intended to constitute a
tax free plan of reorganization within the meaning of section 1.368-2(g)
of the income tax regulations promulgated under the Internal Revenue
Code, and the parties have agreed not to take any action which will
adversely affect this intended tax treatment. News Corporation and Chris-
Craft have agreed to deliver representation letters to Squadron Ellenoff,
tax counsel to News Corporation, and Skadden, tax counsel to Chris-Craft,
in connection with the proposed tax opinions of each such tax adviser and
in connection with the IRS ruling.
. Listing Applications. The companies have agreed to prepare and submit
promptly an application to the NYSE for the listing of the new Preferred
ADSs to be issued in the merger, and within two business days after the
date the merger is effective, prepare and submit an application to the
ASX for the listing of the Preferred Ordinary Shares that underlie the
Preferred ADSs.
. ASX Waiver. The companies will promptly seek the waiver of the Australian
Stock Exchange's Listing Rule 10.1 (or if not obtained, the approval of
News Corporation's stockholders). This waiver has been obtained.
. Public Announcements. The companies will consult with each other prior to
making any public announcements concerning the merger.
. Affiliates. Chris-Craft will notify News Corporation of all persons that
may be deemed affiliates of Chris-Craft under Rule 145 of the Securities
Act, and Chris-Craft will use its reasonable best efforts to obtain from
each affiliate a letter in which the affiliate agrees to comply with the
resale restrictions of Rules 144 and 145 under the Securities Act
following the merger.
. Comfort Letters. News Corporation will use reasonable best efforts to
deliver to Chris-Craft, and Chris-Craft will use reasonable best efforts
to deliver to News Corporation, two comfort letters in customary form,
from the companies' respective independent public accountants.
. Compliance with Merger and Voting Agreements. News Corporation has agreed
to comply with its obligations under the BHC merger agreement and the
United Television merger agreement, and Chris-Craft has agreed to comply
with its obligations under the voting and proxy agreement related to the
BHC merger, and has agreed to cause BHC to comply with its obligations
under the voting and proxy agreement related to the United Television
merger.
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. Solicitation of Key Employees. The companies will not solicit for
employment any current senior management level employees or any of the
three highest compensated on-air talent employees at each television
station of the other company.
Reorganization of television assets
News Corporation has agreed to effect specified transfers of the television
assets acquired from Chris-Craft in the mergers and to take other specified
actions in connection with these transfers. For a discussion of the proposed
transfers and related transactions, see "Related Transactions" on page [ . ].
No solicitation provision
Chris-Craft has agreed not to, directly or indirectly, through any officer,
director, agent or otherwise, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information), or take any other
action knowingly to facilitate, any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any "competing
transaction", which is defined in the merger agreement as any transaction,
other than the merger, that would result in a third party or its stockholders
acquiring more than 25% of the voting power of the Chris-Craft capital stock
then outstanding or more than 25% of the assets of Chris-Craft and its
subsidiaries, taken as a whole, or enter into or maintain or continue
discussions or negotiate with any person in furtherance of any related
inquiries or to obtain a competing transaction, or agree to or endorse any
competing transaction, or authorize any of the officers, directors or employees
of Chris-Craft or any agent or representative of Chris-Craft to take any of
these actions. Chris-Craft has agreed to notify News Corporation as promptly as
practicable of all the relevant material details relating to all inquiries and
proposals that Chris-Craft, or any officer, director, employee, agent or
representative, may receive relating to any of the foregoing matters.
Notwithstanding the foregoing, prior to the adoption of the merger agreement
by the stockholders of Chris-Craft, the board of directors of Chris-Craft is
not prohibited from:
. furnishing information to, or entering into and engaging in discussions
or negotiations with, any person that makes an unsolicited proposal that
the board of directors of Chris-Craft determines in good faith, after
consultation with Chris-Craft financial advisors and independent legal
counsel, can be reasonably expected to result in a "superior proposal",
which is defined in the merger agreement as any proposal that would
result in a third party acquiring, directly or indirectly, more than 50%
of the voting power of the outstanding Chris-Craft capital stock or all
or substantially all the assets of Chris-Craft and its subsidiaries,
taken as a whole, for consideration which the board of directors of
Chris-Craft determines in its good faith judgment to be more favorable to
Chris-Craft's stockholders than the merger with News Publishing (or a
subsidiary of News Corporation), provided that Chris-Craft must notify
News Corporation of its intention to provide information to, or enter
into negotiations with, a third party concerning a superior proposal,
inform News Corporation of the identity of the third party and the
material terms and conditions of any superior proposal and enter into a
confidentiality agreement with the third party; or
. complying with its disclosure and other obligations under applicable
laws.
Other employee arrangements
During the one year period commencing on the effective date of the merger,
News Corporation will provide employees and former employees of Chris-Craft and
its subsidiaries with employee benefits that are either substantially
comparable to the benefits provided to Chris-Craft employees as of the date of
the merger agreement, or substantially similar to those provided to employees
of News Corporation who are similarly situated.
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If the effective time occurs during the calendar year 2001, then Chris-Craft
employees who are employed by Chris-Craft immediately prior to the effective
time, and who are eligible by virtue of being a participant in the Chris-Craft
2001 Bonus Plan or by virtue of receiving an annual bonus in 2000 and being
eligible to receive an annual bonus for the year 2001, may receive a prorated
bonus for service in 2001. The process for determining the bonus for those
employees who remain employed on and after the effective date through December
31, 2001 will be determined in the discretion of News Corporation.
News Corporation will recognize service with Chris-Craft under News
Corporation's employee benefit plans for purposes of determining eligibility to
participate and vesting, but not for purposes of benefit accrual. This service
will also apply for purposes of satisfying any waiting periods, evidence of
insurability requirements, or the application of any preexisting condition
limitations. If Chris-Craft employees are transferred to a new health plan,
Chris-Craft employees will be given credit for amounts paid under a
corresponding health plan during the new health plan's year in which the Chris-
Craft employees are transferred for purposes of applying deductibles,
copayments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms of the new health plan. News Corporation will also
honor all vacation, personal and sick days accrued by Chris-Craft employees.
News Corporation will make required payments when due under all Chris-Craft
benefit plans maintained or contributed to by Chris-Craft or any of its
subsidiaries that are applicable with respect to any current or former employee
or director, including their beneficiaries, of Chris-Craft or any of its
subsidiaries. However, News Corporation may amend or terminate any Chris-Craft
benefit plan in accordance with its terms.
Prior to the effective time, Chris-Craft may amend the Chris-Craft/United
Television Stock Purchase Plan, the Chris-Craft Pension Plan and the Chris-
Craft Benefit Equalization Plan in specified respects relating to the merger.
Also prior to the effective time, Chris-Craft may cause a contribution to be
made to the Chris-Craft Profit Sharing Plan at the rate of 9% of each eligible
participant's compensation for such calendar year, or may terminate the Profit
Sharing Plan, as of the effective time.
News Corporation has agreed to guarantee the full and prompt payment of all
obligations of the surviving corporation under the Chris-Craft Benefit
Equalization Plan, Executive Deferred Income Plan, executive employment
agreements, and the employment agreement between Chris-Craft and its current
Chairman and CEO, Herbert J. Siegel (but only with respect to employees who
remain employed immediately prior to the effective time).
Chris-Craft and Herbert J. Siegel amended Mr. Siegel's employment agreement
on August 11, 2000, as described under "Interests of Certain Directors and
Executive Officers of the Companies in the Mergers--Chris-Craft Executive
Officers" on page [ . ]. No effect will be given to any of these amendments
from and after the consummation of the Chris-Craft merger since Mr. Siegel's
employment will be governed by the terms of a new employment agreement he is
expected to enter into with News Corporation.
Prior to the effective time, Chris-Craft may amend specified employment
agreements with executive officers to:
. clarify issues with respect to the timing and amount of bonuses;
. provide that in the event of a qualifying termination all outstanding
options held by the executive that were granted prior to August 13, 2000
become fully vested and exercisable;
. provide that in the event of a qualifying termination the executive is
entitled to additional payments for certain excise taxes (which payments
to all executives will not exceed $2,000,000 in the aggregate); and
. provide that in the event of a qualifying termination, the executive may
remain a consultant to News Corporation for the full duration of his or
her consulting term, to the extent the employment agreement provides for
consulting.
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Prior to the effective time, Chris-Craft has the discretion to award special
bonuses to reward employees whose efforts were instrumental to the successful
consummation of the merger, provided that the aggregate of such bonuses does
not exceed $10,000,000. For additional information about special bonuses, see
"Interests of Certain Directors and Executive Officers of the Companies in the
Merger--Bonus Pool" on page [ . ].
Indemnification; directors' and officers' insurance
Following the merger, the surviving corporation's certificate of
incorporation and by-laws will contain the indemnification provisions in favor
of officers and directors that are contained in Chris-Craft's current restated
certificate of incorporation and by-laws.
For six years following the merger the surviving corporation will maintain
directors' and officers' liability insurance covering those persons who are
currently covered by Chris-Craft's directors' and officers' liability insurance
policy on terms comparable to Chris-Craft's existing coverage. However, the
surviving corporation will not be required to expend in any one year an amount
in excess of 300% of the annual premiums currently paid by Chris-Craft for such
insurance. If the annual premiums of such insurance coverage exceed this
amount, News Corporation will only be obligated to obtain a policy with the
greatest coverage available for an annual cost not exceeding such amount.
News Corporation will cause the surviving corporation to indemnify to the
fullest extent permitted by law present and former officers, directors and
employees of Chris-Craft and other specified persons against various specified
indemnifiable claims, including against amounts paid in settlement of any
threatened, pending or completed claim based upon the fact that such person is
or was a director, officer, employee or stockholder of Chris-Craft or any of
its current or former subsidiaries.
Conditions to closing
The merger agreement contains certain conditions to the parties' obligations
to complete the merger. The parties will not be obligated to complete the
merger unless at or before the time the merger becomes effective:
. Stockholder Approval. The merger agreement has been adopted by the
affirmative vote of a majority of the votes entitled to be cast by
stockholders at the Chris-Craft stockholders' meeting, including the
holders of Chris-Craft convertible preferred stock, voting together as a
single class, and a majority of the votes entitled to be cast by holders
of Chris-Craft convertible preferred stock, voting as a separate class.
. Hart-Scott-Rodino Antitrust Improvements Act of 1976. Any applicable
waiting period under the HSR Act has terminated or expired.
. Legality. No governmental authority or court has entered an order or
taken other legal action making the merger illegal or otherwise
prohibiting its consummation.
. Registration Statement. The registration statement, of which this joint
proxy statement/prospectus forms a part, is declared effective and there
is no stop order to suspend the effectiveness of the registration
statement.
. FCC Consent. The FCC has consented to the assignment or to the transfer
of control of the FCC licenses of Chris-Craft and its subsidiaries to Fox
Television Holdings (or a wholly owned subsidiary of Fox Television
Holdings), including transfer of those authorizations, licenses, permits,
and other approvals, issued by the FCC, and used in the operation of the
Chris-Craft television stations.
. Authorizations. Both companies have obtained all other material
authorizations, consents, waivers, orders or approvals for the merger
required to be obtained from governmental authorities, and both companies
have made all required filings and notices with governmental authorities
prior to the consummation of the merger.
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. Listing of Shares. The shares of Preferred ADSs issuable to the Chris-
Craft's stockholders in the merger and to holders of Chris-Craft options
outstanding immediately prior to effective time are authorized for
listing on the NYSE, subject to official notice of issuance.
. Satisfaction/Waiver of Conditions. All conditions to all parties'
obligations to consummate the BHC and United Television mergers, except
completion of the Chris-Craft merger and, in the case of the United
Television merger, completion of the BHC merger, are satisfied or waived.
. Representations and Warranties. Each representation and warranty that is
qualified by materiality is true and correct as of the time the merger
becomes effective (other than those which speak as of a different date,
which must be true and correct as of that date), each representation and
warranty that is not so qualified is true and correct in all material
respects, all material agreements and covenants have been performed and
complied with, and each party has received from the other party a
certificate of the chief executive officer or chief financial officer
certifying to the foregoing.
In addition, News Corporation will not be obligated to complete the merger
unless:
. Affiliate Letter. News Corporation has received an executed copy of an
agreement substantially in the form of Exhibit A to the merger agreement
from each person named in the letter identifying all persons who may be
deemed affiliates of Chris-Craft under Rule 145 of the Securities Act.
. Consents and Orders. News Corporation has received satisfactory evidence
that all material consents, approvals, authorizations, qualifications and
orders of all governmental authorities legally required for the
consummation of the merger, and all other consents, approvals,
authorizations, qualifications and orders of all governmental authorities
or third parties required for the consummation of the merger have been
obtained.
. Prior Preferred Stock. The prior preferred stock of Chris-Craft has been
redeemed.
. Tax Matters. In the case of a forward merger, News Corporation has
received:
. an opinion from its tax counsel that the merger will qualify as a tax-
free reorganization under section 368 of the Internal Revenue Code, no
income, gain or loss will be recognized by News Corporation, News
Publishing and Chris-Craft as a result of the merger, and no income,
gain, or loss will be recognized by the holders of Chris-Craft
convertible preferred stock, common stock and the class B common stock
except to the extent such holders receive cash under the merger; and
. a private letter ruling from the IRS to the effect that the merger will
satisfy the continuity of business enterprise requirement described in
section 1.368-1(d) of the Treasury Regulations.
. Adverse Condition. No "adverse condition" exists in the FCC consent.
"Adverse Conditions" are discussed under the heading "Covenants of Chris-
Craft and News Corporation--Regulatory Filings" on page [ . ].
Chris-Craft will not be obligated to complete the merger unless:
. Tax Matters. In the case of a forward merger, Chris-Craft has received:
. an opinion from its tax counsel that the merger will qualify as a tax-
free reorganization under section 368 of the Internal Revenue Code, no
income, gain or loss will be recognized by News Corporation, News
Publishing and Chris-Craft as a result of the merger, and no income,
gain, or loss will be recognized by the holders of Chris-Craft
convertible preferred stock, common stock and class B common stock
except to the extent such holders receive cash under the merger; and
. a private letter ruling from the IRS to the effect that the merger will
satisfy the continuity of business enterprise requirement described in
section 1.368-1(d) of the Treasury Regulations.
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Termination
The merger agreement may be terminated and the merger abandoned at any time
prior to the effective time:
. by mutual written consent duly authorized by the boards of directors of
each of News Corporation and Chris-Craft;
. by either company, if the transaction is not completed on or prior to
November 13, 2001;
. by Chris-Craft, upon a breach of a representation, warranty, covenant or
agreement on the part of News Corporation or Fox Television Holdings set
forth in the merger agreement, such that a condition to the merger cannot
be satisfied prior to November 13, 2001;
. by News Corporation, upon breach of a representation, warranty, covenant
or agreement on the part of Chris-Craft set forth in the merger
agreement, such that a condition to the merger cannot be satisfied prior
to November 13, 2001;
. by either company, if a governmental authority has issued a final and
non-appealable order or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the merger;
. by either company, if the approval of the merger by the stockholders of
Chris-Craft required for the consummation of the merger has not been
obtained by reason of the failure to obtain the required vote at a duly
held stockholders' meeting; or
. by either company, if either the BHC merger agreement or the United
Television merger agreement has been terminated; provided that a party
will not have the right to terminate the merger agreement if its actions
or failure to act has prevented the consummation of either merger; and
provided further that this condition may not be enforced by Chris-Craft
because of the failure of BHC and/or United Television stockholders, as
the case may be, to approve their mergers at a duly held stockholders'
meeting called for such purpose.
None of the parties is required to pay a "termination" or "break-up" fee if
the merger agreement is terminated. Any party may, however, be liable to the
other parties in the event of any wilful breach of the merger agreement.
Amendment; Waiver
At any time before the merger becomes effective, the parties may amend or
supplement any of the terms of the merger agreement in writing, except that
following approval by the Chris-Craft stockholders, the parties may not make
any other change requiring stockholder approval without obtaining such
approval. The parties may extend the time for performance of any obligation,
waive any inaccuracy in any representation and warranty or other document
delivered under the merger agreement, or waive compliance with any condition or
agreement in the merger agreement. Any valid waiver must be in writing signed
by the party bound by the waiver.
Costs and Expenses
The parties will bear their own costs and expenses in connection with the
merger agreement and the contemplated transactions except that News Corporation
and Chris-Craft will each pay one-half of the costs associated with printing,
filing and mailing this joint proxy statement/prospectus and regulatory filing
fees. News Corporation will pay all expenses of the exchange agent. Chris-
Craft, BHC and United Television will not, in the aggregate, pay more than one-
half of the aggregate transaction expenses.
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The BHC Merger Agreement
The following summary describes the material terms of the BHC merger
agreement. We urge you to read carefully the complete BHC merger agreement, to
which the following is subject, a copy of which is attached as Annex B to this
joint proxy statement/prospectus and is incorporated herein by reference.
Form of Merger
The BHC merger is structured initially as a forward merger. However, in the
event of a restructuring trigger (described below) the merger will be
restructured as a reverse merger.
The Forward Merger. If the BHC merger is effected as a forward merger, BHC
will merge into News Publishing, a subsidiary of News Corporation, with News
Publishing continuing as the surviving corporation in the merger.
Restructuring. In the event a restructuring trigger has occurred and has not
been cured prior to the effective time of the BHC merger, the merger will be
restructured as a reverse merger. A restructuring trigger is defined in the BHC
merger agreement as either a ruling failure (described below) or an FCC failure
(described below).
. A "ruling failure" will occur if (within various time periods specified
in the merger agreement):
. News Corporation and BHC do not receive a private letter ruling from
the IRS to the effect that the forward merger will satisfy the
continuity of business enterprise requirement contained in Treasury
Regulations section 1.368-1(d);
. the IRS indicates to the parties that it is not likely to grant such a
ruling; or
. tax counsel to either News Corporation or BHC indicates that it will
be unable to deliver the tax opinion which is required as a condition
to effecting a forward merger.
. An "FCC failure" will occur if (within various time periods specified in
the merger agreement):
. the FCC does not consent to the assignment or transfer of control of
the FCC licenses (including the transfer of applicable authorizations,
licenses, permits and other FCC approvals) to Fox Television Holdings,
or one of its subsidiaries, in the manner contemplated by the merger
agreement; or
. the FCC indicates to the parties that it will not so consent.
The Reverse Merger. If the merger is effected as a reverse merger, at the
election of News Corporation, either a wholly-owned subsidiary of Fox
Entertainment Group or, if the Chris-Craft merger has occurred prior to the
effective time of the BHC merger, a wholly-owned subsidiary of Chris-Craft,
will merge with BHC, and BHC will be the surviving corporation following the
merger. If the Chris-Craft merger is effected as a forward merger, but the
conditions which would permit a BHC forward merger are not met at the effective
time of the BHC merger, then a first-tier subsidiary of News Corporation that
is controlled by News Corporation within the meaning of section 368(c) of the
Internal Revenue Code will merge into BHC and BHC will be the surviving
corporation following the merger.
Closing Matters
Closing. BHC and News Corporation will announce the anticipated date of the
closing of the forward merger at least three but no more than five business
days prior to the proposed closing date. In both the forward and reverse merger
structures, unless the parties otherwise agree, the closing will occur
immediately following the Chris-Craft merger, or, if the Chris-Craft agreement
is terminated, then the closing of the BHC merger will not take place earlier
than the second business day following the day on which all the conditions to
closing are met (except for certain conditions relating to compliance and
representations and warranties, which may be met as of the closing date).
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Effective Time. On the closing date, the merger will be effective upon
filing a certificate of merger with the Secretary of State of the State of
Delaware. The effective time of the merger is the time the certificate of
merger is filed with the Secretary of State of the State of Delaware or such
other date and time as BHC and News Corporation specify in the certificate of
merger.
Order of Mergers
If all of the conditions to closing the Chris-Craft merger and the BHC
merger are satisfied or waived, the mergers will occur in order such that the
BHC merger will occur after the Chris-Craft merger. If the conditions to
closing the United Television merger are satisfied or waived, the United
Television merger will occur after the BHC merger.
Merger Consideration
The consideration to be received by BHC stockholders in the BHC merger
depends on whether the merger is effected as a forward merger or a reverse
merger and is described below.
. In both the forward merger and the reverse merger, the form of Preferred
ADSs to be issued are American depositary shares of News Corporation,
which are traded on the New York Stock Exchange under the symbol "NWS.A".
Each Preferred ADS represents four Preferred Ordinary Shares of News
Corporation, which are traded on the Australian Stock Exchange under the
symbol "NCPDP". For a description of the Preferred ADSs, see "Description
of News Corporation Capital Stock" beginning on page [ . ].
. In both the forward merger and the reverse merger, you will receive cash
in lieu of any fractional Preferred ADSs. For more information about
fractional shares, see "--No Fractional Shares" on page [ . ].
Forward Merger Consideration
If the merger is effected as a forward merger, BHC stockholders will have
the right, with respect to each of their BHC shares, to make one of the
following elections and to receive the consideration indicated below, subject
to proration and adjustment as described below.
<TABLE>
<CAPTION>
Type of Election Consideration to be Received per BHC Common Share
---------------- -------------------------------------------------
<C> <S>
. Mixed Election...... $66 in cash and 2.2278 Preferred ADSs
. All Cash Election... An amount in cash equivalent in value to the per
share consideration received by a stockholder who
made a mixed election (determined in the manner
described below)
. All Stock Election.. A number of Preferred ADSs equivalent in value to the
per share consideration received by a stockholder who
made a mixed election (determined in the manner
described below)
</TABLE>
The consideration to be paid for all stockholders who make all cash or all
stock elections cannot be determined until the close of trading on the business
day immediately prior to the closing of the merger. We intend to announce these
amounts when known.
Any BHC stockholder who does not make an election or otherwise indicates no
preference in his or her form of election will be deemed to have made a non-
election and will receive cash and/or stock based on what is available after
giving effect to the elections made by other stockholders, as well as the
proration and adjustment described below. In addition, BHC stockholders may
specify different elections with respect to different lots of their shares (for
example, a stockholder with 100 shares could make a mixed election with respect
to 25 shares, an all cash election with respect to 50 shares and an all stock
election with respect to the remaining 25 shares).
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Mixed Election. The number of Preferred ADSs and the amount of cash to be
paid to stockholders who make mixed elections (unlike all cash elections and
all stock elections) will not be subject to proration other than adjustment in
specified circumstances for tax purposes and to avoid dilution. For information
about adjustment in specific circumstances for tax purposes and to avoid
dilution, see "--Adjustment to Preserve Tax Treatment of Forward Merger" and
"--Anti-dilution Adjustments to Merger Consideration" on pages [ . ] and [ . ].
All Cash Election. Each BHC stockholder who makes a valid all cash election
will have the right to receive in exchange for each share of BHC stock an
amount in cash equivalent in value (as of the closing date of the merger) to
the value of the cash and Preferred ADSs received by a stockholder who made a
mixed election. The value of the cash to be received per share in a valid all
cash election is determined using a formula contained in the merger agreement,
which is summarized below. The formula contained in the merger agreement is
more complex than the computation method we used in the examples contained
under "Summary--What You Will Receive in the Mergers" beginning on page [ . ];
however, in both cases, substantially the same result is obtained, except for
differences due to rounding.
The BHC merger agreement provides that each BHC stockholder who makes a
valid all cash election will have the right to receive, in exchange for each
share of BHC stock, an amount in cash equal to the "per share amount".
The "per share amount" is the amount obtained by dividing the "closing
transaction value" by the number of "exchangeable shares".
. The "closing transaction value" is the dollar amount of the sum of (A)
the "aggregate cash amount" and (B) the product of the "aggregate buyer
share amount" and the "closing buyer share value".
. The "aggregate cash amount" is:
(1) 40% of the product of the amount obtained by multiplying the number
of shares of BHC stock issued and outstanding immediately prior to
the effective time of the merger, less any shares cancelled in the
merger, by $165, less
(2) the amount of cash to be paid in respect of shares of BHC stock for
which the holders have made mixed elections (other than dissenting
shares) (as described below).
. The "aggregate buyer share amount" is:
(1) 60% of the product of the amount obtained by multiplying the number
of shares of BHC stock issued and outstanding immediately prior to
the effective time of the merger, less any shares cancelled in the
merger, by 3.7131, less
(2) the number of Preferred ADSs to be issued in respect of shares of
BHC stock for which the holders have made mixed elections (other than
dissenting shares).
. The "closing buyer share value" is the volume weighted average trading
price for all trades of Preferred ADSs reported on the NYSE for each of
the five trading days preceding, but not including, the closing date of
the merger, unless an earlier date is required to comply with SEC rules.
. The "exchangeable shares" are the shares of BHC stock issued and
outstanding immediately prior to the effective time of the merger, less
any shares to be cancelled in the merger (such as treasury stock) or
shares for which the holders have made mixed elections (other than
dissenting shares).
. The "dissenting shares", for purposes of these and certain other
computations, are shares of BHC stock for which the holder has taken all
the necessary steps required to be taken by the applicable date to
exercise his or her appraisal rights under Delaware law. For more
information about appraisal rights, see "Appraisal Rights" on page [ . ].
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All Stock Election. Each BHC stockholder who makes a valid all stock
election will receive in exchange for each share of BHC stock a number of
Preferred ADSs equivalent in value (as of the closing date of the merger) to
the value of the cash and Preferred ADSs received by a stockholder who made a
mixed election. The value of the Preferred ADSs to be received is determined
using a formula contained in the merger agreement, which is summarized below.
The formula contained in the merger agreement is more complex than the
computation method we used in the examples contained under "Summary--What You
Will Receive in the Mergers" beginning on page [ . ]; however, in both cases,
substantially the same result is obtained.
The BHC merger agreement provides that each BHC stockholder who makes a
valid all stock election will receive, in exchange for each share of BHC stock,
a number of Preferred ADSs equal to the "exchange ratio".
The "exchange ratio" is defined in the merger agreement as the number of
Preferred ADSs obtained by dividing the per share amount by the closing buyer
share value (each of which is described above).
Non-Election Shares. BHC stockholders who indicate that they have no
preference as to whether they receive cash or Preferred ADSs in the merger, and
BHC stockholders who do not make a valid election, will be deemed to have made
a "non-election". Stockholders making a non-election may be paid in cash,
Preferred ADSs or a mixture of cash and Preferred ADSs depending on, and after
giving effect to, the number of mixed elections, all cash elections and all
stock elections that have been made by other BHC stockholders making elections
using the proration adjustment described below.
Proration. The total number of Preferred ADSs that will be issued and the
total amount of cash that will be paid in the BHC merger is 2.22786 and $66,
respectively, multiplied by the total number of BHC shares outstanding
immediately prior to the completion of the BHC merger. Therefore, the all cash
and all stock elections are subject to proration to preserve these limitations
on the amount of cash to be paid and number of Preferred ADSs to be issued in
the BHC merger.
As a result, even if you make the all cash election or all stock election,
you may nevertheless receive a mix of cash and stock. Stockholders who make the
mixed election will not be subject to proration.
Proration if Too Much Cash is Elected. Preferred ADSs may be issued to
stockholders who make all cash elections if the all-cash election is
oversubscribed. We describe below how the proration mechanism will be used.
The maximum number of shares of BHC common stock that may be converted into
the right to receive cash in the merger (other than through mixed elections or
dissenting shares) is equal to the "all cash election number".
The "all cash election number" is computed by dividing the aggregate cash
amount (as described above) by the per share amount (as described above) and
then subtracting the number of dissenting shares, if any.
If the all-cash election is oversubscribed, then BHC stockholders making all
cash elections will receive a combination of cash and Preferred ADSs equal to
the following for each share of BHC stock:
. an amount in cash equal to the product of (1) the per share amount (as
described above) and (2) the "cash fraction" (described below); and
. a number of Preferred ADSs equal to the product of (1) the exchange ratio
(as described above) and (2) a fraction equal to one minus the cash
fraction.
In addition, if the all cash election is oversubscribed, stockholders making
all stock elections or making (or deemed to be making) non-elections for any of
their shares of BHC stock will receive Preferred ADSs for each of these shares.
The "cash fraction" is a fraction with (1) a numerator equal to the all cash
election number and (2) a denominator equal to the total number of shares of
BHC common stock for which an all cash election has been made (other than
dissenting shares).
Proration if Too Much Stock is Elected. Cash may be paid to stockholders who
make all stock elections if the all stock election is oversubscribed. We
describe below how the proration mechanism will be used.
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The maximum number of shares of BHC common stock that may be converted into
Preferred ADSs in the merger (other than through mixed elections (other than
dissenting shares)) is equal to the "stock election number".
The "stock election number" is computed by taking the number of shares of
BHC stock issued and outstanding immediately prior to the effective time of the
merger and subtracting from that amount (1) the all cash election number (as
described above), (2) any cancelled or dissenting shares and (3) any shares for
which the holders have made mixed elections (other than dissenting shares).
If the all stock election is oversubscribed, then BHC stockholders making an
all stock election will receive a combination of cash and Preferred ADSs equal
to the following for each share of BHC stock:
. a number of Preferred ADSs equal to the product of (1) the exchange ratio
(as described above) and (2) the "stock fraction" (described below), and
. an amount in cash equal to the product of (1) the per share amount (as
described above) and (2) a fraction equal to one minus the stock
fraction.
In addition, if the all stock election is oversubscribed, stockholders
making all cash elections or making (or deemed to be making) non-elections for
any of their shares of BHC stock will receive cash for each of these shares.
The "stock fraction" is a fraction with (1) a numerator equal to the stock
election number and (2) a denominator equal to the total number of shares of
BHC common stock for which a stock election has been made (other than
dissenting shares).
Proration of Non-Election Share Consideration. As described above, if too
many stockholders make all cash elections, stockholders making (or deemed to be
making) non-elections will receive only Preferred ADSs and if too many
stockholders make all stock elections, stockholders making (or deemed to be
making) non-elections will receive only cash. If both the all cash election and
all stock election are undersubscribed (after giving effect to all mixed
elections), the merger consideration received by stockholders making (or deemed
to be making) non-elections will be determined in accordance with the following
mechanism.
If the aggregate number of shares of BHC stock covered by all cash elections
does not exceed the all cash election number (as described above) and the
number of shares of BHC stock covered by all stock elections does not exceed
the stock election number (described above), then BHC stockholders having made
(or deemed to have made) non-elections will receive the following for each
share of BHC stock:
. an amount in cash (if any) equal to the product of (1) the per share
amount (as described above) and (2) the "non-election fraction"
(described below); and
. a number of Preferred ADSs (if any) equal to the product of (1) the
exchange ratio (as described above) and (2) a fraction equal to one minus
the non-election fraction.
. The "non-election fraction" is a fraction with (1) a numerator equal to
(A) the all cash election number (as described above under "Proration
if Too Much Cash is Elected" on page [ . ]) less (B) the total number
of shares of BHC stock for which an all cash election has been made
(other than dissenting shares), and (2) a denominator equal to (A) the
number of exchangeable shares (as described above) less (B) any
dissenting shares and less (C) the total number of shares of BHC stock
for which either an all cash election or an all stock election has been
made (other than dissenting shares).
Reverse Merger Consideration
If the transaction is effected as a reverse merger, each BHC share will be
converted into $69.30 in cash and 2.3392 Preferred ADSs. Unlike the forward
merger, BHC stockholders have no right to make elections in the reverse merger
and, except for anti-dilution protection, these amounts generally are not
subject to adjustment.
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Adjustment to Preserve Tax Treatment of Forward Merger
In the event that the closing price of Preferred ADSs on the NYSE on the
trading day immediately preceding the date of the closing is such that the
aggregate amount of cash paid as merger consideration exceeds 55% of the
combined value of all of the cash and the Preferred ADSs to be paid in the
merger, then, in order for the forward merger to qualify as a tax-free
reorganization, the amount of cash paid to BHC stockholders making all cash
elections and, in some circumstances, the amount of cash paid to BHC
stockholders making mixed elections may be adjusted so that, in lieu of cash,
these stockholders will receive Preferred ADSs in the amount of the adjustment.
To effect the adjustment, the merger agreement provides that if the "cash
amount" (described below) exceeds 55% of the total consideration, the
components of the merger consideration will be modified as follows:
. first, in the case of shares of BHC stock for which an all cash election
has been made, by reducing the cash portion of the merger consideration
by the minimum amount necessary to avoid this result, but in no event
below the amount of cash payable in exchange for shares for which a mixed
election has been made, and paying in lieu of this cash, a number of
Preferred ADSs equal to the amount of the per share cash reduction
divided by the closing price of Preferred ADSs referred to above; and
. second, after making the above reduction, in the event that the cash
amount is still in excess of 55% of the total consideration to be paid in
the merger, by reducing the cash payable in exchange for shares of BHC
stock for which all cash elections or mixed elections have been made to
the extent necessary to avoid this result and paying, in lieu of this
cash, a number of Preferred ADSs equal to the amount of per share cash
reduction divided by the closing price of Preferred ADSs referred to
above.
The "cash amount" is defined in the merger agreement as the sum of (1) the
aggregate cash amount (as described above) and (2) the product of (A) $66 and
(B) the number of shares of BHC stock for which a mixed election has been made.
The "total consideration" is defined in the merger agreement as the sum of
(1) the cash amount and (2) the product of (A) the closing price of Preferred
ADSs referred to above, (B) 3.7131 and (C) 60% of the number of shares of BHC
stock outstanding immediately prior to the effective time of the merger (less
any cancelled shares).
In a forward merger, if either Squadron Ellenoff or Kaye Scholer is unable
to render an opinion that the receipt of Preferred ADSs will be tax-free for
U.S. federal income tax purposes, News Corporation will make adjustments
similar to those described above, to the extent necessary, so that each tax
advisor is able to render its tax opinion.
Anti-dilution Adjustments to Merger Consideration
If, before the merger becomes effective, News Corporation declares or
effects a stock split, stock or cash dividend (other than ordinary cash
dividends declared and paid consistent with past practice) or other
reclassification, acquisition, exchange or distribution with respect to the
Preferred ADSs, there will be an appropriate adjustment to the merger
consideration unless such adjustment would:
. in a forward merger, prevent either Kaye Scholer or Squadron Ellenoff
from delivering an opinion that the merger will be a tax free
reorganization;
. create a meaningful risk that the consideration paid in respect of the
adjustment would be taxable to or have an adverse tax consequence to BHC
stockholders; or
. change the tax treatment of the event giving rise to the adjustment.
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If the adjustment would have any of the above consequences, News Corporation
will adjust the merger consideration in an appropriate manner:
. to convey value to the BHC stockholders in an amount equal to the anti-
dilution adjustment;
. in the case of a forward merger, to permit the tax opinions to be
rendered; and
. if BHC requests, to avoid the adverse tax consequences to holders of BHC
shares.
Dividends
BHC stockholders will not have the right to receive any dividends or other
distributions payable by News Corporation with respect to the Preferred ADSs
unless and until they exchange their BHC stock certificates for Preferred ADSs.
After delivering their BHC stock certificates to the exchange agent, those
stockholders will receive, subject to applicable laws, accumulated dividends
and distributions with a record date after the effective time of the merger,
without interest.
No Fractional Shares
No fractional Preferred ADSs will be issued. In addition, no dividend or
other distribution of Preferred ADSs will relate to any fractional Preferred
ADSs, and no fractional Preferred ADSs will entitle the holder to any voting or
other rights of a holder of Preferred ADSs.
BHC stockholders otherwise entitled to fractional Preferred ADSs will
instead receive a cash payment equal to the amount of the stockholder's
proportionate interest in the net proceeds from the sale by the exchange agent,
on behalf of all BHC stockholders, of the aggregate fractions of Preferred ADSs
which would otherwise be issued in the merger, without interest.
No Interest
No interest will be paid on any portion of the merger consideration.
Withholding
News Corporation will be entitled to deduct and withhold from the merger
consideration payable to any stockholder the amounts it is required to deduct
and withhold under federal state, local or foreign tax law. If News Corporation
withholds any amounts, these amounts will be treated for all purposes of the
merger as having been paid to the stockholders from whom they were withheld.
Exchange of Certificates; Elections as to Form of Consideration
Exchange agent. News Corporation has selected [ . ] as exchange agent. The
exchange agent will exchange certificates representing shares of BHC stock for
merger consideration to be received in the merger. At the effective time, News
Corporation will:
. deposit with the exchange agent cash to the extent it constitutes merger
consideration; and
. deposit certificates representing Preferred Ordinary Shares with its
custodian, and instruct Citibank, N.A., as depositary under a depositary
agreement, to deposit the Preferred ADSs, each representing four fully
paid and non-assessable shares of Preferred Ordinary Shares, to be
exchanged as merger consideration in the merger with the exchange agent
for the benefit of holders exchanging BHC shares in the merger.
The Preferred Ordinary Shares underlying the Preferred ADSs to be issued as
consideration in the merger will rank pari passu with all of the Preferred
Ordinary Shares. The Preferred Ordinary Shares will receive the same dividend
entitlement of any previously issued Preferred Ordinary Shares outstanding as
of the date of the effective time of the merger.
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Letter of transmittal and form of election. The merger agreement provides
that concurrent with the mailing of this joint proxy statement/prospectus, the
companies will mail to each stockholder a letter of transmittal that
stockholders must properly complete and deliver to the exchange agent with the
certificates they are surrendering and a form of election with instructions for
making the mixed election, all cash election or all stock election in a forward
merger. If a stockholder cannot deliver his or her stock certificates to the
exchange agent by the election deadline described below, a stockholder may
deliver an appropriate guarantee of delivery promising to deliver his or her
stock certificates, as described in the letter of transmittal and form of
election, so long as (1) the guarantee of delivery is from a firm which is a
member of the NYSE or another registered national securities exchange or a
commercial bank or trust company having an office or correspondent in the
United States and (2) the actual stock certificates are in fact delivered to
the exchange agent within five NYSE trading days after the election deadline.
The companies will use their reasonable best efforts to mail the letter of
transmittal and form of election to each holder who is a holder on the record
date for the special meeting or becomes a holder during the period between the
record date and seven calendar days prior to the effective time of the merger.
The companies will use their reasonable best efforts to make the letter of
transmittal and form of election available to all holders who become holders
subsequent to the seventh calendar day prior to the effective time of the
merger up until 5:00 pm New York City time on the last business day prior to
the effective time of the merger.
Holders of BHC stock who wish to elect the type of merger consideration they
will receive in the event of a forward merger should carefully review and
follow the instructions set forth in the letter of transmittal and form of
election. The form of election, accompanied by the certificates to be exchanged
or a pledge to deliver such certificates after the closing, must be received by
the exchange agent prior to the election deadline, which is 10:00 am New York
City time on the day of the closing of the merger. News Corporation has the
discretion to review the forms of election to determine whether an election has
been validly made.
An election may be revoked, but only by written notice received by the
exchange agent prior to the election deadline. Upon any revocation, unless a
duly completed letter of transmittal and form of election, accompanied by a
certificate, is thereafter submitted, such shares shall be deemed to be non-
election shares. If a letter of transmittal and form of election is revoked, or
the merger agreement is terminated, and any certificates have been transmitted
to the exchange agent, the exchange agent will promptly return those
certificates, without charge, to the person who submitted those certificates.
Shares of BHC stock as to which the holder has not made a valid election
prior to the election deadline, including as a result of revocation, will be
deemed non-electing shares. If News Corporation or the exchange agent
determines that any purported mixed election, all cash election, or all stock
election was not properly made, the purported election will be deemed to be of
no force or effect and the holder making the purported election will be deemed
to have made a non-election for these purposes.
News Corporation will have the discretion (which it may delegate in whole or
in part to the exchange agent) to determine whether letters of transmittal and
forms of election have been properly completed, signed and submitted or revoked
and to disregard immaterial defects in letters of transmittal and forms of
election. The decision of News Corporation (or the exchange agent) in such
matters, absent manifest error, shall be conclusive and binding. Neither News
Corporation nor the exchange agent will be under any obligation to notify any
person of any defect in a letter of transmittal and form of election submitted
to the exchange agent. The exchange agent and News Corporation shall also make
all computations related to elections, proration and adjustment and all such
computations shall be conclusive and binding on stockholders absent manifest
error. In addition, News Corporation reserves the right not to recalculate the
effects of proration and adjustment if, subsequent to such calculation,
stockholders withdraw any demands for dissenters' rights they may have made.
Soon after the completion of the BHC merger, the exchange agent will send
another letter of transmittal to each person who was a stockholder at the
effective time who has not previously and properly surrendered shares of BHC
stock to the exchange agent. This mailing will contain instructions on how to
surrender shares
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of BHC stock (if these shares have not already been surrendered) in exchange
for the merger consideration the holder is entitled to receive under the merger
agreement.
Dissenting Shares
The merger agreement provides that, notwithstanding other provisions
contained in the merger agreement, to the extent that stockholders are entitled
to appraisal rights under Section 262 of the Delaware General Corporation Law,
shares of stock issued and outstanding immediately prior to closing and held by
stockholders who have properly exercised and perfected their demand for
appraisal rights under Section 262 of the Delaware General Corporation Law
(i.e., dissenting shares) will not be converted into the right to receive the
merger consideration. Instead, the holders of dissenting shares will be
entitled to receive the consideration determined by Section 262 of the Delaware
General Corporation Law; provided, however, that if any stockholder fails to
perfect, effectively withdraws or loses his or her right to appraisal and
payment under Delaware law, that stockholder's shares will be deemed to have
been converted as of the closing date into the right to receive the merger
consideration, without any interest, and those shares will not be deemed to be
dissenting shares. For a discussion of appraisal rights, see "Appraisal Rights"
on page [ . ].
Officers and Directors; Articles and By-laws
If a forward merger occurs, the officers and directors of News Publishing
will continue as the officers and directors following the merger. Also, the
articles and by-laws of News Publishing will continue as the articles and by-
laws of News Publishing after the merger. If a reverse merger occurs, the board
of directors and officers of the wholly owned subsidiary of Fox Entertainment
Group formed for the purpose of effecting the merger will become the officers
and directors of BHC and the certificate of incorporation and by-laws of BHC
will be amended and restated to conform to the certificate and by-laws of such
subsidiary.
Representations and Warranties of BHC and News Corporation
In the merger agreement, News Corporation and BHC make representations and
warranties to each other about their respective companies and their respective
subsidiaries. The representations and warranties of News Corporation and BHC
are subject to exceptions for disclosures made by each of the respective
companies. News Corporation and BHC make representations and warranties to each
other regarding, among other things, the following:
. their corporate organization, good standing and qualification to do
business;
. validity and effectiveness of their charter and by-laws;
. capitalization of their companies;
. the authorization, execution, delivery and performance and the
enforceability of the merger agreement and related matters;
. absence of material defaults or violations under their certificates of
incorporation and bylaws and certain other agreements and laws as a
result of the contemplated transactions, except as disclosed;
. except as disclosed, the absence of any requirement of consents,
including consents of third parties, approvals, filings or other
authorizations to enter into the merger agreement and consummate the
merger;
. possession and effectiveness of all permits and licenses and contracts
necessary to carry on business as currently conducted;
. the absence of material violations of laws or government orders;
. filings with the SEC and the accuracy and completeness of the information
contained in these filings;
. accuracy of financial statements included in filings with the SEC;
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. the absence of certain material changes in their respective businesses
since December 31, 1999;
. the absence of actions, facts, agreements, plans or other circumstances
that would be reasonably likely to prevent the merger from qualifying as
a reorganization within the meaning of section 368(a) of the Internal
Revenue Code; and
. their use of brokers.
In addition, BHC also makes representations and warranties in the merger
agreement with respect to BHC and its subsidiaries, as applicable, regarding
the following matters, except as disclosed in the BHC merger agreement:
. material compliance with applicable rules and regulations of the FCC, and
the absence of material proceedings before the FCC;
. absence of conflict with permits and material obligations;
. absence of defaults under material contracts and licenses;
. ownership by BHC of its subsidiaries;
. authority of special committee, and recommendation of special committee
that stockholders of BHC approve the merger and adopt the merger
agreement;
. nonexistence of contracts or agreements that restrict the ability of BHC
or its subsidiaries from competing in any line of business or with any
person and engaging in any business in any geographic area;
. absence of facts or circumstances that would prevent the construction and
operation of DTV stations by the relevant deadline established by the
FCC;
. absence of material litigation;
. material compliance of employee benefit plans with applicable laws,
benefit obligations of BHC and its subsidiaries and the effect of the
merger on such plans, and the absence of proceedings regarding such
plans;
. absence of outstanding options to purchase BHC common stock;
. absence of pending labor actions and material compliance with labor
agreements;
. environmental matters;
. ownership of intellectual property;
. material compliance with applicable tax laws;
. title to properties and assets;
. Year 2000 compliance;
. opinion of Wasserstein Perella, financial advisors to the BHC special
committee;
. stockholder vote required to adopt the merger agreement;
. inapplicability of state anti-takeover provisions to the merger agreement
and the voting agreement and proxy delivered in connection therewith; and
. the capitalization of United Television.
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News Corporation also makes representations and warranties in the merger
agreement with respect to News Corporation and its subsidiaries, as applicable,
regarding:
. authority of Fox Television Stations and a newly-formed subsidiary of Fox
Entertainment Group, to enter into the agreement under which Fox
Television Stations will operate the television stations acquired in the
merger as licensee;
. conformity of Preferred ADSs to be issued as merger consideration in all
material respects to the description of such shares set forth in the
proxy statement dated July 10, 1997 of Heritage Media Corporation;
. due authorization, execution and delivery of the deposit agreement under
which News Corporation will deposit its Preferred ADSs with Citibank, NA,
acting as depositary;
. compliance with all applicable ASX filing requirements and accuracy and
completeness of such ASX filings;
. accuracy of financial statements contained in ASX filings;
. no conduct of business prior to the effective time of any subsidiary
formed for the purpose of merging into Chris-Craft, BHC or United
Television; and
. ownership of at least 80% of the voting and nonvoting stock of News
Publishing.
All representations and warranties made in the merger agreement expire at
the closing of the merger.
Conduct of Business by BHC
BHC has agreed that, until the merger is effected or the merger agreement is
terminated, it will not, subject to various exceptions and fiduciary duties to
United Television and the board of directors of United Television, take
specific actions without the consent of News Corporation, unless expressly
permitted by the merger agreement or in the Chris-Craft merger agreements. BHC
has agreed to the following with respect to itself and, where applicable, its
subsidiaries:
. Conduct of Operations. To conduct its businesses in the ordinary course
and in a manner consistent with past practice, including preserving
intact its business organizations and relationships.
. Governing Documents. Not to amend its charter or by-laws in any material
respect.
. Issuance of Stock. Not to issue, sell or otherwise dispose of shares of
its capital stock, except for the issuance of common stock upon the
exercise of outstanding options.
. Properties and Assets. Not to sell, encumber or otherwise dispose of any
assets except for sales of marketable securities and investment assets
for their fair value and except for sales of other assets in the ordinary
course of business consistent with past practice not in excess of
specified amounts.
. Dividends and Distributions; Distributions to Parent Chris-Craft. Not to
declare, make or pay any dividend or other distribution (other than cash
dividends payable by any wholly owned subsidiary, or by United Television
(if permitted under the United Television merger agreement) with respect
to ordinary course dividends, including dividends designated as special
dividends, in a manner consistent with past practice). BHC may, however,
advance funds to Chris-Craft on an as-needed basis, including, without
limitation, to pay merger expenses under short term loans on arms-length
terms, which loans must be repaid by Chris-Craft if the Chris-Craft
merger is not consummated no later than 30 days after consummation of the
BHC merger.
. Changes to Capital Stock. Not to reclassify, combine, split, subdivide or
redeem, purchase or otherwise acquire, directly or indirectly, any of its
or its subsidiaries' capital stock.
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. Business Combinations; Assets; Indebtedness. Except in connection with
acquisitions or investments in the ordinary course of business consistent
with past practice and not in excess of specified amounts, not to (1)
invest in other companies or assets, or acquire any interest in any
broadcast radio or television station, daily English-language newspaper
or cable television system; or (2) incur any indebtedness except the
refinancing of existing indebtedness.
. Material Contracts. Not to enter into or amend any material contracts
other than in the ordinary course of business and that would not be
reasonably likely to prevent or materially delay the consummation of the
merger.
. Capital Expenditures. Not to authorize any capital expenditures in excess
of specified amounts.
. Employee Compensation. Not to increase compensation to executive officers
or employees except as specified and except for special bonuses to reward
those employees whose efforts were instrumental to the successful
consummation of the merger. For additional information about special
bonuses, see "Interests of Certain Directors and Executive Officers of
the Companies in the Mergers--Bonus Pool" on page [ . ].
. Employee Benefits. Not to grant any severance or termination pay to any
director or executive officer or employee or take action to accelerate
any rights or benefits under any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement.
. Accounting. Not to change its accounting practices.
. New Contracts. Not to enter into any contract, agreement, lease, license,
permit, franchise or other instrument or obligation which, if in
existence and known prior to the execution of the merger agreement, would
have resulted in it breaching certain representation and warranties.
. Litigation; Liabilities. Not to make any material settlements or
compromises in connection with any material arbitration, action, suit,
investigation or proceeding (other than those related to tax matters), or
in connection with the merger or settle or discharge any material
liability except as specified.
. Related Party Agreements. Not to amend or waive any right under or enter
into any agreement with any affiliate of BHC (other than its wholly owned
subsidiaries or United Television in the ordinary course of business
consistent with past practice) or with any stockholder or any of the
stockholders' affiliates.
. Affiliation Agreements. Not to materially change or terminate any network
affiliation agreement, retransmission consent agreement or, subject to
specified exceptions, any agreement licensing or creating any obligations
with respect to the use of the digital data stream of any digital
television station.
. Licenses and Syndication Agreements. Not to enter into, amend or
terminate any film or program license or syndication agreement involving
aggregate payments beyond specified amounts:
. General Prohibition. Not to enter into or publicly announce an intention
to enter into any contract, agreement, commitment or arrangement to do
any of the items set forth above.
. FCC Matters. To:
. use its reasonable best efforts to comply with all applicable material
requirements of the FCC;
. deliver promptly to News Corporation copies of reports filed with the
FCC;
. notify promptly News Corporation of any inquiry, investigation or
proceeding initiated by the FCC;
. not make or revoke any material election with the FCC; and
. use its reasonable best efforts to take all actions necessary to
complete construction and initial operation of its digital television
stations.
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. Taxes. To:
. timely file all tax returns required to be filed by it, and prepare the
returns in a manner consistent with past practice;
. timely pay all taxes due;
. accrue a reserve in its books and records and financial statements in
accordance with past practice for all taxes payable by it for which a
tax return is not due prior to the time the merger is effective;
. promptly notify News Corporation of any tax or material suit, action or
audit with respect to it or any of its subsidiaries in respect of any
tax matter; and
. not make or revoke any material tax election or adopt or change a
material tax accounting method.
Covenants of BHC and News Corporation
News Corporation and BHC have agreed as follows:
. Securities Filings. Each company has agreed to cooperate to file the SEC
documents necessary to complete the merger.
. Special Meeting of BHC. BHC has agreed to call and hold a stockholders'
meeting to vote upon the adoption of the merger agreement and approval of
the merger.
. Proxy Solicitation by BHC. BHC has agreed to solicit proxies in favor of
the adoption of the merger agreement and approval of the merger, unless
it determines, after receiving advice from independent legal counsel,
that failure to do so is required in order for its directors to comply
with their fiduciary duties under applicable law.
. Approvals of News Corporation. News Corporation has agreed to obtain, and
cause its subsidiaries to obtain, all stockholder and other approvals
necessary to consummate the merger and the other transactions
contemplated thereby.
. Regulatory Filings. Each company has agreed to promptly make all
governmental filings necessary under the HSR Act and to promptly make all
filings with or applications to the FCC that are necessary to consummate
the merger and otherwise use reasonable best efforts to consummate the
merger, and will do so in a manner designed to obtain regulatory
clearance and the satisfaction of these conditions as expeditiously as
reasonably possible. Each company has agreed to promptly take any and all
steps necessary to avoid or eliminate each and every impediment and
obtain all consents or waivers under any antitrust, competition or
communications or broadcast law that may be validly required by any
governmental authority, so as to enable the companies to close the merger
as expeditiously as reasonably possible, subject to various specified
limitations. News Corporation and Fox Television Holdings will have the
right to make all decisions concerning any divestiture commitments
necessary to comply with the multiple ownership rules (See "The Mergers--
Regulatory Matters Relating to the Mergers" on page [ . ]), although they
have agreed to regularly consult with and consider the views of BHC in
good faith. News Corporation and Fox Television Holdings have also agreed
not to seek a waiver of section 73.3555 of the FCC's rules, except for a
temporary waiver of subsections (b) and (e) of that section, for a period
not to exceed 12 months for television divestitures required to obtain
FCC consent, and with respect to subsection (d) of that section, in the
application to the FCC requesting such consent, News Corporation has
agreed to maintain that no waiver is required to permit it to own a
newspaper and two television stations in the New York market, and to
request, in the alternative, if that position is rejected or a permanent
waiver is not issued by the FCC, a temporary waiver to hold a newspaper
and two television stations for a period not to extend beyond the date
which is the later to occur of (1) 12 months from the closing date, and
(2) the conclusion of any then pending FCC rulemaking proceeding
regarding 47 CFR Section 73.35555 (d). The parties will not be obligated
to take actions in order to comply with conditions which are "adverse
conditions". "Adverse conditions"
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include (1) any requirement that News Corporation or Fox Television
Holdings divest any material assets or accept any material limitation on
any of their respective material businesses, other than divestitures or
operational limitations of broadcast assets (i.e. newspaper and television
stations) as required to comply with the multiple ownership rules or a
final order of an antitrust or other similar governmental authority; or
(2) any requirement (including any requirement under the multiple
ownership rules or a final order of an antitrust or other similar
governmental authority) that would require News Corporation, Fox
Television Holdings, Chris-Craft, BHC or United Television to divest, hold
separate, accept any material operational limitation with respect to, or
waive any rights with respect to any of their respective television assets
in Los Angeles.
. Consents. Each company will use reasonable best efforts to obtain any
third party consents necessary, proper or advisable to consummate the
merger.
. Access to Information; Confidentiality. Each company has agreed to
continue to allow the other company reasonable access to its corporate
records and has agreed to comply with the Confidentiality Agreement dated
September 16, 1999 between News Corporation and Chris-Craft, as amended.
. Notification. Each company has agreed to promptly notify the other
company of (1) any event that would likely cause any representation or
warranty to be untrue or inaccurate, or any covenant or condition not to
be complied with or satisfied, or the forward merger not to be
consummated, and (2) any failure to comply with or satisfy any covenant
or condition or agreement to be complied with or satisfied.
. Tax and FCC Matters. The companies have agreed to cooperate in the
preparation of and submission of filings necessary to obtain a favorable
ruling from the IRS with the respect to the tax treatment of the BHC
merger and consent of the FCC. Chris-Craft will submit any filings and
documents in connection with the IRS ruling and shall control the process
of obtaining the IRS ruling on behalf of BHC. The forward merger is
intended to constitute a tax free plan of reorganization within the
meaning of section 1.368-2(g) of the income tax regulations promulgated
under the Internal Revenue Code, and the parties have agreed not to take
any action which will adversely affect this intended tax treatment. News
Corporation and BHC have agreed to deliver certain representation letters
to Squadron Ellenoff, tax counsel to News Corporation, and Kaye Scholer,
tax counsel to BHC, in connection with the proposed tax opinions of each
such tax adviser, and also deliver representation letters to Squadron
Ellenoff, tax counsel to News Corporation, and Skadden, tax counsel to
Chris-Craft, in connection with the IRS ruling.
. Listing Applications. The companies have agreed to prepare and submit
promptly an application to the NYSE for the listing of the new Preferred
ADSs to be issued in the merger, and within two business days after the
date the merger is effective, prepare and submit an application to the
ASX for the listing of the Preferred Ordinary Shares that underlie the
Preferred ADSs.
. ASX Waiver. The companies will promptly seek the waiver of the Australian
Stock Exchange's Listing Rule 10.1 (or if not obtained, the approval of
News Corporation's stockholders). This waiver has been obtained.
. Public Announcements. The companies will consult with each other prior to
making any public announcements concerning the merger.
. Affiliates. BHC will notify News Corporation of all persons that may be
deemed affiliates of BHC under Rule 145 of the Securities Act, and BHC
will use its reasonable best efforts to obtain from each affiliate a
letter in which the affiliate agrees to comply with the resale
restrictions of Rules 144 and 145 under the Securities Act following the
merger.
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. Comfort Letters. News Corporation will use reasonable best efforts to
deliver to BHC, and BHC will use reasonable best efforts to deliver to
News Corporation, two comfort letters in customary form, from the
companies' respective independent public accountants.
. Compliance with Merger and Voting Agreements. News Corporation has agreed
to comply with its obligations under the Chris-Craft merger agreement and
the United Television merger agreement, and BHC has agreed to comply with
its obligations under the voting and proxy agreement related to the
United Television merger.
. Solicitation of Key Employees. The companies will not solicit for
employment any current senior management level employees or any of the
three highest compensated on-air talent employees at each television
station of the other company.
Reorganization of television assets
News Corporation has agreed to effect specified transfers of the television
assets acquired from BHC in the merger and to take other specified actions in
connection with these transfers. For a discussion of the proposed transfers and
related transactions, see "Related Transactions" on page [ . ].
No solicitation provision
BHC has agreed not to, directly or indirectly, through any officer,
director, agent or otherwise, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information), or take any other
action knowingly to facilitate, any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any "competing
transaction", which is defined in the merger agreement as any transaction,
other than the merger, that would result in a third party or its stockholders
acquiring more than 25% of the voting power of the BHC capital stock then
outstanding or more than 25% of the assets of BHC and its subsidiaries, taken
as a whole, or enter into or maintain or continue discussions or negotiate with
any person in furtherance of any related inquiries or to obtain a competing
transaction, or agree to or endorse any competing transaction, or authorize any
of the officers, directors or employees of BHC or any agent or representative
of BHC to take any of these actions. BHC has agreed to notify News Corporation
as promptly as practicable of all the relevant material details relating to all
inquiries and proposals that BHC, or any officer, director, employee, agent or
representative, may receive relating to any of the foregoing matters.
Notwithstanding the foregoing, prior to the adoption of the merger agreement
by the stockholders of BHC, the board of directors of BHC is not prohibited
from:
. furnishing information to, or entering into and engaging in discussions
or negotiations with, any person that makes an unsolicited proposal that
the board of directors of BHC determines in good faith, after
consultation with BHC financial advisors and independent legal counsel,
can be reasonably expected to result in a "superior proposal", which is
defined in the merger agreement as any proposal that would result in a
third party acquiring, directly or indirectly, more than 50% of the
voting power of the outstanding BHC capital stock or all or substantially
all the assets of BHC and its subsidiaries, taken as a whole, for
consideration which the board of directors of BHC determines in its good
faith judgment to be more favorable to BHC's stockholders than the merger
with News Publishing (or a subsidiary of News Corporation), provided that
BHC must notify News Corporation of its intention to provide information
to, or enter into negotiations with, a third party concerning a superior
proposal, inform News Corporation of the identity of the third party and
the material terms and conditions of any superior proposal and enter into
a confidentiality agreement with the third party; or
. complying with its disclosure and other obligations under applicable
laws.
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Other employee arrangements
During the one year period commencing on the effective date of the merger,
News Corporation will provide employees and former employees of BHC and its
subsidiaries with employee benefits that are either substantially comparable to
the benefits provided to BHC employees as of the date of the merger agreement,
or substantially similar to those provided to employees of News Corporation who
are similarly situated.
If the effective time occurs during the calendar year 2001, then BHC
employees who are employed by BHC immediately prior to the effective time, and
who are eligible by virtue of being a participant in the BHC 2001 Bonus Plan or
by virtue of receiving an annual bonus in 2000 and being eligible to receive an
annual bonus for the year 2001, may receive a prorated bonus for service in
2001. The process for determining the bonus for those employees who remain
employed on and after the effective date through December 31, 2001 will be
determined in the discretion of News Corporation.
News Corporation will recognize service with BHC under News Corporation's
employee benefit plans for purposes of determining eligibility to participate
and vesting, but not for purposes of benefit accrual. This service will also
apply for purposes of satisfying any waiting periods, evidence of insurability
requirements, or the application of any preexisting condition limitations. If
BHC employees are transferred to a new health plan, BHC employees will be given
credit for amounts paid under a corresponding health plan during the new health
plan's year in which the BHC employees are transferred for purposes of applying
deductibles, copayments and out-of-pocket maximums as though such amounts had
been paid in accordance with the terms of the new health plan. News Corporation
will also honor all vacation, personal and sick days accrued by BHC employees.
News Corporation will make required payments when due under all BHC benefit
plans maintained or contributed to by BHC or any of its subsidiaries that are
applicable with respect to any current or former employee or director,
including their beneficiaries, of BHC or any of its subsidiaries. However, News
Corporation may amend or terminate any BHC benefit plan in accordance with its
terms.
Indemnification; directors' and officers' insurance
Following the merger, the surviving corporation's certificate of
incorporation and by-laws will contain the indemnification provisions in favor
of officers and directors that are contained in BHC's current restated
certificate of incorporation and by-laws.
For six years following the merger the surviving corporation will maintain
directors' and officers' liability insurance covering those persons who are
currently covered by BHC's directors' and officers' liability insurance policy
on terms comparable to BHC's existing coverage. However, the surviving
corporation will not be required to expend in any one year an amount in excess
of 300% of the annual premiums currently paid by BHC for such insurance. If the
annual premiums of such insurance coverage exceed this amount, News Corporation
will only be obligated to obtain a policy with the greatest coverage available
for an annual cost not exceeding such amount.
News Corporation will cause the surviving corporation to indemnify, to the
fullest extent permitted by law, present and former officers, directors and
employees of BHC and other specified persons against various specified
indemnifiable claims, including against amounts paid in settlement of any
threatened, pending or completed claim based upon the fact that such person is
or was a director, officer, employee or stockholder of BHC or any of its
current or former subsidiaries.
Conditions to closing
The merger agreement contains certain conditions to the parties' obligations
to complete the merger. The parties will not be obligated to complete the
merger unless at or before the time the merger becomes effective:
. Stockholder Approval. The merger agreement has been adopted by the
affirmative vote of a majority of the votes entitled to be cast by
stockholders at the BHC stockholders' meeting, voting together as a
single class.
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. Hart-Scott-Rodino Antitrust Improvements Act of 1976. Any applicable
waiting period under the HSR Act has terminated or expired.
. Legality. No governmental authority or court has entered an order or
taken other legal action making the merger illegal or otherwise
prohibiting its consummation.
. Registration Statement. The registration statement, of which this joint
proxy statement/prospectus forms a part, is declared effective and there
is no stop order to suspend the effectiveness of the registration
statement.
. FCC Consent. The FCC has consented to the assignment or to the transfer
of control of the FCC licenses of BHC and United Television to Fox
Television Holdings (or a wholly owned subsidiary of Fox Television
Holdings), including transfer of those authorizations, licenses, permits,
and other approvals, issued by the FCC, and used in the operation of the
BHC television stations.
. Authorizations. Both companies have obtained all other material
authorizations, consents, waivers, orders or approvals for the merger
required to be obtained from governmental authorities, and both companies
have made all required filings and notices with governmental authorities
prior to the consummation of the merger.
. Listing of Shares. The shares of Preferred ADSs issuable to the BHC
stockholders in the merger are authorized for listing on the NYSE,
subject to official notice of issuance.
. Chris-Craft Merger. The Chris-Craft merger shall have occurred or the
stockholders of Chris-Craft shall have failed to approve the Chris-Craft
merger at a duly held stockholders' meeting.
. Satisfaction/Waiver of Conditions. All conditions to all parties'
obligations to consummate the United Television merger, except completion
of the United Television merger, are satisfied or waived.
. Representations and Warranties. Each representation and warranty that is
qualified by materiality is true and correct as of the time the merger
becomes effective (other than those which speak as of a different date,
which must be true and correct as of that date), each representation and
warranty that is not so qualified is true and correct in all material
respects, all material agreements and covenants have been performed and
complied with, and each party has received from the other party a
certificate of the chief executive officer or chief financial officer
certifying to the foregoing.
In addition, News Corporation will not be obligated to complete the merger
unless:
. Affiliate Letter. News Corporation has received an executed copy of an
agreement substantially in the form of Exhibit A to the merger agreement
from each person named in the letter identifying all persons who may be
deemed affiliates of BHC under Rule 145 of the Securities Act.
. Consents and Orders. News Corporation has received satisfactory evidence
that all material consents, approvals, authorizations, qualifications and
orders of all governmental authorities legally required for the
consummation of the merger, and all other consents, approvals,
authorizations, qualifications and orders of all governmental authorities
or third parties required for the consummation of the merger have been
obtained.
. Tax Matters. In the case of a forward merger, News Corporation has
received:
. an opinion from its tax counsel that the merger will qualify as a tax-
free reorganization under section 368 of the Internal Revenue Code, no
income, gain or loss will be recognized by News Corporation, News
Publishing and BHC as a result of the merger, and no income, gain, or
loss will be recognized by the holders of BHC common stock except to
the extent such holders receive cash under the merger; and
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. a private letter ruling from the IRS to the effect that the merger will
satisfy the continuity of business enterprise requirement described in
section 1.368-1(d) of the Treasury Regulations.
. Adverse Condition. No "adverse condition" exists in the FCC consent.
"Adverse Conditions" are discussed under the heading "Covenants of Chris-
Craft and News Corporation--Regulatory Filings" on page [ . ].
BHC will not be obligated to complete the merger unless:
. Tax Matters. In the case of a forward merger, BHC has received:
. an opinion from its tax counsel that the merger will qualify as a tax-
free reorganization under section 368 of the Internal Revenue Code, no
income, gain or loss will be recognized by News Corporation, News
Publishing and BHC as a result of the merger, and no income, gain, or
loss will be recognized by the holders of BHC common stock except to
the extent such holders receive cash under the merger; and
. a private letter ruling from the IRS to the effect that the merger will
satisfy the continuity of business enterprise requirement described in
section 1.368-1(d) of the Treasury Regulations.
Termination
The merger agreement may be terminated and the merger abandoned at any time
prior to the effective time:
. by mutual written consent duly authorized by the boards of directors of
each of News Corporation and BHC;
. by either company, if the transaction is not completed on or prior to
November 13, 2001;
. by BHC, upon a breach of a representation, warranty, covenant or
agreement on the part of News Corporation or Fox Television Holdings set
forth in the merger agreement, such that a condition to the merger cannot
be satisfied prior to November 13, 2001;
. by News Corporation, upon breach of a representation, warranty, covenant
or agreement on the part of BHC set forth in the merger agreement, such
that a condition to the merger cannot be satisfied prior to November 13,
2001;
. by either company, if a governmental authority has issued a final and
non-appealable order or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the merger;
. by either company, if the approval of the merger by the stockholders of
BHC required for the consummation of the merger has not been obtained by
reason of the failure to obtain the required vote at a duly held
stockholders' meeting, provided BHC will not have the right to terminate
the BHC merger agreement if the breach by Chris-Craft of the voting
agreement is the reason for such failure;
. by either company, if the Chris-Craft merger agreement has been
terminated, provided that neither party will have the right to terminate
the BHC merger agreement if its actions or failure to act prevented the
consummation of the Chris-Craft merger, and provided further that BHC
will not have the right to terminate the BHC merger agreement if the
Chris-Craft merger was terminated because of the failure of the Chris-
Craft stockholders to approve their merger at a duly held stockholders
meeting called for such purpose; or
. by either company, if the United Television merger agreement has been
terminated; provided, that a party will not have the right to terminate
the merger agreement if its actions or failure to act has prevented the
consummation of the United Television merger; and provided further that
this condition
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may not be enforced by BHC because of the failure of United Television
stockholders to approve their merger at a duly held stockholders' meeting
called for such purpose.
None of the parties is required to pay a "termination" or "break-up" fee to
another party if the merger agreement is terminated. Any party may, however,
be liable to the other parties in the event of any willful breach of the
merger agreement.
Amendment; Waiver
At any time before the merger becomes effective, the parties may amend or
supplement any of the terms of the merger agreement in writing, except that
following approval by the BHC stockholders, the parties may not make any other
change requiring stockholder approval without obtaining such approval, and any
such amendment must also be approved by the special committee. The parties may
extend the time for performance of any obligation, waive any inaccuracy in any
representation and warranty or other document delivered under the merger
agreement, or waive compliance with any condition or agreement in the merger
agreement. Any valid waiver must be in writing signed by the party bound by
the waiver.
Costs and Expenses
The parties will bear their own costs and expenses in connection with the
merger agreement and the contemplated transactions except that News
Corporation and BHC will each pay one-half of the costs associated with
printing, filing and mailing this joint proxy statement/prospectus and
regulatory filing fees. News Corporation will pay all expenses of the exchange
agent. BHC, Chris-Craft and United Television will not, in the aggregate, pay
more than one-half of the aggregate transaction expenses.
The BHC Voting Agreement and Proxy
Simultaneously with the execution of the BHC merger agreement, Chris-Craft,
which holds approximately 97% of the voting power of BHC, entered into a
voting agreement with News Corporation Limited and News Publishing in which
Chris-Craft agreed to vote all of its shares of class A common stock, class B
common stock, and any other equity securities of BHC with voting rights it
owns in favor of the approval and adoption of the BHC merger agreement,
against any proposals in opposition to the BHC merger agreement and against
any competing transaction or superior proposal. Chris-Craft has also agreed in
the voting agreement not to transfer ownership of any of its shares of BHC
stock unless the transferee unconditionally agrees in writing to be bound by
the voting agreement. The voting agreement terminates upon the earlier of the
termination of the BHC merger agreement or the effective time of the merger.
In connection with the voting agreement, Chris-Craft delivered an
irrevocable proxy granting to News Corporation the power to vote Chris-Craft's
BHC shares in favor of the merger proposal in the event that Chris-Craft does
not comply with the terms of the voting agreement.
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The United Television Merger Agreement
The following summary describes the material terms of the United Television
merger agreement. We urge you to read carefully the complete United Television
merger agreement, to which the following is subject, a copy of which is
attached as Annex C to this joint proxy statement/prospectus and is
incorporated herein by reference.
Form of Merger
The United Television merger is structured initially as a forward merger.
However, in the event of a restructuring trigger (described below) the merger
will be restructured as a reverse merger.
The Forward Merger. If the United Television merger is effected as a forward
merger, United Television will merge into News Publishing, a subsidiary of News
Corporation, with News Publishing continuing as the surviving corporation in
the merger.
Restructuring. In the event a restructuring trigger has occurred and has not
been cured prior to the effective time of the United Television merger, the
merger will be restructured as a reverse merger. A restructuring trigger is
defined in the United Television merger agreement as either a ruling failure
(described below) or an FCC failure (described below).
. A "ruling failure" will occur if (within various time periods specified
in the merger agreement):
. News Corporation and United Television do not receive a private letter
ruling from the IRS to the effect that the forward merger will satisfy
the continuity of business enterprise requirement contained in
Treasury Regulations section 1.368-1(d);
. the IRS indicates to the parties that it is not likely to grant such a
ruling; or
. tax counsel to either News Corporation or United Television indicates
that it will be unable to deliver the tax opinion which is required as
a condition to effecting a forward merger.
. An "FCC failure" will occur if (within various time periods specified in
the merger agreement):
. the FCC does not consent to the assignment or transfer of control of
the FCC licenses (including the transfer of applicable authorizations,
licenses, permits and other FCC approvals) to Fox Television Holdings
or one of its subsidiaries, in the manner contemplated by the merger
agreement; or
. the FCC indicates to the parties that it will not so consent.
The Reverse Merger. If the merger is effected as a reverse merger, at the
election of News Corporation, either a wholly owned subsidiary of Fox
Entertainment Group, or, if the BHC merger has occurred prior to the effective
time of the United Television merger, a wholly owned subsidiary of BHC, will
merge with and into United Television, and United Television will be the
surviving corporation following the merger.
Closing Matters
Closing. United Television and News Corporation will announce the
anticipated date of the closing of the forward merger at least three but no
more than five business days prior to the proposed closing date. In both the
forward and reverse merger structures, unless the parties otherwise agree, the
closing will occur immediately following the closing of the BHC merger.
Effective Time. On the closing date, the merger will be effective upon
filing a certificate of merger with the Secretary of State of the State of
Delaware. The effective time of the merger is the time the certificate of
merger is filed with the Secretary of State of the State of Delaware or such
other date and time as United Television and News Corporation specify in the
certificate of merger.
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Order of Mergers
If all of the conditions to closing the Chris-Craft merger and the BHC
merger are satisfied or waived, the mergers will occur in order such that the
BHC merger will occur after the Chris-Craft merger. If the conditions to
closing the United Television merger are satisfied or waived the United
Television merger will occur after the BHC merger.
Merger Consideration
The consideration to be received by United Television stockholders in the
United Television merger depends on whether the merger is effected as a forward
merger or a reverse merger and is described below.
. In both the forward merger and the reverse merger, the form of Preferred
ADSs to be issued are American depositary shares of News Corporation,
which are traded on the New York Stock Exchange under the symbol
"NWS.A". Each Preferred ADS represents four Preferred Ordinary Shares of
News Corporation, which are traded on the Australian Stock Exchange
under the symbol "NCPDP". For a description of the Preferred ADSs, see
"Description of News Corporation Capital Stock" beginning on page [ . ].
. In both the forward merger and the reverse merger, you will receive cash
in lieu of any fractional Preferred ADSs. For more information about
fractional shares, see "--No Fractional Shares" on page [ . ].
Forward Merger Consideration
If the merger is effected as a forward merger, United Television
stockholders will have the right, with respect to each of their United
Television shares, to make one of the following elections and to receive the
consideration indicated below, subject to proration and adjustment as described
below.
<TABLE>
<CAPTION>
Consideration to be Received per United Television
Type of Election Common Share
---------------- --------------------------------------------------
<C> <S>
. Mixed Election...... $60 in cash and 2.0253 Preferred ADSs
. All Cash Election... An amount in cash equivalent in value to the per
share consideration received by a stockholder who
made a mixed election (determined in the manner
described below)
. All Stock Election.. A number of Preferred ADSs equivalent in value to the
per share consideration received by a stockholder who
made a mixed election (determined in the manner
described below)
</TABLE>
The consideration to be paid for all stockholders who make all cash or all
stock elections cannot be determined until the close of trading on the business
day immediately prior to the closing of the merger. We intend to announce these
amounts when known.
Any United Television stockholder who does not make an election or otherwise
indicates no preference in his or her form of election will be deemed to have
made a non-election and will receive cash and/or stock based on what is
available after giving effect to the elections made by other stockholders, as
well as the proration and adjustment described below. In addition, United
Television stockholders may specify different elections with respect to
different lots of their shares (for example, a stockholder with 100 shares
could make a mixed election with respect to 25 shares, an all cash election
with respect to 50 shares and an all stock election with respect to the
remaining 25 shares).
Mixed Election. The number of Preferred ADSs and the amount of cash to be
paid to stockholders who make mixed elections (unlike all cash elections and
all stock elections) will not be subject to proration, other than adjustment in
specified circumstances for tax purposes and to avoid dilution. For information
about adjustment in specific circumstances for tax purposes and to avoid
dilution, see "--Adjustment to Preserve Tax Treatment of Forward Merger" and
"--Anti-dilution Adjustments to Merger Consideration" on pages [ . ] and [ . ].
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All Cash Election. Each United Television stockholder who makes a valid all
cash election will have the right to receive in exchange for each share of
United Television stock an amount in cash equivalent in value (as of the
closing date of the merger) to the value of the cash and Preferred ADSs
received by a stockholder who made a mixed election. The value of the cash to
be received per share in a valid all cash election is determined using a
formula contained in the merger agreement, which is summarized below. The
formula contained in the merger agreement is more complex than the computation
method we used in the examples contained under "Summary --What You Will Receive
in the Mergers" beginning on page [ . ]; however, in both cases, substantially
the same result is obtained, except for differences due to rounding.
The United Television merger agreement provides that each United Television
stockholder who makes a valid all cash election will have the right to receive,
in exchange for each share of United Television stock, an amount in cash equal
to the "per share amount".
The "per share amount" is the amount obtained by dividing the "closing
transaction value" by the number of "exchangeable shares".
. The "closing transaction value" is the dollar amount of the sum of (A)
the "aggregate cash amount" and (B) the product of the "aggregate buyer
share amount" and the "closing buyer share value".
. The "aggregate cash amount" is:
(1) 40% of the product of the amount obtained by multiplying the
number of shares of United Television stock issued and
outstanding immediately prior to the effective time of the
merger, less any shares cancelled in the merger, by $150, less
(2) the amount of cash to be paid in respect of shares of United
Television stock for which the holders have made mixed elections
(other than dissenting shares) (as described below).
. The "aggregate buyer share amount" is:
(1) 60% of the product of the amount obtained by multiplying the
number of shares of United Television stock issued and
outstanding immediately prior to the effective time of the
merger, less any shares cancelled in the merger, by 3.3755, less
(2) the number of Preferred ADSs to be issued in respect of shares of
United Television stock for which the holders have made mixed
elections (other than dissenting shares).
. The "closing buyer share value" is the volume weighted average trading
price for all trades of Preferred ADSs reported on the NYSE for each of
the five trading days preceding, but not including, the closing date of
the merger, unless an earlier date is required to comply with SEC rules.
. The "exchangeable shares" are the shares of United Television stock
issued and outstanding immediately prior to the effective time of the
merger, less any shares to be cancelled in the merger (such as treasury
stock) or shares for which the holders have made mixed elections (other
than dissenting shares).
. The "dissenting shares", for purposes of these and certain other
computations, are shares of United Television stock for which the holder
has taken all the necessary steps required to be taken by the applicable
date to exercise his or her appraisal rights under Delaware law. For more
information about appraisal rights, see "Appraisal Rights" on page [ . ].
All Stock Election. Each United Television stockholder who makes a valid all
stock election will receive in exchange for each share of United Television
stock a number of Preferred ADSs equal in value (as of the closing date of the
merger) to the value of the cash and Preferred ADSs received by a stockholder
who made a mixed election. The value of the Preferred ADSs to be received is
determined using a formula contained in the merger agreement, which is
summarized below. The formula contained in the merger agreement is more complex
than the computation method we used in the examples contained under "Summary--
What You Will Receive in the Mergers" beginning on page [ . ]; however, in both
cases, substantially the same result is obtained.
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The United Television merger agreement provides that each United Television
stockholder who makes a valid all stock election will receive, in exchange for
each share of United Television stock, a number of Preferred ADSs equal to the
"exchange ratio".
The "exchange ratio" is defined in the merger agreement as the number of
Preferred ADSs obtained by dividing the per share amount by the closing buyer
share value (each of which is described above).
Non-Election Shares. United Television stockholders who indicate that they
have no preference as to whether they receive cash or Preferred ADSs in the
merger, and United Television stockholders who do not make a valid election,
will be deemed to have made a "non-election". Stockholders making a non-
election may be paid in cash, Preferred ADSs or a mixture of cash and Preferred
ADSs depending on, and after giving effect to, the number of mixed elections,
all cash elections and all stock elections that have been made by other United
Television stockholders making elections using the proration adjustment
described below.
Proration. The total number of Preferred ADSs that will be issued and the
total amount of cash that will be paid in the United Television merger is
2.0253 and $60, respectively, multiplied by the total number of United
Television shares outstanding immediately prior to the completion of the United
Television merger. Therefore, the all cash and all stock elections are subject
to proration to preserve these limitations on the amount of cash to be paid and
number of Preferred ADSs to be issued in the United Television merger.
As a result, even if you make the all cash election or all stock election,
you may nevertheless receive a mix of cash and stock. Stockholders who make the
mixed election will not be subject to proration.
Proration if Too Much Cash is Elected. Preferred ADSs may be issued to
stockholders who make all cash elections if the all-cash election is
oversubscribed. We describe below how the proration mechanism will be used.
The maximum number of shares of United Television common stock that may be
converted into the right to receive cash in the merger (other than through
mixed elections or dissenting shares) is equal to the "all cash election
number".
The "all cash election number" is computed by dividing the aggregate cash
amount (as described above) by the per share amount (as described above) and
then subtracting the number of dissenting shares, if any.
If the all-cash election is oversubscribed, then United Television
stockholders making all cash elections will receive a combination of cash and
Preferred ADSs equal to the following for each share of United Television
stock:
. an amount in cash equal to the product of (1) the per share amount (as
described above) and (2) the "cash fraction" (described below); and
. a number of Preferred ADSs equal to the product of (1) the exchange
ratio (as described above) and (2) a fraction equal to one minus the
cash fraction.
In addition, if the all cash election is oversubscribed, stockholders making
all stock elections or making (or deemed to be making) non-elections for any of
their shares of United Television stock will receive Preferred ADSs for each of
these shares.
The "cash fraction" is a fraction with (1) a numerator equal to the all cash
election number and (2) a denominator equal to the total number of shares of
United Television common stock for which an all cash election has been made
(other than dissenting shares).
Proration if Too Much Stock is Elected. Cash may be paid to stockholders who
make all stock elections if the all stock election is oversubscribed. We
describe below how the proration mechanism will be used.
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The maximum number of shares of United Television common stock that may be
converted into Preferred ADSs in the merger (other than through mixed elections
(other than dissenting shares)) is equal to the "stock election number".
The "stock election number" is computed by taking the number of shares of
United Television stock issued and outstanding immediately prior to the
effective time of the merger and subtracting from that amount (1) the all cash
election number (as described above), (2) any cancelled or dissenting shares
and (3) any shares for which the holders have made mixed elections (other than
dissenting shares).
If the all stock election is oversubscribed, then United Television
stockholders making an all stock election will receive a combination of cash
and Preferred ADSs equal to the following for each share of United Television
stock:
. a number of Preferred ADSs equal to the product of (1) the exchange
ratio (as described above) and (2) the "stock fraction" (described
below), and
. an amount in cash equal to the product of (1) the per share amount (as
described above) and (2) a fraction equal to one minus the stock
fraction.
In addition, if the all stock election is oversubscribed, stockholders
making all cash elections or making (or deemed to be making) non-elections for
any of their shares of United Television stock will receive cash for each of
these shares.
The "stock fraction" is a fraction with (1) a numerator equal to the stock
election number and (2) a denominator equal to the total number of shares of
United Television common stock for which a stock election has been made (other
than dissenting shares).
Proration of Non-Election Share Consideration. As described above, if too
many stockholders make all cash elections, stockholders making (or deemed to be
making) non-elections will receive only Preferred ADSs and if too many
stockholders make all stock elections, stockholders making (or deemed to be
making) non-elections will receive only cash. If both the all cash election and
all stock election are undersubscribed (after giving effect to all mixed
elections), the merger consideration received by stockholders making (or deemed
to be making) non-elections will be determined in accordance with the following
mechanism.
If the aggregate number of shares of United Television stock covered by all
cash elections does not exceed the all cash election number (as described
above) and the number of shares of United Television stock covered by all stock
elections does not exceed the stock election number (described above), then
United Television stockholders having made (or deemed to have made) non-
elections will receive the following for each share of United Television stock:
. an amount in cash (if any) equal to the product of (1) the per share
amount (as described above) and (2) the "non-election fraction"
(described below); and
. a number of Preferred ADSs (if any) equal to the product of (1) the
exchange ratio (as described above) and (2) a fraction equal to one
minus the non-election fraction.
. The "non-election fraction" is a fraction with (1) a numerator equal
to (A) the all cash election number (as described above under
"Proration if Too Much Cash is Elected" on page [ . ]) less (B) the
total number of shares of United Television stock for which an all
cash election has been made (other than dissenting shares), and (2)
a denominator equal to (A) the number of exchangeable shares (as
described above) less (B) any dissenting shares and less (C) the
total number of shares of United Television stock for which either
an all cash election or an all stock election has been made (other
than dissenting shares).
Reverse Merger Consideration
If the transaction is effected as a reverse merger, each United Television
share will be converted into $63 in cash and 2.1266 Preferred ADSs. Unlike the
forward merger, United Television stockholders have no right
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to make elections in the reverse merger and, except for anti-dilution
protection, these amounts generally are not subject to adjustment.
Stock Options
Stock options for the purchase of United Television stock will be converted
into options to purchase Preferred ADSs. Each outstanding unexpired and
unexercised option to purchase shares of common stock of United Television will
be automatically converted at the effective time of the merger into an option
to purchase a number of Preferred ADSs equal to the number of shares of United
Television common stock that could have been purchased under the United
Television option multiplied by either (1) the exchange ratio (as described
above) in the case of the forward merger or (2) 3.54433 in the case of the
reverse merger, in each case at a price per Preferred ADS equal to the per-
share option exercise price specified in the United Television option divided
by the exchange ratio in the case of the forward merger and by 3.54433 in the
case of the reverse merger. The substitute options will be subject to the same
terms and conditions as were applicable to the United Television options,
except as mandated by the requirements of the ASX or Australian law. After the
effective time of the merger, all references to United Television in United
Television's stock option agreements will be deemed to refer to News
Corporation.
News Corporation has agreed to file a Form S-8 or other appropriate
registration statement with the SEC covering the Preferred ADSs subject to the
substituted options, to the extent a registration is required under applicable
law, within two business days after the effective time of the merger and will
use its reasonable best efforts to obtain and maintain the effectiveness of the
registration statement.
Adjustment to Preserve Tax Treatment of Forward Merger
In the event that the closing price of Preferred ADSs on the NYSE on the
trading day immediately preceding the date of the closing is such that the
aggregate amount of cash paid as merger consideration exceeds 55% of the
combined value of all of the cash and the Preferred ADSs to be paid in the
merger, then, in order for the forward merger to qualify as a tax-free
reorganization, the amount of cash paid to United Television stockholders
making all cash elections and, in some circumstances, the amount of cash paid
to United Television stockholders making mixed elections may be adjusted so
that, in lieu of cash, these stockholders will receive Preferred ADSs in the
amount of the adjustment. To effect the adjustment, the merger agreement
provides that if the "cash amount" (described below) exceeds 55% of the total
consideration, the components of the merger consideration will be modified as
follows:
. first, in the case of shares of United Television stock for which an all
cash election has been made, by reducing the cash portion of the merger
consideration by the minimum amount necessary to avoid this result, but
in no event below the amount of cash payable in exchange for shares for
which a mixed election has been made, and paying in lieu of this cash, a
number of Preferred ADSs equal to the amount of the per share cash
reduction divided by the closing price of Preferred ADSs referred to
above; and
. second, after making the above reduction, in the event that the cash
amount is still in excess of 55% of the total consideration to be paid
in the merger, by reducing the cash payable in exchange for shares of
United Television stock for which all cash elections or mixed elections
have been made to the extent necessary to avoid this result and paying,
in lieu of this cash, a number of Preferred ADSs equal to the amount of
per share cash reduction divided by the closing price of Preferred ADSs
referred to above.
The "cash amount" is defined in the merger agreement as the sum of (1) the
aggregate cash amount (as described above) and (2) the product of (A) $60 and
(B) the number of shares of United Television stock for which a mixed election
has been made.
The "total consideration" is defined in the merger agreement as the sum of
(1) the cash amount and (2) the product of (A) the closing price of Preferred
ADSs referred to above, (B) 3.3755 and (C) 60% of the
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number of shares of United Television stock outstanding immediately prior to
the effective time of the merger (less any cancelled shares).
In a forward merger, if either Squadron Ellenoff or Kaye Scholer is unable
to render an opinion that the receipt of Preferred ADSs will be tax-free for
U.S. federal income tax purposes, News Corporation will make adjustments
similar to those described above, to the extent necessary, so that each tax
advisor is able to render its tax opinion.
Anti-dilution Adjustments to Merger Consideration
If, before the merger becomes effective, News Corporation declares or
effects a stock split, stock or cash dividend (other than ordinary cash
dividends declared and paid consistent with past practice) or other
reclassification, acquisition, exchange or distribution with respect to the
Preferred ADSs, there will be an appropriate adjustment to the merger
consideration unless such adjustment would:
. in a forward merger, prevent either Kaye Scholer or Squadron Ellenoff
from delivering an opinion that the merger will be a tax free
reorganization;
. create a meaningful risk that the consideration paid in respect of the
adjustment would be taxable to or have an adverse tax consequence to
United Television stockholders; or
. change the tax treatment of the event giving rise to the adjustment.
If the adjustment would have any of the above consequences, News Corporation
will adjust the merger consideration in an appropriate manner:
. to convey value to the United Television stockholders in an amount equal
to the anti-dilution adjustment;
. in the case of a forward merger, to permit the tax opinions to be
rendered; and
. if United Television requests, to avoid the adverse tax consequences to
holders of United Television shares.
Dividends
United Television stockholders will not have the right to receive any
dividends or other distributions payable by News Corporation with respect to
the Preferred ADSs unless and until they exchange their United Television stock
certificates for Preferred ADSs. After delivering their United Television stock
certificates to the exchange agent, those stockholders will receive, subject to
applicable laws, accumulated dividends and distributions with a record date
after the effective time of the merger, without interest.
No Fractional Shares
No fractional Preferred ADSs will be issued. In addition, no dividend or
other distribution of Preferred ADSs will relate to any fractional Preferred
ADSs, and no fractional Preferred ADSs will entitle the holder to any voting or
other rights of a holder of Preferred ADSs.
United Television stockholders otherwise entitled to fractional Preferred
ADSs will instead receive a cash payment equal to the amount of the
stockholder's proportionate interest in the net proceeds from the sale by the
exchange agent, on behalf of all United Television stockholders, of the
aggregate fractions of Preferred ADSs which would otherwise be issued in the
merger, without interest.
No Interest
No interest will be paid on any portion of the merger consideration.
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Withholding
News Corporation will be entitled to deduct and withhold from the merger
consideration payable to any stockholder the amounts it is required to deduct
and withhold under federal, state, local or foreign tax law. If News
Corporation withholds any amounts, these amounts will be treated for all
purposes of the merger as having been paid to the stockholders from whom they
were withheld.
Exchange of Certificates; Elections as to Form of Consideration
Exchange agent. News Corporation has selected [ . ] as exchange agent. The
exchange agent will exchange certificates representing shares of United
Television stock for merger consideration to be received in the merger. At the
effective time, News Corporation will:
. deposit with the exchange agent cash to the extent it constitutes merger
consideration; and
. deposit certificates representing Preferred Ordinary Shares with its
custodian, and instruct Citibank, N.A., as depositary under a depositary
agreement, to deposit the Preferred ADSs, each representing four fully
paid and non-assessable shares of Preferred Ordinary Shares, to be
exchanged as merger consideration in the merger with the exchange agent
for the benefit of holders exchanging United Television shares in the
merger.
The Preferred Ordinary Shares underlying the Preferred ADSs to be issued as
consideration in the merger will rank pari passu with all of the Preferred
Ordinary Shares. The Preferred Ordinary Shares will receive the same dividend
entitlement of any previously issued Preferred Ordinary Shares outstanding as
of the date of the effective time of the merger.
Letter of transmittal and form of election. The merger agreement provides
that concurrent with the mailing of this joint proxy statement/prospectus, the
companies will mail to each stockholder a letter of transmittal that
stockholders must properly complete and deliver to the exchange agent with the
certificates they are surrendering and a form of election with instructions for
making the mixed election, all cash election or all stock election in a forward
merger. If a stockholder cannot deliver his or her stock certificates to the
exchange agent by the election deadline described below, a stockholder may
deliver an appropriate guarantee of delivery promising to deliver his or her
stock certificates, as described in the letter of transmittal and form of
election, so long as (1) the guarantee of delivery is from a firm which is a
member of the NYSE or another registered national securities exchange or a
commercial bank or trust company having an office or correspondent in the
United States and (2) the actual stock certificates are in fact delivered to
the exchange agent within five NYSE trading days after the election deadline.
The companies will use their reasonable best efforts to mail the letter of
transmittal and form of election to each holder who is a holder on the record
date for the special meeting or becomes a holder during the period between the
record date and seven calendar days prior to the effective time of the merger.
The companies will use their reasonable best efforts to make the letter of
transmittal and form of election available to all holders who become holders
subsequent to the seventh calendar day prior to the effective time of the
merger up until 5:00 pm New York City time on the last business day prior to
the effective time of the merger.
Holders of United Television stock who wish to elect the type of merger
consideration they will receive in the event of a forward merger should
carefully review and follow the instructions set forth in the letter of
transmittal and form of election. The form of election, accompanied by the
certificates to be exchanged or a pledge to deliver such certificates after the
closing, must be received by the exchange agent prior to the election deadline,
which is 10:00 am New York City time on the day of the closing of the merger.
News Corporation has the discretion to review the forms of election to
determine whether an election has been validly made.
An election may be revoked, but only by written notice received by the
exchange agent prior to the election deadline. Upon any revocation, unless a
duly completed letter of transmittal and form of election, accompanied by a
certificate, is thereafter submitted, such shares shall be deemed to be non-
election shares. If a
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letter of transmittal and form of election is revoked, or the merger agreement
is terminated, and any certificates have been transmitted to the exchange
agent, the exchange agent will promptly return those certificates, without
charge, to the person who submitted those certificates.
Shares of United Television stock as to which the holder has not made a
valid election prior to the closing of the merger, including as a result of
revocation, will be deemed non-electing shares. If News Corporation or the
exchange agent determines that any purported mixed election, all cash election,
or all stock election was not properly made, the purported election will be
deemed to be of no force or effect and the holder making the purported election
will be deemed to have made a non-election for these purposes.
News Corporation will have the discretion (which it may delegate in whole or
in part to the exchange agent) to determine whether letters of transmittal and
forms of election have been properly completed, signed and submitted or revoked
and to disregard immaterial defects in letters of transmittal and forms of
election. The decision of News Corporation (or the exchange agent) in such
matters, absent manifest error, shall be conclusive and binding. Neither News
Corporation nor the exchange agent will be under any obligation to notify any
person of any defect in a letter of transmittal and form of election submitted
to the exchange agent. The exchange agent and News Corporation shall also make
all computations related to elections, proration and adjustment and all such
computations shall be conclusive and binding on stockholders absent manifest
error. In addition, News Corporation reserves the right not to recalculate the
effects of proration and adjustment if, subsequent to such calculation,
stockholders withdraw any demands for dissenters' rights they may have made.
Soon after the completion of the United Television merger, the exchange
agent will send another letter of transmittal to each person who was a
stockholder at the effective time who has not previously and properly
surrendered shares of United Television stock to the exchange agent. This
mailing will contain instructions on how to surrender shares of United
Television stock (if these shares have not already been surrendered) in
exchange for the merger consideration the holder is entitled to receive under
the merger agreement.
Dissenting Shares
The merger agreement provides that, notwithstanding other provisions
contained in the merger agreement, to the extent that stockholders are entitled
to appraisal rights under Section 262 of the Delaware General Corporation Law,
shares of stock issued and outstanding immediately prior to closing and held by
stockholders who have properly exercised and perfected their demand for
appraisal rights under Section 262 of the Delaware General Corporation Law
(i.e., dissenting shares) will not be converted into the right to receive the
merger consideration. Instead, the holders of dissenting shares will be
entitled to receive the consideration determined by Section 262 of the Delaware
General Corporation Law; provided, however, that if any stockholder fails to
perfect, effectively withdraws or loses his or her right to appraisal and
payment under Delaware law, that stockholder's shares will be deemed to have
been converted as of the closing date into the right to receive the merger
consideration, without any interest, and those shares will not be deemed to be
dissenting shares. For a discussion of appraisal rights, see "Appraisal Rights"
on page [ . ].
Officers and Directors; Articles and By-laws
If a forward merger occurs, the officers and directors of News Publishing
will continue as the officers and directors following the merger. Also, the
articles and by-laws of News Publishing will continue as the articles and by-
laws of News Publishing after the merger. If a reverse merger occurs, the board
of directors and officers of the wholly owned subsidiary of Fox Entertainment
Group formed for the purpose of effecting the merger will become the officers
and directors of United Television and the certificate of incorporation and by-
laws of United Television will be amended and restated to conform to the
certificate and by-laws of such subsidiary.
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Representations and Warranties of United Television and News Corporation
In the merger agreement, News Corporation and United Television make
representations and warranties to each other about their respective companies
and their respective subsidiaries. The representations and warranties of News
Corporation and United Television are subject to exceptions for disclosures
made by each of the respective companies. News Corporation and United
Television make representations and warranties to each other regarding, among
other things, the following:
. their corporate organization, good standing and qualification to do
business;
. validity and effectiveness of their charter and by-laws;
. capitalization of their companies;
. the authorization, execution, delivery and performance and the
enforceability of the merger agreement and related matters;
. absence of material defaults or violations under their certificates of
incorporation and bylaws and certain other agreements and laws as a
result of the contemplated transactions, except as disclosed;
. except as disclosed, the absence of any requirement of consents,
including consents of third parties, approvals, filings or other
authorizations to enter into the merger agreement and consummate the
merger;
. possession and effectiveness of all permits and licenses and contracts
necessary to carry on business as currently conducted;
. the absence of material violations of laws or government orders;
. filings with the SEC and the accuracy and completeness of the
information contained in these filings;
. accuracy of financial statements included in filings with the SEC;
. the absence of certain material changes in their respective businesses
since December 31, 1999;
. the absence of actions, facts, agreements, plans or other circumstances
that would be reasonably likely to prevent the merger from qualifying as
a reorganization withing the meaning of section 368(a) of the Internal
Revenue Code; and
. their use of brokers.
In addition, United Television also makes representations and warranties in
the merger agreement with respect to United Television and its subsidiaries, as
applicable, regarding the following matters, except as disclosed in the United
Television merger agreement:
. material compliance with applicable rules and regulations of the FCC,
and the absence of material proceedings before the FCC;
. absence of conflict with permits and material obligations;
. absence of defaults under material contracts and licenses;
. ownership by United Television of its subsidiaries;
. authority of special committee, and recommendation of special committee
that stockholders of United Television approve the merger and adopt the
merger agreement;
. nonexistence of contracts or agreements that restrict the ability of
United Television or its subsidiaries from competing in any line of
business or with any person and engaging in any business in any
geographic area;
. absence of facts or circumstances that would prevent the construction
and operation of DTV stations by the relevant deadline established by
the FCC;
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. absence of material litigation;
. material compliance of employee benefit plans with applicable laws,
benefit obligations of United Television and its subsidiaries and the
effect of the merger on such plans, and the absence of proceedings
regarding such plans;
. absence of pending labor actions and material compliance with labor
agreements;
. environmental matters;
. ownership of intellectual property;
. material compliance with applicable tax laws;
. title to properties and assets;
. Year 2000 compliance;
. opinion of Bear, Stearns & Co. Inc., financial advisor to the United
Television special committee;
. stockholder vote required to adopt the merger agreement; and
. inapplicability of state anti-takeover provisions to the merger
agreement and the voting agreement and proxy delivered in connection
therewith.
News Corporation also makes representations and warranties in the merger
agreement with respect to News Corporation and its subsidiaries, as applicable,
regarding:
. authority of Fox Television Stations and a newly-formed subsidiary of
Fox Entertainment Group to enter into the agreement under which Fox
Television Stations will operate the television stations acquired in the
merger as licensee;
. conformity of Preferred ADSs to be issued as merger consideration in all
material respects to the description of such shares set forth in the
proxy statement dated July 10, 1997 of Heritage Media Corporation;
. due authorization, execution and delivery of the deposit agreement under
which News Corporation will deposit its Preferred ADSs with Citibank,
NA, acting as depositary;
. compliance with all applicable ASX filing requirements and accuracy and
completeness of such ASX filings;
. accuracy of financial statements contained in ASX filings;
. no conduct of business prior to the effective time of any subsidiary
formed for the purpose of merging into Chris-Craft, BHC or United
Television; and
. ownership of at least 80% of the voting and nonvoting stock of News
Publishing.
All representations and warranties made in the merger agreement expire at
the closing of the merger.
Conduct of business by United Television
United Television has agreed that, until the merger is effected or the
merger agreement is terminated, it will not, subject to various exceptions,
take specific actions without the consent of News Corporation, unless expressly
permitted by the merger agreement or in the Chris-Craft merger agreement.
United Television has agreed to the following with respect to itself and, where
applicable, its subsidiaries:
. Conduct of Operations. To conduct its businesses in the ordinary course
and in a manner consistent with past practice, including preserving
intact its business organizations and relationships.
. Governing Documents. Not to amend its charter or by-laws in any material
respect.
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. Issuance of Stock. Not to issue, sell or otherwise dispose of shares of
its capital stock, except for the issuance of common stock upon the
exercise of outstanding options.
. Properties and Assets. Not to sell, encumber or otherwise dispose of any
assets except for sales of marketable securities and investment assets
for their fair value and except for sales of other assets in the
ordinary course of business consistent with past practice not in excess
of specified amounts.
. Dividends and Distributions. Not to declare, make or pay any dividend or
other distribution (other than regular cash dividends payable by any
wholly owned subsidiary with respect to ordinary course dividends,
including dividends designated as special dividends, in a manner
consistent with past practice). United Television may, however, advance
funds to Chris-Craft on an as-needed basis, including, without
limitation, to pay merger expenses, under short term loans on arms-
length terms, which loans must be repaid by Chris-Craft if the Chris-
Craft merger is not consummated no later than 30 days after consummation
of the United Television merger.
. Changes to Capital Stock. Not to reclassify, combine, split, subdivide
or redeem, purchase or otherwise acquire, directly or indirectly, any of
its or its subsidiaries' capital stock.
. Business Combinations; Assets; Indebtedness. Except in connection with
acquisitions or investments in the ordinary course of business
consistent with past practice and not in excess of specified amounts,
not to (1) invest in other companies or assets, or acquire any interest
in any broadcast radio or television station, daily English-language
newspaper or cable television system; or (2) incur any indebtedness
except the refinancing of existing indebtedness.
. Material Contracts. Not to enter into or amend any material contracts
other than in the ordinary course of business and that would not be
reasonably likely to prevent or materially delay the consummation of the
merger.
. Capital Expenditures. Not to authorize any capital expenditures in
excess of specified amounts.
. Employee Compensation. Not to increase compensation to executive
officers or employees except as specified and except for special bonuses
to reward those employees whose efforts were instrumental to the
successful consummation of the merger. For additional information about
special bonuses, see "Interests of Certain Directors and Executive
Officers of the Companies in the Mergers--Bonus Pool" on page [ . ].
. Employee Benefits. Not to grant any severance or termination pay to any
director or executive officer or employee or take action to accelerate
any rights or benefits under any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement.
. Accounting. Not to change its accounting practices.
. New Contracts. Not to enter into any contract, agreement, lease,
license, permit, franchise or other instrument or obligation which, if
in existence and known prior to the execution of the merger agreement,
would have resulted in it breaching certain representation and
warranties.
. Litigation; Liabilities. Not to make any material settlements or
compromises in connection with any material arbitration, action, suit,
investigation or proceeding (other than those related to tax matters),
or in connection with the merger or settle or discharge any material
liability except as specified.
. Related Party Agreements. Not to amend or waive any right under or enter
into any agreement with any affiliate of United Television or with any
stockholder or any of the stockholders' affiliates.
. Affiliation Agreements. Not to materially change or terminate any
network affiliation agreement, retransmission consent agreement or,
subject to specified exceptions, any agreement licensing or creating any
obligations with respect to the use of the digital data stream of any
digital television station.
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. Licenses and Syndication Agreements. Not to enter into, amend or
terminate any film or program license or syndication agreement involving
aggregate payments beyond specified amounts.
. General Prohibition. Not to enter into or publicly announce an intention
to enter into any contract, agreement, commitment or arrangement to do
any of the items set forth above.
. FCC Matters. To:
. use its reasonable best efforts to comply with all applicable material
requirements of the FCC;
. deliver promptly to News Corporation copies of reports filed with the
FCC;
. notify promptly News Corporation of any inquiry, investigation or
proceeding initiated by the FCC;
. not make or revoke any material election with the FCC; and
. use its reasonable best efforts to take all actions necessary to
complete construction and initial operation of its digital television
stations.
. Taxes. To:
. timely file all tax returns required to be filed by it, and prepare
the returns in a manner consistent with past practice;
. timely pay all taxes due;
. accrue a reserve in its books and records and financial statements in
accordance with past practice for all taxes payable by it for which a
tax return is not due prior to the time the merger is effective;
. promptly notify News Corporation of any tax or material suit, action
or audit with respect to it or any of its subsidiaries in respect of
any tax matter; and
. not make or revoke any material tax election or adopt or change a
material tax accounting method.
Covenants of United Television and News Corporation
News Corporation and United Television have agreed as follows:
. Securities Filings. Each company has agreed to cooperate to file the SEC
documents necessary to complete the merger.
. Special Meeting of United Television. United Television has agreed to
call and hold a stockholders' meeting to vote upon the adoption of the
merger agreement and approval of the merger.
. Proxy Solicitation by United Television. United Television has agreed to
solicit proxies in favor of the adoption of the merger agreement and
approval of the merger, unless it determines, after receiving advice
from independent legal counsel, that failure to do so is required in
order for its directors to comply with their fiduciary duties under
applicable law.
. Approvals of News Corporation. News Corporation has agreed to obtain,
and cause its subsidiaries to obtain, all stockholder and other
approvals necessary to consummate the merger and the other transactions
contemplated thereby.
. Regulatory Filings. Each company has agreed to promptly make all
governmental filings necessary under the HSR Act and to promptly make
all filings with or applications to the FCC that are necessary to
consummate the merger and otherwise use reasonable best efforts to
consummate the merger, and will do so in a manner designed to obtain
regulatory clearance and the satisfaction of these conditions as
expeditiously as reasonably possible. Each company has agreed to
promptly take any and all steps necessary to avoid or eliminate each and
every impediment and obtain all consents or waivers under any antitrust,
competition or communications or broadcast law that may be validly
required by any governmental authority, so as to enable the companies to
close the merger as expeditiously as
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reasonably possible, subject to various specified limitations. News
Corporation and Fox Television Holdings will have the right to make all
decisions concerning any divestiture commitments necessary to comply with
the multiple ownership rules (See "The Mergers--Regulatory Matters
Relating to the Mergers" on page [ . ]), although they have agreed to
regularly consult with and consider the views of United Television in good
faith. News Corporation and Fox Television Holdings have also agreed not
to seek a waiver of section 73.3555 of the FCC's rules, except for a
temporary waiver of subsections (b) and (e) of that section, for a period
not to exceed 12 months for television divestitures required to obtain FCC
consent, and with respect to subsection (d) of that section, in the
application to the FCC requesting such consent, News Corporation has
agreed to maintain that no waiver is required to permit it to own a
newspaper and two television stations in the New York market, and to
request, in the alternative, if that position is rejected or a permanent
waiver is not issued by the FCC, a temporary waiver to hold a newspaper
and two television stations for a period not to extend beyond the date
which is the later to occur of (1) 12 months from the closing date, and
(2) the conclusion of any then pending FCC rulemaking proceeding regarding
47 CFR Section 73.35555 (d). The parties will not be obligated to take
actions in order to comply with conditions which are "adverse conditions".
"Adverse conditions" include (1) any requirement that News Corporation or
Fox Television Holdings divest any material assets or accept any material
limitation on any of their respective material businesses, other than
divestitures or operational limitations of broadcast assets (i.e.
newspaper and television stations) as is required to comply with the
multiple ownership rules or a final order of an antitrust or other similar
governmental authority; or (2) any requirement (including any requirement
under the multiple ownership rules or a final order of an antitrust or
other similar governmental authority) that would require News Corporation,
Fox Television Holdings, Chris-Craft, BHC or United Television to divest,
hold separate, accept any material operational limitation with respect to,
or waive any rights with respect to any of their respective television
assets in San Francisco.
. Consents. Each company will use reasonable best efforts to obtain any
third party consents necessary, proper or advisable to consummate the
merger.
. Access to Information; Confidentiality. Each company has agreed to
continue to allow the other company reasonable access to its corporate
records and has agreed to comply with the Confidentiality Agreement
dated September 16, 1999 between News Corporation and Chris-Craft, as
amended.
. Notification. Each company has agreed to promptly notify the other
company of (1) any event that would likely cause any representation or
warranty to be untrue or inaccurate, or any covenant or condition not to
be complied with or satisfied, or the forward merger not to be
consummated, and (2) any failure to comply with or satisfy any covenant
or condition or agreement to be complied with or satisfied.
. Tax and FCC Matters. The companies have agreed to cooperate in the
preparation of and submission of filings necessary to obtain a favorable
ruling from the IRS with the respect to the tax treatment of the United
Television merger and consent of the FCC. Chris-Craft will submit any
filings and documents in connection with the IRS ruling and shall
control the process of obtaining the IRS ruling on behalf of United
Television. The forward merger is intended to constitute a tax free plan
of reorganization within the meaning of section 1.368-2(g) of the income
tax regulations promulgated under the Internal Revenue Code, and the
parties have agreed not to take any action which will adversely affect
this intended tax treatment. News Corporation and United Television have
agreed to deliver certain representation letters to Squadron Ellenoff,
tax counsel to News Corporation, and Kaye Scholer, tax counsel to United
Television, in connection with the proposed tax opinions of each such
tax adviser, and also deliver representation letters to Skadden, tax
counsel to Chris-Craft, in connection with the IRS ruling.
. Listing Applications. The companies have agreed to prepare and submit
promptly an application to the NYSE for the listing of the new Preferred
ADSs to be issued in the merger, and within two business days after the
date the merger is effective, prepare and submit an application to the
ASX for the listing of the Preferred Ordinary Shares that underlie the
Preferred ADSs.
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. ASX Waiver. The companies will promptly seek the waiver of the
Australian Stock Exchange's Listing Rule 10.1 (or if not obtained, the
approval of News Corporation's stockholders). This waiver has been
obtained.
. Public Announcements. The companies will consult with each other prior
to making any public announcements concerning the merger.
. Affiliates. United Television will notify News Corporation of all
persons that may be deemed affiliates of United Television under Rule
145 of the Securities Act, and United Television will use its reasonable
best efforts to obtain from each affiliate a letter in which the
affiliate agrees to comply with the resale restrictions of Rules 144 and
145 under the Securities Act following the merger.
. Comfort Letters. News Corporation will use reasonable best efforts to
deliver to United Television, and United Television will use reasonable
best efforts to deliver to News Corporation, two comfort letters in
customary form, from the companies' respective independent public
accountants.
. Compliance with Merger and Voting Agreements. News Corporation has
agreed to comply with its obligations under the Chris-Craft merger
agreement and the BHC merger agreement.
. Solicitation of Key Employees. The companies will not solicit for
employment any current senior management level employees or any of the
three highest compensated on-air talent employees at each television
station of the other company.
Reorganization of television assets
News Corporation has agreed to effect specified transfers of the television
assets acquired from United Television in the merger and to take other
specified actions in connection with these transfers. For a discussion of the
proposed transfers and related transactions, see "Related Transactions" on page
[ . ].
No solicitation provision
United Television has agreed not to, directly or indirectly, through any
officer, director, agent or otherwise, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information), or take any other
action knowingly to facilitate, any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any "competing
transaction", which is defined in the merger agreement as any transaction,
other than the merger, that would result in a third party or its stockholders
acquiring more than 25% of the voting power of the United Television capital
stock then outstanding or more than 25% of the assets of United Television and
its subsidiaries, taken as a whole, or enter into or maintain or continue
discussions or negotiate with any person in furtherance of any related
inquiries or to obtain a competing transaction, or agree to or endorse any
competing transaction, or authorize any of the officers, directors or employees
of United Television or any agent or representative of United Television to
take any of these actions. United Television has agreed to notify News
Corporation as promptly as practicable of all the relevant material details
relating to all inquiries and proposals that United Television, or any officer,
director, employee, agent or representative, may receive relating to any of the
foregoing matters.
Notwithstanding the foregoing, prior to the adoption of the merger agreement
by the stockholders of United Television, the board of directors of United
Television is not prohibited from:
. furnishing information to, or entering into and engaging in discussions
or negotiations with, any person that makes an unsolicited proposal that
the board of directors of United Television determines in good faith,
after consultation with United Television financial advisors and
independent legal counsel, can be reasonably expected to result in a
"superior proposal", which is defined in the merger agreement as any
proposal that would result in a third party acquiring, directly or
indirectly, more than 50% of the voting power of the outstanding United
Television capital stock or all or substantially all the assets of
United Television and its subsidiaries, taken as a whole, for
consideration which the board of directors of United Television
determines in its good faith judgment to be more favorable to United
Television's
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stockholders than the merger with News Publishing (or a subsidiary of News
Corporation), provided that United Television must notify News Corporation
of its intention to provide information to, or enter into negotiations
with, a third party concerning a superior proposal, inform News
Corporation of the identity of the third party and the material terms and
conditions of any superior proposal and enter into a confidentiality
agreement with the third party; or
. complying with its disclosure and other obligations under applicable
laws.
Other employee arrangements
During the one year period commencing on the effective date of the merger,
News Corporation will provide employees and former employees of United
Television and its subsidiaries with employee benefits that are either
substantially comparable to the benefits provided to United Television
employees as of the date of the merger agreement, or substantially similar to
those provided to employees of News Corporation who are similarly situated.
If the effective time occurs during the calendar year 2001, then United
Television employees who are employed by United Television immediately prior to
the effective time, and who are eligible by virtue of being a participant in
the United Television 2001 Bonus Plan or by virtue of receiving an annual bonus
in 2000 and being eligible to receive an annual bonus for the year 2001, may
receive a prorated bonus for service in 2001. The process for determining the
bonus for those employees who remain employed on and after the effective date
through December 31, 2001 will be determined in the discretion of News
Corporation.
News Corporation will recognize service with United Television under News
Corporation's employee benefit plans for purposes of determining eligibility to
participate and vesting, but not for purposes of benefit accrual. This service
will also apply for purposes of satisfying any waiting periods, evidence of
insurability requirements, or the application of any preexisting condition
limitations. If United Television employees are transferred to a new health
plan, United Television employees will be given credit for amounts paid under a
corresponding health plan during the new health plan's year in which the United
Television employees are transferred for purposes of applying deductibles,
copayments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms of the new health plan. News Corporation will also
honor all vacation, personal and sick days accrued by United Television
employees.
News Corporation will make required payments when due under all United
Television benefit plans maintained or contributed to by United Television or
any of its subsidiaries that are applicable with respect to any current or
former employee or director, including their beneficiaries, of United
Television or any of its subsidiaries. However, News Corporation may amend or
terminate any United Television benefit plan in accordance with its terms.
Indemnification; directors' and officers' insurance
Following the merger, the surviving corporation's certificate of
incorporation and by-laws will contain the indemnification provisions in favor
of officers and directors that are contained in United Television's current
restated certificate of incorporation and by-laws.
For six years following the merger the surviving corporation will maintain
directors' and officers' liability insurance covering those persons who are
currently covered by United Television's directors' and officers' liability
insurance policy on terms comparable to United Television's existing coverage.
However, the surviving corporation will not be required to expend in any one
year an amount in excess of 300% of the annual premiums currently paid by
United Television for such insurance. If the annual premiums of such insurance
coverage exceed this amount, News Corporation will only be obligated to obtain
a policy with the greatest coverage available for an annual cost not exceeding
such amount.
News Corporation will cause the surviving corporation to indemnify, to the
fullest extent permitted by law, present and former officers, directors and
employees of United Television and other specified persons
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against various specified indemnifiable claims, including against amounts paid
in settlement of any threatened, pending or completed claim based upon the fact
that such person is or was a director, officer, employee or stockholder of
United Television or any of its current or former subsidiaries.
Conditions to closing
The merger agreement contains certain conditions to the parties' obligations
to complete the merger. The parties will not be obligated to complete the
merger unless at or before the time the merger becomes effective:
. Stockholder Approval. The merger agreement has been adopted by the
affirmative vote of a majority of the votes entitled to be cast by
stockholders at the United Television stockholders' meeting.
. Hart-Scott-Rodino Antitrust Improvements Act of 1976. Any applicable
waiting period under the HSR Act has terminated or expired.
. Legality. No governmental authority or court has entered an order or
taken other legal action making the merger illegal or otherwise
prohibiting its consummation.
. Registration Statement. The registration statement, of which this joint
proxy statement/prospectus forms a part, is declared effective and there
is no stop order to suspend the effectiveness of the registration
statement.
. FCC Consent. The FCC has consented to the assignment or to the transfer
of control of the FCC licenses of United Television and its subsidiaries
to Fox Television Holdings (or a wholly owned subsidiary of Fox
Television Holdings), including transfer of those authorizations,
licenses, permits, and other approvals, issued by the FCC, and used in
the operation of the United Television television stations.
. Authorizations. Both companies have obtained all other material
authorizations, consents, waivers, orders or approvals for the merger
required to be obtained from governmental authorities, and both
companies have made all required filings and notices with governmental
authorities prior to the consummation of the merger.
. Listing of Shares. The shares of Preferred ADSs issuable to the United
Television's stockholders in the merger are authorized for listing on
the NYSE, subject to official notice of issuance.
. Chris-Craft Merger. The Chris-Craft merger shall have occurred or the
stockholders of Chris-Craft shall have failed to approve the Chris-Craft
merger at a duly held stockholders' meeting.
. Satisfaction/Waiver of Conditions. All conditions to all parties'
obligations to consummate the BHC merger, except completion of the BHC
merger, are satisfied or waived.
. Representations and Warranties. Each representation and warranty that is
qualified by materiality is true and correct as of the time the merger
becomes effective (other than those which speak as of a different date,
which must be true and correct as of that date), each representation and
warranty that is not so qualified is true and correct in all material
respects, all material agreements and covenants have been performed and
complied with, and each party has received from the other party a
certificate of the chief executive officer or chief financial officer
certifying to the foregoing.
In addition, News Corporation will not be obligated to complete the merger
unless:
. Affiliate Letter. News Corporation has received an executed copy of an
agreement substantially in the form of Exhibit A to the merger agreement
from each person named in the letter identifying all persons who may be
deemed affiliates of United Television under Rule 145 of the Securities
Act.
. Consents and Orders. News Corporation has received satisfactory evidence
that all material consents, approvals, authorizations, qualifications
and orders of all governmental authorities legally required for the
consummation of the merger, and all other consents, approvals,
authorizations, qualifications and orders of all governmental
authorities or third parties required for the consummation of the merger
have been obtained.
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<PAGE>
. Tax Matters. In the case of a forward merger, News Corporation has
received:
. an opinion from its tax counsel that the merger will qualify as a
tax-free reorganization under section 368 of the Internal Revenue
Code, no income, gain or loss will be recognized by News
Corporation, News Publishing and United Television as a result of
the merger, and no income, gain, or loss will be recognized by the
holders of United Television common stock except to the extent such
holders receive cash under the merger; and
. a private letter ruling from the IRS to the effect that the merger
will satisfy the continuity of business enterprise requirement
described in section 1.368-1(d) of the Treasury Regulations.
. Adverse Condition. No "adverse condition" exists in the FCC consent.
"Adverse Conditions" are discussed under the heading "Covenants of
Chris-Craft and News Corporation--Regulatory Filings" on page [ . ].
United Television will not be obligated to complete the merger unless:
. Tax Matters. In the case of a forward merger, United Television has
received:
. an opinion from its tax counsel that the merger will qualify as a
tax-free reorganization under section 368 of the Internal Revenue
Code, no income, gain or loss will be recognized by News
Corporation, News Publishing and United Television as a result of
the merger, and no income, gain, or loss will be recognized by the
holders of United Television common stock except to the extent such
holders receive cash under the merger; and
. a private letter ruling from the IRS to the effect that the merger
will satisfy the continuity of business enterprise requirement
described in section 1.368-1(d) of the Treasury Regulations.
Termination
The merger agreement may be terminated and the merger abandoned at any time
prior to the effective time:
. by mutual written consent duly authorized by the boards of directors of
each of News Corporation and United Television;
. by either company, if the transaction is not completed on or prior to
November 13, 2001;
. by United Television, upon a breach of a representation, warranty,
covenant or agreement on the part of News Corporation or Fox Television
Holdings set forth in the merger agreement, such that a condition to the
merger cannot be satisfied prior to November 13, 2001;
. by News Corporation, upon breach of a representation, warranty, covenant
or agreement on the part of United Television set forth in the merger
agreement, such that a condition to the merger cannot be satisfied prior
to November 13, 2001;
. by either company, if a governmental authority has issued a final and
non-appealable order or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the merger;
. by either company, if the approval of the merger by the stockholders of
United Television required for the consummation of the merger has not
been obtained by reason of the failure to obtain the required vote at a
duly held stockholders' meeting, provided United Television will not
have the right to terminate the United Television merger agreement if
the breach by BHC of the voting agreement is the reason for such
failure;
. by either company, if the Chris-Craft merger agreement has been
terminated; provided, that a party will not have the right to terminate
the merger agreement if its actions or failure to act has prevented the
consummation of the Chris-Craft merger; provided further that United
Television will not have the right
174
<PAGE>
to terminate the United Television merger agreement if the Chris-Craft
merger was terminated because of the failure of the Chris-Craft
stockholders to approve their merger at a duly held stockholders meeting
called for such purpose; or
. by either company, if the BHC merger agreement has been terminated;
provided, that a party will not have the right to terminate the merger
agreement if its actions or failure to act has prevented the
consummation of the BHC merger.
None of the parties is required to pay a "termination" or "break-up" fee to
another party if the merger agreement is terminated. Any party may, however,
be liable to the other parties in the event of any willful breach of the
merger agreement.
Amendment; Waiver
At any time before the merger becomes effective, the parties may amend or
supplement any of the terms of the merger agreement in writing, except that
following approval by the United Television stockholders, the parties may not
make any other change requiring stockholder approval without obtaining such
approval, and any such amendment must also be approved by the special
committee. The parties may extend the time for performance of any obligation,
waive any inaccuracy in any representation and warranty or other document
delivered under the merger agreement, or waive compliance with any condition
or agreement in the merger agreement. Any valid waiver must be in writing
signed by the party bound by the waiver.
Costs and Expenses
The parties will bear their own costs and expenses in connection with the
merger agreement and the contemplated transactions except that News
Corporation and United Television will each pay one-half of the costs
associated with printing, filing and mailing this joint proxy
statement/prospectus and regulatory filing fees. News Corporation will pay all
expenses of the exchange agent. Chris-Craft, BHC and United Television will
not, in the aggregate, pay more than one-half of the aggregate transaction
expenses.
The United Television Voting Agreement and Proxy
Simultaneously with the execution of the United Television merger
agreement, BHC, which holds approximately 58% of the voting shares of United
Television, entered into a voting agreement with News Corporation and News
Publishing in which BHC agreed to vote all of its shares of common stock of
United Television and any other voting securities of United Television it owns
in favor of the approval and adoption of the United Television merger
agreement, against any proposals in opposition to the United Television merger
agreement and against any competing transaction or superior proposal. BHC also
agreed in the voting agreement not to transfer ownership of any of its shares
of United Television unless the transferee unconditionally agrees in writing
to be bound by the voting agreement. The voting agreement terminates upon the
earlier of the termination of the United Television merger agreement or the
effective time of the merger.
In connection with the voting agreement, BHC granted an irrevocable proxy
to News Corporation giving certain officers of News Corporation the power to
vote BHC's United Television shares in favor of the merger proposal in the
event that BHC does not comply with the terms of the voting agreement.
175
<PAGE>
THE COMPANIES
News Corporation
The News Corporation Limited, together with its subsidiaries, is a
diversified international communications company principally engaged in the
production and distribution of motion pictures and television programming;
television, satellite and cable broadcasting; the publication of newspapers,
magazines and books; the production and distribution of promotional and
advertising products and services; the development and distribution of
conditional access systems, interactive television applications and broadcast
control software systems; and the creation and distribution of on-line
programming. The activities of News Corporation are conducted principally in
the United States, the United Kingdom and Australia and the Pacific Basin. News
Corporation has also entered into joint ventures to provide direct-to-home
(DTH) television services in Italy and Latin America.
United States Operations and Interests
News Corporation holds an 82.76% equity interest (representing a 97.79%
voting interest) in Fox Entertainment Group. Fox Entertainment Group is
principally engaged in the development, production and worldwide distribution
of feature films and television programs, television broadcasting and cable
network programming.
Filmed Entertainment
Fox Entertainment Group engages in feature film and television production
and distribution principally through the following businesses: Fox Filmed
Entertainment, a producer and distributor of feature films; Twentieth Century
Fox Television, a producer of network television programming; and Fox
Television Studios, a producer of television programming for domestic and
international distribution.
Fox Filmed Entertainment produces, finances, acquires and distributes motion
pictures throughout the world under a variety of arrangements through Twentieth
Century Fox and Fox 2000, which produce motion pictures for mainstream
audiences; Fox Searchlight Pictures, which produces and acquires specialized
motion pictures; and Twentieth Century Fox Animation, which produces feature-
length animated motion pictures.
Twentieth Century Fox Television produces television programs for the Fox
Broadcasting Company, or "FOX", as well as for the ABC, CBS, NBC, WB and UPN
television networks and the USA cable network. In addition to U.S. prime-time
network series, Fox Television Studios also produces programming in a wide
variety of genres for a variety of other domestic and international programming
services.
Television Broadcasting
Fox Entertainment Group is engaged in the distribution of network
programming and the operation of broadcast television stations. FOX has 200
affiliated stations, which reach, during prime time, approximately 99% of all
U.S. television households. Of the 200 FOX affiliates, 23 full power television
stations are owned by subsidiaries of Fox Entertainment Group. These stations
are located in 9 of the top 10 largest designated market areas.
Cable Network Programming
Fox Entertainment Group operates and holds interests in cable network
programming businesses in the areas of news, sports, general entertainment,
family entertainment, documentary programming and movies.
Fox News Channel is a 24-hour all news cable channel which is currently
available to over 54 million U.S. households.
Fox Sports Networks owns the largest regional sports network programmer in
the U.S., focusing on live professional and major collegiate home team sports
events. Fox Sports Networks also operates FX Networks, a general entertainment
network that currently reaches approximately 53 million cable and DBS
households.
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<PAGE>
Fox Entertainment Group owns 49.5% of Fox Family Worldwide, which is an
integrated family and children's entertainment company that develops, acquires,
produces, broadcasts and distributes live-action and animated family and
children's television programming on a global basis. Fox Family Worldwide's
principal operations are comprised of: (i) International Family Entertainment,
Inc., which operates the Fox Family Channel; (ii) the Fox Kids Network; (iii)
the Fox Kids International Network Europe N.V.; and (iv) Saban Entertainment,
which owns and manages an extensive and growing library of family and
children's programming.
Fox Entertainment Group owns and operates the Los Angeles Dodgers Major
League Baseball franchise, along with Dodger Stadium and other related real
estate.
Magazines and Inserts
News America Marketing FSI, Inc. is one of the two largest publishers in the
U.S. of promotional free-standing inserts, known in the industry as "FSIs",
which are multi-page promotional booklets containing coupons, sweepstakes,
rebates and other consumer offers which are distributed to consumers through
insertion in local Sunday newspapers. News America Marketing In-Store, Inc. is
the leading provider of in-store marketing products and services, primarily to
consumer packaged goods manufacturers, with products in more than 27,000
supermarkets, drug stores and mass merchandisers worldwide.
News Corporation publishes The Weekly Standard, a weekly magazine offering
conservative political commentary, and Maximum Golf, a magazine devoted to golf
which is published ten times per year.
Book Publishing
Through HarperCollins Publishers, News Corporation is engaged in English
language book publishing on a worldwide basis. HarperCollins primarily
publishes fiction and non-fiction, including religious books, for the general
consumer. In the United Kingdom, HarperCollins also publishes some titles for
the educational market.
Newspapers
News Corporation owns the New York Post, a mass circulation, metropolitan
morning newspaper which is published seven days a week in New York City.
Other Activities and Interests
News Digital Media operates News Corporation's U.S. internet properties,
including Fox News Online (www.foxnews.com), Fox Sports Online
(www.foxsports.com) and Fox.com (www.fox.com).
News Corporation currently owns approximately 21% of Gemstar-TV Guide, a
leading global technology and media company focused on consumer entertainment.
News Corporation has entered into an agreement to acquire Liberty Media
Corporation's approximate 21% interest in Gemstar-TV Guide. Gemstar-TV Guide
provides interactive program guides and other consumer products including VCR
Plus+, a technology that simplifies the recording of television programming,
and TV Guide Magazine, the most widely circulated paid weekly magazine in the
U.S.
United Kingdom and Other European Operations and Interests
Newspapers
The four national newspapers published by News Corporation account for
approximately one third of all national newspapers sold in the United Kingdom.
The Times and The Sunday Times are leading quality newspapers and The Sun and
the News of the World are both popular, mass market newspapers.
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<PAGE>
Television
News Corporation owns approximately 37% of British Sky Broadcasting Group
plc, or "BSkyB". BSkyB is one of the leading pay television broadcasters in the
United Kingdom and is one of the leading suppliers of content, including
movies, news, sports and general entertainment, to pay television operators in
the United Kingdom. News Corporation also owns approximately 50% of Stream
S.p.A., a leading Italian pay television service provider.
Technology
News Corporation owns approximately 80% of NDS Group plc, a leading provider
of interactive television applications and conditional access systems to
digital satellite and cable pay television broadcasters. Conditional access
systems scramble programming content to prevent unauthorized access and,
therefore, are a necessary component of every pay television system.
Australia and the Pacific Basin Operations and Interests
Newspapers
News Corporation is the largest newspaper publisher in Australia, owning
more than 100 daily, Sunday, weekly, bi-weekly and tri-weekly newspapers, of
which 76 are suburban publications. News Corporation publishes the only
nationally distributed general interest newspaper in Australia, leading
metropolitan and suburban newspapers in each of the major Australian cities of
Sydney, Melbourne, Adelaide and Perth and their respective suburbs. News
Corporation's daily and Sunday newspapers (exclusive of its suburban and
regional newspapers) account for over 50% of the total circulation of all daily
and Sunday newspapers (excluding suburban and regional newspapers) published in
Australia. News Corporation owns a 42% equity interest in Queensland Press
Limited, which publishes two metropolitan and eight regional newspapers in
Australia.
Television
News Corporation, through its wholly-owned subsidiary, STAR, is engaged in
the development, production and distribution of television programming
throughout Asia and the Middle East. STAR is the leading pan-Asian television
content and service provider, focused on India and China and operating in 51
other countries. STAR currently broadcasts its programming in seven languages
across 28 channels. News Corporation also has an approximate 8% interest in Sky
PerfecTV!, the leading multi-channel digital satellite television distribution
platform in Japan.
Latin American Operations and Interests
News Corporation has a 36% interest in Net Sat Servicos Ltda., operator of
Sky Brazil, the leading DTH pay television service in Brazil, and a 30%
interest in Innova S. de R.L., operator of Sky Mexico, the leading DTH pay
television service in Mexico. News Corporation also owns a 30% interest in Sky
Multi-Country Partners, a joint venture which, together with local partners, is
operating DTH pay television services in Colombia and Chile and recently
launched a pay television service in Argentina. News Corporation has agreed to
purchase Liberty Media International, Inc.'s 10% interest in Net Sat, Innova
and Sky Multi-Country Partners, subject to several conditions, in connection
with its acquisition of Liberty's interest in Gemstar-TV Guide.
Chris-Craft
Chris-Craft Industries, Inc. was organized in 1928 and adopted its present
name in 1962. Chris-Craft is primarily engaged in television broadcasting,
conducted through its majority-owned (80% at November 30, 2000) subsidiary, BHC
Communications, Inc., which owns 100% of Chris-Craft Television, Inc., 100% of
Pinelands, Inc. and, as of November 30, 2000, 58% of United Television, Inc.
178
<PAGE>
Television Division
BHC and United Television together operate six very high frequency (VHF)
television stations and four ultra high frequency (UHF) television stations,
together constituting Chris-Craft's Television Division. Commercial television
broadcasting in the U.S. is conducted on 68 channels numbered 2 through 69.
Channels 2 through 13 are in the VHF bank, and channels 14 through 69 are in
the UHF bank. In general, UHF stations are at a disadvantage relative to VHF
stations, because UHF frequencies are more difficult for households to receive.
This disadvantage generally is eliminated when a viewer receives the UHF
station through a cable system.
Commercial broadcast television stations may be either affiliated with one
of the three major national networks (ABC, NBC and CBS); three more recently
established national networks (Fox Broadcasting Company, United Paramount
Network (UPN) and The WB Network), which provide substantially fewer hours of
programming; or may be independent.
The following table sets forth selected information with respect to BHC and
United Television stations and their respective markets as of October 2000:
<TABLE>
<CAPTION>
Network
Station and Affiliation/ DMA TV DMA DMA Cable TV
Location(1) Channel Households(2) Rank(2) Penetration(3)
----------- ------------ ------------- ------- --------------
<S> <C> <C> <C> <C>
WWOR(4) UPN 9 6,935,610 1st 75%
Secaucus
KCOP UPN 13 5,354,150 2nd 65%
Los Angeles
KPTV UPN 12 1,017,760 23rd 62%
Portland
KMSP UPN 9 1,510,130 14th 55%
Minneapolis/ St. Paul
KTVX ABC 4 732,380 36th 53%
Salt Lake City
KMOL NBC 4 693,810 37th 65%
San Antonio
KBHK UPN 44 2,431,720 5th 72%
San Francisco
KUTP UPN 45 1,441,660 17th 59%
Phoenix
WRBW UPN 65 1,126,000 21st 76%
Orlando
WUTB UPN 24 1,010,160 24th 69%
Baltimore
</TABLE>
--------
(1) KCOP, KPTV and WWOR are owned by wholly-owned subsidiaries of BHC; the
remaining stations are owned by United Television or wholly-owned
subsidiaries of United Television.
(2) Designated Market Area (DMA) is an exclusive geographic area consisting of
all counties in which the home-market commercial stations received a
preponderance of total viewing hours. The ranking shown is the nationwide
rank, in terms of television households in DMA, of the market served by the
station. Source: Nielsen Media Research television households universe
estimates.
(3) Cable penetration refers to the percentage of DMA television viewing
households receiving cable television service, as estimated by Nielsen
Media Research.
(4) WWOR UPN 9 broadcasts across a tri-state area including the entire New York
City metropolitan area.
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<PAGE>
Industrial Division
Chris-Craft Industrial Products, Inc., a wholly-owned subsidiary of Chris-
Craft that constitutes its Industrial Division, is primarily engaged in
manufacturing plastic flexible films and distributing containment systems to
the healthcare industry. These products are marketed as roll and cut stock as
well as proprietary and private-label end products. The end products include
plastic flexible films and water-soluble hospital laundry bags. Significant
portions of the sales of the Industrial Division are to the flexible film
packaging industry, composite material fabricators, and health care facilities.
Sales of particular items may vary widely from year to year as specifications,
designs and other conditions change. The products of the Industrial Division
are sold by it directly and by sales agents and distributors.
BHC
BHC is the majority-owned (80% at November 30, 2000) television broadcasting
subsidiary of Chris-Craft. BHC was organized in 1977 under the name BHC, Inc.
and changed its name to BHC Communications, Inc. in 1989. BHC's principal
business is television broadcasting, conducted through its wholly-owned
subsidiaries, Chris-Craft Television, Inc. and Pinelands, Inc., and its
majority-owned (58% at November 30, 2000) subsidiary, United Television.
BHC and United Television together operate six VHF television stations and
four UHF television stations, as indicated in the table under the caption
"Chris-Craft". Eight stations are affiliates of UPN, one is affiliated with
ABC, and one is affiliated with NBC.
United Television
United Television, organized in 1956, is the majority-owned (58% at November
30, 2000) subsidiary of BHC. United Television owns and operates three VHF
television stations and four UHF television stations of BHC's ten television
stations that comprise Chris-Craft's Television Division, as indicated in the
table under the caption "Chris-Craft". Five stations are affiliates of UPN, one
is affiliated with ABC, and one is affiliated with NBC.
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<PAGE>
COMPARISON OF STOCKHOLDERS' RIGHTS
Each of Chris-Craft, BHC and United Television is incorporated in the State
of Delaware, and News Corporation is incorporated under the laws of the State
of South Australia. The rights of stockholders of Chris-Craft, BHC or United
Television currently are governed by the law of Delaware and that company's
certificate of incorporation and by-laws. The rights of stockholders of News
Corporation currently are governed by the law of South Australia and that
company's constitution.
In accordance with the merger agreements, at the date the mergers become
effective, the stockholders of Chris-Craft, BHC and United Television who elect
to receive the stock of News Corporation in the mergers will each exchange all
or a portion of their respective shares for News Corporation Preferred American
Depositary Shares (Preferred ADSs), each representing four News Corporation
Preferred Ordinary Shares.
The following summary is a comparison of the material rights of:
. the holders of Preferred Ordinary Shares of News Corporation,
represented by Preferred ADSs;
. the holders of common stock and convertible preferred stock of Chris-
Craft; and
. the holders of common stock of BHC and United Television.
The certificates of incorporation and the by-laws of Chris-Craft, BHC and
United Television and the constitution of News Corporation are incorporated by
reference in this joint proxy statement/prospectus. Copies of these constituent
documents can be found with each company's respective filing with the SEC. For
additional information about those documents, see "Where You Can Find More
Information" on page [ . ]. The following summary is not and does not purport
to be complete or identify all differences that may exist between the different
companies' stockholders' rights, whether under the companies' constituent
documents or under Delaware, Australian or any other applicable law. Because
Chris-Craft redeemed all of its outstanding prior preferred stock in September
2000, the provisions relating to the prior preferred stock are generally not
included in this summary. The following summary is qualified by reference to
the full text of:
. the Delaware General Corporation Law;
. the Australian Corporations Law, which is uniform in every Australian
state; and
. the constituent documents of each of:
. News Corporation;
. Chris-Craft;
. BHC; and
. United Television.
181
<PAGE>
<TABLE>
<S> <C>
Provision News Chris-Craft BHC United
Corporation Television
-------------------------------------------------------------------------------
Authorized . There is no . Chris- . BHC's . United
Capital: longer any Craft's certificate Television's
concept of certificate of certificate
authorized of incorporation of
capital or incorporation provides for incorporation
par value provides for authorized provides for
under authorized capital authorized
Australian capital totaling capital
law. News totaling 450,000,000 totaling
Corporation's 160,397,553 shares, 26,000,000
constitution shares, consisting shares,
provides for consisting of: consisting
the issuance of: . 200,000,000 of:
of the . 73,399 shares, par . 25,000,000
following shares, value $.01 shares, par
types of without par per share, value $.10
shares: value, of of class A per share,
prior common of common
preferred stock; stock; and
stock;
. a Preferred
Limited
Voting . 200,000,000 . 1,000,000
Ordinary shares, par shares, par
Share, value $.01 value $1.00
referred to per share, per share,
in this of class B of
joint proxy common preferred
statement/prospectus stock; and stock.
as a
Preferred
Ordinary
Share;
. 324,154
shares, par
value $1.00
per share,
of
convertible
preferred . 50,000,000
stock; shares, par
. 10,000,000 value $.01
shares, par per share,
. an Ordinary value $1.00 of
Share; per share, preferred
. a Non- of stock.
Voting preferred
Ordinary stock;
Share; or . 100,000,000
. such other shares, par
shares as value $.50
may be per share,
permitted of common
by News stock; and
Corporation's . 50,000,000
constitution, shares, par
which value $.50
currently per share,
includes: of class B
. Converting common
Preference stock.
Shares;
. Redeemable
Ordinary
Shares;
. Perpetual
Preference
Shares;
and
. Redeemable
Preference
Shares.
Quorum: . Under News . Under . Under . Under
Corporation's Delaware Delaware Delaware
constitution, law, a law, a law, a
five quorum quorum quorum
shareholders exists at exists at exists at
entitled to any meeting any meeting any meeting
vote and at which the at which the at which the
present in holders of a holders of a holders of a
person, by majority of majority of majority of
proxy, the shares the shares the shares
attorney or entitled to entitled to entitled to
representative vote are vote are vote are
(if a present or present or present or
corporation) represented represented represented
constitute a at the at the at the
quorum. commencement commencement commencement
of the of the of the
meeting. meeting. meeting.
Chris-
Craft's
certificate
of
incorporation
further
provides
that with
respect to
the approval
</TABLE> of the
Chris-Craft
merger
agreement a
quorum
requires the
presence, in
person or by
proxy, of
the holders
of shares
representing
a majority
of the votes
entitled to
be cast by
Chris-Craft
convertible
preferred
stockholders.
182
<PAGE>
<TABLE>
<S> <C>
Provision News Chris-Craft BHC United
Corporation Television
--------------------------------------------------------------------------------
Voting: . Under . The vote of . The vote of . The vote of
Australian holders of a holders of a holders of a
law, most majority of majority of majority of
matters the voting the voting the voting
requiring stock stock stock
shareholder represented represented represented
approval may at a at a at a
be acted stockholders stockholders stockholders
upon by an meeting of a meeting of a meeting of a
ordinary Delaware Delaware Delaware
resolution, corporation corporation corporation
but some generally generally generally
matters constitutes constitutes constitutes
require the stockholder stockholder stockholder
approval of action, action, action,
a special except that except that except that
resolution. directors directors directors
are elected are elected are elected
by a by a by a
. Under plurality of plurality of plurality of
Australian the votes the votes the votes
law, voting and as and as and as
rights of otherwise otherwise otherwise
shareholders set forth set forth set forth
are largely below. below. below.
governed by
the . Chris- . BHC's . Each share
company's Craft's certificate of United
constitution, certificate of Television
the of incorporation common stock
Australian incorporation provides in carries one
Corporations provides in general vote.
Law and the general that:
listing that: . each share
rules of the . each share of class A
Australian of common common
Stock stock stock
Exchange. carries one carries one
vote; and vote; and
. each share . each share
. Votes at of class B of class B
meetings are common common
conducted by stock stock
a show of carries ten carries ten
hands unless votes. votes.
a poll is . Chris-
demanded. A Craft's
poll may be certificate
demanded by: of
incorporation
provides . BHC's by- . United
that each laws Television's
holder of a provide by-laws
share of that the require all
convertible vote on any elections of
preferred question directors to
stock is need not be be by
entitled to: by written written
ballot ballot.
unless: Voting on
any other
matter may
be viva
voce, unless
voting by
ballot is:
. chairman of
the . required by
meeting; statute; or
. at least . determined
five . except as by the
shareholders otherwise chairman of
having a provided in the meeting
right to the to be . required by
vote; or certificate advisable. law; or
. members of . demanded by
with at incorporation, any
least 5% of 7.8 votes; stockholder
the vote or entitled to
that may be . Delaware vote.
cast on the law
resolution requires
on a poll. . such number that all
of votes elections
equal to 21 of . Delaware law
times the directors requires
number of be by that all
. Each holder shares of written elections of
of Ordinary common ballot, directors be
Shares or stock into unless by written
Redeemable which the otherwise ballot,
Ordinary share of provided in unless
Shares (or convertible the otherwise
proxy, preferred corporation's provided in
attorney or stock is certificate the
representative directly of corporation's
of such convertible incorporation. certificate
holder) has: if: BHC's of
. one vote on . the share certificate incorporation.
a show of was held by of United
hands; and the incorporation Television's
. one vote holder on does not certificate
per the date otherwise of
Ordinary class B provide. incorporation
Share or common stock does not
Redeemable was first . BHC's by- otherwise
Ordinary distributed laws provide.
Share to common provide
registered stock that, on a . United
in his or stockholders, vote by Television's
her name on or the written by-laws
a poll holder is ballot, provide that
(but, votes a permitted each ballot on a vote by
on a poll transferee; shall be written
with and signed by ballot, each
respect to the ballot shall
partly paid stockholder, be signed by
shares are or proxy, the
pro rata in voting and stockholder,
accordance shall state or proxy,
with the the number voting and
amount paid of shares shall state
up on such voted. the number
shares). . so long as of shares
any class voted.
B common stock
is
outstanding;
or
. the number
of votes
equal to
the number
of shares
of common
stock into
which the
share of
convertible
preferred
stock is
directly
convertible,
as
described
in Chris-
Craft's
certificate
of
incorporation,
if:
. Under BHC's
certificate
of
incorporation,
holders of
class A
common
stock and
class B
common
stock vote
on all
matters
together as
one class.
</TABLE>
183
<PAGE>
<TABLE>
<CAPTION>
Provision News Chris-Craft BHC United
Corporation Television
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
. The vote of . the share
a majority was
of members transferred
present at a after the
meeting and above date,
entitled to unless the
vote is holder is a
generally permitted
required to transferee;
pass a or
resolution . there is no
on a show of longer any
hands. class B
However, the common
rights and stock
privileges outstanding.
attached to
each class . Chris- . Under . Under
into which Craft's by- Delaware law Delaware law
the capital laws provide and BHC's and United
is divided that the certificate Television's
may be vote on any of certificate
modified, question incorporation, of
abrogated or need not be any action incorporation,
dealt with by written may be taken any action
only by: ballot by written may be taken
. a three- unless: consent of by written
fourths . required by holders of consent of
majority of statute; or stock holders of
the votes . determined sufficient stock
cast at a by the to authorize sufficient
separate chairman of the action to authorize
meeting of the meeting at a the action
the holders to be meeting. at a
of that advisable. meeting.
class; or
. in certain cir- . Delaware law
cumstances requires
written that all
consent elections of
approving directors be
such action by written
by the ballot,
holders of unless
three- otherwise
fourths of provided in
the shares the
of such corporation's
class. certificate
of
. A holder of incorporation.
a Preferred Chris-Craft's
Ordinary certificate
Share is of
entitled to incorporation
vote at any does not
general otherwise
meeting in provide.
the same
manner and . Chris-
subject to Craft's by-
the same laws provide
conditions that on a
as the vote by
holder of an written
Ordinary ballot, each
Share but ballot shall
only under be signed by
the the
following stockholder,
circumstances: or proxy,
. on a voting and
proposal: shall state
. to reduce the number
the share of shares
capital of voted.
the
company; . Under
. to wind up Delaware law
or during and
the Chris-Craft's
winding up certificate
of the of
company; incorporation,
or any action
. for the may be taken
disposal by written
of the consent of
whole of holders of
the stock
property, sufficient
business to authorize
and the action
undertaking at a
of the meeting.
company;
. when any . Except as
preferential otherwise
dividend required by
declared on law or
such provided
Preferred under
Ordinary Chris-Craft's
Share is in certificate
arrears; of
. on a incorporation,
proposal holders of
which convertible
affects preferred
rights stock,
attached to common stock
Preferred and class B
Ordinary common stock
Shares; or vote on all
. on a matters
resolution (including
to approve the election
the terms of
of an directors)
agreement together as
to buy-back one class.
the shares.
. The
following
will be
deemed to
directly
affect the
rights
attached to,
and the
rights and
privileges
of holders
of,
Preferred
Ordinary
Shares:
. issuance of
other
preference
shares
ranking in
any respect
prior to
Preferred
Ordinary
Shares; or
</TABLE>
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. conversion . Chris-
of Ordinary Craft's
Shares and certificate
Non-Voting of
Ordinary incorporation
Shares into specifies
preference matters
shares requiring
ranking in the
any respect affirmative
prior to or vote of the
ranking holders of a
equally particular
Preferred class of
Ordinary stock,
Shares. voting as a
separate
. The class, such
following as:
will be . to adopt an
deemed not amendment
to directly to the
affect such certificate
rights or of
privileges: incorporation
. issue of that alters
other adversely
preference the rights
shares of holders
ranking of that
equally particular
with class;
Preferred . to effect a
Ordinary merger,
Shares; or consolidation,
. issue of dissolution
additional or
Preferred liquidation;
Ordinary or
Shares. . to authorize
new classes
of stock
with
specified
characteristics
or
additional
shares of
specified
classes.
Voting for . Under . In addition . Delaware law . Delaware law
mergers and Australian to any class requires the requires the
other law and vote affirmative affirmative
corporate Australian required by vote of a vote of a
reorganizations: Stock Chris- majority of majority of
Exchange Craft's the stock the stock
Listing certificate entitled to entitled to
Rules, the of vote to vote to
method of incorporation, authorize authorize
effecting a as described any merger, any merger,
merger or above, consolidation, consolidation,
corporate Delaware law dissolution, dissolution,
reorganisation requires the or sale of or sale of
will affirmative substantially substantially
determine vote of a all of the all of the
whether News majority of assets of a assets of a
Corporation's the stock corporation. corporation.
shareholders entitled to However, no However, no
vote on the vote to vote by vote by
transaction. authorize stockholders stockholders
. No any merger, of a of a
shareholder consolidation, Delaware Delaware
approval is dissolution, corporation corporation
required or sale of surviving a surviving a
under the substantially merger is merger is
Australian all of the required if: required if:
Corporations assets of a . the . the
Law for a corporation. surviving surviving
takeover bid However, no corporation's corporation's
made under vote by certificate certificate
Chapter 6 of stockholders of of
the of a incorporation incorporation
Australian Delaware is not is not
Corporations corporation amended by amended by
Law. surviving a the merger; the merger;
merger is
required if:
. Australian . each share . each share
law provides of stock of of stock of
for schemes the the
of surviving surviving
arrangement, corporation corporation
arrangements will be an will be an
or outstanding outstanding
compromises or treasury or treasury
between a share of the share of
company and surviving the
any class of corporation surviving
its after the corporation
shareholders merger; and after the
or merger; and
creditors,
to be used
for certain
types of
reconstructions,
amalgamations,
capital
reorganizations
and
takeovers.
These
schemes of
arrangement
require:
. the
surviving
corporation's
certificate
of
incorporation
is not
amended by
the merger;
. each share
of stock of
the . the shares
surviving to be issued . the shares
corporation in the to be
will be an merger do issued in
outstanding not the merger
or treasury constitute do not
share of more than constitute
the 20% of the more than
surviving surviving 20% of the
corporation corporation's surviving
after the outstanding corporation's
merger; and common stock outstanding
. the shares immediately common
to be prior to the stock
issued in effective immediately
. the the merger date of the prior to
approval at do not merger. the
a special constitute effective
meeting of more than date of the
the company 20% of the merger.
of a surviving
majority in corporation's . United
number of outstanding Television's
the common certificate
shareholders; stock of
and immediately incorporation
. the prior to provides
affirmative the that
votes of effective whenever a
75% of the date of the compromise
votes merger. or
attaching arrangement
</TABLE> to the is proposed
relevant between:
class of
shares held . the
by those corporation
present and and its
voting, creditors
either in or any
person or class of
by proxies; creditors;
and or
. the
sanction of
the court.
185
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. A sale of . the
substantially corporation
all of News and its
Corporation's stockholders
assets or a or any
change in class of
the nature stockholders;
or rate of any Delaware
its court of
activities equitable
will jurisdiction
require may, on
approval by application
majority by any
vote of its creditor,
shareholders stockholder,
under the receiver or
Australian trustee
Stock order:
Exchange . a meeting
Listing of
Rules. creditors
or class of
creditors;
and/or
. a meeting
of
stockholders
or class of
stockholders
(as the case
may be), and
must be:
. agreed to
by a
majority in
number
representing
three-
fourths in
value of
the
creditors
or class of
creditors,
and/or the
stockholders
or class of
stockholders
(as the
case may
be); and
. sanctioned
by the
Delaware
court of
equitable
jurisdiction.
Amendment of . Under . Under . Under . Under
charter Australian Delaware Delaware Delaware
documents: law, a law, charter law, charter law, charter
corporation amendments amendments amendments
is able to generally generally generally
modify or require: require: require:
repeal its . approval of . approval of . approval of
constitution directors; directors; directors;
in whole or . vote of the . vote of the . vote of the
in part by a holders of a holders of holders of
three- majority of a majority a majority
fourths outstanding of of
majority of stock; and outstanding outstanding
the votes . vote of the stock; and stock; and
cast by holders of a . vote of the . vote of the
members majority of holders of holders of
entitled to each class a majority a majority
vote on the of stock of each of each
resolution outstanding class of class of
who attend and entitled stock stock
and vote at to vote outstanding outstanding
a general thereon as a and and
meeting. The class. entitled to entitled to
board of vote vote
directors is thereon as thereon as
not a class. a class.
authorized
to change
the
constitution.
. Amendments . Chris- . BHC's . United
affecting Craft's certificate Television's
the rights certificate of certificate
of the of incorporation of
holders of incorporation requires any incorporation
any class of requires any amendment to requires any
shares may, amendment to Article amendment to
depending on Article Fifth Articles
the rights Seventh (dealing Seventh and
attached to (dealing with the Eighth
such class, with the number, (dealing
also require number, election, with the
approval of election, removal and number,
the classes removal and vacancy of election,
affected in vacancy of directors) removal and
separate directors) or to the vacancy of
class or to the by-laws directors)
meetings. by-laws dealing with to be
dealing with the same to approved:
the same to be approved: . by the
be approved: . by the holders of
. by the holders of shares
holders of shares representing
shares representing at least
representing at least two-thirds
at least two-thirds of the
two-thirds of the votes
of the votes entitled to
votes entitled to be cast at
entitled to be cast at a meeting
be cast at a meeting of
a meeting of stockholders
of stockholders called for
stockholders called for consideration
called for consideration of such
consideration of such amendment;
</TABLE> of such amendment; or
amendment; or
or . by the
. by the written
. by the written consent of
written consent of the holders
consent of the holders of such
the holders of such shares.
of such shares.
shares.
186
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<S> <C> <C> <C> <C>
. Chris- . BHC's by- . United
Craft's laws may Television's
by-laws be amended by-laws
may be by: may be
amended . the adopted,
by: holders amended or
. the of shares repealed
stockholders representing by
at a a . the vote
meeting; majority of the
or of the holders of
. by the votes shares
board of entitled entitled
directors, to be to vote in
provided cast in the
that any the election
by-laws election of
so of directors,
adopted directors; or
may be or . the board
amended . the board of
or of directors,
repealed directors, provided
by the provided that any
stockholders that any by-laws so
by-laws made,
so amended or
adopted repealed
may be may be
amended amended or
or repealed.
repealed
by the
stockholders.
Dividends: . Under . Under . Under . Under
Australian Delaware Delaware Delaware
law, a law, a law, a law, a
corporation corporation corporation corporation
is only is is is
permitted permitted permitted permitted
to pay to declare to declare to declare
dividends and pay and pay and pay
out of dividends dividends dividends
profits out of out of out of
available surplus or surplus or surplus or
for net net net
distribution profits profits profits
and not for the for the for the
out of the current current current
share and/or and/or and/or
capital. preceding preceding preceding
fiscal fiscal fiscal
year, so year, so year, so
long as long as long as
dividends dividends dividends
will not will not will not
reduce reduce reduce
capital capital capital
below that below that below that
represented represented represented
by all by all by all
classes of classes of classes of
stock stock stock
having having having
preference preference preference
upon the upon the upon the
distribution distribution distribution
of assets. of assets. of assets.
. News . Holders of . Holders of
Corporation's convertible class A
constitution preferred common
provides stock are stock and
that, entitled class B
subject to to receive common
the cumulative stock will
satisfaction preferential be
of the dividends entitled
rights of of $1.40 to receive
holders of cash per such
Converting year per dividends
Preference outstanding and
Shares and share, distributions
Preferred payable (payable
Ordinary (if in cash or
Shares, declared) otherwise)
dividends in equal as may be
on semi- declared
Ordinary annual by the
Shares, installments. board of
Redeemable . All directors
Ordinary cumulative from time
Shares and dividends to time.
Non-Voting on . All
Ordinary convertible dividends
Shares: preferred or
stock must distributions
. may be have been to holders
declared paid, or of class A
by the declared common
directors; and set stock and
and apart for class B
. are payment, common
distributed before: stock will
among . any sum be paid or
holders can be made in
of those set aside equal
shares in for or amounts
proportion applied and types
to the to the of
amount of purchase consideration,
capital or share for
paid on redemption share, as
those of any: if class A
shares by . common common
such stock; stock and
holders . class B class B
(and, if common common
an stock; stock were
Ordinary or a single
Share or . preferred class of
Redeemable stock stock,
Ordinary junior except:
Share is in right . BHC may
issued or of pay an
any redemption equal or
capital to the greater
is paid convertible amount
on an preferred per share
Ordinary stock; on class
Share or or A common
Redeemable . any stock
Ordinary dividend than on
Share can be class B
during paid or common
the declared stock if
period in or set a
respect aside or dividend
of which any other is paid
the distribution solely in
dividend ordered cash and
is or made it is not
declared, upon any: a
according . common dividend
to the stock; paid in
terms of . class B partial
issue or common or
otherwise stock; complete
proportionately or liquidation
for the of the
period corporation.
during
which
such
capital
was paid
up).
</TABLE>
187
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. Subject to . preferred . A stock
any special stock dividend in
rights junior in shares of
attached to right of either
shares, the redemption class may
directors or to the be paid
members at convertible only on
general preferred shares of
meetings may stock; that class
also resolve and only if
that profits . Whenever the a stock
or other full dividend in
legally dividends shares of
available upon the the other
reserves be convertible class is
capitalised preferred paid at the
and stock for same rate
distributed all past and on the
among such current shares of
of the dividend the other
shareholders periods have class.
as would be been paid,
entitled to or declared . In any
receive the and set distribution
same if aside for of the
distributed payment, the common stock
by way of holders of or
dividend and common stock substantially
in the same and class B equivalent
proportions common stock equity
and the same will be securities
be applied entitled to of any
for the receive such subsidiary
benefit of dividends of the
members in and corporation,
certain distributions the board of
distributions as may be directors
of capital, declared by may
including: the board of distribute
. payment of directors to:
unpaid from time to
capital on time. . holders of
shares; class A
. issuing . All common
fully paid dividends or stock
shares or distributions securities
debentures; to holders with rights
or of common corresponding
. in stock and to class A
accordance class B common
with the common stock stock; and
rules of a will be paid . holders of
bonus share or made in class B
plan of the equal common
company. amounts, stock
share for securities
. Dividends on share, as if with rights
any class of common stock corresponding
the and class B to class B
company's common stock common
securities were a stock.
are not single class
required to of stock,
be paid in except:
the fiscal . Chris-Craft
year in may pay an
respect of equal or
which they greater
are amount per
declared. share on
Dividends common stock
are payable: than on
. on the date class B
specified common stock
by the if a
board of dividend is
directors paid solely
at the time in cash and
of it is not a
declaration; dividend
or paid in
. if no such partial or
date is complete
specified, liquidation
forthwith of the
after the corporation.
declaration.
. A stock
. If dividends dividend in
on the shares of
Preferred either class
Ordinary may be paid
Shares are only on
not declared shares of
with respect that class
to any and only if
fiscal year a stock
or, if any dividend in
dividends shares of
declared on the other
Preferred class is
Ordinary paid at the
Shares in same rate on
respect of the shares
the fiscal of the other
year fall class.
short in
aggregate of . In any
15% on the distribution
amount of of the
capital paid common stock
up on such or
shares, such substantially
omission or equivalent
shortfall equity
will not securities
limit the of any
dividends subsidiary
which may be of the
declared or corporation,
paid on the the board of
Ordinary directors
Shares or may
Redeemable distribute
Ordinary to:
Shares with . holders of
respect to common
</TABLE> any stock
subsequent securities
year. with rights
corresponding
to common
. No dividends stock; and
may be paid
to the
holders of:
. Preferred
Ordinary
Shares;
. Ordinary
Shares;
. Redeemable
Ordinary
Shares; or
188
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. Non-Voting . holders of
Ordinary class B
Shares, common
until all stock
Base securities
Dividends with rights
(as defined corresponding
in News to class B
Corporation's common
constitution) stock.
and
Supplementary
Dividends
(as defined
in News
Corporation's
constitution)
payable in
respect of
Converting
Preference
Shares
immediately
preceding
the
declaration
of
dividends
in those
other
classes of
shares, or
any of
them, have
been paid
or
otherwise
provided
for in
full.
. Preferred
Ordinary
Shares
confer a
preferential
but non-
cumulative
right to
dividends
with respect
to any
financial
year of News
Corporation
of equal to
the greater
of:
. the Base
Dividend,
which is
such amount
(if any) as
is declared
by the
directors
as a
dividend
not
exceeding
15% of the
paid up
capital on
the
Preferred
Ordinary
Shares (or
a lesser
percentage
in
proportion
to any
increase in
the capital
resulting
from a
bonus issue
of
Preferred
Ordinary
Shares);
and
. the Premium
Dividend,
which is
120% of the
aggregate
of all
dividends
declared in
respect of
that
financial
year on any
Ordinary
Share paid
up to the
same
proportion
for the
same period
of time.
. Ordinary
Shares,
Redeemable
Ordinary
Shares and
Non-Voting
Ordinary
Shares are
entitled to
dividends
equally,
without
preference,
with all
other such
shares, but
the right to
such a
dividend is
subject to:
. declaration
of the
greater of
the Base
Dividend
</TABLE> and the
Premium
Dividend on
the
Preferred
Ordinary
Shares and
Converting
Preference
Shares;
189
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. in the case
of an
interim
dividend,
prior to
concurrent
payment of
the greater
of:
. 50% of the
Preference
Dividend,
which is
the amount
of
dividend
declared
in respect
of each of
the
Preferred
Ordinary
Shares;
and
. an amount
equal to
120% of
all
dividends
paid on
Ordinary,
Redeemable
Ordinary
and Non-
Voting
Ordinary
Shares in
that
financial
year; and
. in the
case of a
final
dividend,
prior or
concurrent
payment of
the
remainder
of the
Preference
Dividend.
. Each Non-
Voting
Ordinary
Share will
confer the
same
dividend
entitlement
as an
Ordinary
Share.
. If any
Perpetual
Preference
Shares or
Redeemable
Preference
Shares are
issued by
the company,
they will
carry
dividend
rights to be
determined
upon or
prior to
issue by the
directors in
accordance
with News
Corporation's
constitution.
Those
dividend
rights:
. will rank
senior to
the rights
attaching
to Ordinary
Shares and
Redeemable
Ordinary
Shares;
. will rank
junior to
the rights
attaching
to
Converting
Preference
Shares; and
. may rank
senior to,
equally,
without
preference,
with or
junior to
other
classes of
preference
shares
outstanding
at the time
those
shares are
issued,
including
the
Preferred
Ordinary
Shares,
depending
on their
terms of
issue.
190
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Meetings of . Under . Under . Under . Under
stockholders: Australian Delaware Delaware Delaware
law, an law, annual law, annual law, annual
annual meetings of meetings of meetings of
meeting of a stockholders stockholders stockholders
public and special and special and special
corporation's meetings of meetings of meetings of
members is stockholders stockholders stockholders
required to must be held must be held must be held
be held. in in in
accordance accordance accordance
. Directors with the with the with the
may call a corporation's corporation's corporation's
meeting when certificate certificate certificate
they deem a of of of
meeting incorporation incorporation incorporation
necessary or or by-laws. or by-laws. or by-laws.
appropriate.
. Chris- . BHC's by- . United
. Under the Craft's by- laws require Television's
Corporations laws require an annual by-laws
Law, at an annual meeting to require an
least 28 meeting to be held annual
days' notice be held between meeting to
must be between April 1 and be held in
given of a April 1 and August 31 of March, April
meeting of June 30 of each year. or May of
News each year. each year.
Corporation's . Special
shareholders. . Special meetings may . Special
meetings may be called at meetings may
. A general be called at any time by be called at
meeting may any time by the board of any time by
also be the board of directors or the chairman
called when directors or the chairman or the
the the chairman and the president,
directors and the president. and must be
are president. called by
required to . Notice of the
do so by: . Notice of any meeting secretary on
. shareholders any meeting must be the written
holding at must be given to request of
least 5% of given to each record
the total each stockholder holder(s) of
votes that stockholder entitled to at least 20%
may be cast entitled to vote at such of the
at the vote at such meeting not shares of
general meeting not less than 10 stock
meeting; or less than 10 and not more entitled
. at least and not more than 60 days generally to
100 than 50 days before the vote for the
shareholders before the date of the election of
who are date of the meeting. directors or
entitled to meeting. the written
vote at a request of
general . Any special any two
meeting. meeting of directors.
. Ordinary holders of
resolutions convertible . Notice of
require a preferred any meeting
simple stock for must be
majority of the purpose given to
votes cast of electing each
by those directors stockholder
present and following a entitled to
voting dividend vote at such
personally default will meeting not
or by be held upon less than 10
representative, 40 days' and not more
proxy or notice by than 60 days
attorney. the before the
secretary or date of the
. Special any holder meeting.
resolutions of
require a convertible
three- preferred
quarters stock.
majority of
votes cast
by those
present and
voting
personally
or by
representative,
proxy or
attorney.
. News
Corporation's
constitution
requires
notice of
any
nomination
of a person
for election
as a
director,
other than a
director
retiring and
seeking re-
election or
a person
recommended
by the
directors,
to be given
to it on or
before the
30th
business day
before the
meeting at
which the
director is
to be
elected.
191
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Rights of . Under . Under . Under . Under
inspection: Australian Delaware Delaware Delaware
law, the law, any law, any law, any
registers, stockholder stockholder stockholder
index of may inspect may inspect may inspect
names of the the the
shareholders, corporation's corporation's corporation's
and minutes stock stock stock
of meetings ledger, a ledger, a ledger, a
of list of its list of its list of its
shareholders stockholders stockholders stockholders
may be and other and other and other
inspected by books and books and books and
the records, and records, and records, and
company's make copies, make copies, make copies,
shareholders upon written upon written upon written
and copies demand under demand under demand under
of such oath stating oath stating oath stating
registers a purpose a purpose a purpose
may be reasonably reasonably reasonably
obtained by related to related to related to
a company's such such such
shareholders. person's person's person's
Published interest as interest as interest as
annual a a a
accounts of stockholder. stockholder. stockholder.
the company
or a concise
financial
report are
also
required to
be mailed to
shareholders.
Shareholders
are also
entitled to
inspect
other
registers.
Upon showing
a proper
purpose, a
shareholder
may apply
for a court
order
allowing the
shareholder's
lawyer or
accountant
access to
the
company's
books,
including
books of
account,
registers
and
documents.
Rights of . Australian . Except as . Except as . Except as
Appraisal: law described described described
generally below, a below, a below, a
does not stockholder stockholder stockholder
provide for of record of of record of of record of
appraisal a Delaware a Delaware a Delaware
rights. corporation corporation corporation
that is a that is a that is a
. Dissenters party to a party to a party to a
under a merger may merger may merger may
scheme of receive cash receive cash receive cash
arrangement in the in the in the
will be amount of amount of amount of
bound by the the fair the fair the fair
decision of value of his value of his value of his
the majority or her or her or her
(50% by shares, in shares, in shares, in
number and lieu of the lieu of the lieu of the
75% of the consideration consideration consideration
votes cast he or she he or she he or she
on the would would would
resolution) otherwise otherwise otherwise
of holders receive in receive in receive in
of shares in such such such
the relevant transaction transaction transaction
class. if the if the if the
stockholder stockholder stockholder
neither neither neither
voted in voted in voted in
favor of nor favor of nor favor of nor
consented in consented in consented in
writing to writing to writing to
the the the
transaction. transaction. transaction.
192
<PAGE>
<TABLE>
<S> <C>
Provision News Corporation Chris-Craft BHC United Television
--------------------------------------------------------------------------------
. However, a . No appraisal . No appraisal . No appraisal
dissenting rights are rights are rights are
shareholder available to available to available to
whose rights stockholders stockholders stockholders
are subject of the of the of the
to surviving surviving surviving
compulsory corporation corporation corporation
acquisition if a vote of if a vote of if a vote of
following a the the the
takeover may surviving surviving surviving
appeal to a corporation's corporation's corporation's
court for an stockholders stockholders stockholders
order that is not is not is not
his or her required required required
shares not under under under
be acquired Section Section Section
if the 251(f) of 251(f) of 251(f) of
dissenter the Delaware the Delaware the Delaware
can prove he General General General
or she has Corporation Corporation Corporation
been treated Law or to Law or to Law or to
unfairly. holders of holders of holders of
shares shares shares
listed on a listed on a listed on a
national national national
securities securities securities
exchange, exchange, exchange,
designated designated designated
as national as national as national
market market market
system system system
securities securities securities
on an on an on an
interdealer interdealer interdealer
quotation quotation quotation
system by system by system by
the National the National the National
Association Association Association
of of of
Securities Securities Securities
Dealers, Dealers, Dealers,
Inc., or Inc., or Inc., or
held by more held by more held by more
than 2,000 than 2,000 than 2,000
stockholders, stockholders, stockholders,
if the only if the only if the only
consideration consideration consideration
to be to be to be
received by received by received by
the the the
stockholders stockholders stockholders
is stock, is stock, is stock,
cash in lieu cash in lieu cash in lieu
of of of
fractional fractional fractional
shares or shares or shares or
any any any
combination combination combination
of the above of the above of the above
of the of the of the
corporation corporation corporation
surviving surviving surviving
the merger the merger the merger
or of or of or of
another another another
corporation corporation corporation
listed, listed, listed,
designated designated designated
or held in or held in or held in
the manner the manner the manner
described described described
above. above. above.
Stockholders'
suits: . Australian . Under . Under . Under
law permits Delaware Delaware Delaware
an law, law, law,
individual stockholders stockholders stockholders
shareholder may bring may bring may bring
to: derivative, derivative, derivative,
individual individual individual
and, when and, when and, when
the the the
requirements requirements requirements
for for for
maintaining maintaining maintaining
a class a class a class
action action action
lawsuit lawsuit lawsuit
under under under
Delaware law Delaware law Delaware law
have been have been have been
met, class met, class met, class
action action action
lawsuits lawsuits lawsuits
against a against a against a
corporation corporation corporation
and its and its and its
officers and officers and officers and
directors directors directors
for breach for breach for breach
of fiduciary of fiduciary of fiduciary
duty and duty and duty and
other other other
wrongs. wrongs. wrongs.
. bring an
action in
his or her
own name
as the
representative
of other
shareholders
where his
or her and
the other
shareholders'
personal
rights are
threatened;
and
. apply for
leave to
seek a
court
order to
bring an
action on
behalf of
a company
in the
company's . A derivative . A derivative . A derivative
name. action action action
allows allows allows
. When stockholders stockholders stockholders
granting to sue on to sue on to sue on
relief, behalf of behalf of behalf of
courts have the the the
wide corporation corporation corporation
discretion where those where those where those
and may in control in control in control
authorize of the of the of the
civil corporation corporation corporation
proceedings refuse to refuse to refuse to
brought in assert a assert a assert a
the name of claim claim claim
the company belonging to belonging to belonging to
by a it. it. it.
shareholder
against the . To maintain . To maintain . To maintain
persons a derivative a derivative a derivative
responsible action, a action, a action, a
for the plaintiff plaintiff plaintiff
prejudicial must must must
action. . be a . be a . be a
stockholder stockholder stockholder
of the of the of the
</TABLE> defendant defendant defendant
corporation corporation corporation
at the time at the time at the time
of the of the of the
alleged alleged alleged
wrong; wrong; wrong;
193
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Provision News Chris-Craft BHC United
Corporation Television
--------------------------------------------------------------------------------
. Except in . make demand . make demand . make demand
the above on the on the on the
limited directors directors directors
respects, of the of the of the
Australian corporation corporation corporation
law does not to assert to assert to assert
permit class the claim the claim the claim
action unless such unless such unless such
lawsuits by a demand a demand a demand
shareholders would be would be would be
on behalf of futile; and futile; and futile; and
the company . be an . be an . be an
or on behalf adequate adequate adequate
of other represen- represen- represen-
shareholders. tative tative tative
of the of the of the
corporation's corporation's corporation's
other other other
stockholders. stockholders. stockholders.
Loans to . Under . Under . Under . Under
directors and Australian Delaware Delaware Delaware
officers: law, a loan law, loans law, loans law, loans
or other can can can
financial generally be generally be generally be
benefit made to made to made to
cannot be officers and officers and officers and
provided to directors directors directors
a director upon upon upon
or officer approval by approval by approval by
by a public the board of the board of the board of
company directors. directors. directors.
unless the
loan or
benefit:
. constitutes
reasonable
remuneration;
. is given to
a director
or a
director's
spouse not
exceeding
A$2,000;
. is made on
arm's-
length
terms; or
. has been
approved by
disinterested
shareholders.
Fiduciary . Under . Under . Under . Under
duties: Australian Delaware Delaware Delaware
law, the law, law, law,
board of directors directors directors
directors is owe a owe a owe a
charged with fiduciary fiduciary fiduciary
managing the duty to the duty to the duty to the
affairs of corporation corporation corporation
the and its and its and its
corporation. stockholders, stockholders, stockholders,
including: including: including:
. Although . a duty of . a duty of . a duty of
directors' care, under care, under care, under
duties are which which which
similar to directors directors directors
those must must must
described properly properly properly
for Chris- apprise apprise apprise
Craft, BHC themselves themselves themselves
and United of all of all of all
Television reasonably reasonably reasonably
under available available available
Delaware information, information, information,
law, the and and and
directors . a duty of . a duty of . a duty of
owe these loyalty, loyalty, loyalty,
duties to under which under which under which
the company directors directors directors
as a whole. must must must
While "the protect the protect the protect the
company as a interests interests interests
whole" of the of the of the
typically corporation corporation corporation
references and refrain and refrain and refrain
the from from from
company's injuring injuring injuring
shareholders, the the the
in certain corporation corporation corporation
circumstances and its and its and its
the term may stockholders stockholders stockholders
also or or or
encompass a depriving depriving depriving
company's them of any them of any them of any
creditors. profit or profit or profit or
advantage. advantage. advantage.
. As permitted . As permitted . As permitted
by Delaware by Delaware by Delaware
law, Chris- law, BHC's law, United
Craft's certificate Television's
certificate of certificate
of incorporation of
incorporation eliminates incorporation
eliminates or limits, eliminates
or limits, depending or limits,
depending upon the depending
upon the circumstances, upon the
circumstances, directors' circumstances,
directors' monetary directors'
monetary liability monetary
liability for breach liability
for breach of the duty for breach
of the duty of care. of the duty
of care. of care.
194
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Corporation Television
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<S> <C> <C> <C> <C>
Indemnification . Under . Delaware law . Delaware law . Delaware law
of directors Australian provides provides provides
and officers: law, a that a that a that a
company may corporation corporation corporation
not may may may
indemnify a indemnify indemnify indemnify
person any person any person any person
against any party, or party, or party, or
liability to threatened threatened threatened
the company to be made a to be made a to be made a
or a related party, to party, to party, to
body any any any
corporate threatened, threatened, threatened,
incurred as pending or pending or pending or
an officer completed completed completed
or auditor action, suit action, suit action, suit
of the or or or
company. proceeding proceeding proceeding
(other than (other than (other than
an action by an action by an action by
or in the or in the or in the
right of the right of the right of the
corporation) corporation) corporation)
against against against
expenses, expenses, expenses,
judgments, judgments, judgments,
fines and fines and fines and
amounts paid amounts paid amounts paid
in in in
settlement settlement settlement
actually and actually and actually and
reasonably reasonably reasonably
incurred by incurred by incurred by
the person the person the person
in in in
connection connection connection
with such with such with such
action, suit action, suit action, suit
or or or
proceeding proceeding proceeding
by reason of by reason of by reason of
the fact the fact the fact
that he or that he or that he or
she is or she is or she is or
was a was a was a
director, director, director,
officer, officer, officer,
employee or employee or employee or
agent of the agent of the agent of the
corporation corporation corporation
or is or was or is or was or is or was
serving at serving at serving at
the request the request the request
of the of the of the
corporation corporation corporation
as a as a as a
director, director, director,
officer, officer, officer,
employee or employee or employee or
agent of agent of agent of
another another another
organization. organization. organization.
. Delaware law . Delaware law . Delaware law
provides provides provides
that a that a that a
corporation corporation corporation
may may may
indemnify indemnify indemnify
any person any person any person
party, or party, or party, or
threatened threatened threatened
to be made a to be made a to be made a
party, to party, to party, to
any any any
threatened, threatened, threatened,
pending or pending or pending or
completed completed completed
action or action or action or
suit brought suit brought suit brought
by or in the by or in the by or in the
right of the right of the right of the
corporation corporation corporation
to procure a to procure a to procure a
judgment in judgment in judgment in
its favor by its favor by its favor by
reason of reason of reason of
the fact the fact the fact
that he or that he or that he or
she was an she was an she was an
officer, officer, officer,
director, director, director,
employee or employee or employee or
agent of the agent of the agent of the
corporation, corporation, corporation,
or is or was or is or was or is or was
serving at serving at serving at
the request the request the request
of the of the of the
corporation corporation corporation
as a as a as a
director, director, director,
officer, officer, officer,
employee or employee or employee or
agent of agent of agent of
another another another
corporation corporation corporation
or other or other or other
entity, entity, entity,
against against against
expenses expenses expenses
actually and actually and actually and
reasonably reasonably reasonably
incurred in incurred in incurred in
connection connection connection
with the with the with the
defense or defense or defense or
settlement settlement settlement
of such of such of such
action or action or action or
suit, except suit, except suit, except
that there that there that there
may be no may be no may be no
such such such
indemnification indemnification indemnificationn
if the if the if the
person is person is person is
found liable found liable found liable
to the to the to the
corporation corporation corporation
unless the unless the unless the
court court court
determines determines determines
the person the person the person
is entitled is entitled is entitled
thereto. thereto. thereto.
. Delaware law . Delaware law . Delaware law
provides provides provides
that a that a that a
corporation corporation corporation
must must must
indemnify a indemnify a indemnify a
director or director or director or
officer who officer who officer who
successfully successfully successfully
defends defends defends
himself or himself or himself or
herself in herself in herself in
an action, an action, an action,
suit or suit or suit or
proceeding proceeding proceeding
to which he to which he to which he
or she was a or she was a or she was a
party party party
because he because he because he
or she is or or she is or or she is or
was a was a was a
director or director or director or
officer officer officer
against against against
expenses expenses expenses
actually and actually and actually and
reasonably reasonably reasonably
incurred by incurred by incurred by
him or her. him or her. him or her.
</TABLE>
195
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Corporation Television
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<S> <C> <C> <C> <C>
. Australian . Indemnification . Indemnification . Indemnification
law does not is generally is generally is generally
prohibit a permitted permitted permitted
company from under under under
indemnifying Delaware law Delaware law Delaware law
a person for: for: for:
from . acts . acts . acts
liability to performed performed performed
any other in good in good in good
person faith and faith and faith and
incurred as in a manner in a manner in a manner
an officer the the the
or auditor indemnified indemnified indemnified
of the person person person
company, reasonably reasonably reasonably
except believed to believed to believed to
liability be in or be in or be in or
which arises not opposed not opposed not opposed
out of to the best to the best to the best
conduct interest of interest of interest of
involving a the the the
lack of good corporation; corporation; corporation;
faith and and and and
certain . with . with . with
penalty or respect to respect to respect to
compensation any any any
orders. criminal criminal criminal
action or action or action or
. Australian proceeding, proceeding, proceeding,
law does not such such such
prohibit a indemnified indemnified indemnified
company from person had person had person had
indemnifying no no no
a person for reasonable reasonable reasonable
legal costs cause to cause to cause to
incurred as believe the believe the believe the
a director act was act was act was
or officer unlawful. unlawful. unlawful.
of the
company
except legal
costs which
are incurred
in:
. defending
criminal
proceedings
in which the
person is
found
guilty;
. defending or
resisting
certain
compensation
orders which
the person
is required
to pay;
. connection
with
proceedings
for relief
to that
person which
are denied;
or
. defending or
resisting
certain
other orders
if the
grounds for
those orders
are
established.
. News . Chris- . BHC's by- . United
Corporation's Craft's by- laws require Television's
constitution laws require indemnification by-laws
provides indemnification of require
that the of directors, indemnification
company: directors, officers, of directors
. must officers, employees and officers
indemnify employees and agents to the
its and agents to the fullest
directors, upon a fullest extent and
principal determination extent and in the
executive that the in the manner set
officers and director, manner set forth and
secretaries officer, forth and permitted by
to the employee or permitted by the Delaware
extent agent has the Delaware General
permitted by met the General Corporation
the relevant applicable Corporation Law and
statutory standard of Law and other
provisions; conduct set other applicable
and out above. applicable law. The
. may law. corporation
indemnify . However, no may
any auditor, plaintiff . However, no indemnify
employee or will be plaintiff employees or
other indemnified will be agents in
officer of unless the indemnified, the same
the company board of unless the manner.
or any directors board of
subsidiary otherwise directors
of the determines. otherwise
company determines.
(including a
director,
principal
executive
officer or
secretary of
such
subsidiary)
where its
board of
directors
considers it
appropriate
to do so.
</TABLE>
196
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<S> <C> <C> <C> <C>
. The . Chris- . BHC's by- . United
Australian Craft's by- laws Television's
Corporations laws authorize it by-laws
Law permits authorize it to purchase authorize it
a company or to purchase directors' to purchase
any related directors' and directors'
body and officers' and
corporate to officers' insurance officers'
purchase and insurance covering insurance
maintain covering claims covering
insurance on claims respecting claims
behalf of respecting which it respecting
present and which it lacks the which it
past lacks the power to lacks the
directors, power to indemnify. power to
other indemnify. indemnify.
officers or
auditors of
the company
against any
liability
(other than
legal costs)
except
liability
which arises
out of
conduct
involving a
wilful
breach of
duty, the
improper use
of
information
acquired by
virtue of
his or her
position, or
the improper
use of his
or her
position, to
gain an
advantage
for himself
or herself
or any other
person, or
to cause
detriment to
the company.
. News
Corporation's
constitution
permits the
board of
directors to
authorize
the purchase
and
maintenance
of such
insurance on
behalf of
the current
and former
directors,
principal
executive
officers,
secretaries
and auditors
of the
company or
any
subsidiary,
and any
insurance on
behalf of
other
employees of
the company
or a
subsidiary.
Interested . Under . Under . Under . Under
director Australian Delaware Delaware Delaware
transactions: law and News law, certain law, certain law, certain
Corporation's contracts or contracts or contracts or
constitution, transactions transactions transactions
a in which at in which at in which at
transaction least one of least one of least one of
will be not a a a
void or corporation's corporation's corporation's
voidable directors directors directors
merely has an has an has an
because a interest are interest are interest are
director has not void or not void or not void or
a personal voidable voidable voidable
interest in solely solely solely
the because of because of because of
transaction. such such such
interest or interest or interest or
. However, because such because such because such
Australian director was director was director was
law present at present at present at
prohibits a the meeting the meeting the meeting
director who where such a where such a where such a
has a contract or contract or contract or
material transaction transaction transaction
personal was was was
interest in authorized authorized authorized
a matter or ratified or ratified or ratified
from voting by the by the by the
on the stockholders stockholders stockholders
matter or or the board or the board or the board
being of directors of directors of directors
present when so long as so long as so long as
the certain certain certain
remainder of conditions, conditions, conditions,
the board such as good such as good such as good
votes on the faith and faith and faith and
matter, full full full
unless the disclosure, disclosure, disclosure,
disinterested are met. The are met. The are met. The
directors contract or contract or contract or
agree. News transaction: transaction: transaction:
Corporation's . must be . must be . must be
constitution approved by approved by approved by
prohibits a either: either: either:
director who . a majority . a majority . a majority
has a of the of the of the
material disinterested disinterested disinterested
interest directors directors directors
from voting (even if (even if (even if
on the such group such group such group
transaction. is less is less is less
than a than a than a
quorum); or quorum); or quorum);
or
</TABLE>
197
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Corporation Television
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<S> <C> <C> <C> <C>
. Further, . a vote of . a vote of . a vote of
Australian the the the
law stockholders; stockholders; stockholders;
prohibits a or or or
related . must be fair . must be fair . must be
party of a to the to the fair to the
public corporation corporation corporation
company from as of the as of the as of the
obtaining a time it is time it is time it is
financial authorized authorized authorized
benefit by the board by the board by the
(defined of of board of
expansively) directors, a directors, a directors,
from the committee committee a committee
public thereof or thereof or thereof or
company or the the the
its child stockholders. stockholders. stockholders.
entities
unless the
giving of
the benefit
is excluded
from the
prohibition.
Relevant
exclusions
include
benefits
which are:
. reasonable
remuneration
to
officers;
. given to
directors
or their
spouses and
does not
exceed
A$2,000;
. otherwise
on arm's
length
terms; or
. has been
approved by
a
resolution
of
disinterested
shareholders.
Business . Australian . Delaware . Delaware . Delaware
combination law provides law, in law, in law, in
restrictions: that if any general, general, general,
person or prohibits a prohibits a prohibits a
their Delaware Delaware Delaware
associate (a corporation corporation corporation
defined from from from
term) has or engaging in engaging in engaging in
ceases to a business a business a business
have 5% of combination combination combination
the total (defined as (defined as (defined as
voting power a variety of a variety of a variety of
in a company transactions, transactions, transactions,
listed in including including including
Australia mergers, mergers, mergers,
(power that consolidations consolidations consolidations
arises by and certain and certain and certain
owning the sales of sales of sales of
voting assets and assets and assets and
shares in issuances of issuances of issuances of
the company) stock) with stock) with stock) with
(a an an an
substantial interested interested interested
shareholding) stockholder stockholder stockholder
or there is (defined (defined (defined
a movement generally as generally as generally as
of more than a person a person a person
1% in a that is the that is the that is the
substantial beneficial beneficial beneficial
share owner of 15% owner of 15% owner of 15%
holding, the or more of a or more of a or more of a
person must corporation's corporation's corporation's
provide outstanding outstanding outstanding
certain voting voting voting
detailed stock) for a stock) for a stock) for a
information period of period of period of
about their three years three years three years
substantial following following following
shareholding the date the date the date
to the that such that such that such
company and person person person
to each became an became an became an
Australian interested interested interested
securities stockholder stockholder stockholder
exchange on unless, unless, unless,
which the among other among other among other
company is things, things, things,
listed prior to the prior to the prior to the
within 2 date such date such date such
business person person person
days after became an became an became an
they become interested interested interested
aware of the stockholder, stockholder, stockholder,
information. the board of the board of the board of
directors of directors of directors of
. Australian the the the
law also corporation corporation corporation
places approved approved approved
restrictions either the either the either the
on a person business business business
acquiring combination combination combination
interests in or the or the or the
voting transaction transaction transaction
shares in a that that that
company resulted in resulted in resulted in
listed in the the the
Australia stockholder stockholder stockholder
such that becoming an becoming an becoming an
the person's interested interested interested
or someone stockholder stockholder stockholder
else's or, at or or, at or or, at or
voting power subsequent subsequent subsequent
in the to such to such to such
company time, the time, the time, the
increases business business business
from 20% or combination combination combination
below to is approved is approved is approved
more than by the board by the board by the board
20% or from of directors of directors of directors
a starting and and and
point that authorized authorized authorized
is above 20% at an annual at an annual at an annual
and below or special or special or special
90%. meeting of meeting of meeting of
Generally, stockholders stockholders stockholders
such (not by (not by (not by
acquisitions written written written
cannot be consent) by consent) by consent) by
made unless the the the
the person affirmative affirmative affirmative
does not vote of at vote of at vote of at
acquire more least 2/3 of least 2/3 of least 2/3 of
than 3% of the the the
the voting outstanding outstanding outstanding
shares of voting stock voting stock voting stock
the target which is not which is not which is not
in any six owned by the owned by the owned by the
interested interested interested
stockholder. stockholder. stockholder.
</TABLE>
198
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Provision News Chris-Craft BHC United
Corporation Television
--------------------------------------------------------------------------------
month period,
the
acquisition
is made with
shareholder
approval or
the
acquisition
is made
pursuant to a
takeover bid
under the
Australian
Corporations
Law. Takeover
bids must
treat all
shareholders
of the target
company alike
and must not
involve any
collateral
benefits.
Various
restrictions
about
conditional
offers exist
and there are
also
substantial
restrictions
concerning
the
withdrawal
and
suspension of
offers.
Rights on a . On a winding . Chris- . BHC's
winding-up: up of News Craft's certificate
Corporation, certificate of
the of incorporation
company's incorporation provides
assets provides that in the
(including that in the event of any
capital event of any liquidation,
uncalled at liquidation, dissolution
the dissolution or winding
commencement or winding up of BHC,
of the up of Chris- the assets
winding up) Craft, the of the
remaining assets of corporation
after paying the available
and corporation for
discharging available distribution
the for are to be
company's distribution applied as
debts and are to be follows:
liabilities applied as . first, in
and the follows: the payment
costs of . first, in to the
winding up the payment holders of
are to be to the preferred
applied as holders of stock of
follows: convertible their
. first, in preferred preferential
the payment stock the amounts;
to the sum of and
holders of $23.00 per . second, any
Converting share plus residual
Preference an amount will belong
Shares of equal to to and be
any Base cumulative distributable
Dividend dividends in equal
(as defined not paid, amounts per
in the and amounts share to
company's payable will the holders
constitution) be pro rated of class A
not paid if full common
and any payment is stock and
Supplementary not the holders
Dividend possible; of class B
(as defined and common
in the . any residual stock, as
company's will belong if such
constitution) to and be classes
not distributable constituted
declared on in equal a single
those amounts per class.
shares, pro . For the
rata purposes
according described
to the above, the
amounts not following
paid; events will
not be
. second, in deemed to be
the payment a
of capital liquidation,
paid up on dissolution
Converting or winding
Preference up of BHC:
Shares pro . the merger
rata or
according consolidation
to the of
amounts so
paid;
. third, in
repayment
of the
capital
paid up on
the
Preferred
Ordinary
Shares pro
rata
according
to the
amounts so
paid;
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. fourth, in share to the BHC into or
payment to holders of with another
holders of common stock corporation;
the and the . the merger
Preferred holders of or
Ordinary class B consolidation
Shares of common stock, of another
the as if such corporation
preferential classes into or
dividends constituted a with BHC;
declared single class. . any sale,
but not transfer or
paid on . The lease of
their following all or
shares pro events will substantially
rata not be all of
according deemed to be BHC's
to the a assets;
amounts not liquidation, . any
paid; dissolution transaction
or winding or series of
. fifth, in up of Chris- transactions
repayment Craft for having the
to the the purposes effect of a
holders of described reorganization;
Redeemable above: . any partial
Ordinary . the merger liquidation
Shares of or distribution
up to consolidation or
A$1.00 for of Chris- transaction
every 1,000 Craft into commonly
Redeemable or with known as a
Ordinary another spin-off or
Shares corporation; split-off,
held; . the merger or other
or transaction
. sixth, in consolidation in the
repayment of another nature of a
of the corporation partial
capital into or liquidation,
paid up on with Chris- if the
the Craft; record date
Ordinary . any sale, fixed to
Shares, transfer or determine
Redeemable lease of stockholders
Ordinary all or so entitled
Shares and substantially is at least
any other all of 30 days
class of Chris- after the
securities Craft's date such
of the assets; distribution
company pro is approved
rata or
according authorized.
to the . any
amounts so transaction
paid; and or series
of
transactions
having the
effect of a
. seventh, in reorganization;
payment to . any partial
the holders liquidation
of distribution
Preferred or
Ordinary transaction
Shares, commonly
Ordinary known as a
Shares, spin-off or
Redeemable split-off,
Ordinary or other
Shares and transaction
Non-Voting in the
Ordinary nature of a
Shares of partial
non- liquidation,
preferential if the
dividends record date
declared fixed to
but not determine
paid on stockholders
their so entitled
shares pro- is at least
rata 30 days
according after the
to the date such
amounts not distribution
paid. is approved
or
. Lastly, any authorized.
residue
shall be
divided
amongst the
holders of:
. the
Preferred
Ordinary
Shares;
. Ordinary
Shares;
. Redeemable
Ordinary
Shares; and
. Non-Voting
Ordinary
Shares, pro
rata
according to
the amounts
of capital
paid up on
such shares,
respectively.
. On a winding
up of News
Corporation,
repayment of
the capital
of members
will rank
junior to
payment of
all of the
company's
creditors.
Also, as
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<S> <C> <C> <C> <C>
between
holders of
preferred
shares in the
company,
holders of
Preferred
Ordinary
Shares will
rank junior
to holders of
Converting
Preference
Shares.
. If any
Perpetual
Preference
Shares or
Redeemable
Preference
Shares are
issued by
the company,
their
ranking on
winding up
shall be on
terms
determined
by the
directors in
accordance
with News
Corporation's
constitution
on or prior
to the issue
of those
shares. Such
shares:
. shall rank
senior to
Ordinary
Shares and
Redeemable
Ordinary
Shares,
. shall rank
junior to
Converting
Preference
Shares, and
. may rank
senior to,
equally,
without
preference,
with, or
junior to,
other
classes of
preference
shares
outstanding
at the time
those
shares are
issued,
including
the
Preferred
Ordinary
Shares,
depending
on their
terms of
issue.
Transfers: . Other than . Under . Under . Under
the Delaware Delaware Delaware
transfer of law, a law, a law, a
shares corporation corporation corporation
under the may impose may impose may impose
business restrictions restrictions restrictions
rules of on transfer on transfer on transfer
the of of of
Australian securities securities securities
Securities either: either: either:
Clearing . by the . by the . by the
House as corporation's corporation's corporation's
permitted certificate certificate certificate
by News of of of
Corporation's incorporation incorporation incorporation
constitution, or by-laws or by-laws or by-laws
delivery of or or or
the . by an . by an . by an
following agreement agreement agreement
items to among among among
the company security security security
are holders. holders. holders.
prerequisites
to . Under . Under BHC's . Under
registration Chris- by-laws, a United
of a Craft's by- transfer of Television's
transfer in laws, a shares of by-laws, a
the transfer of stock will transfer of
register of shares of only be shares of
shareholders: stock will made on the stock will
. an only be stock only be
instrument made on the records made on the
of stock upon: stock
transfer records records
in proper upon: upon:
form and . authorization
duly by the
stamped; . authorization registered . authorization
by the holder or by the
registered his registered
. the share holder or authorized holder or
certificates his attorney; his
(if any); authorized and authorized
and attorney; attorney;
. such other and and
information . surrender
relating of the
to the certificate(s)
transferor's for such
right to shares
dispose of properly
the endorsed
shares, as or
the accompanied
directors by a duly
require. executed
stock
transfer
power; and
. surrender . surrender
of the of the
certificate(s) certificate(s)
for such for such
shares shares
properly properly
endorsed endorsed
or for
accompanied transfer;
by a duly and
executed . the
stock payment of
transfer all
power; and necessary
. the transfer
payment of taxes.
. the all taxes
payment of on the
all taxes transfer.
on the
transfer.
</TABLE>
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. The . Chris- . BHC's
directors Craft's certificate
may decline certificate of
to register of incorporation
any incorporation provides
transfer of provides that:
shares: that: . no person
. if the . no person holding
company holding any any share
has a lien share of of class B
on those class B common
shares; or common stock may
. where to stock may transfer;
register transfer; and
the and . the
transfer . the corporation
would corporation will not
result in will not register
a register the
contravention the transfer
of or transfer of,
failure to of, such share of
observe a such share of class B
law of an class B common stock
Australian common stock or any
jurisdiction;or any interest in
or interest in that stock,
. as that stock, whether by
permitted whether by sale,
by the sale, assignment,
Australian assignment, gift,
Corporations gift, bequest,
Law, bequest, appointment
listing appointment or otherwise,
rules of or otherwise, except to a
the except to a "Permitted
Australian "Permitted Transferee"
Stock Transferee" of such
Exchange of such person.
or person.
business
rules of
the
Australian
Securities
Clearing
House.
. News . Any
Corporation's purported
constitution transfer of
permits shares of
shares to class B
be common
transferred stock other
in any than to a
manner Permitted
permitted Transferee
by the will result
listing in the
rules of conversion
the of such
Australian shares into
Stock shares of
Exchange common
and the stock,
business effective
rules of on the date
the of such
Australian purported
Securities transfer.
Clearing
House. News . Chris-Craft
Corporation's may
constitution require, as
also makes a condition
provision to transfer
for the or
refusal to registration
register of transfer
any of class B
transfer of common
shares stock or
where the convertible
shares are preferred
subject to: stock to a
. a lien in purported
respect of Permitted
unpaid Transferee,
calls; that the
. an escrow record
agreement holder file
entered with the
into in transfer
accordance agent:
with the . an
listing appropriate
rules of certificate
the or
Australian affidavit;
Stock or
Exchange; . such other
or proof as
. where such the
transfer: corporation
. would deems
create a necessary,
new as
shareholding satisfactory
of less evidence that
than the
marketable transferee is
parcel; a Permitted
. must or Transferee.
may be
refused in
accordance
with the
Australian
Stock
Exchange
Listing
Rules, the
Corporations
Law or the
Australian
Securities
Clearing
House
Business
Rules; or
. would
require
registration
of more
than three
persons as
joint
holders
unless
they are
executors
or
trustees
of a
deceased
shareholder.
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. The Listing
Rules of
the
Australian
Stock
Exchange
also
provide for
an
application
to be made
to the
Australian
Securities
Clearing
House, if
certain
circumstances
exist, to
prevent
shares from
being
transferred.
. All shares
of the
company are
presently
approved
for
participation
in the
Australian
Securities
Clearing
House's
Clearing
House
Electronic
Subregister
System.
. News
Corporation's
constitution
also
provides
that a
person may
not:
. offer to
acquire;
or
. procure
any offer
to
acquire;
or
. acquire,
any Ordinary
Shares or
Preferred
Ordinary
Shares under
a takeover
scheme or
announcement
or other
general
offer (as
defined in
News
Corporation's
constitution)
for such
shares
unless:
. the
takeover
scheme or
announcement
relates to
both
Ordinary
Shares and
Preferred
Ordinary
Shares; or
. contemporaneous
offers are
made for
both
Ordinary
Shares and
Preferred
Ordinary
Shares and
the terms
of the
offer are
comparable
(as that
term is
used in
News
Corporation's
constitution).
. In
accordance
with Section
140 of the
Australian
Corporations
Law, such a
provision in
News
Corporation's
constitution
has the
effect of a
contract
under seal
between:
. the company
and each
member;
. the company
and each of
its
directors
or
secretaries;
and
. each of the
members as
between
themselves,
under which
each of them
agrees to
observe and
perform those
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Corporation Television
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provisions
applicable to
them as in
force for the
time being. As
long as that
provision
remains in
News
Corporation's
constitution,
it may be
enforced by
and against
such persons
to the extent
permitted by
Section 140.
News
Corporation's
constitution
does not
affect the
operation of
those
provisions of
the Australian
Corporations
Law which
control the
acquisition of
shares in the
company and
regulate
takeover bids.
Election of . Under . Under . Under . Under
directors; Australian Delaware Delaware Delaware
Classified law, board law, the law, the law, the
board of composition total number total number total number
directors is largely of directors of directors of directors
provided for may be fixed may be fixed may be fixed
in a in the in the in the
company's certificate certificate certificate
constitution, of of of
although a incorporation incorporation incorporation
public or as or as or as
company must provided by provided by provided by
have at the by-laws. the by-laws. the by-laws.
least 3 Board Board Board
directors, meetings may meetings may meetings may
two of whom be held by be held by be held by
must be telephone, telephone, telephone,
Australian and the and the and the
residents. board may board may board may
act by act by act by
. News written written written
Corporation's consent. consent. consent.
constitution
provides
that at . Chris- . BHC's . United
every annual Craft's certificate Television's
general certificate of certificate
meeting: of incorporation of
incorporation provides incorporation
. one third generally that there provides
of the provides will be no that there
directors that there less than 3 will be no
other than will be no and no more less than 3
the less than 3 than 15 and no more
managing and no more directors, than 15
director; than 15 with the directors,
or directors, exact number with the
. if the with the to be fixed exact number
number of exact number by the to be fixed
directors to be board. by the
is not a fixed by the Currently, board.
multiple of board. BHC has 8 Currently,
three, the Currently, directors. United
number Chris-Craft Television
nearest to has 10 has 7
but not directors. directors.
exceeding
one-third
of the
directors,
shall retire
and be
eligible for
reelection.
. The
directors
who must
retire are
those who
have held
office for
the longest
time since
being
elected or
re-elected.
The managing
director is
not required
to retire by
rotation.
Any director
who has been
appointed by
the
directors to
fill a
casual
vacancy on
the Board or
as an
additional
director is
also
required to
retire at
the next
general
meeting
following
his or
204
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her . Whenever
appointment three or
and is more semi-
eligible for annual
re-election dividends,
at that in whole or
meeting. Such in part
a director (whether or
and the not
managing consecutive)
director are have not
not taken been paid,
into account or declared
in deciding and set
the number or aside for
identity of payment,
the one-third with respect
of directors to any share
who must of the
retire by convertible
rotation. preferred
stock, the
. Except for holders of
the managing the
director, a convertible
director may preferred
not hold stock have
office: the right to
. for a elect two
period in directors,
excess of voting
three separately
years; or as a class:
. after the . at a
third special
annual meeting of
general convertible
meeting preferred
following stock
his or her stockholders
appointment, convened
(whichever after the
occurs later) occurrence
without of such
submitting event; and
for re- . at each
election. subsequent
annual
meeting
thereafter,
only if and
so long as
any dividend
remains in
arrears at
the time such
meeting is
held. These
directorships
will be
automatically
vacated and
abolished
upon the
dividends
being paid or
set aside for
payment.
. Delaware law . Delaware law . Delaware law
permits, but permits, but permits, but
does not does not does not
require, a require, a require, a
classified classified classified
board of board of board of
directors directors directors
with with with
staggered staggered staggered
terms under terms under terms under
which one- which one- which one-
half or one- half or one- half or one-
third of the third of the third of the
directors directors directors
are elected are elected are elected
for terms of for terms of for terms of
two or three two or three two or three
years, years, years,
respectively. respectively. respectively.
Chris- BHC's United
Craft's certificate Television's
certificate of certificate
of incorporation of
incorporation provides for incorporation
provides for directors to provides for
directors to be divided directors to
be divided into three be divided
into three classes. into three
classes. classes.
205
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Removal of . Australian . Under . Under . Under
directors: law allows Delaware Delaware Delaware
shareholders law, a law, a law, a
to remove director can director can director can
any director be removed be removed be removed
of a public with or with or with or
company by without without without
an ordinary cause by the cause by the cause by the
resolution holders of a holders of a holders of a
at a general majority of majority of majority of
meeting. shares shares shares
entitled to entitled to entitled to
. News vote in an vote in an vote in an
Corporation's election of election of election of
constitution directors directors directors
provides unless: unless: unless:
that the . the . the . the
office of certificate certificate certificate
director may of of of
be vacated incorporation incorporation incorporation
on grounds provides provides provides
of: otherwise otherwise otherwise
. mental (where a (where a (where a
disorder corporation corporation corporation
. ceasing to has a has a has a
hold an classified classified classified
executive board, board, board,
office; or stockholders stockholders stockholders
. continual must have must have must have
absence cause to cause to cause to
from board remove), or remove), or remove), or
meetings . if less . if less . if less
for a than the than the than the
period of entire entire entire
six months board is to board is to board is to
without be removed be removed be removed
leave of and the and the and the
absence corporation corporation corporation
from the has has has
Board. cumulative cumulative cumulative
voting, no voting, no voting, no
director director director
may be may be may be
removed removed removed
without without without
cause if cause if cause if
the votes the votes the votes
cast cast cast
against his against his against his
or her or her or her
removal removal removal
would be would be would be
sufficient sufficient sufficient
to elect to elect to elect
him or her him or her him or her
if if if
cumulatively cumulatively cumulatively
voted at an voted at an voted at an
election of election of election of
the entire the entire the entire
board. board. board.
. BHC's
certificate
of
incorporation
provides
that any
director may
be removed
without
cause:
. with the
concurrence
of a
majority of
the entire
board of
directors;
and
. the vote or
consent of
holders of
shares
representing
a majority
of the
votes
entitled to
be cast,
voting
together as
a single
class.
Vacancies on . Under News . Delaware law . Delaware law . Delaware law
the board of Corporation's provides provides provides
directors constitution, that that that
the company vacancies vacancies vacancies
may, by and newly and newly and newly
ordinary created created created
resolution directorships directorships directorships
of its may be may be may be
shareholders, filled by a filled by a filled by a
appoint a majority of majority of majority of
person who the the the
has been directors directors directors
nominated in then in then in then in
advance and office office office
is willing (although (although (although
to be a less than a less than a less than a
director quorum) quorum) quorum)
either to unless: unless: unless:
fill a
vacancy or
as an
additional
director.
</TABLE>
206
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. News . the . the . the
Corporation's certificate certificate certificate
board of of of of
directors incorporation incorporation incorporation
may also or by-laws or by-laws or by-laws
appoint a provide provide provide
director to otherwise; otherwise; otherwise;
fill a or or or
vacancy or . the . the . the
as an certificate certificate certificate
additional of of of
director, so incorporation incorporation incorporation
long as such directs a directs a directs a
appointment particular particular particular
will only class is to class is to class is to
last until elect such elect such elect such
the next director, director, director,
following in which in which in which
general case any case any case any
meeting of other other other
the company directors directors directors
where the elected by elected by elected by
director may such class, such class, such class,
be re- or a sole or a sole or a sole
elected. remaining remaining remaining
director, director, director,
shall fill shall fill shall fill
such such such
vacancy. vacancy. vacancy.
. Other than . There is no . There is no
with contrary contrary
respect to provision in provision in
the rights BHC's United
of the constituent Television's
convertible documents. constituent
preferred documents.
stockholders
to elect
directors
upon a
dividend
default, as
described
above,
there is no
contrary
provision
in Chris-
Craft's
constituent
documents.
. No person is . If, at the . If, at the . If, at the
eligible for time of time of time of
appointment filling any filling any filling any
as director vacancy or vacancy or vacancy or
unless: newly newly newly
. the nominee created created created
is a directorship, directorship, directorship,
director the the the
retiring at directors directors directors
a meeting; then in then in then in
. the nominee office office office
has been constitute constitute constitute
recommended less than a less than a less than a
by the majority of majority of majority of
board of the entire the entire the entire
directors; board, the board, the board, the
or Delaware Delaware Delaware
. notice of Court of Court of Court of
the Chancery Chancery Chancery
nomination may, upon may, upon may, upon
is given by application application application
a of of of
shareholder stockholders stockholders stockholders
to the holding at holding at holding at
company on least 10% of least 10% of least 10% of
or before the shares the shares the shares
the 30th outstanding outstanding outstanding
business and entitled and entitled and entitled
day before to vote, to vote, to vote,
the order an order an order an
meeting. election to election to election to
be held: be held: be held:
. News . to fill any . to fill any . to fill any
Corporation's such such such
constitution vacancies vacancies vacancies
provides or newly or newly or newly
that the created created created
board of directorships; directorships; directorships;
directors or or or
will be . to replace . to replace . to replace
comprised of the the the
not less directors directors directors
than 5 chosen by chosen by chosen by
directors the the the
unless the directors directors directors
shareholders in office. in office. in office.
determine
otherwise in
a general
meeting.
</TABLE>
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Reporting obligations
. As a foreign . As a U.S. . As a U.S. . As a U.S.
private public public public
issuer, News company, company, BHC company,
Corporation Chris-Craft must file United
is not must file with the Television
required to with the SEC, among must file
file Annual SEC, among other with the
Reports on other reports and SEC, among
Form 10-K, reports and notices: other
Quarterly notices: . Annual reports and
Reports on . Annual Reports on notices:
Form 10-Q or Reports on Form 10-K . Annual
Current Form 10-K within 90 Reports on
Reports on within 90 days after Form 10-K
Form 8-K days after the end of within 90
with the the end of each fiscal days after
SEC. In lieu each fiscal year; the end of
of such year; . Quarterly each fiscal
reports, . Quarterly Reports on year;
News Reports on Form 10-Q . Quarterly
Corporation Form 10-Q within 45 Reports on
is required within 45 days after Form 10-Q
to file: days after the end of within 45
. Annual the end of each fiscal days after
Reports on each fiscal quarter; the end of
Form 20-F quarter; and each fiscal
and and . Current quarter;
. Reports of . Current Reports on and
Foreign Reports on Form 8-K . Current
Private Form 8-K upon the Reports on
Issuer on upon the occurrence Form 8-K
Form 6-K. occurrence of upon the
of important occurrence
. The Form 20- important corporate of
F (which is corporate events. important
required to events. corporate
be filed events.
with the SEC
within six
months after
the close of
the
company's
fiscal year)
contains
information
on various
topics,
including
the
company's
business,
properties,
officers and
directors,
compensation
of its
officers and
directors,
related
party
transactions,
outstanding
options to
purchase
securities
from the
company or
its
subsidiaries
and
financial
data and
audited
financial
statements.
. Unlike the
Form 10-K
required of
domestic
registrants,
the contents
of the non-
financial
portions of
the Form 20-
F are not
governed by
Regulation
S-K.
. The
information
in the Form
20-F
regarding
compensation
paid to the
company's
officers and
directors
during the
fiscal year
is presented
as an
aggregate
amount for
all officers
and
directors as
a group
without
naming them
unless such
information
is otherwise
made public
for
individually
named
officers and
directors.
208
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. The Form 20-
F is
required to
contain
financial
statements
prepared in
accordance
with
Australian
Generally
Accepted
Accounting
Principles.
The Form 20-
F is also
required to
contain a
description
of the
significant
differences
in the
accounting
principles,
practices
and methods
used in
Australian
Generally
Accepted
Accounting
Principles
from the
principles,
practices
and methods
used in U.S.
Generally
Accepted
Accounting
Principles.
. Information
regarding
related
party
transactions
specified in
the
instructions
to Form 20-F
is required
to be
disclosed in
the Form 20-
F only to
the extent
it is
otherwise
made public
by the
company.
. The
information
required to
be furnished
under Form
6-K is
material
information
regarding
the company
and its
subsidiaries
which News
Corporation:
. makes
public
under the
law of its
domicile or
country of
incorporation;
. files with
a stock
exchange on
which its
securities
are traded
and which
information
is made
public by
that stock
exchange;
or
. distributes
to its
security
holders.
. The Form 6-K
is required
to be
furnished to
the SEC
promptly
after the
material
contained in
it is made
public as
described in
the
preceding
sentence.
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. Foreign . Unlike News . Unlike News . Unlike News
private Corporation, Corporation, Corporation,
issuers as a U.S. as a U.S. as a U.S.
(such as public public public
News company, company, company,
Corporation) Chris-Craft BHC is United
are exempt is subject subject to Television
from the to Sections Sections is subject
following 14(a), (b), 14(a), (b), to Sections
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the and Section and Section (c) and (f)
Securities 16 of the 16 of the and Section
Exchange Act Securities Securities 16 of the
1934: 14(a), Exchange Exchange Securities
(b), (c) and Act of Act of Exchange
(f) 1934. 1934. Act of
concerning 1934.
proxies and
information
statements
and
securities
registered
by foreign
private
issuers
under the
Securities
Exchange Act
1934 are
exempt from
Section 16
of that Act
concerning,
among other
things,
short swing
profits.
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DESCRIPTION OF NEWS CORPORATION CAPITAL STOCK
News Corporation's Preferred Ordinary Shares are listed on the Australian
Stock Exchange. The Australian Stock Exchange presently constitutes the
principal non-U.S. trading market for the Preferred Ordinary Shares. In
November 1994, News Corporation issued by means of a bonus issue (i.e., a stock
dividend) one authorized but previously unissued Preferred Ordinary Share for
each two of its Ordinary Shares held of record on November 11, 1994.
In the U.S., News Corporation's Preferred American Depositary Shares
(Preferred ADSs), each representing four Preferred Ordinary Shares, are listed
on the NYSE and traded under the symbol NWS.A. In accordance with the rules of
the NYSE, the Preferred Ordinary Shares are also listed on NYSE solely in
connection with the listing of the Preferred ADSs and without the ability to
trade.
The Preferred American Depositary Shares
The Preferred ADSs will be issued under the Amended and Restated Deposit
Agreement, dated as of December 3, 1996, between The News Corporation Limited,
Citibank, N.A., as Depositary, and the holders from time to time of the
Preferred ADSs. The following is a summary of the material provisions of that
agreement. This summary is not intended to be complete and is qualified in its
entirety by reference to the Amended and Restated Deposit Agreement. Copies of
the Amended and Restated Deposit Agreement are available for inspection at the
office of the Depositary, located at 111 Wall Street, 20th Floor, New York, New
York 10043.
American Depositary Receipts
American Depositary Receipts (Preferred ADRs) representing Preferred ADSs
are issuable by the Depositary under the Amended and Restated Deposit
Agreement. Each Preferred ADR evidences a specified number of Preferred ADSs
deposited with the Depositary's custodian, Citicorp Nominees Pty Ltd., located
in Melbourne, Australia or its successors or any other firms or corporations
appointed as Custodians by the Depositary. A Preferred ADR may represent any
number of Preferred ADSs.
Deposit and Withdrawal of Shares
Upon deposit with the Custodian of:
. certificates for Preferred Ordinary Shares or evidence of rights to
receive such shares endorsed or accompanied by any appropriate
instruments of transfer; and
.such certifications and payments as may be required by the Custodian or
the Depositary,
the Depositary agrees to execute and deliver at its office to, or upon the
written order of, the person or persons specified by the depositor, a Preferred
ADR or Preferred ADRs for the number of Preferred Ordinary Shares issuable in
respect of such deposit.
Each holder of a Preferred ADR is entitled to withdraw the underlying
Preferred Ordinary Shares at any time. This right to withdraw is not restricted
in any manner, subject only to:
. temporary delays caused by the closing transfer books of the Depositary
or News Corporation or the deposit of Preferred Ordinary Shares in
connection with voting at a shareholders' meeting, or the payment of
dividends;
. the payment of fees, taxes and similar charges; and
. compliance with any laws or governmental regulations relating to
Preferred ADRs or to the withdrawal of deposited securities.
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Upon surrendering a Preferred ADR at the Depositary's office, the holder of
the Preferred ADR is entitled to delivery, at that office or at the Custodian's
office in Melbourne, Australia, of the Preferred Ordinary Shares and any other
documents of title at the time represented by the surrendered Preferred ADR.
However, the entitlement to delivery is subject to the payment of the fees and
charges provided in the Amended and Restated Deposit Agreement, as applicable,
and the terms of that agreement. The forwarding of share certificates and other
documents of title for delivery at the Depositary's office, in New York, New
York will be at the risk and expense of the Preferred ADR holder.
The Depositary may issue Preferred ADRs against rights to receive Preferred
Ordinary Shares from:
.News Corporation;
.any agent of News Corporation; or
. any other entity involved in ownership or transaction records in respect
of the Preferred Ordinary Shares.
The Depositary will not issue Preferred ADRs against any other rights to
receive Preferred Ordinary Shares unless:
. such Preferred ADRs are fully collateralized (marked-to-market daily)
with cash or U.S. government securities, or other collateral of
comparable safety and liquidity;
. the applicant for such Preferred ADRs represents in writing that it, or
its customer, owns such Preferred Ordinary Shares or Preferred ADRs
before the issuance of such Preferred ADRs or such evidence of ownership
as the Depositary deems appropriate; and will hold them in trust for the
Depositary until delivery upon the Depositary's request; and
. such issuance shall be terminable by the Depositary on not more than five
business days' notice and subject to such further indemnities and credit
regulations as the Depositary deems appropriate.
Additionally, the Depositary intends that the number of Preferred ADRs
issued by it prior to the receipt of Preferred Ordinary Shares and outstanding
at any one time generally will not exceed 30% of the Preferred ADSs issued by
the Depositary with respect to which Preferred Ordinary Shares are on deposit
with the Depositary or Custodian. However, the Depositary reserves the right to
change or disregard such limit from time to time as it deems appropriate. The
Depositary will set limits with respect to the number of Preferred ADRs and
Preferred Ordinary Shares involved in transactions under these provisions on a
case-by-case basis. The Depositary or the Custodian may only deliver Preferred
Ordinary Shares in accordance with the Amended and Restated Deposit Agreement.
Voting Deposited Securities
If the Depositary receives any notice of any meeting or solicitation of
consents or proxies of holders of Preferred Ordinary Shares or other deposited
securities, the Depositary will:
. as soon as practicable, fix a record date for determining the Preferred
ADR holders entitled to give instructions for the exercise of voting
rights or the grant of proxies or consents, as provided in the Amended
and Restated Deposit Agreement; and
. mail to such holders a notice containing:
. the information contained in the notice of meeting and solicitation
materials, if any;
. a statement that such holders at the close of business on a specified
record date will be entitled, subject to applicable law, News
Corporation's constitution and the provisions of the deposited
securities, to instruct the Depositary as to the exercise of the voting
rights (if any) pertaining to the Preferred Ordinary Shares and other
deposited securities represented thereby; and
. a brief statement as to the manner in which such instructions may be
given.
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If the Depositary receives a written request of a Preferred ADR holder on
such record date, on or before the date established by the Depositary for such
purpose, it shall endeavor, insofar as practicable and permitted under
applicable law, News Corporation's constitution and the provisions of the
deposited securities, to vote or cause to be voted the amount of Preferred
Ordinary Shares or other deposited securities represented by such Preferred
ADSs, in accordance with the instructions set out in the request. Other than in
accordance with instructions received from holders, the Depositary will not
itself exercise any voting discretion over any Preferred ADSs or other
deposited securities evidenced by a Preferred ADR.
Dividends, Other Distributions and Rights
Whenever the Depositary receives any cash dividend or other cash
distribution on the deposited securities, the Depositary or the Custodian will,
subject to the provisions of the Amended and Restated Deposit Agreement:
. convert on a reasonable basis such dividend or distribution without
unreasonable delay into U.S. dollars; and
. distribute the converted amounts to the record holders entitled to such
dividend or distribution, in proportion to the number of Preferred ADSs
representing such deposited securities held by it,
provided, however, that the amount distributed will be reduced by any amounts
required to be withheld by News Corporation, the Custodian or the Depositary on
account of taxes.
The Depositary will either:
. distribute the non-U.S. dollar currency received by the Depositary to the
then Preferred ADR holders entitled to the dividend or distribution; or
. hold such non-U.S. dollar currency for the respective accounts of such
persons, without liability for interest, and distribute to them an
appropriate document or notice evidencing their rights to receive such
currency, if:
. the Depositary determines that non-U.S. dollar amounts may not be
converted on a reasonable basis into the U.S. dollars transferable to
the U.S.;
. any approval or license of any government or agency, which is required
for such conversion, is denied or, in the Depositary's opinion, is
unobtainable; or
. any such approval or license is not obtained within a reasonable period
as determined by the Depositary.
If any distribution consists of a dividend in Preferred Ordinary Shares or a
free distribution of such shares, the Depositary may in its discretion, upon
prior consultation with and the approval of News Corporation, distribute to the
Preferred ADR holders entitled to the dividend or distribution additional
Preferred ADRs representing the aggregate number of Preferred Ordinary Shares
received, subject to the terms of the Amended and Restated Deposit Agreement.
The Depositary must distribute such additional Preferred ADRs if News
Corporation so requests. In lieu of delivering Preferred ADRs for fractional
Preferred ADSs in any such case, the Depositary may sell the number of
Preferred Ordinary Shares represented by the aggregate of such fractions at
public or private sale, at such place or places and upon such terms as it may
deem proper, and distribute the net proceeds of any such sale, all in the
manner and subject to the conditions described in the Amended and Restated
Deposit Agreement.
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Whenever the Depositary or the Custodian receives any distribution other
than cash or Preferred Ordinary Shares or rights upon any deposited securities,
the Depositary will, upon consultation with News Corporation, distribute
without unreasonable delay to the Preferred ADR holders entitled to the
distribution such securities or property in any manner that the Depositary,
after consultation with News Corporation if practicable, may deem equitable and
practicable for accomplishing such distribution. If:
. in the Depositary's opinion, such distribution cannot be made to the
Preferred ADR holders entitled to the distribution; or
. for any other reason (such as any requirement (a) that News Corporation,
the Depositary or the Custodian withhold an amount on account of taxes,
or other governmental charges, (b) under any applicable securities or
exchange control regulations or law, or (c) that such securities must be
registered under the Securities Act of 1933, as amended, or other law in
order to be distributed to holders of Preferred ADRs), the Depositary,
after consultation with News Corporation if practicable, deems such
distribution to be unfeasible,
the Depositary may adopt such method as it deems equitable and practicable for
the purpose of effecting such distribution, including the sale (at public or
private sale) of the securities or property thus received, or any part thereof,
at such place or places and upon such terms as it may deem proper or in
accordance with applicable law. The net proceeds of any such sale will be
distributed by the Depositary to the Preferred ADR holders so entitled as in
the case of a distribution received in cash.
If News Corporation offers, or causes to be offered, to the holders of any
deposited securities any rights to purchase additional Preferred Ordinary
Shares or any other rights, such rights shall be made available by the
Depositary to the Preferred ADR holders in such manner as the Depositary may
determine, either:
. by the issue to the record holders so entitled of warrants or other
instruments representing such rights; or
. by such other method as the Depositary deems feasible, after consultation
with News Corporation,
provided, however, that:
. if at the time of the offering of any rights, the Depositary determines
that it is unlawful or not feasible to make such rights available to
Preferred ADR holders by the issue of warrants or otherwise; or
. if the rights, warrants or other instruments are not exercised and appear
to be about to lapse,
the Depositary in its discretion may, in accordance with applicable law, sell
such rights, warrants or other instruments at public or private sale, at such
place or places and upon such terms as it may deem proper. The net proceeds of
such sale will be distributed to the extent practicable to the Preferred ADR
holders so entitled as in the case of a distribution received in cash. Disposal
of rights in accordance with this paragraph may reduce the equity interest of
the Preferred ADR holders in News Corporation.
If registration under the Securities Act of the securities to which any
rights relate is required in order for News Corporation to offer such rights to
Preferred ADR holders and sell the securities represented by such rights, the
Depositary will not offer such rights to the Preferred ADR holders:
. unless and until such a registration statement is in effect; or
. unless the offering and sale of such securities to such Preferred ADR
holders are exempt from registration under the provisions of the
Securities Act.
If such rights are offered, the Depositary may dispose of such rights in
accordance with the preceding paragraph. News Corporation will, in connection
with any offer of such rights, use reasonable efforts to make such rights
generally transferable or consent to the transfer of such rights by foreign
investors not resident in Australia.
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Fixing Record Dates
Whenever:
. the Depositary receives notice of the fixing of a record date by News
Corporation for the determination of holders of News Corporation's
Preferred Ordinary Shares or other deposited securities entitled to
receive any cash dividend, cash or non-cash distribution, or any rights
to be issued with respect to the Preferred Ordinary Shares or other
deposited securities;
. the Depositary receives notice of any meeting of holders of the Preferred
Ordinary Shares or other deposited securities; or
. upon such other circumstances as are specified in the Amended and
Restated Deposit Agreement,
the Depositary will, after consultation with News Corporation if practicable,
fix a record date (which, where applicable, will be as close as practicable to
the date corresponding to the record date fixed by News Corporation in respect
of the Preferred Ordinary Shares) for determining the Preferred ADR holders who
will be entitled to:
. receive such dividend, distribution or rights, or the net proceeds of the
sale thereof; or
. to give instructions for the exercise of voting rights at any such
meeting or to take such other action.
Subject to the provisions of the Amended and Restated Deposit Agreement, the
record Preferred ADR holders at the close of business on the record date fixed
by the Depositary will be entitled to:
. receive the amount distributable by the Depositary with respect to such
dividend or distribution or rights or the net proceeds of the sale
thereof; or
. give voting instructions for the exercise of such voting rights,
in proportion to the number of Preferred ADSs held by them.
Transfer of Preferred ADRs
The Preferred ADRs are transferable on the books of the Depositary in
accordance with the provisions of the Amended and Restated Deposit Agreement.
As a condition precedent to the execution and delivery, registration of
transfer, split-up, combination or surrender of any Preferred ADR, the
Depositary or a Custodian may require:
. payment of a sum sufficient for reimbursement of any tax or other
governmental charge and any stock transfer registration fee with respect
thereto;
. payment of any applicable fees as provided in the Amended and Restated
Deposit Agreement;
. the production of proof satisfactory to it as to the identity and
genuineness of any signature; and
. compliance with any laws or governmental regulations and such reasonable
regulations, if any, as the Depositary may establish consistent with the
provisions of the Amended and Restated Deposit Agreement.
The Depositary or News Corporation may:
. suspend the delivery of Preferred ADRs against deposits of Preferred
Ordinary Shares generally;
. suspend the delivery of Preferred ADRs against deposits of particular
Preferred Ordinary Shares;
. withhold the delivery of Preferred ADRs against the deposit of particular
Preferred Ordinary Shares;
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. refuse the registration of transfer of Preferred ADRs in particular
instances; or
. suspend the transfer of Preferred ADRs generally,
during any period when the transfer books are closed, or if any such action is
deemed necessary or advisable by the Depositary or News Corporation at any time
or from time to time because of:
. any requirement of law, any government or governmental body, authority or
commission or under any provision of the Amended and Restated Deposit
Agreement;
. the provisions of or governing deposited securities;
. any meeting of shareholders of News Corporation; or
. any other reason in accordance with the Amended and Restated Deposit
Agreement.
Filing Proofs, Certificates and Other Information
Any person presenting Preferred Ordinary Shares for deposit or any Preferred
ADR holder may be required from time to time to:
. file such proof of citizenship or residence, evidence of the number of
Preferred Ordinary Shares beneficially owned and any other matters
necessary or appropriate to evidence compliance with applicable laws, the
constitution of News Corporation or other matters;
. file such other information including, without limitation:
. taxpayer status;
. exchange control approval;
. information relating to the registration on the books of News
Corporation (or its appointed agent for transfer and registration of
Preferred Ordinary Shares);
. execute such certificates; and
. make such representations and warranties,
as the Depositary or News Corporation may deem necessary or proper. The
Depositary may, and will if requested by News Corporation:
. withhold the delivery or registration of transfer of any Preferred ADR or
the distribution of rights or of the proceeds thereof or the delivery of
any such deposited securities; and
. make a reasonable effort to, refuse to vote the deposited securities of a
specified holder in accordance with instructions received from such
holder under the Amended and Restated Deposit Agreement,
until such proof or other information is filed or such certificates are
executed or such representations and warranties are made.
Amendment of the Amended and Restated Deposit Agreement
The form of the Preferred ADRs and any provisions of the Amended and
Restated Deposit Agreement may at any time be amended by written agreement
between News Corporation and the Depositary.
Any amendment:
. imposing or increasing any fees or charges payable by Preferred ADR
holders (other than stock transfer or other taxes and other governmental
charges, transfer or registration fees, cable, telex or facsimile
transmission costs, delivery costs or other such expenses); or
. otherwise prejudicing any substantial existing right of Preferred ADR
holders,
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shall not take effect as to outstanding Preferred ADRs until the expiration of
thirty days after notice of such amendment has been given to the record holders
of outstanding Preferred ADRs. Every Preferred ADR holder at the time such
amendment so becomes effective will be deemed, by continuing to hold such
Preferred ADR, to consent and agree to such amendment and to be bound by the
Amended and Restated Deposit Agreement as amended thereby.
No amendment may impair the right of any Preferred ADR holder to surrender
his Preferred ADR and receive the underlying deposited securities except as
permitted under the Amended and Restated Deposit Agreement.
Termination of the Amended and Restated Deposit Agreement
The Depositary will, at the direction of News Corporation, terminate the
Amended and Restated Deposit Agreement by mailing notice of such termination to
the record Preferred ADR holders then outstanding under the Amended and
Restated Deposit Agreement, at least thirty (30) days prior to the date fixed
in such notice for termination. The Depositary may likewise terminate the
Amended and Restated Deposit Agreement at any time after sixty days of
delivering to News Corporation a written notice of its election to resign, and
a successor depositary has not have been appointed and accepted its appointment
within such sixty days.
If any Preferred ADRs remain outstanding after the date of termination of
the Amended and Restated Deposit Agreement, the Depositary thereafter shall:
. discontinue the registration of transfer of Preferred ADRs;
. suspend the distribution of dividends to the holders of any outstanding
Preferred ADRs; and
. not give further notices or perform any further acts under the Amended
and Restated Deposit Agreement, except for:
. the collection of dividends and other distributions pertaining to the
deposited securities;
. the sale of rights as provided in the Amended and Restated Deposit
Agreement; and
. the delivery of the deposited securities, together with any dividends
or other distributions received with respect to the deposited
securities and the net proceeds of the sale of any rights or other
property, in exchange for surrendered Preferred ADRs.
At any time after the expiration of six months from the date of termination,
the Depositary may:
. sell the deposited securities then held at public or private sale, at
such place or places as it deems proper, and in accordance with
applicable law, and
. thereafter hold uninvested the net proceeds of such sale, together with
any cash then held by it under the Amended and Restated Deposit
Agreement, in an unsegregated escrow account, without liability for
interest, for the pro rata benefit of the outstanding American Deposit
Receipt holders.
Notices and Reports
On or before the date that News Corporation gives notice to its
shareholders, by publication or otherwise, of:
. any meeting of holders of its Preferred Ordinary Shares or other
deposited securities;
. any adjourned meeting of such holders; or
. the taking of any action in respect of any cash or other distributions or
the offering of any rights in respect of the deposited securities,
News Corporation will transmit to the Depositary and the Custodian a copy of
such notice in the form given to holders of the Preferred Ordinary Shares or
other deposited securities.
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The Depositary will, at News Corporation's expense:
. arrange for the prompt transmittal by the Custodian to the Depositary of
such notices and any other reports and communications which are made
generally available by News Corporation to holders of its Preferred
Ordinary Shares; and
. arrange for the mailing of copies of such notices, reports and other
communications to all Preferred ADR holders; or
. at News Corporation's request, make such notices, reports and other
communications available to Preferred ADR holders on a basis similar to
that for holders of Preferred Ordinary Shares or other deposited
securities or on such other basis as News Corporation may advise the
Depositary may be required by any applicable law or regulation.
The Depositary will make available for inspection by Preferred ADR holders
at its office, any reports and communications received from News Corporation
which are both:
. received by the Depositary as the holder of the deposited securities; and
. made generally available to the holders of such deposited securities by
News Corporation,
and the Depositary will furnish such communications and reports to Preferred
ADR holders upon request of such holders.
Inspection of Transfer Books
The Depositary will keep books in the Borough of Manhattan, The City of New
York, New York for the registration and transfer of Preferred ADRs. These books
will at all reasonable times be open for inspection by:
. the Preferred ADR holders; and
. News Corporation,
provided that such inspection, to the Depositary's knowledge, shall not be for
the purpose of communicating with Preferred ADR holders in the interest of a
business or object other than:
. the business of News Corporation; or
. a matter related to the Amended and Restated Deposit Agreement or
Preferred ADRs.
The Depositary may close the books, at any time or from time to time, when
deemed expedient by it in connection with the performance of its duties under
the Amended and Restated Deposit Agreement or at the request of News
Corporation.
Charges of Depositary
The Depositary will charge:
. the party to whom Preferred ADRs are delivered against deposits of stock;
and
. the party surrendering Preferred ADRs for delivery of stock and other
deposited securities,
$5.00 per 100 Preferred ADSs (or fraction thereof) represented by each
Preferred ADR delivered or surrendered. News Corporation will pay other charges
of the Depositary except for:
. stock transfer and other taxes and other governmental charges;
. fees of the Depositary for execution, delivery, transfer, combination,
split-up or surrender of, and the making of distributions with respect
to, Preferred ADRs;
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. fees for registration, exchange or transfer of Preferred Ordinary Shares;
. expenses incurred by the Depositary in the conversion of foreign
currency; and
. such cable, telex or facsimile transmission and delivery charges as are
expressly provided in the Amended and Restated Deposit Agreement.
Liability of Holders for Taxes or Other Charges
Any tax or other governmental charge or assessment which becomes payable by
the Depositary with respect to:
. a Preferred ADR; or
. any deposited security evidenced by a Preferred ADR,
will be payable by such Preferred ADR holder or any deposited security
represented by a Preferred ADS. Until such payments are made:
. transfer of such Preferred ADS or any split-up or combination or
withdrawal of deposited securities represented by the share may be
refused;
. any dividends or other distributions may be withheld; and
. any part or all of the deposited securities evidenced by such Preferred
ADR and not sold may be sold for the account of the holder of such
Preferred ADR,
and such dividends or other distributions or the proceeds of any such sale may
be applied to any payment of such tax or other governmental charge. The holder
of such Preferred ADR remains liable for any deficiency.
Limitation on Liability
The Depositary, News Corporation or any of their respective agents will not
be liable to the Preferred ADR holders if it is prevented or delayed in
performing its obligations under the Amended and Restated Deposit Agreement by:
.any present or future law,
.any rule or regulation;
.any present or future provision of News Corporation's constitution; or
.any circumstances beyond its control.
The obligations of the Depositary and the Custodian under the Amended and
Restated Deposit Agreement are expressly limited to performing their respective
obligations and duties specified in that agreement in good faith using their
best judgment.
The Preferred Ordinary Shares
News Corporation's constitution provides that each unclassified share in
News Corporation must, on issuance by the directors, be classified as:
. a Preferred Limited Voting Ordinary Share, which is referred to in this
joint proxy statement/prospectus as a Preferred Ordinary Share;
. an Ordinary Share;
. a Non-Voting Ordinary Share; or
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. such other share as may be permitted by News Corporation's constitution,
which currently includes:
. Converting Preference Shares, which are convertible into Ordinary
Shares and otherwise have rights and privileges attached to them as set
out in News Corporation's constitution;
. Redeemable Ordinary Shares, which upon transfer or disposal prior to a
"Triggering Event" (as defined at the time of issuance) other than to a
"Permitted Transferee" (also as so defined) are automatically redeemed
and converted into one Preferred Ordinary Share for each Redeemable
Ordinary Share redeemed, plus an amount of cash calculated in
accordance with News Corporation's constitution equating to the excess
of the then current market price of the Redeemable Ordinary Shares over
the current market price of the Preferred Ordinary Shares. The
Redeemable Ordinary Shares otherwise have the rights and privileges
attached to them as specified in News Corporation's constitution;
. Perpetual Preference Shares, with such rights attaching to them as the
directors determine on or prior to allotment, but in accordance with
News Corporation's constitution; and
. Redeemable Preference Shares, with such rights attaching to them as the
directors determine on or prior to allotment, but in accordance with
News Corporation's constitution
As at November 30, 2000, there were outstanding 2,044,746,771 Ordinary
Shares, 2,146,679,473 Preferred Ordinary Shares and no other classes of shares
in News Corporation. Australian Stock Exchange Listing Rule 7.1 generally
provides that a company may not issue (in any 12 month period) more than 15% of
the number of equity securities already on issue without the approval of the
holders of ordinary securities.
Voting
At annual and extraordinary general meetings of shareholders:
. five members entitled to vote and present in person, by proxy, attorney
or (if a corporation) representative constitute a quorum;
. each holder of Ordinary Shares or Redeemable Ordinary Shares or proxy,
attorney or (if a corporation) representative of such holder present has
one vote on a show of hands; and
. on a poll, each holder of Ordinary Shares or Redeemable Ordinary Shares
present in person or by proxy, attorney or representative has one vote
per Ordinary Share or Redeemable Ordinary Share registered in his name
(provided that votes on a poll in respect of partly paid Ordinary Shares
or Redeemable Ordinary Shares are pro rata in accordance with the amount
paid up on such shares).
Votes at meetings are conducted by a show of hands unless a poll is
demanded. A poll may be demanded by:
. the chairman of the meeting;
. not less than five shareholders having a right to vote; or
. members with at least 5% of the votes that may be cast on a resolution on
a poll.
A majority of votes cast is required generally for the passing of
resolutions. However, the rights and privileges attached to each class into
which the capital is divided may be modified, abrogated or dealt with only by a
three-fourths majority of the votes cast at a separate meeting of the holders
of that class, or, in certain circumstances, written consent approving such
action by the holders of three-fourths of the shares of such class.
A holder of a Preferred Ordinary Share is by virtue of holding such share
entitled to vote at any general meeting of the members of News Corporation in
the same manner and subject to the same conditions as the holder of an Ordinary
Share or a Redeemable Ordinary Share, but only under the following
circumstances:
. on a proposal to reduce the share capital of News Corporation;
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. on a proposal to wind up or during the winding up of News Corporation;
. on a proposal for the disposal of the whole of the property, business and
undertaking of News Corporation;
. when any preferential dividend declared on such Preferred Ordinary Shares
is in arrears;
. on a proposal which affects rights attached to the Preferred Ordinary
Share; or
. on a resolution to approve the terms of a buy-back agreement.
Other than as set forth in the preceding paragraph, a holder of a Preferred
Ordinary Share has no right to vote. The following circumstances will be deemed
to directly affect the rights attached to, and the rights and privileges of
holders of, Preferred Ordinary Shares:
. the issuance of other preference shares ranking in any respect prior to
Preferred Ordinary Shares; or
. the conversion of Ordinary Shares and Non-Voting Ordinary Shares into
preference shares ranking in any respect prior to or ranking equally with
the Preferred Ordinary Shares.
But the issue of other preference shares ranking equally with the Preferred
Ordinary Shares or of additional Preferred Ordinary Shares will be deemed not
to affect directly such rights or privileges.
A holder of a Non-Voting Ordinary Share is not entitled to vote at any
general meeting of members of News Corporation by virtue of holding such share.
A holder of a Converting Preference Share, a Perpetual Preference Share or a
Redeemable Preference Share is not entitled to vote at any general meeting of
members of News Corporation except in certain limited circumstances similar to
those in which holders of Preferred Ordinary Shares will be permitted to vote.
Dividends
Subject to the satisfaction of the rights of holders of Converting
Preference Shares (described below) and Preferred Ordinary Shares (also
described below), dividends on Ordinary Shares, Redeemable Ordinary Shares and
Non-Voting Ordinary Shares:
. may be declared by the directors of News Corporation;
. are payable only out of the profits of News Corporation; and
. are distributed among holders of those shares in proportion to the amount
of capital paid on those shares by such holders (and, if an Ordinary
Share or Redeemable Ordinary Share is issued or any capital is paid on an
Ordinary Share or Redeemable Ordinary Share during the period in respect
of which the dividend is declared, according to the terms of issue or
otherwise proportionately for the period during which such capital was
paid up).
The directors or members in general meeting may also resolve that:
. profits or other legally available reserves be capitalised and
distributed among such of the shareholders as would be entitled to
receive the same if distributed by way of dividend and in the same
proportions; and
. the same be applied for the benefit of members in certain distributions
of capital, including:
. payment of unpaid capital on shares;
. issuing fully paid shares or debentures; or
. in accordance with the rules of a bonus share plan of News Corporation.
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<PAGE>
Dividends on any class of securities of News Corporation are not required to
be paid in the fiscal year in respect of which they are declared and are
payable:
. on the date specified by the board of directors at the time of
declaration; or
. if no such date is specified, forthwith after the declaration.
If dividends on the Preferred Ordinary Shares are not declared in respect of
any fiscal year, such omission or shortfall shall not limit the dividends which
may be declared or paid on the Ordinary Shares in respect of any subsequent
year.
No dividends may be paid to the holders of Preferred Ordinary Shares,
Ordinary Shares or Non-Voting Ordinary Shares until all Base Dividends and
Supplementary Dividends (each as defined in News Corporation's constitution)
payable in respect of Converting Preference Shares immediately preceding the
declaration of dividends in those other classes of shares or any of them, have
been paid or otherwise provided in full.
Each Preferred Ordinary Share will confer a preferential but non-cumulative
right to dividends in respect of any financial year of News Corporation equal
to the greater of:
. the Base Dividend, which is such amount (if any) as is declared by the
directors as a dividend not exceeding 15% of the paid up capital on the
Preferred Ordinary Shares, or a lesser percentage in proportion to any
increase in the capital resulting from a bonus issue of Preferred
Ordinary Shares; and
. the Premium Dividend, which is 120% of the aggregate of all dividends
declared in that financial year on an Ordinary Share paid up to the same
proportion for the same period of time.
Ordinary Shares, Redeemable Ordinary Shares and Non-Voting Ordinary Shares
are entitled to dividends equally, without preference, with all other such
shares, but the right to such a dividend is subject to:
. declaration of the greater of the Base Dividend or the Premium Dividend
on the Preferred Ordinary Shares;
. in the case of an interim dividend on the Ordinary, Redeemable Ordinary
or Non-Voting Ordinary Shares, prior or concurrent payment of the greater
of:
. 50% of the Preferred Dividend, which is the amount of dividend declared
in respect of each of the Preferred Ordinary Shares;
. an amount equal to 120% of all dividends paid on Ordinary, Redeemable
Ordinary and Non-Voting Shares in that financial year; and
. in the case of a final dividend on the Ordinary, Redeemable Ordinary or
Non-Voting Ordinary Shares, prior or concurrent payment of the
remainder of the Preferred Dividend.
Each Non-Voting Ordinary Share will confer the same dividend entitlement as
an Ordinary Share.
If any Perpetual Preference Shares or Redeemable Preference Shares are
issued by News Corporation, they will carry dividend rights to be determined
upon or prior to issue by the directors of News Corporation in accordance with
that company's constitution. Those dividend rights:
. will rank senior to the rights attaching to Ordinary Shares;
. will rank junior to the rights attaching to Converting Preference Shares;
and
. may rank senior to, equally, without preference, with or junior to other
classes of preference shares outstanding at the time those shares are
issued, including the Preferred Ordinary Shares, depending on their terms
of issue.
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Rights on a Winding-Up
On a winding up of News Corporation, News Corporation's assets (including
capital uncalled at the commencement of the winding up) remaining after paying
and discharging its debts and liabilities and the costs of the winding up, are
to be applied as follows:
. first, in payment to the holders of Converting Preference Shares of any
Base Dividends not paid and any Supplementary Dividend not declared on
those shares, pro rata according to the amounts not paid;
. second, in repayment of the capital paid up on Converting Preference
Shares pro rata according to the amounts so paid;
. third, in repayment of the capital paid up on the Preferred Ordinary
Shares pro rata according to the amounts so paid;
. fourth, in payment to the holders of the Preferred Ordinary Shares of the
preferential dividends declared but not paid on their shares pro rata
according to the amounts not paid;
. fifth, in repayment to the holders of Redeemable Ordinary Shares of up to
A$1.00 for every 1,000 Redeemable Ordinary Shares held;
. sixth, in repayment of the capital paid up on the Ordinary Shares and any
other class of securities of News Corporation pro rata according to the
amounts so paid;
. seventh, in payment to the holders of Preferred Ordinary Shares, Ordinary
Shares, Redeemable Ordinary Shares and Non-Voting Ordinary Shares of non-
preferential dividends declared but not paid on their shares pro rata
according to the amounts not paid; and
. any residue shall be divided amongst the holders of the Preferred
Ordinary Shares, Ordinary Shares, Redeemable Ordinary Shares and Non-
Voting Ordinary Shares pro rata according to the amounts of capital paid
up on such shares, respectively.
On a winding up of News Corporation, repayment of the capital of members
will rank junior to payment of all of the creditors of News Corporation. Also,
holders of Preferred Ordinary Shares will rank junior to holders of Converting
Preference Shares.
If any Perpetual Preference Shares or Redeemable Preference Shares are
issued by News Corporation, their ranking on winding up shall be one of the
terms determined by the directors in accordance with News Corporation's
constitution on or prior to the issue of those shares, and:
. they shall rank senior to Ordinary Shares and Redeemable Ordinary Shares;
. they shall junior to Converting Preference Shares; and
. they may rank senior to, equally, without preference, with, or junior to,
other classes of preference shares outstanding at the time those shares
are issued, including the Preferred Ordinary Shares, depending on their
terms of issue.
Transfers
News Corporation's constitution permits its shares to be transferred in any
manner permitted by the listing rules of the Australian Stock Exchange and the
business rules of the Australian Securities Clearing House.
The company's constitution also makes provision for the refusal to register
any transfer of shares:
. where the shares are subject to a lien in respect of unpaid calls;
. where an escrow agreement has been entered into in accordance with the
listing rules of the Australian Stock Exchange;
. where such transfer would create a new shareholding of a less than
marketable parcel;
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<PAGE>
. where such transfer must or may be refused in accordance with the
Australian Stock Exchange Listing Rules, the Corporations law or the
Australian Securities Clearing House Business Rules; or
. where such transfer would require registration of more than three persons
as joint holders (unless they are executors or trustees of a deceased
shareholder).
The existing rules of the Australian Stock Exchange also provide for an
application to be made to the Australian Securities Clearing House, if certain
circumstances exist, to prevent shares from being transferred. All shares of
News Corporation are presently approved for participation in the Clearing House
Electronic Subregister System administered by the Australian Securities
Clearing House.
Other than transfers under the rules of the Australian Securities Clearing
House, as permitted by News Corporation's constitution, the following must be
delivered to News Corporation as a prerequisite to a transfer in the register
of shareholders:
. an instrument of transfer in proper form and duly stamped;
. the share certificates (if any); and
. such other information relating to the transferor's right to dispose of
the shares as the directors require.
The share registry office of News Corporation is KPMG Peat Marwick,
Adelaide, South Australia, Australia.
News Corporation's constitution also provides that a person may not:
. offer to acquire;
. procure any offer to acquire; or
. acquire,
any Ordinary Shares, Redeemable Ordinary Shares or Preferred Ordinary Shares
under a takeover scheme or announcement or other general offer (as defined in
News Corporation's constitution) for such shares unless:
. the takeover scheme or announcement or other offer relates to Ordinary
Shares, Redeemable Ordinary Shares and Preferred Ordinary Shares; or
. contemporaneous offers are made for Ordinary Shares, Redeemable Ordinary
Shares and Preferred Ordinary Shares,
and the terms of the offer are comparable (as that term is used in News
Corporation's constitution). In accordance with section 140 of the Australian
Corporations Law, such a provision in a company's constitution has the effect
of a contract under seal between the company and each member, between the
company and each of its directors or secretaries and between each of the
members as between themselves, under which each of them agrees to observe and
perform those provisions applicable to them as in force for the time being. As
long as that provision remains in News Corporation's constitution, it may be
enforced by and against such persons to the extent permitted by section 140.
News Corporation's constitution does not affect the operation of those
provisions of the Australian Corporations Law which control the acquisition of
shares in the company and regulate takeover bids.
224
<PAGE>
Australian exchange controls and other limitations affecting holders
The Australian Banking (Foreign Exchange) Regulations and other Australian
legislation and regulations control and regulate, or permit the control and
regulation of, a broad range of payments and transactions involving non-
residents of Australia. Under certain general and specific exemptions,
authorities and approvals, however, News Corporation is not restricted from
transferring funds from Australia or placing funds to the credit of non-
residents of Australia subject to:
. withholding for Australian tax due in respect of dividends (to the extent
they are unfranked) and interest and royalties paid to non-residents of
Australia; and
. a requirement for approval from the Reserve Bank of Australia for certain
payments in or from Australia to or on behalf of:
. the government of Iraq, its agencies or nationals;
. authorities in the Federal Republic of Yugoslavia (Serbia and
Montenegro) or their agencies;
. the government or a public authority of Libya or certain Libyan
undertakings;
. Taliban or any undertaking owned or controlled directly or indirectly
by the Taliban; or
. Unita as an organization, senior officials of Unita and adult members
of the immediate families of the senior officials of Unita.
Accordingly, at the present time, remittance of dividends on the Preferred
Ordinary Shares to the Depositary is not subject to exchange controls.
There are no limitations, either under Australian law or under News
Corporation's constitution, on the right to hold or vote Preferred Ordinary
Shares other than under the Australian Foreign Acquisitions and Takeovers Act
of 1975, as amended, and the Australian Corporations Law insofar as such laws
regulate certain fundamental corporate transactions.
Limitations on foreign acquisitions and investment in Australian companies
The following Australian laws impose limitations on the right of non-
residents or non-citizens of Australia to hold, own or vote shares in News
Corporation.
Australian Foreign Acquisitions and Takeovers Act
Each of the following persons is defined by the Australian Foreign
Acquisitions and Takeovers Act to be a foreign person for the purposes of that
Act:
. any natural person not ordinarily resident in Australia, or
. any corporation or trustee of a trust estate in which:
. a natural person not ordinarily resident in Australia, or a foreign
corporation (being a body corporate organized outside Australia), holds
a Substantial Interest (as defined in the following paragraph); or
. in which two or more such persons or foreign corporations hold an
Aggregate Substantial Interest (as defined in the following paragraph).
A person is taken to hold a Substantial Interest:
. in a corporation if the person, alone or together with any associates (as
defined in the Australian Foreign Acquisitions and Takeovers Act):
. is in a position to control at least 15% of the voting power in the
corporation; or
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<PAGE>
. holds interests in at least 15% of the issued shares in the
corporation; and
. in a trust estate, if the person alone or together with any associates
(as so defined) holds a beneficial interest in at least 15% of the corpus
or income of the trust estate.
Two or more persons are taken to hold an Aggregate Substantial Interest:
. in a corporation, if they together with any associates (as so defined):
. are in a position to control at least 40% of the voting power in the
corporation; or
. hold at least 40% of the issued shares in the corporation; and
. in a trust estate, if they together with any associates hold in the
aggregate beneficial interests in at least 40% of the corpus or income of
the trust estate.
Where a trustee has power or discretion under the terms of a trust as to the
distribution of income or corpus of the trust estate to beneficiaries, each
beneficiary is taken for the purposes of the definitions of Substantial
Interest and Aggregate Substantial Interest above to hold a beneficial interest
in the maximum percentage of income or corpus of the trust estate that the
trustee is empowered to distribute to that beneficiary.
As applied to News Corporation, the Australian Foreign Acquisitions and
Takeovers Act prohibits any foreign person (as described above) from entering
into an agreement by virtue of which the foreign person acquires any interests
in any shares if:
. the foreign person already holds a Substantial Interest in News
Corporation; or
. on acquisition of those interests (together with any interests in other
shares in News Corporation that the person has offered to acquire) the
foreign person would hold a Substantial Interest,
without first applying in the prescribed form for approval of such acquisition
by the Australian Treasurer and such approval being granted or (if no order is
made) forty (40) days having elapsed after such application was made.
The circumstances in which a person is to be taken to hold an interest in a
share are widely described in the Australian Foreign Acquisitions and Takeovers
Act and, without limitation, include:
. having a legal or equitable interest in the share;
. having entered into a contract to purchase the share or an option over
the share or an interest in the share; or
. having the right to vote the share.
The Australian Foreign Acquisitions and Takeovers Act also provides that,
for the purpose of that Act, a holder of a Substantial Interest or holders of
an Aggregate Substantial Interest (including any such interest held by other
applications of the relevant provision) in a corporation or a trust estate
which:
. is in a position to control any voting power in another corporation; or
. holds interest in shares in another corporation or in another trust
estate,
shall be taken to be in the position to control such voting power in the other
corporation or to hold such interests in the other corporation or in the other
trust estate (as the case may be).
The Australian Treasurer has the power to compel divestiture of shares
where:
. an Australian corporation becomes foreign controlled or undergoes a
change in foreign control without consent, which is determined according
to whether:
. a Substantial Interest or an Aggregate Substantial Interest is acquired
by the foreign person or persons; or
226
<PAGE>
. where foreign persons hold an Aggregate Substantial Interest, there is
any change in the foreign persons holding any interest; and
. the Treasurer is satisfied that such a result would be contrary to the
national interest.
Notwithstanding that the Australian Foreign Acquisitions and Takeovers Act
does not require compulsory notification of the acquisition of an Aggregate
Substantial Interest, it is possible to lodge a voluntary notification under
that Act to ascertain the Australian Treasury Department's view of the
transaction. If the Australian Treasury Department advises that it does not
object to the transaction or the time for the Australian Treasury Department to
make a decision expires, then the Treasurer will not be permitted to compel
divestiture of the shares that are the subject of the notified transaction.
News Corporation believes that Cruden Investments Pty. Limited may
technically be deemed to be a foreign person under the Australian Foreign
Acquisitions and Takeovers Act. Based upon the latest information available to
it, News Corporation has reason to believe that approximately an additional 47%
of the Ordinary Shares and approximately an additional 56% of News
Corporation's issued capital in total are held by a foreign person or persons;
thus foreign persons may hold an Aggregate Substantial Interest in News
Corporation.
The Australian Treasury Department issues from time to time a statement of
its policy relating to foreign investment in terms of particular industry
sectors (including the media sector). The current foreign investment policy is
available from the Australian Treasury Department's web site located at
"http://www.treasury.gov.au".
The Australian Corporations Law
As applied to News Corporation, the Australian Corporations Law, which is
uniform in all Australian States, prohibits any person (including a
corporation) from acquiring Ordinary Shares or Redeemable Ordinary Shares,
except under a takeover bid or in certain other exceptional circumstances, if
after the acquisition that person's or someone else's voting power in News
Corporation would exceed 20%.
In general terms, a person's voting power in News Corporation is: (a) the
total number of votes attached to Ordinary Shares and Redeemable Ordinary
Shares that the person or an associate of the person has a relevant interest
in; divided by (b) the total number of votes attached to all of News
Corporation's Ordinary Shares and Redeemable Ordinary Shares.
In general terms, a person is considered to have a relevant interest in a
share under the Australian Corporations Law if he is the holder of the share or
has, or is deemed under the Australian Corporations Law to have:
. power to exercise, or to control the exercise of, the right to vote
attached to that share; or
. power to dispose of, or to control the exercise of a power to dispose of
that share,
whether such power is direct or indirect and legally enforceable or not, and
irrespective of certain restrictions and restraints on such power and other
matters and things as specified in the Australian Corporations Law. A person is
considered to have acquired a share when he or she has acquired such power over
such share.
Shares are regarded as being held by a person if they are held by a
corporation which the person controls or in which the person has a 20% voting
interest.
In general terms, a person is considered to be an associate of another
person (the primary person) under the Australian Corporations Law:
. if the primary person is a body corporate, if the person is a director or
secretary of the body, a related body corporate (as defined in the
Australian Corporations Law) or a director or secretary of a related body
corporate,
227
<PAGE>
. in relation to a body corporate, if the primary person has, or proposes
to enter into an agreement:
. under which one of them will have any voting power with respect to the
body;
. for the purpose of influencing the conduct of the affairs of the body;
. under which one of them may acquire shares in the body in which the
other has a relevant interest;
. under which one of them may be required to dispose of shares in the
body; or
. if he is a person with whom the primary person is acting, or proposes to
act.
The above Australian Corporations Law prohibition is subject to certain
exceptions which must be strictly complied with to be applicable.
228
<PAGE>
RELATED TRANSACTIONS
Simultaneously with the closing of forward mergers, News Publishing will
contribute substantially all of the television assets and liabilities of Chris-
Craft, BHC and United Television to a newly-formed subsidiary of Fox
Entertainment Group in exchange for shares of Fox Entertainment Group's class A
common stock. The remaining assets and liabilities (including Chris-Craft's
industrial business) will remain with News Publishing. As a result, News
Corporation's indirect equity interest in Fox Entertainment Group will increase
from approximately 82.76% to approximately 85.25%, and its indirect voting
interest will increase from approximately 97.79% to approximately 97.84%.
In the case of forward mergers, upon receipt of the Chris-Craft, BHC and
United Television assets and liabilities, the newly formed subsidiary of Fox
Entertainment Group will simultaneously transfer title to all of the FCC
licenses of the 10 television stations historically operated by Chris-Craft,
BHC and United Television to Fox Television Stations. Fox Television Stations
is a wholly-owned subsidiary of Fox Television Holdings, Inc., which is an
entity in which the Fox Entertainment Group holds approximately 99% of the
equity and 24% of the voting power and Mr. K. Rupert Murdoch holds
approximately 1% of the equity and 76% of the voting power. In connection with
the license transfer, the newly formed Fox Entertainment Group subsidiary will
enter into an operating agreement with Fox Television Stations which will
provide that Fox Television Stations will hold the licenses and control the
management and operation of the acquired television stations. The proposed
transfer of the assets and liabilities including the licenses and entering into
the operating agreement are subject to approval by the FCC.
The operating agreement for the operation of the television stations
acquired in a forward merger will have a twenty year term, provide for the full
authority, power and control of the management and operation of the television
station assets by Fox Television Stations, allocate to the Fox Entertainment
Group subsidiary which will continue to own the television stations assets 95%
of the operating income and losses in connection with the operation of the
stations, provide that such stations cannot be sold without the consent of the
Fox Entertainment Group subsidiary and Fox Television Holdings, and provide
that the station licenses cannot be sold separately from the other television
assets.
If the mergers are effected as reverse mergers, simultaneously with the
closing, the Preferred ADSs to be issued in the mergers will be contributed to
Fox Entertainment Group in exchange for Fox Entertainment Group class A common
stock. As a result of this contribution, News Corporation's indirect equity
interest in Fox Entertainment Group will increase from approximately 82.76% to
approximately 85.45%, and its indirect voting interest will increase from
approximately 97.79% to approximately 97.84%. Following the reverse mergers,
Fox Entertainment Group will transfer the non-television operating assets and
liabilities acquired in the mergers, including Chris-Craft's industrial
business, to a subsidiary of News Corporation in which Fox Entertainment Group
holds no interest. The television assets and liabilities, or the ownership
interests in Chris-Craft and its subsidiaries, will be transferred
simultaneously with the closing of the merger to Fox Television Stations,
subject to approval by the FCC.
229
<PAGE>
MARKET PRICE DATA
News Corporation Preferred ADSs
The Ordinary Shares and Preferred Ordinary Shares of News Corporation are
listed on the Australian Stock Exchange Limited (ASX), which operates stock
exchanges in the capital cities of each state of Australia, the London Stock
Exchange and the New Zealand Stock Exchange. The ASX constitutes the principal
non-U.S. trading market for News Corporation's Ordinary Shares and Preferred
Ordinary Shares.
In the U.S., News Corporation's Ordinary American Depositary Shares
(Ordinary ADSs), each representing four Ordinary Shares, and Preferred ADSs,
each representing four Preferred Ordinary Shares, are listed on the New York
Stock Exchange. In accordance with the rules of the NYSE, News Corporation
Ordinary Shares and Preferred Ordinary Shares are also listed on the NYSE but
only for technical reasons and without trading privileges.
The following table sets forth, for the periods indicated, in U.S. dollars
the reported high and low closing sales prices on the NYSE by calendar quarter
of Preferred ADSs.
<TABLE>
<CAPTION>
News Corporation
Preferred ADSs
----------------
US$ High US$ Low
-------- -------
<S> <C> <C>
1998
First Quarter............................................... 24 18 7/8
Second Quarter.............................................. 28 7/8 20 1/4
Third Quarter............................................... 29 3/8 21
Fourth Quarter.............................................. 25 13/16 18 1/4
1999
First Quarter............................................... 28 11/16 23 5/16
Second Quarter.............................................. 33 11/16 28 5/8
Third Quarter............................................... 33 5/8 26 1/4
Fourth Quarter.............................................. 36 1/2 24 9/16
2000
First Quarter............................................... 56 3/8 32 1/4
Second Quarter.............................................. 47 1/2 36 3/4
Third Quarter............................................... 48 5/8 42 1/16
Fourth Quarter (through [ . ], 2000)........................ [ . ] [ . ]
</TABLE>
On August 11, 2000, the last full trading day prior to the public
announcement of the signing of the merger agreements and the day on which
Viacom Inc. issued a press release to the effect that it had terminated
discussions with Chris-Craft regarding an acquisition, the closing price of the
Preferred ADSs was $44 1/8 on the NYSE.
As of [ . ], 2000, the latest practicable date before the printing of this
joint proxy statement/prospectus for us to obtain this information, the closing
price of the Preferred ADSs was $ [ . ] on the NYSE and there were
approximately [ . ] registered holders of Preferred ADSs.
You are urged to obtain a current market price quotation for the Preferred
ADSs prior to making any decision with respect to the mergers.
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Chris-Craft Common Stock
Shares of Chris-Craft common stock are listed on the NYSE and the Pacific
Exchange under the symbol "CCN". The following table sets forth, for the
calendar quarters indicated, in U.S. dollars, the reported high and low closing
sales prices of Chris-Craft common stock on the NYSE. Since Chris-Craft class B
common stock is ordinarily non-transferable, there is no trading market for
class B common stock.
<TABLE>
<CAPTION>
Chris-Craft
Common Stock
----------------
US$ High US$ Low
-------- -------
<S> <C> <C>
1998
First Quarter.................................................. 59 1/4 49 3/4
Second Quarter................................................. 60 1/16 51 5/16
Third Quarter.................................................. 56 7/16 41 5/8
Fourth Quarter................................................. 48 15/16 40 1/8
1999
First Quarter.................................................. 48 3/16 41 9/16
Second Quarter................................................. 49 44 3/8
Third Quarter.................................................. 58 9/16 46 1/16
Fourth Quarter................................................. 76 15/16 57 1/16
2000
First Quarter.................................................. 78 3/8 60 1/16
Second Quarter................................................. 69 3/16 57 1/2
Third Quarter.................................................. 84 7/8 62
Fourth Quarter (through [ . ], 2000)........................... [ . ] [ . ]
</TABLE>
On August 11, 2000, the last full trading day prior to the public
announcement of the signing of the merger agreements and the day on which
Viacom Inc. issued a press release to the effect that it had terminated
discussions with Chris-Craft regarding an acquisition, the closing price of
Chris-Craft common stock was $62 on the NYSE.
As of [ . ] , 2000, the most recent practicable date before the printing of
this joint proxy statement/prospectus, the closing price of Chris-Craft common
stock was $ [ . ] on the NYSE.
You are urged to obtain a current market price quotation for Chris-Craft
common stock prior to making any decision with respect to the Chris-Craft
merger.
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<PAGE>
BHC Common Stock
Shares of BHC class A common stock are listed on the American Stock Exchange
under the symbol "BHC". The following table sets forth, for the calendar
quarters indicated, in U.S. dollars, the reported high and low closing sales
prices of BHC class A common stock on the American Stock Exchange. All shares
of BHC class B common stock, which in general are non-transferable, are held by
Chris-Craft, and, there is no trading market for the class B common stock.
<TABLE>
<CAPTION>
BHC Common Stock
----------------
US$
High US$ Low
------- --------
<S> <C> <C>
1998
First Quarter.................................................. 141 125 3/8
Second Quarter................................................. 144 7/8 135 7/16
Third Quarter.................................................. 140 1/2 111
Fourth Quarter................................................. 119 3/8 105 1/2
1999
First Quarter.................................................. 128 107 7/8
Second Quarter................................................. 131 115 1/2
Third Quarter.................................................. 138 5/8 124 3/4
Fourth Quarter................................................. 169 141
2000
First Quarter.................................................. 164 7/8 141 5/8
Second Quarter................................................. 160 140 1/4
Third Quarter.................................................. 160 141 3/4
Fourth Quarter (through [ . ], 2000)........................... [ . ] [ . ]
</TABLE>
On August 11, 2000, the last full trading day prior to the public
announcement of the signing of the merger agreements and the day on which
Viacom Inc. issued a press release to the effect that it had terminated
discussions with Chris-Craft regarding an acquisition, the closing price of BHC
class A common stock was $141 3/4 on the AMEX.
As of [ . ] , 2000, the most recent practicable date before the printing of
this joint proxy statement/prospectus, the closing price of BHC class A common
stock was $ [ . ] on the AMEX.
You are urged to obtain a current market price quotation for BHC class A
common stock prior to making any decision with respect to the BHC merger.
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<PAGE>
United Television Common Stock
Shares of United Television common stock are listed on the Nasdaq National
Market under the symbol "UTVI". The following table sets forth, for the
calendar quarters indicated, in U.S. dollars, the reported high and low closing
sales prices of United Television common stock on the Nasdaq National Market.
<TABLE>
<CAPTION>
United Television
Common Stock
-----------------
US$ High US$ Low
-------- --------
<S> <C> <C>
1998
First Quarter................................................. 110 100 7/16
Second Quarter................................................ 114 1/2 108 1/4
Third Quarter................................................. 117 106 1/2
Fourth Quarter................................................ 113 101 1/2
1999
First Quarter................................................. 114 5/16 100 5/16
Second Quarter................................................ 104 7/8 96
Third Quarter................................................. 112 3/4 104 7/16
Fourth Quarter................................................ 139 7/8 114
2000
First Quarter................................................. 141 3/4 125 3/16
Second Quarter................................................ 139 1/2 125
Third Quarter................................................. 149 7/16 128
Fourth Quarter (through [ . ], 2000).......................... [ . ] [ . ]
</TABLE>
On August 11, 2000, the last full trading day prior to the public
announcement of the signing of the merger agreements and the day on which
Viacom Inc. issued a press release to the effect that it had terminated
discussions with Chris-Craft regarding an acquisition, the closing price of
United Television common stock was $136 on NASDAQ.
As of [ . ] , 2000, the most recent practicable date before the printing of
this joint proxy statement/prospectus, the closing price of United Television
common stock was $ [ . ] on NASDAQ.
You are urged to obtain a current market price quotation for United
Television common stock prior to making any decision with respect to the United
Television merger.
233
<PAGE>
DIVIDEND DATA
News Corporation Preferred Ordinary Shares
The following table sets forth the annual dividends paid per Preferred
Ordinary Share of News Corporation with respect to the financial years
indicated. Four Preferred Ordinary Shares underlie each Preferred ADS.
<TABLE>
<CAPTION>
Dividend paid per
News Corporation
Preferred Ordinary Share
--------------------------
Fiscal year ended 30 June, A$ US$(1)
-------------------------- ----------- --------------
<S> <C> <C>
1996.............................................. 0.075 0.0544
1997.............................................. 0.075 0.0593
1998.............................................. 0.075 0.0470
1999.............................................. 0.075 0.0483
2000.............................................. 0.075 0.0389
</TABLE>
--------
(1) Dividend amounts have been translated into US dollars at the noon buying
rates prevailing on the dates the final dividends were paid.
The dividend levels of past years may not be indicative of future dividends.
Chris-Craft Common Stock
The following table sets forth the annual dividends paid per share of Chris-
Craft common stock with respect to the calendar years indicated.
<TABLE>
<CAPTION>
Dividend paid
per share of
Calendar year Chris-Craft common stock
------------- ------------------------
<S> <C>
1996.............................................. 3% Stock Dividend
1997.............................................. 3% Stock Dividend
1998.............................................. 3% Stock Dividend
1999.............................................. 3% Stock Dividend
2000.............................................. 3% Stock Dividend
</TABLE>
BHC Common Stock
The following table sets forth the annual dividends paid per share of BHC
common stock with respect to the calendar years indicated.
<TABLE>
<CAPTION>
Dividend paid
per share of
Calendar year BHC common stock
------------- ----------------
<S> <C>
1996...................................................... $ --
1997...................................................... $1.00
1998...................................................... $1.00
1999...................................................... $1.00
2000...................................................... $2.00
</TABLE>
234
<PAGE>
United Television Common Stock
The following table sets forth the annual dividends paid per share of United
Television common stock with respect to the calendar years indicated.
<TABLE>
<CAPTION>
Dividend paid
per share of
United Television
Calendar year common stock
------------- -----------------
<S> <C>
1996..................................................... $0.50
1997..................................................... $0.50
1998..................................................... $0.50
1999..................................................... $0.50
2000..................................................... $0.50
</TABLE>
235
<PAGE>
DEADLINE FOR STOCKHOLDER PROPOSALS
Chris-Craft
Chris-Craft will hold a 2001 annual meeting of its stockholders in the
second quarter of 2001 only if the Chris-Craft merger is not completed before
the scheduled date of the 2001 annual meeting. Chris-Craft expects to complete
the merger by the end of the second quarter of 2001. The following information
shall apply with respect to stockholder proposals to be included in a proxy
statement if one is distributed for a 2001 annual meeting.
The SEC rules set forth standards as to what stockholder proposals are
required to be included in a proxy statement. Chris-Craft stockholders who wish
to submit written proposals for possible inclusion in the proxy materials for
the 2001 annual meeting must have made certain that they were received no later
than December 6, 2000, as stated in the most recent Chris-Craft proxy
statement. Proposals should be sent to Brian C. Kelly, Corporate Secretary,
Chris-Craft Industries, Inc., 767 Fifth Avenue, 46th Floor, New York, New York
10153. The persons named on the front of the proxy to be sent in connection
with the solicitation of proxies on behalf of Chris-Craft's board of directors
for Chris-Craft's 2001 annual meeting of stockholders will vote in their own
discretion on any matter as to which Chris-Craft has not received notice by
February 19, 2001, as stated in the most recent Chris-Craft proxy statement.
BHC
BHC will hold a 2001 annual meeting of its stockholders in the second
quarter of 2001 only if the BHC merger is not completed before the scheduled
date of the 2001 annual meeting. BHC expects to complete the merger by the end
of the second quarter of 2001. The following information shall apply with
respect to stockholder proposals to be included in a proxy statement if one is
distributed for a 2001 annual meeting.
The SEC rules set forth standards as to what stockholder proposals are
required to be included in a proxy statement. BHC stockholders who wish to
submit written proposals for possible inclusion in the proxy materials for the
2001 annual meeting must have made certain that they were received no later
than December 6, 2000, as stated in the most recent BHC proxy statement.
Proposals should be sent to Brian C. Kelly, Corporate Secretary, BHC
Communications, Inc., 767 Fifth Avenue, 46th Floor, New York, New York 10153.
The persons named on the front of the proxy to be sent in connection with the
solicitation of proxies on behalf of BHC's board of directors for BHC's 2001
annual meeting of stockholders will vote in their own discretion on any matter
as to which BHC has not received notice by February 19, 2001, as stated in the
most recent BHC proxy statement.
United Television
United Television will hold a 2001 annual meeting of its stockholders in the
second quarter of 2001 only if the United Television merger is not completed
before the scheduled date of the 2001 annual meeting. United Television expects
to complete the merger by the end of the second quarter of 2001. The following
information shall apply with respect to stockholder proposals to be included in
a proxy statement if one is distributed for a 2001 annual meeting.
The SEC rules set forth standards as to what stockholder proposals are
required to be included in a proxy statement. United Television stockholders
who wish to submit written proposals for possible inclusion in the proxy
materials for the 2001 annual meeting must have made certain that they were
received no later than December 6, 2000, as stated in the most recent United
Television proxy statement. Proposals should be sent to Garth S. Lindsey,
Corporate Secretary, United Television Inc., 132 South Rodeo Drive, 4th Floor,
Beverly Hills, California 90212. The persons named on the front of the proxy to
be sent in connection with the solicitation of proxies on behalf of United
Television's board of directors for United Television's 2001 annual meeting of
stockholders will vote in their own discretion on any matter as to which United
Television has not received notice by February 19, 2001, as stated in the most
recent United Television proxy statement.
236
<PAGE>
CURRENCY OF PRESENTATION, EXCHANGE RATES AND CERTAIN DEFINITIONS
News Corporation publishes its consolidated financial statements in
Australian dollars. In this joint proxy statement/prospectus, unless otherwise
stated or the context otherwise requires, all references to "A$" are to
Australian dollars and references to "$" or "US$" are to U.S. dollars.
For your convenience, this joint proxy statement/prospectus contains
translations of certain A$ amounts into US$ amounts at specified exchange
rates. These translations of A$ into US$ and of US$ into A$ have been made at
the indicated Noon Buying Rate in New York City for cable transfers in
Australian dollars as certified for customs purposes by The Federal Reserve
Bank of New York. These translations should not be construed as representations
that the A$ amounts actually represent such US$ amounts or could be converted
to US$ at the rates indicated.
The following table sets out, for the periods and dates indicated,
information concerning the rates of exchange of A$1.00 into US$ based on the
noon buying rate on the relevant dates:
<TABLE>
<CAPTION>
US$ Per A$
----------------------------
At
Period Average
Fiscal Year Ended June 30, End Rate(1) High Low
-------------------------- ------ ------- ------ ------
<S> <C> <C> <C> <C>
2001 (through December 1, 2000).................... 0.5415 0.5531 0.5996 0.5372
2000............................................... 0.5971 0.6256 0.6703 0.5685
1999............................................... 0.6611 0.6246 0.6712 0.5550
1998............................................... 0.6030 0.6773 0.7550 0.5867
1997............................................... 0.7455 0.7823 0.8137 0.7455
1996............................................... 0.7856 0.7612 0.8026 0.7100
</TABLE>
--------
(1) The average of the Noon Buying Rates on the last business day of each
fiscal month during the year.
On [ . ], 2000, the latest practicable date for which exchange rate
information was available before the printing of this joint proxy
statement/prospectus, the noon buying rate was US$[ . ] per A$1.00.
Fluctuations in the A$/US$ exchange rate will also affect the US$ equivalent
of the A$ price of the Preferred Ordinary Shares of News Corporation, on the
Australian Stock Exchange and, as a result, are likely to affect the market
price of the corresponding Preferred ADSs in the U.S. Such fluctuations would
also affect the US$ amounts received by holders of Preferred ADSs on conversion
by Citibank, N.A., as the Depositary, of cash dividends, if any, paid in A$ on
the Preferred Ordinary Shares of News Corporation.
237
<PAGE>
EXCHANGE CONTROLS AND OTHER LIMITATIONS
The Australian Banking (Foreign Exchange) Regulations and other Australian
legislation and regulations control and regulate, or permit the control and
regulation of, a broad range of payments and transactions involving non-
residents of Australia. Under certain general and specific exemptions,
authorities and approvals, however, News Corporation is not restricted from
transferring funds from Australia or placing funds to the credit of non-
residents of Australia subject to:
. withholding for Australian tax due in respect of dividends (to the extent
they are unfranked) and interest and royalties paid to non-residents of
Australia; and
. a requirement for approval from the Reserve Bank of Australia for certain
payments in or from Australia to or on behalf of:
. the government of Iraq, its agencies or nationals;
. authorities in the Federal Republic of Yugoslavia (Serbia and
Montenegro) or their agencies;
. the government or a public authority of Libya or certain Libyan
undertakings;
. Taliban or any undertaking owned or controlled directly or indirectly
by the Taliban; or
. Unita as an organization, senior officials of Unita and adult members
of the immediate families of the senior officials of Unita.
Accordingly, at the present time, remittance of dividends on News
Corporation Preferred Ordinary Shares, represented by Preferred ADSs, to
Citibank, N.A., as the Depositary, is not subject to exchange controls. (See
"Description of News Corporation Capital Stock--Australian exchange controls
and other limitations affecting holders" on page [ . ]).
There are no limitations, either under Australian law or under the
constitution of News Corporation, on the right to hold or vote News Corporation
Preferred Ordinary Shares, represented by Preferred ADSs, other than under the
Australian Foreign Acquisitions and Takeovers Act of 1975, as amended, and the
Australian Corporations Law insofar as such laws regulate certain fundamental
corporate transactions.
238
<PAGE>
ENFORCEMENT OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS
News Corporation is a corporation organized under the laws of the State of
South Australia in the Commonwealth of Australia.
Since many of News Corporation's directors and officers, its Australian
counsel and its independent auditors named in this joint proxy
statement/prospectus reside outside the U.S., it may not be possible to:
. effect service of process within the U.S. upon those directors,
officers, counsel and experts; or
. enforce, in U.S. courts, judgments against those persons obtained in
U.S. courts predicated on the civil liability provisions of the U.S.
federal securities laws.
Furthermore, since all directly owned assets of News Corporation are located
outside the U.S., any judgment obtained in the U.S. against News Corporation
may not be collectible within the U.S.
News Corporation has been advised by its Australian counsel, Allen Allen &
Hemsley, that there is doubt as to the enforceability of civil liabilities
under the U.S. federal securities laws in actions originating in federal and
state courts in Australia. However, Allen Allen & Hemsley has further advised
News Corporation that, subject to certain conditions, exceptions and time
limitations, Australian courts will enforce foreign (including the U.S.)
judgments for liquidated amounts in civil matters, including (although there is
no express authority relating to this) judgments for such amounts rendered in
civil actions under the civil liability provisions of the U.S. federal
securities laws. Such Australian counsel has expressed no opinion, however, as
to whether the enforcement by Australian courts of any judgment would be
effected in any currency other than Australian dollars and if in Australian
dollars, the date of determination of the applicable exchange rate from U.S.
dollars to Australian dollars.
News Corporation has expressly submitted to the jurisdiction of New York
State and U.S. federal courts sitting in The City of New York for the purpose
of any suit, action or proceeding arising out of the offering with respect to
which this joint proxy statement/prospectus is delivered. News Corporation has
appointed News America Publishing Incorporated at 1211 Avenue of the Americas,
New York, New York 10036 to accept service of process in any such action with
respect to the offering with respect to this joint proxy statement/prospectus.
For additional information about the enforcement of civil liabilities, see
"Enforceability of Judgments", below.
239
<PAGE>
ENFORCEABILITY OF JUDGMENTS
News Corporation is a corporation incorporated under the laws of the State
of South Australia in the Commonwealth of Australia. Service of process upon
directors, officers, its Australian counsel and certain of the experts named in
this joint proxy statement/prospectus who reside outside the U.S. may be
difficult to obtain within the U.S. Furthermore, since all directly owned
assets of News Corporation are outside the U.S., any judgment obtained in the
U.S. against News Corporation may not be collectible within the U.S. News
Corporation has been advised by its Australian counsel, Allen Allen & Hemsley,
that there is doubt as to the enforceability of civil liabilities under the
Securities Act and the Exchange Act in actions originating in federal and state
courts in Australia.
News Corporation conducts its operations through direct and indirect
subsidiaries worldwide, but it does not directly own any significant assets
outside of Australia. News Corporation has been advised by Allen Allen &
Hemsley that, subject to certain exceptions and time limitations, federal and
state courts in Australia will enforce a foreign (including the U.S.) judgment
for a liquidated amount in a civil matter, including (although there is no
express authority relating to this) a judgment for such amount rendered in an
action under the Securities Act or the Exchange Act obtained after due trial
before a court which has jurisdiction on grounds recognized under Australian
conflicts of law rules for the purposes of enforcement of judgments, provided
that:
. due service of process has been effected with sufficient notice to enable
appearance in defense; and
. such judgment:
(a) is not contrary to Australian law or public policy and the
proceedings by which it was obtained were not contrary to natural
justice; and
(b) is final and conclusive and cannot be reopened by the parties and was
not obtained by actual or constructive fraud or duress; and
(c) could be enforced by execution in the jurisdiction in which such
judgment was rendered; and
(d) has not been stayed or satisfied in full or set aside; and
(e) is not directly or indirectly for the payment of foreign taxes or
charges of like nature or of a fine or other penalty (in particular,
Allen Allen & Hemsley have indicated that they believe that (subject
to the proviso in paragraph (g) below) Australian courts would
probably not enforce a judgment for an amount arrived at by doubling,
trebling or otherwise multiplying a sum assessed as compensation for
loss or damage sustained by the person in whose favor the judgment
was given, such as a treble-damage award under the United States
Racketeer Influenced and Corrupt Organizations Act); and
(f) was not awarded against a non-U.S. resident or corporation in respect
of acts committed outside the U.S.; and
(g) is not a judgment in respect of which the Australian Attorney-General
has made a declaration or order under the Australian Foreign
Proceedings (Excess of Jurisdiction) Act, 1984 (provided that if the
declaration is under Section 9(1)(d) of that Act and the amount of
the judgment is deemed to be reduced to an amount specified in the
declaration, the judgment may, subject to the other requirements for
recognition or enforcement, be recognized or enforced as if the
reduced amount were substituted for the amount of the judgment); and
(h) is not a judgment given in respect of a cause of action which had
previously been determined by a court having jurisdiction; and
(i) is not a judgment on a claim for contribution in respect of a
judgment which does not satisfy the terms of this proviso.
240
<PAGE>
Allen Allen & Hemsley has further advised that News Corporation might be
allowed to raise any counterclaim which it might have raised had the action
originally been brought before the courts of Australia, unless such
counterclaim was in issue before and had previously been decided by such U.S.
court. Of the foregoing matters which affect the enforceability of a foreign
judgment in an Australian court, some must be established by the party seeking
enforcement and others by the party resisting enforcement. Moreover, Allen
Allen & Hemsley has expressed no opinion as to whether the enforcement by an
Australian court of any judgment would be effected in any currency other than
Australian dollars, and if in Australian dollars, the date of determination of
the applicable exchange rate from U.S. dollars to Australian dollars.
241
<PAGE>
LEGAL MATTERS
The validity of News Corporation Preferred Ordinary Shares, represented by
Preferred ADSs, to be issued in the mergers will be passed upon by Allen Allen
& Hemsley, Australian counsel for News Corporation. Material U.S. federal
income tax consequences of the mergers will be passed upon by Squadron,
Ellenoff, Plesent & Sheinfeld, LLP for News Corporation, Skadden, Arps, Slate,
Meagher & Flom LLP for Chris-Craft and Kaye, Scholer, Fierman, Hays & Handler,
LLP for BHC and United Television.
EXPERTS
The audited financial statements and schedules of The News Corporation
Limited, incorporated by reference in this joint proxy statement/prospectus and
elsewhere in the registration statement, have been audited by Arthur Andersen,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
The audited financial statements and schedules of Fox Entertainment Group,
Inc., incorporated by reference in this joint proxy statement/prospectus and
elsewhere in the registration statement, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
The audited financial statements and schedules of British Sky Broadcasting
Group plc and subsidiaries, incorporated by reference in this joint proxy
statement/prospectus and elsewhere in the registration statement, have been
audited by Arthur Andersen, independent chartered accountants, as indicated in
their reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
The audited financial statements and schedules of Stream S.p.A.,
incorporated by reference in this joint proxy statement/prospectus and
elsewhere in the registration statement, have been audited by Arthur Andersen
SpA, independent auditors, as indicated in their reports with respect thereto,
and are incorporated by reference herein in reliance upon the authority of said
firm as experts in giving said reports.
The consolidated financial statements of Chris-Craft incorporated in this
joint proxy statement/prospectus by reference to the Annual Report on Form 10-K
for the year ended December 31, 1999, have been so incorporated in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of BHC incorporated in this joint
proxy statement/prospectus by reference to the Annual Report on Form 10-K for
the year ended December 31, 1999, have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements and schedule of United Television
incorporated in this joint proxy statement/prospectus by reference to the
Annual Report on Form 10-K for the year ended December 31, 1999, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
242
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
News Corporation, Chris-Craft, BHC and United Television file reports and
other information with the SEC. Chris-Craft, BHC and United Television also
file proxy statements with the SEC. News Corporation, as a foreign private
issuer, is exempt from the SEC's rules prescribing the furnishing and content
of proxy statements. You may read and copy any reports, statements or other
information filed by the companies at the SEC's public reference room at 450
Fifth Street, NW, Washington, D.C. 20549 or at one of the SEC's other public
reference rooms in New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Various reports, proxy statements and other information filed by the companies
may also be obtained at the SEC's Web site located at "http://www.sec.gov".
News Corporation and Chris-Craft also file reports and other information
with the New York Stock Exchange. BHC also files reports and other information
with the American Stock Exchange and United Television also files reports and
other information with the Nasdaq National Market. Such reports and other
information relating to News Corporation or Chris-Craft may be inspected at the
New York Stock Exchange, 20 Broad Street, New York, New York 10005. Such
reports and other information relating to BHC and United Television may be
inspected at the American Stock Exchange, Inc., 86 Trinity Place, New York, New
York 10006, and the Nasdaq National Market, 1735 K Street, NW, Washington, D.C.
20006, respectively.
The Preferred ADSs, each representing four Preferred Ordinary Shares of News
Corporation, will be issued under the Amended and Restated Deposit Agreement,
dated as of December 3, 1996, between The News Corporation Limited, Citibank,
N.A., as Depositary, and the holders from time to time of the Preferred ADSs.
News Corporation will provide the Depositary with copies of its annual reports
containing consolidated financial statements which are audited and reported
upon, with an opinion expressed by News Corporation's independent public
accountants. Such consolidated financial statements will be prepared in
conformity with Australian generally accepted accounting principles. News
Corporation will also prepare annual reconciliations of its financial
statements to U.S. generally accepted accounting principles. The Depositary
will mail such reports to record holders of Preferred ADSs. News Corporation
will also provide to the Depositary all notices of shareholders' meetings and
other reports and communications that are generally made available to
shareholders of News Corporation. The Depositary will, in its discretion, make
such notices, other reports and communications available to holders of
Preferred ADSs, and will mail to all record holders a notice containing a
summary of the information contained in any notice of a shareholders' meeting
of News Corporation received by it.
News Corporation has filed a Registration Statement on Form F-4 to register
with the SEC the Preferred Ordinary Shares to be issued in the mergers to the
stockholders of Chris-Craft, BHC and United Television. This joint proxy
statement/prospectus is a part of that Registration Statement and constitutes a
prospectus of News Corporation in addition to being a proxy statement of each
of Chris-Craft, BHC and United Television for the special meetings. As allowed
by the SEC's rules, this document does not contain all the information you can
find in the registration statement or the exhibits to the registration
statement.
243
<PAGE>
The SEC allows us to "incorporate by reference" information into this joint
proxy statement/prospectus. This means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
joint proxy statement/prospectus, except for any information superseded by
information in this joint proxy statement/prospectus. This joint proxy
statement/prospectus incorporates by reference the following documents which we
have previously filed with the SEC:
<TABLE>
<CAPTION>
News Corporation Filings (File No. 1-9141) Relevant Period or Date Filed
------------------------------------------ -----------------------------
<C> <S>
. Annual Report on Form 20-F Fiscal year ended June 30,
1999
. Reports of Foreign Private Issuer on Form 6-K Filed July 16, 20 and 23,
1999; August 20, 24, 26 and
27, 1999; September 1, 22, 29
and 30, 1999; October 1, 7 and
12, 1999; November 4, 5, 9, 22
and 30, 1999; December 7, 8
and 30, 1999; February 15, 16,
18, 23, 24 and 29, 2000; March
2 and 27, 2000; April 12 and
19, 2000; May 3, 12, 24, 25,
26 and 30, 2000; June 7, 9,
12, 14, 15, 16, 20, 22 and 26,
2000; August 15, 18, 22 and
25, 2000; September 5, 22, 27,
28 and 29, 2000; October 4, 6,
13, 17, 18 and 19, 2000; and
November 1, 10 and 16, 2000
<CAPTION>
Chris-Craft Filings (File No. 1-2999) Relevant Period or Date Filed
------------------------------------- -----------------------------
<C> <S>
. Annual Report on Form 10-K Fiscal year ended December 31,
1999
. Definitive Proxy Statement on Form 14A Filed on April 5, 2000
. Quarterly Reports on Form 10-Q Quarters ended March 31, 2000;
June 30, 2000; and September
30, 2000
. Current Reports on Form 8-K Filed on August 23, 2000 and
November 15, 2000
<CAPTION>
BHC Filings (File No. 1-10342) Relevant Period or Date Filed
------------------------------ -----------------------------
<C> <S>
. Annual Report on Form 10-K Fiscal year ended December 31,
1999
. Definitive Proxy Statement on Form 14A Filed on April 6, 2000
. Quarterly Reports on Form 10-Q Quarters ended March 31, 2000;
June 30, 2000; and September
30, 2000
. Current Report on Form 8-K Filed on August 23, 2000 and
November 15, 2000
<CAPTION>
United Television Filings (File No. 1-8411) Relevant Period or Date Filed
------------------------------------------- -----------------------------
<C> <S>
. Annual Report on Form 10-K Fiscal year ended December 31,
1999
. Definitive Proxy Statement on Form 14A Filed on April 6, 2000
. Quarterly Reports on Form 10-Q Quarters ended March 31, 2000;
June 30, 2000; and September
30, 2000
. Current Reports on Form 8-K Filed on August 23, 2000 and
November 15, 2000
</TABLE>
All documents filed by News Corporation, Chris-Craft, BHC and United
Television with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date of this joint proxy statement/prospectus and before the
closing of the mergers are also incorporated by reference into this joint proxy
statement/prospectus.
244
<PAGE>
News Corporation, Chris-Craft, BHC and United Television have each supplied
all of the information contained or incorporated by reference in this document
relating to itself.
You can obtain any document incorporated by reference in this joint proxy
statement/prospectus by contacting us or the SEC. We will provide the documents
incorporated by reference, without charge, upon written or oral request. If
exhibits to the documents incorporated by reference are not themselves
specifically incorporated by reference in this joint proxy
statement/prospectus, then those exhibits will not be provided. Any request for
documents should be made by [ . ], 2000 so that you will receive them before
the special meetings.
Requests for documents relating to News Corporation should be directed to:
Investor Relations
The News Corporation Limited
c/o News America Incorporated
1211 Avenue of the Americas
New York, NY 10036
Tel: (212) 852-7000
Requests for documents relating to Chris-Craft, BHC or United Television
should be directed to:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Tel: (212) 750-5833 (for banks and brokers)
(888) 750-5834 (toll-free for stockholders)
Requests for additional copies of this joint proxy statement/prospectus, the
enclosed proxy card or voting instructions, or the form of election and letter
of transmittal can also be made to Innisfree M&A Incorporated at the address
and telephone number set forth above.
You should rely only on the information contained or incorporated by
reference into this joint proxy statement/prospectus to vote on the merger
relevant to you. No one has been authorized to provide you with information
that is different from what is contained in, or incorporated by reference into,
this joint proxy statement/prospectus. This joint proxy statement/prospectus is
dated [ . ], 2000. You should not assume that the information contained in, or
incorporated by reference into, this joint proxy statement/prospectus is
accurate as of any date other than that date. Neither our mailing of this joint
proxy statement/prospectus to Chris-Craft, BHC or United Television's
stockholders nor the issuance by News Corporation of Preferred ADSs or
Preferred Ordinary Shares in connection with the Chris-Craft, BHC or United
Television mergers shall create any implication to the contrary. This joint
proxy statement/prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities, or the solicitation of a
proxy, in any jurisdiction to or from any person to whom it is unlawful to make
such offer or solicitation in such jurisdiction. Information contained in this
joint proxy statement/prospectus regarding Chris-Craft has been provided by
Chris-Craft. Information contained in this joint proxy statement/prospectus
regarding BHC has been provided by BHC. Information contained in this joint
proxy statement/prospectus regarding United Television has been provided by
United Television. Information contained in this joint proxy
statement/prospectus regarding News Corporation has been provided by News
Corporation.
245
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CONFORMED COPY ANNEX A
AGREEMENT AND PLAN OF MERGER
Among
CHRIS-CRAFT INDUSTRIES, INC.,
THE NEWS CORPORATION LIMITED,
NEWS PUBLISHING AUSTRALIA LIMITED,
and
FOX TELEVISION HOLDINGS, INC.
Dated as of August 13, 2000, as Amended
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE I
The Merger
Section 1.1 The Merger................................................. 2
Section 1.2 Effect on Securities....................................... 2
Section 1.3 Share Election............................................. 5
Section 1.4 Allocation and Proration................................... 7
Section 1.5 Exchange of Certificates................................... 8
Section 1.6 Transfer Taxes; Withholding................................ 10
Section 1.7 Stock Options and Other Stock.............................. 10
Section 1.8 Lost Certificates.......................................... 12
Section 1.9 Dissenting Shares.......................................... 12
Section 1.10 Merger Closing............................................. 12
ARTICLE II
The Surviving Corporation
Section 2.1 Certificate of Incorporation............................... 12
Section 2.2 By-laws.................................................... 12
Section 2.3 Officers and Board of Directors............................ 12
ARTICLE III
Representations and Warranties of the Company
Section 3.1 Organization and Qualification; Subsidiaries............... 13
Section 3.2 Restated Certificate of Incorporation and By-Laws.......... 14
Section 3.3 Capitalization............................................. 14
Section 3.4 Authority Relative to Agreement............................ 15
Section 3.5 No Conflict; Required Filings and Consents................. 15
Section 3.6 Permits and Licenses; Contracts; Compliance with Laws...... 16
Section 3.7 SEC Reports................................................ 18
Section 3.8 Absence of Certain Changes or Events....................... 18
Section 3.9 Absence of Litigation...................................... 19
Section 3.10 Employee Benefit Plans..................................... 19
Section 3.11 Labor Matters.............................................. 21
Section 3.12 Environmental Matters...................................... 21
Section 3.13 Trademarks, Patents and Copyrights......................... 22
Section 3.14 Taxes...................................................... 22
Section 3.15 Tax Matters................................................ 24
Section 3.16 Title to Properties; Assets................................ 24
Section 3.17 Year 2000 Compliance....................................... 24
Section 3.18 Opinion of Financial Advisors.............................. 25
Section 3.19 Vote Required.............................................. 25
Section 3.20 Brokers.................................................... 25
Section 3.21 State Takeover Statutes.................................... 25
Section 3.22 BHC and UTV................................................ 25
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ARTICLE IV
Representations and Warranties of Buyer
Section 4.1 Organization and Qualification; Subsidiaries............... 26
Section 4.2 Charter Documents.......................................... 26
Section 4.3 Capitalization............................................. 27
Section 4.4 Authority Relative to Agreement............................ 27
Section 4.5 No Conflict; Required Filings and Consents................. 28
Section 4.6 Permits and Licenses....................................... 28
Section 4.7 Buyer SEC/ASX Reports...................................... 29
Section 4.8 Absence of Certain Changes or Events....................... 29
Section 4.9 Tax Matters................................................ 29
Section 4.10 Brokers.................................................... 29
Section 4.11 Interim Operations of Acquisition Sub...................... 29
ARTICLE V
Conduct of Business Pending the Merger
Section 5.1 Conduct of Business by the Company Pending the Merger...... 30
Section 5.2 Prior Preferred Stock...................................... 32
Section 5.3 FCC Matters................................................ 32
Section 5.4 Certain Tax Matters........................................ 32
ARTICLE VI
Additional Agreements
Section 6.1 Registration Statement; Proxy Statement.................... 33
Section 6.2 Stockholders' Meetings; Approvals.......................... 34
Section 6.3 Appropriate Action; Consents; Filings...................... 35
Section 6.4 Access to Information; Confidentiality..................... 36
Section 6.5 No Solicitation of Competing Transactions.................. 37
Section 6.6 Directors' and Officers' Indemnification and Insurance..... 37
Section 6.7 Notification of Certain Matters............................ 39
Section 6.8 Tax Matters................................................ 40
Section 6.9 Stock Exchange Listing..................................... 40
Section 6.10 Public Announcements....................................... 40
Section 6.11 Affiliates of the Company.................................. 40
Section 6.12 Employee Matters........................................... 40
Section 6.13 Letters of the Company's Accountants....................... 42
Section 6.14 Letters of Buyer's Accountants............................. 42
Section 6.15 [INTENTIONALLY OMITTED].................................... 42
Section 6.16 Other Merger Agreements.................................... 42
Section 6.17 Employee Solicitation...................................... 42
Section 6.18 Post-Closing Covenant of Buyer............................. 42
Section 6.19 Form of Merger............................................. 43
Section 6.20 Obligations of FTH......................................... 43
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ARTICLE VII
Conditions to the Merger
Section 7.1 Conditions to the Obligations of Each Party............... 44
Section 7.2 Conditions to the Obligations of Buyer.................... 44
Section 7.3 Conditions to the Obligations of the Company.............. 45
ARTICLE VIII
Termination, Amendment and Waiver
Section 8.1 Termination............................................... 46
Section 8.2 Effect of Termination..................................... 47
Section 8.3 Amendment................................................. 47
Section 8.4 Waiver.................................................... 47
Section 8.5 Expenses.................................................. 47
ARTICLE IX
General Provisions
Section 9.1 Non-Survival of Representations, Warranties and
Agreements............................................... 48
Section 9.2 Notices................................................... 48
Section 9.3 Interpretation, Certain Definitions....................... 48
Section 9.4 Severability.............................................. 49
Section 9.5 Entire Agreement; Assignment.............................. 49
Section 9.6 Parties in Interest....................................... 50
Section 9.7 Governing Law............................................. 50
Section 9.8 Consent to Jurisdiction................................... 50
Section 9.9 Counterparts.............................................. 50
Section 9.10 WAIVER OF JURY TRIAL...................................... 50
EXHIBITS
Exhibit A Form of Written Agreement with Company Affiliates
Exhibit B Newco--FTH Agreement Term Sheet
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TABLE OF DEFINED TERMS
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$........................................................................ 49
1999 Balance Sheet....................................................... 23
Acquisition Sub.......................................................... 1
Actions.................................................................. 33
Adverse Condition........................................................ 36
affiliate................................................................ 49
Aggregate Buyer Share Amount............................................. 4
Aggregate Cash Amount.................................................... 4
Agreement................................................................ 1
All Cash Election........................................................ 5
All Cash Election Number................................................. 4
All Cash Election Shares................................................. 7
ASX...................................................................... 10, 28
ASX Listing Rules........................................................ 28
ASX Waiver............................................................... 28
BHC...................................................................... 1
BHC Class A Shares....................................................... 25
BHC Class B Shares....................................................... 25
BHC Merger............................................................... 1
BHC Merger Agreement..................................................... 1
BHC Preferred Stock...................................................... 25
Blue Sky Laws............................................................ 16
business day............................................................. 49
Buyer.................................................................... 1
Buyer Disclosure Schedule................................................ 26
Buyer FCC Licenses....................................................... 28
Buyer Licensed Facilities................................................ 28
Buyer Material Adverse Effect............................................ 26
Buyer Preferred Stock.................................................... 2
Buyer SEC Reports........................................................ 29
Buyer Shareholder Approval............................................... 28
Buyer Shares............................................................. 2
Buyer Shares Trust....................................................... 9
Cash Amount.............................................................. 7
Cash Election Shares..................................................... 3
Cash Fraction............................................................ 7
Cash Merger Price........................................................ 4
CERCLA................................................................... 22
Certificate of Merger.................................................... 2
Certificates............................................................. 8
change in control........................................................ 11
Class B Common Stock..................................................... 1
Closing.................................................................. 12
Closing Buyer Share Value................................................ 4
Closing Date............................................................. 12
Closing Price............................................................ 8
Closing Transaction Value................................................ 4
Code..................................................................... 1
Common Stock............................................................. 1
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Common Stock Equivalents................................................. 1
Communications Act....................................................... 16
Company.................................................................. 1
Company Benefit Plans.................................................... 19
Company Disclosure Schedule.............................................. 13
Company Employees........................................................ 41
Company FCC Licenses..................................................... 17
Company Financial Advisor................................................ 25
Company Intellectual Property Rights..................................... 22
Company Material Adverse Effect.......................................... 13, 16
Company Options.......................................................... 10
Company Permits.......................................................... 16
Company SEC Reports...................................................... 18
Company Stations......................................................... 17
Company Stock Plans...................................................... 14
Company Systems.......................................................... 24
Company Year 2000 Compliant.............................................. 25
Company Year 2000 Plan................................................... 24
Competing Transaction.................................................... 37
Confidentiality Agreement................................................ 36
control.................................................................. 49
controlled by............................................................ 49
Convertible Preferred Stock.............................................. 1
Costs.................................................................... 38
Covered Affiliates....................................................... 38
Delaware Law............................................................. 1
Deposit Agreement........................................................ 8
Depositary............................................................... 8
Dissenting Shares........................................................ 5, 12
dollars.................................................................. 49
DTV...................................................................... 17
DTV Stations............................................................. 18
Effective Time........................................................... 2
Election Deadline........................................................ 6
Elections................................................................ 5
Environmental Laws....................................................... 22
Environmental Permits.................................................... 22
ERISA.................................................................... 19
ERISA Affiliates......................................................... 20
Excess Buyer Shares...................................................... 9
excess parachute payment................................................. 20
Exchange Act............................................................. 11
Exchange Agent........................................................... 5
Exchange Fund............................................................ 10
Exchange Ratio........................................................... 5
Exchangeable Shares...................................................... 5
Exchanged Shares......................................................... 5
Excluded Matters......................................................... 13
Expenses................................................................. 39, 47
FCC...................................................................... 16
FCC Application.......................................................... 35
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FCC Consent.............................................................. 44
FCC Failure.............................................................. 43
FCC Multiple Ownership Rules............................................. 35
FEG...................................................................... 42
Form of Election......................................................... 5
Forward Merger........................................................... 1
FTH...................................................................... 1
GAAP..................................................................... 18
Governmental Authority................................................... 49
Hazardous Materials...................................................... 22
Holders.................................................................. 5
HSR Act.................................................................. 16
incentive stock options.................................................. 11
Indemnifiable Claim...................................................... 38
Indemnifying Party....................................................... 38
Indemnitees.............................................................. 38, 39
Intellectual Property Rights............................................. 22
IRS...................................................................... 19
IRS Ruling............................................................... 45
knowledge................................................................ 49
Laws..................................................................... 16
Liens.................................................................... 14
Merger................................................................... 1
Merger Consideration..................................................... 2
Multiemployer Plans...................................................... 19
Newco.................................................................... 42
Newco-FTH Agreement...................................................... 42
Non-Election............................................................. 7
Non-Election Fraction.................................................... 7
Non-Election Shares...................................................... 7
NYSE..................................................................... 4
Opinions................................................................. 21
Option Registration Statement............................................ 33
Order.................................................................... 36
Partial Cash Election.................................................... 3
Partial Cash Election Shares............................................. 3
Partial Exchange Ratio................................................... 3
Per Share Amount......................................................... 5
Person................................................................... 5
Post-Signing Returns..................................................... 32
Preferred Stock.......................................................... 14
Prior Preferred Stock.................................................... 14
Pro-Rata Bonus........................................................... 41
Program Agreement........................................................ 32
Proxy Statement.......................................................... 33
Registration Statement................................................... 33
Representatives.......................................................... 36
Restated Certificate of Incorporation.................................... 3
Restructuring Trigger.................................................... 43
Reverse Merger........................................................... 1
Reverse Merger Exchange Ratio............................................ 3
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Ruling Failure............................................................. 72
SEC........................................................................ 7
Secretary of State......................................................... 3
Securities Act............................................................. 27
Share Registration Statement............................................... 55
Stock Election............................................................. 9
Stock Election Number...................................................... 8
Stock Election Shares...................................................... 11
Stock Fraction............................................................. 12
Stockholders' Meeting...................................................... 58
subsidiaries............................................................... 82
subsidiary................................................................. 82
Subsidiary Merger Agreements............................................... 2
Subsidiary Mergers......................................................... 2
Substituted Option......................................................... 18
Superior Proposal.......................................................... 63
Surviving Corporation...................................................... 3
Tax........................................................................ 38
Tax Returns................................................................ 38
Taxes...................................................................... 38
Terminating Buyer Breach................................................... 78
Terminating Company Breach................................................. 78
Termination Date........................................................... 77
Total Consideration........................................................ 13
under common control with.................................................. 82
UTV........................................................................ 2
UTV Common Shares.......................................................... 43
UTV Merger................................................................. 2
UTV Merger Agreement....................................................... 2
UTV Preferred Stock........................................................ 43
Valuation Period........................................................... 7
VEBA....................................................................... 32
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AGREEMENT AND PLAN OF MERGER dated as of August 13, 2000, as amended (this
"Agreement") by and among CHRIS-CRAFT INDUSTRIES, INC., a Delaware corporation
(the "Company"), THE NEWS CORPORATION LIMITED, a South Australian corporation
("Buyer"), NEWS PUBLISHING AUSTRALIA LIMITED, a Delaware corporation and a
subsidiary of Buyer ("Acquisition Sub") and FOX TELEVISION HOLDINGS, INC., a
Delaware corporation ("FTH") (but solely as to Section 6.3 and Section 6.20 of
this Agreement).
Whereas, in furtherance of the acquisition of the Company by Buyer, the
respective Boards of Directors of the Company, Buyer and Acquisition Sub, and
Buyer, as the sole stockholder of Acquisition Sub, have each approved this
Agreement and the merger of (A) the Company with and into Acquisition Sub (the
"Forward Merger") and (B) in the event a Restructuring Trigger (as defined
herein) has occurred, the merger of Acquisition Sub with and into the Company
(the "Reverse Merger" and, together with the Forward Merger, as applicable, the
"Merger"), in each case upon the terms and subject to the conditions and
limitations set forth herein and in accordance with the General Corporation Law
of the State of Delaware ("Delaware Law"), whereby each share of the issued and
outstanding shares of Common Stock of the Company, par value $.50 per share
(the "Common Stock"), each share of the issued and outstanding shares of Class
B Common Stock of the Company, par value $.50 per share (the "Class B Common
Stock"), and each share of the issued and outstanding shares of Convertible
Preferred Stock of the Company, par value $1.00 per share (the "Convertible
Preferred Stock" and, collectively with the Common Stock and the Class B Common
Stock, the "Common Stock Equivalents") will, upon the terms and subject to the
conditions and limitations set forth herein, be converted into the Merger
Consideration (as defined herein) as determined in accordance with Article I
hereof;
Whereas, the Board of Directors of the Company (i) has determined that the
Merger is fair to, advisable and in the best interests of, the Company and its
stockholders and has approved and adopted this Agreement, the Merger and the
other transactions contemplated by this Agreement and (ii) has recommended the
approval of this Agreement by the stockholders of the Company;
Whereas, for Federal income tax purposes, it is intended that the Forward
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code");
Whereas, simultaneously with the execution and delivery of this Agreement,
Buyer is entering into an agreement and plan of merger with BHC Communications,
Inc. ("BHC"), a Delaware corporation and a direct subsidiary of the Company
(the "BHC Merger Agreement"), providing for the merger of BHC with and into
Acquisition Sub or, if a Restructuring Trigger has occurred, the merger of a
direct or indirect subsidiary of Buyer (or of the Company) with and into BHC,
in each case upon the terms and subject to the conditions set forth in the BHC
Merger Agreement (the "BHC Merger");
Whereas, simultaneously with the execution and delivery of this Agreement,
Buyer is entering into an agreement and plan of merger with United Television,
Inc. ("UTV"), a Delaware corporation and an indirect subsidiary of the Company
(the "UTV Merger Agreement" and, together with the BHC Merger Agreement, the
"Subsidiary Merger Agreements"), providing for the merger of UTV with and into
Acquisition Sub or, if a Restructuring Trigger has occurred, the merger of a
direct or indirect subsidiary of Buyer (or of BHC) with and into UTV, in each
case upon the terms and subject to the conditions set forth in the UTV Merger
Agreement (the "UTV Merger" and, together with the BHC Merger, the "Subsidiary
Mergers"); and
Whereas, it is intended that the mergers heretofore referred to shall be
completed in the following order: first, the Merger; second, the BHC Merger;
and third, the UTV Merger;
Now, Therefore, in consideration of the foregoing and the mutual covenants
and agreements herein contained and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
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ARTICLE I
The Merger
Section 1.1 The Merger.
(a) Upon the terms and subject to the conditions of this Agreement, and in
accordance with Delaware Law, at the Effective Time (as defined below), in the
case of the Forward Merger, the Company shall be merged with and into
Acquisition Sub, whereupon the separate existence of the Company shall cease,
and Acquisition Sub shall continue as the surviving corporation and, in the
case of the Reverse Merger, Acquisition Sub shall be merged with and into the
Company, whereupon the separate corporate existence of Acquisition Sub shall
cease, and the Company shall continue as the surviving corporation (the
surviving corporation in the Merger is sometimes referred to herein as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware and shall continue under the name "News Publishing Australia
Limited." Whether the Forward Merger or the Reverse Merger is to be effected
shall be determined in accordance with Section 6.19 hereof.
(b) Concurrently with the Closing (as defined in Section 1.10 hereof), the
Company, Buyer and Acquisition Sub shall cause a certificate of merger (the
"Certificate of Merger") with respect to the Merger to be executed and filed
with the Secretary of State of the State of Delaware (the "Secretary of State")
as provided under Delaware Law. The Merger shall become effective on the date
and time at which the Certificate of Merger has been duly filed with the
Secretary of State or at such other date and time as are agreed between the
parties and specified in the Certificate of Merger, and such date and time is
hereinafter referred to as the "Effective Time."
(c) From and after the Effective Time, the Surviving Corporation shall
possess all rights, privileges, immunities, powers and franchises and be
subject to all of the obligations, restrictions, disabilities, liabilities,
debts and duties of the Company and Acquisition Sub.
Section 1.2 Effect on Securities.
At the Effective Time:
(a) Cancellation of Securities. Each share of Common Stock Equivalents held
by the Company as treasury stock or held by Buyer or its subsidiaries
immediately prior to the Effective Time shall automatically be cancelled and
retired and revert to the status of authorized but unissued shares and no
consideration or payment shall be delivered therefor or in respect thereto.
(b) Conversion of Securities. Except as otherwise provided in this Agreement
and subject to Section 1.4 hereof, each share of Common Stock Equivalents
issued and outstanding immediately prior to the Effective Time (other than
shares cancelled pursuant to Section 1.2(a) hereof and Dissenting Shares (as
defined in Section 1.9 hereof)) shall be converted into the following (the
"Merger Consideration"):
Either (X) in the case of the Forward Merger:
(i) for each share of Common Stock Equivalents with respect to which
an election to receive only cash (to the extent available) has been
effectively made and not revoked or lost, pursuant to Section 1.3
hereof, the right to receive in cash from Buyer the Per Share Amount
(as defined below), subject to Sections 1.2(f) and 1.4(f) and to the
allocation and proration procedures set forth in Section 1.4 hereof;
and
(ii) for each share of Common Stock Equivalents with respect to
which an election to receive forty percent (40%) of the Cash Merger
Price in cash and the remainder of the Merger Consideration in American
Depositary Shares of Buyer ("Buyer Shares"), each of which represents
four (4) fully paid and nonassessable Preferred Limited Voting Ordinary
Shares, of Buyer ("Buyer Preferred
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Stock"), has been effectively made and not revoked or lost, pursuant to
Section 1.3 hereof (a "Partial Cash Election"), (A) the right to
receive from Buyer an amount in cash equal to $34, or if the Effective
Time shall occur after the one year anniversary of the date hereof, $35
and (B) 1.1591 (the "Partial Exchange Ratio") Buyer Shares (such shares
of Common Stock Equivalents being, collectively, "Partial Cash Election
Shares" and, together with the All Cash Election Shares (as defined
herein), "Cash Election Shares"); provided, however, that the foregoing
shall be subject to Sections 1.2(f) and 1.4(f) hereof. The Buyer
Preferred Stock allotted and issued in accordance with this Agreement
shall on and from its date of allotment rank pari passu with all
existing Buyer Preferred Stock on issue at that date including, as to
all dividend entitlements (in respect of which they shall receive the
same entitlement as any previously issued Buyer Preferred Stock); and
(iii) for each other share of Common Stock Equivalents, the right to
receive from Buyer, the number of Buyer Shares equal to the Exchange
Ratio (as defined below), subject to Sections 1.2(f) and 1.4(f) and to
the allocation and proration procedures set forth in Section 1.4
hereof; or
(Y) in the case of the Reverse Merger, subject to Section 1.2(f), for
each share of Common Stock Equivalents, (A) the right to receive from Buyer
an amount in cash equal to $36 or, if the Effective Time shall occur after
the one year anniversary of the date hereof, $37 and (B) 1.2273 Buyer
Shares (the "Reverse Merger Exchange Ratio").
(c) All shares of Common Stock Equivalents to be converted into the Merger
Consideration pursuant to this Section 1.2 shall, by virtue of the Merger and
without any action on the part of the holders thereof, cease to be outstanding,
be cancelled and retired and cease to exist; and each holder of a certificate
representing prior to the Effective Time any such shares of Common Stock
Equivalents shall thereafter cease to have any rights with respect to such
securities, except the right to receive (i) the Merger Consideration, (ii) any
dividends and other distributions in accordance with Section 1.5(c) hereof and
(iii) any cash to be paid in lieu of any fractional Buyer Share in accordance
with Section 1.5(d) hereof.
(d) The shares of Convertible Preferred Stock shall be entitled to make
elections (in the case of the Forward Merger) and shall be entitled to receive
the Merger Consideration in all cases as if such shares had been converted in
accordance with the Restated Certificate of Incorporation of the Company (the
"Restated Certificate of Incorporation").
(e) Capital Stock of Acquisition Sub. In the Forward Merger, no shares of
Acquisition Sub stock will be issued directly or indirectly and each share of
common stock of Acquisition Sub issued and outstanding immediately prior to the
Effective Time shall remain outstanding following the Effective Time. In the
case of the Reverse Merger, each share of common stock of Acquisition Sub shall
be converted into one fully paid and nonassessable share of the Surviving
Corporation.
(f) Adjustments to Exchange Ratio.
(i) Subject to clause (ii) below, in the event that Buyer declares or
effects a stock split, stock or cash dividend (other than ordinary course
cash dividends declared and paid consistent with past practice) or other
reclassification, acquisition, exchange or distribution with respect to the
Buyer Shares or Buyer Preferred Stock, in each case with a record or ex-
dividend date or effective date occurring after the date hereof and on or
prior to the date of the Effective Time, there will be an appropriate
adjustment made to the Merger Consideration so as to provide for the
inclusion therein of the cash, property, securities or combination thereof
that each holder of Common Stock Equivalents who has the right to receive
the Merger Consideration pursuant to Section 1.2 hereof would have received
had such Common Stock Equivalents been converted into Buyer Shares or Buyer
Preferred Stock as of the date hereof.
(ii) If either (A) in the case of the Forward Merger, the tax opinion to
the Company referred to in Section 7.3(c) hereof as to the Merger
qualifying as a reorganization cannot be rendered (as reasonably determined
by Skadden, Arps, Slate, Meagher & Flom LLP), (B) in the case of the
Forward Merger, the tax opinion to Buyer referred to in Section 7.2(f) as
to the Merger qualifying as a reorganization cannot be
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rendered (as reasonably determined by Squadron, Ellenoff, Plesent &
Sheinfeld LLP), (C) in the case of the Forward Merger, in the reasonable
judgment of the Company or Buyer, based on the advice of their respective
counsel, there is a meaningful risk that the receipt of the cash, property,
securities or combination thereof referred to in clause (i) above would be
taxable or have an adverse tax consequence to the holders of Common Stock
Equivalents or (D) in the case of either the Forward Merger or the Reverse
Merger, the adjustment referred to in clause (i) above is not possible or
not possible without materially changing the tax treatment of the
transaction referred to in clause (i) in question, then, in each case,
Buyer (but only if requested by the Company in the case of clause (C)
above) shall make an appropriate adjustment to the Merger Consideration
that (x) conveys an equivalent value (taking into account, among other
things, the impact of the transaction referred to in clause (i) above on
the trading price of Common Stock, Buyer Shares, Buyer Preferred Stock and
any newly issued securities) to the holders of Common Stock Equivalents as
the adjustments contemplated in paragraph (i) above, (y) in the case of the
Forward Merger, allows such tax opinions to be delivered and (z) in the
case of the Forward Merger, avoids the consequences referred to in clause
(C) above; it being understood that, by way of illustration and not
limitation, the Company's written agreement that clause (x) is satisfied
shall constitute conclusive evidence as to such fact.
(g) Certain Definitions. For purposes of this Agreement, or, in the case of
clause (xii) below, solely for purposes of Sections 1.2, 1.3 and 1.4 hereof,
the following terms shall have the following meanings:
(i) "Aggregate Buyer Share Amount" means (A) 60% of the product of (x)
the number of shares of Common Stock Equivalents (on an as converted basis)
issued and outstanding immediately prior to the Effective Time, less the
number of outstanding shares of Common Stock Equivalents cancelled pursuant
to Section 1.2(a) hereof, and (y) 1.9318, less (B) the number of Buyer
Shares to be paid in respect of Partial Cash Election Shares (other than
Dissenting Shares), in each case subject to adjustment as described in
Section 1.4(f) hereof.
(ii) "Aggregate Cash Amount" means (A) the product of (x) the number of
shares of Common Stock Equivalents (on an as converted basis) issued and
outstanding immediately prior to the Effective Time, less the number of
outstanding shares of Common Stock Equivalents cancelled pursuant to
Section 1.2(a) hereof and (y) $34 or, if the Effective Time shall occur
after the one year anniversary of the date hereof, $35, less (B) the amount
of cash to be paid in respect of Partial Cash Election Shares (other than
Dissenting Shares), in each case subject to adjustment as described in
Section 1.4(f) hereof.
(iii) "All Cash Election Number" means (A) that number of shares of
Common Stock Equivalents as shall be equal to the quotient obtained by
dividing the Aggregate Cash Amount by the Per Share Amount, less (B) the
number of Dissenting Shares, subject to adjustment as described in Section
1.4(f) hereof.
(iv) "Cash Merger Price" means $85.
(v) "Closing Buyer Share Value" means the volume weighted average sales
price for all trades of Buyer Shares reported on the New York Stock
Exchange (the "NYSE") for each of the five trading days immediately
preceding but not including the Closing Date (the "Valuation Period");
provided, however, if necessary to comply with any requirements of the
Securities and Exchange Commission (the "SEC"), the term Closing Date in
this clause (iv) shall be deemed to mean the date which is the closest in
time but prior to the Closing Date which complies with such rules and
regulations. Buyer agrees that during the Valuation Period neither Buyer
nor its affiliates shall (x) purchase or acquire, or offer to purchase or
acquire, or announce any intention to purchase or acquire, any Buyer Shares
or Buyer Preferred Stock or other outstanding securities of Buyer or its
affiliates convertible into Buyer Shares or Buyer Preferred Stock (other
than purchases at market value of Buyer Shares (in accordance with all
applicable laws) by a broker who has full discretion as to the amount and
timing of such purchases pursuant to a pre-existing stock buyback program)
or (y) announce or effect any material corporate transaction.
(vi) "Closing Transaction Value" means the sum of (A) the Aggregate Cash
Amount and (B) the product obtained by multiplying the Aggregate Buyer
Share Amount by the Closing Buyer Share Value.
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(vii) "Exchange Ratio" means that number of Buyer Shares as shall be
obtained by dividing the Per Share Amount by the Closing Buyer Share Value.
(viii) "Exchangeable Shares" means the aggregate number of shares of
Common Stock Equivalents (on an as converted basis) issued and outstanding
immediately prior to the Effective Time less the number of such shares
cancelled pursuant to Section 1.2(a) hereof and less the aggregate number
of Partial Cash Election Shares (other than Dissenting Shares).
(ix) "Exchanged Shares" means the aggregate number of shares of Common
Stock Equivalents (on an as converted basis) issued and outstanding
immediately prior to the Effective Time less the number of such shares (A)
cancelled pursuant to Section 1.2(a) hereof and (B) that are Dissenting
Shares.
(x) "Per Share Amount" means the amount obtained by dividing the Closing
Transaction Value by the number of Exchangeable Shares.
(xi) "Stock Election Number" means that number of shares of Common Stock
Equivalents as shall be equal to (A) the number of Exchanged Shares less
(B) the sum of (i) the All Cash Election Number and (ii) the aggregate
number of Partial Cash Election Shares (other than Dissenting Shares),
subject to adjustment as described in Section 1.4(f) hereof.
(xii) "Dissenting Shares" means shares of Common Stock Equivalents that
are potentially Dissenting Shares within the meaning of Section 1.9 hereof
in respect of which the holder thereof shall have taken all steps necessary
to exercise and perfect properly his or her demand for appraisal under
Section 262 of the Delaware Law to the extent that such steps are required
to have been taken by the applicable date of determination.
Section 1.3 Share Election. In the case of the Forward Merger (and, with
respect to clauses (b) and, unless a Restructuring Trigger has theretofore
occurred, (c) and (e) below, in the case of the Reverse Merger to the extent
applicable):
(a) Each Person (as defined in Section 1.3(b) hereof) who, on or prior to
the Election Deadline referred to in subsection (c) below is a record holder of
shares of Common Stock Equivalents (collectively, "Holders") shall have the
right, with respect to the Merger Consideration, (i) to elect to receive only
cash for such shares pursuant to Section 1.2(b)(X)(i) hereof (an "All Cash
Election"), (ii) to make a Partial Cash Election, (iii) to elect to receive
Buyer Shares for such shares pursuant to Section 1.2(b)(X)(iii) hereof (a
"Stock Election"), (iv) to indicate that such record holder has no preference
as to the receipt of cash or Buyer Shares for such shares (a "Non-Election") or
(v) to make a mixed election, specifying the number of shares of Common Stock
Equivalents corresponding with each such Election (the All Cash Election, the
Partial Cash Election, the Stock Election, and the Non-Election are
collectively referred to as the "Elections"). Holders who hold such shares as
nominees, trustees or in other representative capacities may submit multiple
Forms of Election (as defined below).
(b) Prior to the mailing of the Proxy Statement (as defined in Section 6.1
hereof), The Bank of New York or such other bank, trust company, Person or
Persons shall be designated by Buyer and reasonably acceptable to the Company
to act as exchange agent (the "Exchange Agent") for payment of the Merger
Consideration. The Exchange Agent shall act as the agent for the Company's
stockholders for the purpose of receiving and holding their Forms of Election
and Certificates (as defined below) and shall obtain no rights or interests
(beneficial or otherwise) in such shares. For purposes of this Agreement,
"Person" means any natural person, firm, individual, corporation, limited
liability company, partnership, association, joint venture, company, business
trust, trust or any other entity or organization, whether incorporated or
unincorporated, including a government or political subdivision or any agency
or instrumentality thereof.
(c) All Elections shall be made on a form designed for that purpose, which
shall include a letter of transmittal and election form (together, a "Form of
Election"). Elections shall be made by Holders by mailing to the Exchange Agent
a Form of Election, which shall specify that delivery shall be effected, and
risk of loss
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and title to any Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Buyer, in consultation with the Company, may reasonably
specify. Buyer and the Company will announce the Exchange Ratio and the Per
Share Amount when known and will announce the anticipated Closing Date at least
three business days, but not more than five business days, prior thereto;
provided, however, that the Closing Date shall not be earlier than the second
business day after the satisfaction or waiver of all conditions set forth in
Article VII hereof (other than the conditions set forth in Sections 7.2(a),
7.2(b) 7.2(f), 7.3(a), 7.3(b), 7.3(c) and, in so far as it relates to the
accuracy of representations and warranties and the performance of covenants,
Section 7.1(h), so long as the foregoing enumerated conditions are anticipated
by the parties hereto to be satisfied on the Closing Date). All Certificates so
surrendered shall be subject to the exchange procedures set forth in Section
1.5 hereof. To be effective, a Form of Election must be properly completed,
signed and submitted to the Exchange Agent and accompanied by the Certificates
as to which the election is being made (or by an appropriate guarantee of
delivery of such Certificates as set forth in such Form of Election from a firm
which is a member of the NYSE or another registered national securities
exchange or a commercial bank or trust company having an office or
correspondent in the United States, provided such Certificates are in fact
delivered to the Exchange Agent within five NYSE trading days after the
Election Deadline (as defined below)). Buyer will have the discretion, which it
may delegate in whole or in part to the Exchange Agent, to determine whether
Forms of Election have been properly completed, signed and submitted or revoked
and to disregard immaterial defects in Forms of Election. The decision of Buyer
(or the Exchange Agent) in such matters, absent manifest error, shall be
conclusive and binding. Neither Buyer nor the Exchange Agent will be under any
obligation to notify any person of any defect in a Form of Election submitted
to the Exchange Agent. The Exchange Agent and Buyer shall also make all
computations contemplated by this Section 1.3 and by Section 1.4 hereof and all
such computations shall be conclusive and binding on the Holders absent
manifest error. The Form of Election and the accompanying Certificates (or
appropriate guarantee of delivery in respect thereof) must be received by the
Exchange Agent prior to 10:00 a.m. New York City time on the day on which the
Closing occurs (the "Election Deadline") in order to be effective. If the
Closing is delayed to a subsequent date, the Election Deadline shall be
similarly delayed and Buyer will promptly announce such rescheduled Election
Deadline and Closing. An election may be revoked, but only by written notice
received by the Exchange Agent prior to the Election Deadline. Upon any such
revocation, unless a duly completed Election Form, accompanied by a
Certificate, is thereafter submitted in accordance with this paragraph (c),
such shares shall be deemed to be Non-Election Shares (as defined in Section
1.4 hereof). If a Form of Election is revoked, or in the event that this
Agreement is terminated pursuant to the provisions hereof, and any Certificates
(or guarantee(s) of delivery, as appropriate), have been transmitted to the
Exchange Agent pursuant to the provisions hereof, such Certificates (and, in
the case of a revoked Form of Election, guarantee(s) of delivery, as
appropriate), shall promptly be returned without charge to the Person
submitting the same.
(d) For the purposes hereof, Common Stock Equivalents as to which the Holder
has not made a valid Election prior to the Election Deadline, including as a
result of revocation, shall be deemed to be Non-Electing Shares. If Buyer or
the Exchange Agent shall determine that any purported All Cash Election,
Partial Cash Election or Stock Election was not properly made, such purported
All Cash Election, Partial Cash Election or Stock Election shall be deemed to
be of no force and effect and the Holder making such purported All Cash
Election, Partial Cash Election or Stock Election shall for purposes hereof be
deemed to have made a Non-Election. Shares in respect of which a Non-Election
shall have been made or deemed made shall be treated as Non-Election Shares.
(e) Concurrently with the mailing of the Proxy Statement, Buyer and the
Company shall mail the Form of Election to each person who is a Holder on the
record date for the Stockholder's Meeting (as defined in Section 6.2 hereof)
and shall each use its reasonable best efforts to mail the Form of Election to
all persons who become Holders during the period between (i) such record date
and (ii) the date seven calendar days prior to the anticipated Effective Time,
and to make the Form of Election available to all persons who become Holders
subsequent to the date described in clause (ii) but not later than 5:00 p.m.
New York City time on the last business day prior to the Effective Time. The
Exchange Agent may, with the mutual agreement of Buyer and
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the Company, make such rules as are consistent with this Section 1.3 for the
implementation of the Elections provided for herein as shall be necessary or
desirable to effect such Elections fully.
Section 1.4 Allocation and Proration. In the case of the Forward Merger:
(a) Notwithstanding anything in this Agreement to the contrary, the maximum
number of shares of Common Stock Equivalents (on an as converted basis) which
shall be converted into the right to receive cash in the Merger (other than
pursuant to Partial Cash Elections and other than Dissenting Shares) shall be
equal to the All Cash Election Number. The maximum number of shares of Common
Stock Equivalents (on an as converted basis) to be converted into the right to
receive Buyer Shares in the Merger (other than pursuant to Partial Cash
Elections (other than Dissenting Shares)) shall be equal to the Stock Election
Number.
(b) If the aggregate number of shares of Common Stock Equivalents covered by
All Cash Elections (the "All Cash Election Shares") (other than Dissenting
Shares) exceeds the All Cash Election Number, all shares of Common Stock
Equivalents covered by Stock Elections (the "Stock Election Shares") and all
shares of Common Stock Equivalents covered by Non-Elections (the "Non-Election
Shares") shall be converted into the right to receive Buyer Shares, and the All
Cash Election Shares shall be converted into the right to receive Buyer Shares
and cash in the following manner:
each All Cash Election Share shall be converted into the right to receive
(i) an amount in cash, without interest, equal to the product of (x) the
Per Share Amount and (y) a fraction (the "Cash Fraction"), the numerator of
which shall be the All Cash Election Number and the denominator of which
shall be the total number of All Cash Election Shares (other than
Dissenting Shares), and (ii) a number of shares of Buyer Shares equal to
the product of (x) the Exchange Ratio and (y) a fraction equal to one minus
the Cash Fraction.
(c) If the aggregate number of Stock Election Shares (other than Dissenting
Shares) exceeds the Stock Election Number, all All Cash Election Shares and all
Non-Election Shares shall be converted into the right to receive cash, and the
Stock Election Shares shall be converted into the right to receive Buyer Shares
and cash in the following manner:
each Stock Election Share shall be converted into the right to receive (i)
a number of Buyer Shares equal to the product of (x) the Exchange Ratio and
(y) a fraction (the "Stock Fraction"), the numerator of which shall be the
Stock Election Number and the denominator of which shall be the total
number of Stock Election Shares (other than Dissenting Shares), and (ii) an
amount in cash, without interest, equal to the product of (x) the Per Share
Amount and (y) a fraction equal to one minus the Stock Fraction.
(d) In the event that neither Section 1.4(b) nor 1.4(c) above is applicable,
all All Cash Election Shares shall be converted into the right to receive cash,
all Stock Election Shares shall be converted into the right to receive Buyer
Shares and the Non-Election Shares shall be converted into the right to receive
Buyer Shares and cash in the following manner:
each Non-Election Share shall be converted into the right to receive (i) an
amount in cash, without interest, equal to the product of (x) the Per Share
Amount and (y) a fraction (the "Non-Election Fraction"), the numerator of
which shall be the excess of the All Cash Election Number over the total
number of All Cash Election Shares (other than Dissenting Shares) and the
denominator of which shall be the excess of (A) the number of Exchanged
Shares over (B) the sum of the total number of All Cash Election Shares
(other than Dissenting Shares) and the total number of Stock Election
Shares (other than Dissenting Shares) and (ii) a number of Buyer Shares
equal to the product of (x) the Exchange Ratio and (y) a fraction equal to
one minus the Non-Election Fraction.
(e) Partial Cash Election Shares (other than Dissenting Shares) shall not be
subject to proration and shall be converted into the right to receive the
Merger Consideration pursuant to Section 1.2(b)(X)(ii) hereof, subject to
Section 1.4(f) hereof.
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(f) If the sum of (i) the Aggregate Cash Amount (without giving effect to
the reference therein to this subsection (f)) and (ii) (A) (1) $34 or (2) if
the Effective Time shall occur after the one year anniversary of the date
hereof, $35, multiplied by (B) the number of Partial Cash Election Shares (such
sum being the "Cash Amount") exceeds 55% of the sum of (x) the Cash Amount and
(y) the product of (A) the closing price of Buyer Shares reported on the NYSE
Composite Tape on the trading day immediately preceding the Closing Date (the
"Closing Price") multiplied by (B) 1.9318 multiplied by (C) 60% of the excess
of the number of Common Stock Equivalents (on an as converted basis)
outstanding immediately prior to the Effective Time over the number of
outstanding shares of Common Stock Equivalents cancelled pursuant to Section
1.2(a) hereof (such sum of (x) and (y) being the "Total Consideration"), then
the components of the Merger Consideration shall be modified (1) first, in the
case of shares of Common Stock Equivalents (on an as converted basis) (other
than Dissenting Shares) as to which All Cash Elections shall have been made, by
reducing the cash portion of the Merger Consideration to the minimum extent
necessary, and in no event below the amount of cash payable in respect of
Partial Election Shares, and issuing in lieu thereof additional Buyer Shares in
an amount equal to the result obtained by dividing (x) the amount of such per
share cash reduction by (y) the Closing Price and (2) second, in the event that
the foregoing reduction is not sufficient to result in the Cash Amount not
exceeding 55% of the Total Consideration, in the case of shares of Common Stock
Equivalents as to which an All Cash Election or a Partial Cash Election shall
have been made, by further reducing the amount of the cash portion of the
Merger Consideration to the minimum extent necessary to satisfy the 55%
limitation referred to above and to issue in lieu thereof additional Buyer
Shares, in amount equal to the result obtained by dividing (u) the amount of
such per share cash reduction by (v) the Closing Price. In the case of the
Forward Merger, if either (i) the tax opinion referred to in Section 7.3(c)
hereof cannot be rendered (as reasonably determined by Skadden, Arps, Slate,
Meagher & Flom LLP), or (ii) the tax opinion to Buyer referred to in Section
7.2(f) cannot be rendered (as reasonably determined by Squadron, Ellenoff,
Plesent & Sheinfeld LLP), then the foregoing adjustments shall be similarly
made, in each case to the minimum extent necessary to enable the relevant tax
opinion or opinions, as the case may be, to be rendered. For purposes of this
Section 1.4(f), holders of Dissenting Shares shall be deemed to be Persons
making All Cash Elections notwithstanding, and in lieu of, any election they
have or have not made.
Section 1.5 Exchange of Certificates.
(a) As of the Effective Time, Buyer shall (i) deposit, or cause to be
deposited with (A) the Exchange Agent for the benefit of holders of shares of
Common Stock Equivalents, cash to the extent it constitutes Merger
Consideration and (B) pursuant to the terms of the Deposit Agreement (as
defined below), the Custodian (as defined in the Deposit Agreement)
certificates representing the Buyer Preferred Stock underlying the Buyer Shares
to the extent they constitute Merger Consideration and (ii) pursuant to the
terms of the Deposit Agreement, instruct the Depositary to deposit the Buyer
Shares to be issued in the Merger with the Exchange Agent for the benefit of
the holders of shares of Common Stock Equivalents for exchange in the Merger.
For purposes of this Agreement, "Depositary" shall mean Citibank, N.A., as
Depositary, pursuant to the Amended and Restated Deposit Agreement, dated as of
December 3, 1996, among Buyer, the Depositary and the holders from time to time
of Buyer Shares (the "Deposit Agreement"). In addition, Buyer shall make
available to the Exchange Agent on a daily basis sufficient cash to permit
prompt payment to all Holders entitled to receive the Merger Consideration in
the form of cash. The Buyer shall pay or cause one of its affiliates to pay,
any transfer taxes and all other charges and fees (including all fees for the
depositary, registry or custodian for the ADRs).
(b) As of or promptly following the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail (and to make available for
collection by hand) to each holder of record of a certificate or certificates,
which immediately prior to the Effective Time represented outstanding shares of
Common Stock Equivalents (the "Certificates") (other than in the case of the
Forward Merger those who had not previously properly delivered their
Certificates to the Exchange Agent along with a Form of Election), (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent and which shall be in the form and have
such other provisions as Buyer and the Company may reasonably specify) and (ii)
instructions for use in
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effecting the surrender of the Certificates in exchange for (A) a certificate
or certificates representing that number of whole Buyer Shares, if any, into
which the number of shares of Common Stock Equivalents previously represented
by such Certificate shall have been converted pursuant to this Agreement and
(B) the amount of cash, if any, into which all or a portion of the number of
shares of Common Stock Equivalents previously represented by such Certificate
shall have been converted pursuant to this Agreement (which instructions shall
provide that at the election of the surrendering holder, Certificates may be
surrendered, and the Merger Consideration in exchange therefor collected, by
hand delivery). Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with a letter of transmittal duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each share of Common Stock Equivalents formerly represented
by such Certificate, to be mailed (or made available for collection by hand if
so elected by the surrendering holder) within five business days following the
later to occur of (i) the Effective Time or (ii) the Exchange Agent's receipt
of such Certificates, and the Certificate so surrendered shall be forthwith
cancelled. The Exchange Agent shall accept such Certificates upon compliance
with such reasonable terms and conditions as the Exchange Agent may impose to
effect an orderly exchange thereof in accordance with normal exchange
practices. No interest shall be paid or accrued for the benefit of holders of
the Certificates on the Merger Consideration (or the cash pursuant to
subsections (c) and (d) below) payable upon the surrender of the Certificates.
(c) Buyer may retain any dividends or other distributions with respect to
Buyer Shares with a record date on or after the Effective Time in respect of
the holder of any unsurrendered Certificate with respect to the Buyer Shares
represented thereby by reason of the conversion of shares of Common Stock
Equivalents pursuant to Sections 1.2(b), 1.3 and 1.4 hereof and no cash payment
in lieu of fractional Buyer Shares shall be paid to any such holder pursuant to
Section 1.5(d) hereof until such Certificate is surrendered in accordance with
this Article I. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be released and paid, without interest, to
the Person in whose name the Buyer Shares representing such securities are
registered (i) at the time of such surrender or as promptly as practicable
after the sale of the Excess Buyer Shares (as defined in Section 1.5(d)
hereof), the amount of any cash payable in lieu of fractional Buyer Shares to
which such holder is entitled pursuant to Section 1.5(d) hereof and the
proportionate amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to the Buyer Shares
issued upon conversion of Common Stock Equivalents, and (ii) at the appropriate
payment date or as promptly as practicable thereafter, the proportionate amount
of dividends or other distributions with a record date after the Effective Time
but prior to such surrender and a payment date subsequent to such surrender
payable with respect to such Buyer Shares.
(d) Notwithstanding any other provision of this Agreement, no fraction of a
Buyer Share will be issued and no dividend or other distribution, stock split
or interest with respect to Buyer Shares shall relate to any fractional Buyer
Share, and such fractional interest shall not entitle the owner thereof to vote
or to any rights as a security holder of the Buyer Shares. In lieu of any such
fractional security, each holder of shares of Common Stock Equivalents
otherwise entitled to a fraction of a Buyer Share will be entitled to receive
in accordance with the provisions of this Section 1.5 from the Exchange Agent a
cash payment representing such holder's proportionate interest in the net
proceeds from the sale by the Exchange Agent on behalf of all such holders of
the aggregate of the fractions of Buyer Shares which would otherwise be issued
(the "Excess Buyer Shares"). The sale of the Excess Buyer Shares by the
Exchange Agent shall be executed on the NYSE through one or more member firms
of the NYSE and shall be executed in round lots to the extent practicable.
Until the net proceeds of such sale or sales have been distributed to the
holders of shares of Common Stock Equivalents, the Exchange Agent will, subject
to Section 1.5(e) hereof, hold such proceeds in trust for the holders of such
shares (the "Buyer Shares Trust"). Subject to its right to withhold for taxes
as described in Section 1.6 hereof, the Surviving Corporation shall pay all
commissions, transfer taxes (other than those transfer taxes for which the
Company's former stockholders are solely liable) and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent incurred in connection with such sale of the Excess Buyer Shares. As soon
as practicable after the determination of the amount of cash, if any, to be
paid to holders of
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shares of Common Stock Equivalents in lieu of any fractional Buyer Share
interests, the Exchange Agent shall make available such amounts to such holders
of shares of Common Stock Equivalents without interest.
(e) Any portion of the Merger Consideration deposited with the Exchange
Agent pursuant to this Section 1.5 (the "Exchange Fund") which remains
undistributed to the holders of the Certificates for six months after the
Effective Time shall be delivered to Buyer, upon demand, and any holders of
shares of Common Stock Equivalents prior to the Merger who have not theretofore
complied with this Article I shall thereafter look for payment of their claim,
as general creditors thereof, only to Buyer for their claim for (1) cash, if
any, without interest, (2) Buyer Shares, if any, (3) any cash without interest,
to be paid, in lieu of any fractional Buyer Shares and (4) any dividends or
other distributions with respect to Buyer Shares to which such holders may be
entitled. None of Buyer, Acquisition Sub, the Company, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect of
any Buyer Shares or cash held in the Exchange Fund (and any cash, dividends and
other distributions payable in respect thereof) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) None of Buyer, Acquisition Sub, the Company, the Surviving Corporation
or the Exchange Agent shall be liable to any Person in respect of any Buyer
Shares or cash held in the Exchange Fund (and any cash, dividends and other
distributions payable in respect thereof) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to one year after the
Effective Time (or immediately prior to such earlier date on which (i) any
cash, (ii) any Buyer Shares, (iii) any cash in lieu of fractional Buyer Shares
or (iv) any dividends or distributions with respect to Buyer Shares in respect
of such Certificate would otherwise escheat to or become the property of any
Governmental Authority (as defined in Section 9.3 hereof)), any such Buyer
Shares, cash, dividends or distributions in respect of such Certificate shall,
to the extent permitted by applicable law, become the property of Buyer, free
and clear of all claims or interest of any Person previously entitled thereto.
(g) The Exchange Agent shall invest any cash included in the Exchange Fund,
as directed by Buyer on a daily basis. Any interest and any other income
resulting from such investments shall be paid to Buyer. Nothing contained in
this Section 1.5(g) shall relieve Buyer or the Exchange Agent from making the
payments required by this Article I to be made to the holders of shares of
Common Stock Equivalents.
Section 1.6 Transfer Taxes; Withholding. If any certificate for a Buyer
Share is to be issued to, or cash is to be remitted to, a Person who holds
shares of Common Stock Equivalents (other than the Person in whose name the
Certificate surrendered in exchange therefor is registered), it shall be a
condition of such exchange that the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the Person
requesting such exchange shall (i) pay to the Exchange Agent any transfer or
other Taxes (as defined in Section 3.14 hereof) required by reason of the
payment of the Merger Consideration to a Person other than the registered
holder of the Certificate so surrendered, or (ii) establish to the satisfaction
of the Exchange Agent that such Tax either has been paid or is not applicable.
Buyer or the Exchange Agent shall be entitled to deduct and withhold from the
Buyer Shares (or cash in lieu of fractional Buyer Shares) otherwise payable
pursuant to this Agreement to any holder of shares of Common Stock Equivalents
such amounts as Buyer or the Exchange Agent are required to deduct and withhold
under the Code, or any provision of state, local or foreign Tax law, with
respect to the making of such payment. To the extent that amounts are so
withheld by Buyer or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of shares
of Common Stock Equivalents in respect of whom such deduction and withholding
was made by Buyer or the Exchange Agent.
Section 1.7 Stock Options and Other Stock.
(a) Prior to the Effective Time, Buyer and the Company shall take such
action as may be necessary (including, without limitation, enacting such
amendments, if any, to the Company Stock Plans (as hereinafter defined) as
necessary to comply with the requirements of the Australian Stock Exchange
("ASX") or Australian Law; provided, however, that any such amendments shall
not affect in any respect the number of Buyer Shares issuable upon exercise of
Substituted Options (as defined below) or the exercise price thereof) to
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cause each unexpired and unexercised option to purchase shares of Common Stock
which is outstanding immediately prior to the Effective Time (collectively,
"Company Options"), to be automatically converted at the Effective Time into an
option (collectively, a "Substituted Option") to purchase a number of Buyer
Shares equal to the number of shares of Common Stock that could have been
purchased under such Company Option multiplied by the Exchange Ratio in the
case of the Forward Merger and by the product of one and two-thirds and the
Reverse Merger Exchange Ratio in the case of the Reverse Merger (in each case,
rounded to the nearest whole number of Buyer Shares) at a price per Buyer Share
equal to the per-share option exercise price specified in the Company Option
divided by the Exchange Ratio in the case of the Forward Merger and by the
product of one and two-thirds and the Reverse Merger Exchange Ratio in the case
of the Reverse Merger (in each case, rounded down to the nearest whole cent).
Except as otherwise provided in this Agreement, such Substituted Option shall
otherwise be subject to the same terms and conditions as were applicable to
such Company Option, except as mandated by the requirements of the ASX or
Australian Law; provided, however that clarification of the terms of the
Substitute Options shall be made so as to make clear that, to the extent
permitted by applicable law (without the need for obtaining additional Buyer
shareholder approval), the optionee may use shares of capital stock of Buyer
that have been held for six months by the option holder (including any period
prior to the Effective Time during which such stock was stock of the Company)
as payment of the exercise price thereof and in respect of the legally required
withholding obligation. The date of the grant of the Substituted Option shall
be the date on which the corresponding Company Option was granted and at the
Effective Time all references in the related stock option agreements to the
Company shall be deemed to refer to Buyer. Except as otherwise provided herein
or in the applicable plan or program, employee deferrals and all other equity
based compensation that reference Common Stock will, as of and after the
Effective Time, be deemed to refer to Buyer Shares (as adjusted to reflect the
Exchange Ratio or one and two-thirds multiplied by the Reverse Merger Exchange
Ratio, as applicable). The adjustments provided for herein with respect to any
options which are "incentive stock options" (as defined in Section 422 of the
Code) shall be effected in a manner consistent with the requirements of Section
424(a) of the Code. Nothing contained herein shall alter or affect any
provision providing for the accelerated vesting of Company Options in the event
of a termination of employment following a "change in control" of the Company
contained in any severance plans or employment agreements of the Company in
effect as of the date hereof (or as may be amended pursuant to Section 6.12(e)
and Section 6.12(e) of the Company Disclosure Schedule), as such terms are set
forth in such plans or agreements, and Buyer agrees not to amend such
provisions of any such plans following the Closing.
(b) Buyer shall take such corporate action as may be necessary or
appropriate within two (2) business days following the Effective Time, file
with the SEC a registration statement on Form S-8 (or any successor or other
appropriate form) with respect to the Buyer Shares subject to the Substituted
Options to the extent such registration is required under applicable law in
order for such Buyer Shares to be sold without restriction in the United
States, and Buyer shall use its reasonable best efforts to obtain and maintain
the effectiveness of such registration statement for so long as such
Substituted Options remain outstanding. Buyer shall promptly prepare and submit
to the NYSE applications covering the Buyer Shares subject to the Substituted
Options and use commercially reasonable efforts to cause such securities to be
approved for listing on the NYSE prior to the Effective Time, subject to
official notice of issuance, and within ten days after the Effective Time,
prepare and submit to the ASX, pursuant to the applicable listing rules of the
ASX, applications covering the Buyer Preferred Stock underlying the Buyer
Shares to be issued upon the exercise of Substituted Options.
(c) Prior to the Effective Time, Buyer and the Company shall take all steps
reasonably necessary to cause the transactions contemplated hereby and any
other dispositions of equity securities of the Company (including derivative
securities) or acquisitions of Buyer equity securities (including derivative
securities) in connection with this Agreement by each individual who (a) is a
director or officer of the Company or (b) at the Effective Time, will become a
director or officer of Buyer, to be exempt under Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") to the
extent Section 16 of the Exchange Act is applicable to such person.
(d) At the time that a Substituted Option is exercised in accordance with
the terms hereof, Buyer shall, pursuant to the terms of the Deposit Agreement,
(x) deposit with the Custodian the shares of Buyer Preferred
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Stock underlying the Buyer Shares to be issued upon such exercise and (y)
instruct the Depositary to deliver the Buyer Shares to be issued upon such
exercise in accordance with the written instructions of the holder of such
Substituted Option so exercised.
Section 1.8 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration to which the holder thereof is entitled
pursuant to this Article I.
Section 1.9 Dissenting Shares. Notwithstanding Sections 1.2 and 1.4 hereof,
to the extent that holders thereof are entitled to appraisal rights under
Section 262 of Delaware Law, shares of Common Stock Equivalents issued and
outstanding immediately prior to the Effective Time and held by a holder who
has properly exercised and perfected his or her demand for appraisal rights
under Section 262 of Delaware Law (the "Dissenting Shares"), shall not be
converted into the right to receive the Merger Consideration, but the holders
of Dissenting Shares shall be entitled to receive such consideration as shall
be determined pursuant to Section 262 of Delaware Law; provided, however, that
if any such holder shall have failed to perfect or shall have effectively
withdrawn or lost his or her right to appraisal and payment under Delaware Law,
such holder's shares of Common Stock Equivalents shall thereupon be deemed to
have been converted as of the Effective Time into the right to receive the
Merger Consideration, without any interest thereon, and such shares shall not
be deemed to be Dissenting Shares. Any payments required to be made with
respect to the Dissenting Shares shall be made by Buyer (and not the Company or
Acquisition Sub).
Section 1.10 Merger Closing. Subject to the satisfaction or, if permissible,
waiver of the conditions set forth in Article VII hereof, the closing of the
Merger (the "Closing") will take place at 9:00 a.m., New York City time, on a
date determined in accordance with, in the case of the Forward Merger, the
third sentence of Section 1.3(c) hereof and, in the case of the Reverse Merger,
the proviso of the third sentence of Section 1.3(c) hereof, and in each case at
the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New
York, New York, unless another time, date or place is agreed to in writing by
the parties hereto (such date being the "Closing Date").
ARTICLE II
The Surviving Corporation
Section 2.1 Certificate of Incorporation. The certificate of incorporation
of Acquisition Sub in the case of the Forward Merger and the certificate of
incorporation of the Company in the case of the Reverse Merger, in each case as
in effect immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended in
accordance with applicable law; provided, however, in the case of the Reverse
Merger, the certificate of incorporation of the Company shall be amended at the
Effective Time to read in its entirety as the certificate of incorporation of
Acquisition Sub, as in effect immediately prior to the Effective Time, then
reads.
Section 2.2 By-laws. The By-laws of Acquisition Sub in effect at the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter amended in accordance with applicable law, the articles of formation
of such entity and the By-laws of such entity.
Section 2.3 Officers and Board of Directors.
(a) From and after the Effective Time, the officers of the Acquisition Sub
at the Effective Time shall be the officers of the Surviving Corporation, until
their respective successors are duly elected or appointed and qualified in
accordance with applicable law.
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(b) The Board of Directors of the Surviving Corporation effective as of, and
immediately following, the Effective Time shall consist of the members of the
Board of Directors of Acquisition Sub immediately prior to the Effective Time.
ARTICLE III
Representations and Warranties of the Company
Except (i) as disclosed in the report on Form 10-K dated March 30, 2000 for
the year ended December 31, 1999, the reports on Form 10-Q and Form 8-K since
December 31, 1999 or the proxy statement dated April 5, 2000, in each case in
the form filed by the Company with the SEC prior to the date of this Agreement
or in such similar forms filed by the Company's subsidiaries for such periods
or, to the extent it is readily apparent that such disclosure would be
applicable hereto, in the disclosure schedules to the BHC Merger Agreement or
the UTV Merger Agreement, (ii) as disclosed in a separate disclosure schedule
which has been delivered by the Company to Buyer prior to the execution of this
Agreement (the "Company Disclosure Schedule") (each section of which qualifies
the correspondingly numbered representation and warranty or covenant to the
extent specified therein and such other representations and warranties or
covenants to the extent a matter in such section is disclosed in such a way as
to make its relevance to the information called for by such other
representation and warranty or covenant readily apparent) and (iii) (other than
with respect to the representations of the Company set forth in Section 3.12(a)
hereof, as to which this clause (iii) shall not be applicable) for the
litigations and administrative proceedings set forth in Section 3.0 of the
Company Disclosure Schedule (including claims made in relation thereto, the
subject matter thereof and claims arising with respect thereto) and for any
actions or omissions or alleged actions or omissions relating to or arising
from environmental liabilities that are the subject matter of the litigations
and administrative proceedings set forth in such Section 3.0 (including claims
made in relation thereto, the subject matter thereof and claims arising with
respect thereto) by (A) Montrose Chemical Corporation of California or (B) the
Company (including its predecessors in interest, including, without limitation,
Montrose Chemical Company and Baldwin-Montrose Chemical Company, Inc.)
("Excluded Matters"), the Company hereby represents and warrants to Buyer:
Section 3.1 Organization and Qualification; Subsidiaries.
(a) Each of the Company and its subsidiaries is a corporation or entity duly
incorporated or formed, validly existing and in good standing under the laws of
its jurisdiction of incorporation or formation and has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Company Material Adverse Effect (as defined below). Each of the Company and its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing as would not, individually or in
the aggregate, have a Company Material Adverse Effect. The term "Company
Material Adverse Effect" means any change, effect or circumstance that is or is
reasonably likely to be materially adverse to the business, operations, results
of operations or financial condition of the Company and its subsidiaries taken
as a whole, other than any change, effect or circumstance relating to or
resulting from (i) general changes in the television broadcasting industry,
(ii) changes in general economic conditions or securities markets in general,
or (iii) this Agreement or the transactions contemplated hereby or the
announcement thereof.
(b) Other than with respect to Montrose Chemical Corporation of California
(in which the Company owns a 50% equity interest and which is therefore not a
subsidiary of the Company) and BHC and UTV (the capitalizations of which are
described in Section 3.22 hereof) and their subsidiaries, all the outstanding
shares of capital stock or other equity or voting interests of each subsidiary
of the Company are owned by the Company, by another wholly owned subsidiary of
the Company or by the Company and another wholly owned
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subsidiary of the Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"), and are duly authorized, validly issued, fully paid
and nonassessable. Except as set forth above or in Section 3.1(b) of the
Company Disclosure Schedule and except for the capital stock of, or other
equity or voting interests in, its subsidiaries, the Company does not own,
directly or indirectly, any capital stock of, or other equity or voting
interests in, any corporation, partnership, joint venture, association or other
entity.
Section 3.2 Restated Certificate of Incorporation and By-Laws. The Company
has made available to Buyer a complete and correct copy of the Restated
Certificate of Incorporation and the By-laws, each as amended to date, of the
Company. The Restated Certificate of Incorporation and By-laws (or equivalent
organizational documents) of the Company and its subsidiaries are in full force
and effect. None of the Company or its subsidiaries is in material violation of
any provision of its Restated Certificate of Incorporation or By-laws (or
equivalent organizational documents).
Section 3.3 Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock, 50,000,000 shares of Class B
Common Stock, 73,399 shares of Prior Preferred Stock, no par value per share
(the "Prior Preferred Stock"), 233,668 shares of Convertible Preferred Stock
and 10,000,000 shares, par value $1.00 per share, of preferred stock (the
"Preferred Stock"). As of the close of business on June 30, 2000, (i)
26,904,118 shares of Common Stock (excluding treasury shares) were issued and
outstanding, (ii) no shares of Common Stock were held by the Company in its
treasury, (iii) 5,033,732 shares of Common Stock were reserved for issuance
pursuant to the Company 1999 Management Incentive Plan, the Company 1994
Management Incentive Plan and the Company 1994 Director Stock Option Plan (such
plans, collectively, the "Company Stock Plans") (of which 3,693,992 shares were
subject to outstanding Company Options ), (iv) 8,395,525 shares of Common Stock
were reserved for issuance upon conversion of the Convertible Preferred Stock,
including shares of Class B Common Stock, (v) 8,013,860 shares of Common Stock
were reserved for issuance upon conversion of the Class B Common Stock, (vi)
8,013,860 shares of Class B Common Stock (excluding treasury shares) were
issued and outstanding, (vii) no shares of Class B Common Stock were held by
the Company in its treasury, (viii) no shares of Class B Common Stock were
reserved for issuance pursuant to the Company Stock Plans, (ix) 73,399 shares
of Prior Preferred Stock (excluding treasury shares) were issued and
outstanding, (x) no shares of Prior Preferred Stock were held by the Company in
its treasury, (xi) 233,668 shares of Convertible Preferred Stock (excluding
treasury shares) were issued and outstanding and (xii) no shares of Convertible
Preferred Stock were held by the Company in its treasury and (xiii) no shares
of Preferred Stock were issued and outstanding or were held by the Company in
its treasury. The redemption price of the Prior Preferred Stock is $25.00 per
share plus accrued dividends for the period through and including September 30,
2000 in the amount of $0.25 per share. There are no outstanding stock
appreciation rights or other rights that are linked to the price of Common
Stock granted under any Company Stock Plan that were not granted in tandem with
a related Company Option. No shares of Common Stock or Class B Common Stock or
any other class of capital stock are owned by any subsidiary of the Company.
The Company has delivered to Buyer a true and complete list, as of June 30,
2000, of all outstanding options to purchase Common Stock granted under the
Company Stock Plans and all other rights, if any, to purchase or receive Common
Stock granted under the Company Stock Plans, the number of shares subject to
each such Company Option, the grant dates and exercise prices of each such
Company Option and the names of the holder thereof. As of the date hereof, all
outstanding Company Options have an exercise price on a per share basis lower
than $85, and the weighted average exercise price of such Company Options was
equal to $45.96. Except as set forth above and for the exercise of Company
Options since June 30, 2000, as of the date of this Agreement, no shares of
capital stock of, or other equity or voting interests in, the Company, or
options, warrants or other rights to acquire any such stock or securities were
issued, reserved for issuance or outstanding. During the period from June 30,
2000 to the date of this Agreement, (x) there have been no issuances by the
Company of shares of capital stock of, or other equity or voting interests in,
the Company other than (i) issuances of shares of Common Stock pursuant to the
exercise of Company Options outstanding on such date, (ii) the issuance of
shares of Common Stock and Class B Common Stock issued upon conversion of
shares of Convertible Preferred Stock and (iii) the issuance of shares of
Common Stock issued in exchange
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for shares of Class B Common Stock and (y) there have been no issuances by the
Company of options, warrants or other rights to acquire shares of capital stock
of, or other equity or voting interests in, the Company. All outstanding shares
of capital stock of the Company are, and all shares that may be issued pursuant
to the Company Stock Plans will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no bonds, debentures, notes or other
indebtedness for borrowed money of the Company or any of its subsidiaries, and,
except as disclosed in this Section 3.3, no securities or other instruments or
obligations of the Company or any of its subsidiaries the value of which is in
any way based upon or derived from any capital or voting stock of the Company,
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the Company
may vote. Except as set forth above and except as specifically permitted under
Section 5.1, there are no contracts of any kind to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
is bound obligating the Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of, or other equity or voting interests in, or securities convertible
into, or exchangeable or exercisable for, shares of capital stock of, or other
equity or voting interests in, the Company or any of its subsidiaries (other
than BHC, UTV and their respective subsidiaries) or obligating the Company or
any of its subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right or contract. Except for the redemption
of the Prior Preferred Stock contemplated by this Agreement, there are not any
outstanding contractual obligations of the Company or any of its subsidiaries
to (i) repurchase, redeem or otherwise acquire any shares of capital stock of,
or other equity or voting interests in, the Company or any of its subsidiaries
(other than BHC, UTV and their respective subsidiaries) or (ii) vote or dispose
of any shares of the capital stock of, or other equity or voting interests in,
any of its subsidiaries (other than BHC, UTV and their respective
subsidiaries). To the knowledge of the Company, as of the date of this
Agreement, there are no irrevocable proxies and no voting agreements with
respect to any shares of the capital stock or other voting securities of the
Company or any of its subsidiaries.
Section 3.4 Authority Relative to Agreement. The Company has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Merger and the other transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the Merger and the other
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
the Company are necessary to authorize the execution and delivery of this
Agreement or to consummate the Merger and the other transactions contemplated
hereby (other than, with respect to the Merger, the adoption of this Agreement
by the affirmative vote of a majority of the votes entitled to be cast by
stockholders (including the holders of the Convertible Preferred Stock) at the
Stockholders' Meeting (as defined in Section 6.2 hereof), voting together as a
single class, and the adoption of this Agreement by the affirmative vote of a
majority of the votes entitled to be cast by holders of the Convertible
Preferred Stock at the Stockholders' Meeting, voting as a separate class (after
giving effect to the redemption of the Prior Preferred Stock required pursuant
to Section 5.2 hereof)). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Buyer, this Agreement constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
Section 3.5 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 3.5 of the Company Disclosure Schedule,
the execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby by the Company and its subsidiaries will not,
(i) conflict with or violate the Restated Certificate of Incorporation or By-
Laws (or equivalent organizational documents) of (A) the Company or (B) any of
its subsidiaries, (ii) assuming the consents, approvals and authorizations
specified in Section 3.5(b) have been received and the waiting periods referred
to therein have expired, and any condition precedent to such consent, approval,
authorization, or waiver has been satisfied, conflict with or violate any
domestic (Federal, state or local) or foreign law, rule, regulation, order,
judgment or
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decree (collectively, "Laws") applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration, or cancellation of, or result in the creation of a
lien or other encumbrance on any property or asset of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture or credit
agreement, or any other contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any property or asset of the Company or any of its subsidiaries is bound or
affected, except, in the case of clauses (ii) and (iii) above, for any such
conflicts, violations, breaches, defaults or other occurrences of the type
referred to above which would not, individually or in the aggregate, have a
Company Material Adverse Effect and would not prevent or materially delay the
consummation of the Merger or the Subsidiary Mergers; provided, however, that
for purposes of this Section 3.5(a), the definition of "Company Material
Adverse Effect" shall be read so as not to include clause (iii) thereof.
(b) Except as set forth in Section 3.5 of the Company Disclosure Schedule,
the execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company and the consummation of the Merger
and the other transactions contemplated hereby by the Company and its
subsidiaries will not, require any consent, approval, authorization, waiver or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic, foreign or supranational, except for applicable
requirements of the Exchange Act, the Securities Act of 1933, as amended (the
"Securities Act"), state securities or "blue sky" laws ("Blue Sky Laws"), the
pre-merger notification arrangements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), any filings and approvals and waivers of the Federal
Communications Commission or any successor entity (the "FCC") as may be
required under the Communications Act of 1934, as amended, and the rules,
regulations and published orders of the FCC thereunder (collectively, the
"Communications Act"), filing and recordation of appropriate merger documents
as required by Delaware Law and the rules of the NYSE and except where failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate, have a
Company Material Adverse Effect and would not prevent or materially delay the
consummation of the Merger or the Subsidiary Mergers; provided, however, that
for purposes of this Section 3.5(b), the definition of "Company Material
Adverse Effect" shall be read so as not to include clause (iii) thereof.
Section 3.6 Permits and Licenses; Contracts; Compliance with Laws.
(a) Each of the Company and its subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders necessary for the
Company or any of its subsidiaries to own, lease and operate the properties of
the Company and its subsidiaries or to carry on its business as it is now being
conducted and contemplated to be conducted (the "Company Permits"), and no
suspension or cancellation of any of the Company Permits is pending or, to the
knowledge of the Company, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Company Permits would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Except as set forth in Section 3.6(a) of the Company Disclosure Schedule, none
of the Company or any of its subsidiaries is in conflict with, or in default or
violation of, (i) any Laws applicable to the Company or any of its subsidiaries
or by which any property or asset of the Company or any of its subsidiaries is
bound or affected, (ii) any of the Company Permits or (iii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or any property
or asset of the Company or any of its subsidiaries is bound or affected, except
for any such conflicts, defaults or violations that would not, individually or
in the aggregate, have a Company Material Adverse Effect.
(b) Except as set forth in Section 3.6(b) of the Company Disclosure
Schedule, none of the Company or any of its subsidiaries is a party to, or to
the knowledge of the Company is bound by, any contract or
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agreement that contains a covenant restricting the ability of the Company or
any of its subsidiaries or, after the Effective Time, could restrict the
ability of Buyer or any of its subsidiaries or affiliates, to compete in any
line of business or with any person or engage in any business in any geographic
area.
(c) The Company and its subsidiaries have operated their respective
television stations and associated facilities (the "Company Stations"), in
compliance with the terms of the Company Permits issued by the FCC to the
Company and its subsidiaries ("Company FCC Licenses"), and in compliance with
the Communications Act, and the Company and its subsidiaries have timely filed
or made all applications, reports and other disclosures required by the FCC to
be filed or made with respect to the Company Stations and have timely paid all
FCC regulatory fees with respect thereto, in each case except as, individually
or in the aggregate, (i) as of the date of this Agreement, would not materially
adversely affect the operation of any of the broadcasting facilities of the
Company subsidiaries' New York, Los Angeles, San Francisco or Minneapolis
television stations and would not have a Company Material Adverse Effect and
(ii) would not result in the loss of the Company subsidiaries' main station
license issued by the FCC with respect to any of the Company's New York, Los
Angeles, San Francisco or Minneapolis television stations and would not have a
Company Material Adverse Effect. (i) There is not, as of the date of this
Agreement, pending or, to the Company's knowledge, threatened before the FCC
any material proceeding, notice of violation, order of forfeiture or complaint
or, to the knowledge of the Company, investigation against the Company or any
of its subsidiaries, relating to any of the Company Stations or FCC regulated
services conducted by the Company or any of its subsidiaries and (ii) there is
not pending or, to the Company's knowledge, threatened before the FCC any
proceeding, notice of violation, order of forfeiture or complaint or, to the
knowledge of the Company, investigation against the Company or any of its
subsidiaries, relating to any of the Company Stations or FCC regulated services
conducted by the Company or any of its subsidiaries, except for any such
proceedings, notices, orders, complaints or investigations that would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(d) Except as disclosed in Section 3.6(d) of the Company Disclosure
Schedule, as of the date of this Agreement, there are no contracts or
agreements that are material to the business, properties, assets, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries taken as a whole. Neither the Company nor any of its subsidiaries
is in violation or default of, nor has the Company or, to the knowledge of the
Company, any subsidiary or affiliate thereof received written notice from any
third party alleging that the Company or any of its subsidiaries is in
violation of or in default under, nor, to the knowledge of the Company, does
there exist any condition which upon the passage of time or the giving of
notice would cause such a violation of or default under any loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties
or assets is bound, except for any such violations or defaults which would not,
individually or in the aggregate, have a Company Material Adverse Effect and
would not prevent or materially delay the consummation of the Merger or the
Subsidiary Mergers.
(e) Set forth in Section 3.6(e) of the Company Disclosure Schedule is a
list, as of the date of this Agreement, of all (i) network affiliation
agreements, (ii) employment agreements involving payments in excess of $100,000
per annum or $300,000 in the aggregate, (iii) talent agreements involving
payments in excess of $250,000 per annum or $500,000 in the aggregate, (iv)
program or film syndication or license agreements requiring remaining payments
after the date hereof of more than $500,000 per annum or $2,500,000 in the
aggregate or, in the case of barter agreements, having a term ending more than
one year from the date hereof, (v) retransmission consent agreements entered
into with any direct satellite providers and each of the top 10 (ranked by
number of subscribers) multiple system operators, and (vi) agreements licensing
or creating any obligations with respect to the current or future use of the
digital data stream of any digital television ("DTV") station owned or to be
constructed by the Company or any of its subsidiaries that would be in effect
following the Effective Time, to which, in each case, the Company or any of its
subsidiaries is a party, and the Company has made available to Buyer true and
complete copies of the agreements described in this Section 3.6(e). Also set
forth in Section 3.6(e) of the Company Disclosure Schedule are the most recent
syndicated program and feature film inventory reports for each of the Company
Stations.
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(f) Section 3.6(f) of the Company Disclosure Schedules sets forth a list, as
of the date of this Agreement, of all material licenses and construction
permits held by the Company with respect to the construction and operation of
DTV stations in each of the markets in which the Company and its subsidiaries
operate broadcast television stations (the "DTV Stations"). Except as set forth
in Section 3.6(f) of the Company Disclosure Schedule, to the knowledge of the
Company, there are no facts or circumstances existing as of the date of this
Agreement that would prevent the construction and operation of the DTV Stations
by the relevant deadline established by the FCC.
(g) Set forth in Section 3.6(g) of the Company Disclosure Schedule is a list
of all attributable interests, as defined at Note 2 to 47 C.F.R. Section
73.3555, of the Company and its subsidiaries in any broadcast radio or
television station, daily English-language newspaper or cable television
system.
Section 3.7 SEC Reports. The Company, BHC and UTV have filed with the SEC,
and have heretofore made available to Buyer true and complete copies of, all
forms, reports, schedules, statements and other documents required to be filed
with the SEC by the Company, BHC and UTV since January 1, 1997 (together with
all information incorporated therein by reference, the "Company SEC Reports").
Except for BHC and UTV, no subsidiary of the Company is required to file any
form, report, schedule, statement or other document with the SEC. As of their
respective dates, the Company SEC Reports complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Reports, and none of the Company SEC Reports at
the time they were filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements (including the related
notes) included in the Company SEC Reports comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with U.S. generally accepted accounting principles ("GAAP") (except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of the Company, BHC and UTV and their respective
consolidated subsidiaries as of the dates thereof and their respective
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and recurring year-end
audit adjustments). Except as and to the extent set forth in Section 3.7 of the
Company Disclosure Schedule, the Company and its subsidiaries do not have any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise) other than liabilities and obligations which would not, individually
or in the aggregate, have a Company Material Adverse Effect.
Section 3.8 Absence of Certain Changes or Events. Since December 31, 1999,
except as contemplated by this Agreement, there has not been any change, event
or circumstance which, when taken individually or together with all other
changes, events or circumstances, has had or would have a Company Material
Adverse Effect, including, to the extent covered by the definition of such term
set forth in Section 3.1 hereof, any adverse effect on the Company's investment
in BHC or BHC's investment in UTV, and (b) since December 31, 1999 to the date
of this Agreement, (i) each of the Company and its subsidiaries has conducted
its businesses only in the ordinary course and in a manner consistent with past
practice and (ii) there has not been (A) any material change by the Company or
any of its subsidiaries in its material accounting policies, practices and
procedures, (B) any entry by the Company or any of its subsidiaries into any
commitment or transaction material to the Company and its subsidiaries taken as
a whole other than in the ordinary course of business consistent with past
practice, (C) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any of its
subsidiaries (other than cash dividends payable by any wholly owned subsidiary
to another subsidiary or the Company or regular cash dividends on the
Convertible Preferred Stock or Prior Preferred Stock or the UTV regular annual
cash dividend paid in April 2000 or the BHC special dividend which was paid in
January 2000), (D) any increase in the compensation payable or to become
payable to any corporate officers or heads of divisions of the Company or any
of its
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subsidiaries, except in the ordinary course of business consistent with past
practice, or (E) any action, event, occurrence or transaction that would have
been prohibited by Section 5.1 hereof if this Agreement had been in effect
since December 31, 1999.
Section 3.9 Absence of Litigation. Except as disclosed in Section 3.9 of the
Company Disclosure Schedule, there is no claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or any property or asset of the Company
or any of its subsidiaries, before any court, arbitrator or Governmental
Authority, in each case except as would not, individually or in the aggregate,
have a Company Material Adverse Effect. None of the Company, any of its
subsidiaries nor any property or asset of the Company or any of its
subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award imposed by any court, arbitration or Governmental
Authority, in each case except as would not, individually or in the aggregate,
have a Company Material Adverse Effect.
Section 3.10 Employee Benefit Plans.
(a) Section 3.10(a) of the Company Disclosure Schedule lists each employee
benefit plan, program, arrangement and contract (including, without limitation,
any "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and any
"multiemployer plans" within the meaning of Section 3(37) of ERISA
("Multiemployer Plans")), maintained, contributed or required to be contributed
to by the Company or any of its subsidiaries, or with respect to which the
Company or any of its subsidiaries could incur liability under Section 4069 of
ERISA (the "Company Benefit Plans"). No Company Benefit Plan has ever been or
is currently subject to or governed by the Laws of any jurisdiction other than
the United States or any State or Commonwealth of the United States. The
Company has provided to Buyer a true and correct copy of each of the following
documents, including any amendments thereto, with respect to each Company
Benefit Plan, other than Multiemployer Plans: (i) the most recent annual report
(Form 5500) filed with the Internal Revenue Service (the "IRS"), (ii) all plan
documents for such Company Benefit Plan, (iii) each trust agreement, insurance
contract or other funding vehicle relating to such Company Benefit Plan, (iv)
the most recent summary plan description for each Company Benefit Plan for
which a summary plan description is required, (v) the most recent actuarial
report or valuation relating to a Company Benefit Plan subject to Title IV of
ERISA, if any, and (vi) the most recent determination letter, if any, issued by
the IRS with respect to any Company Benefit Plan qualified under Section 401(a)
of the Code or voluntary employees' benefit association ("VEBA") qualified
under Section 501(c)(9) of the Code. Except as specifically provided in the
foregoing documents delivered to Buyer or except as otherwise contemplated by
this Agreement or except as disclosed in Section 3.10(a) of the Company
Disclosure Schedule, there are no amendments to any Company Benefit Plan that
have been adopted or approved nor has the Company or any of its subsidiaries
undertaken to make any such amendments or to adopt or approve any new Plan. The
Company will, promptly following the date of this Agreement, request a copy of
each Company Benefit Plan that is a multiemployer plan within the meaning of
Section 3(37) of ERISA from the trustees of such multiemployer plan and the
Company shall deliver such copy of the plan to Buyer promptly upon its receipt
thereof.
(b) Each Company Benefit Plan has been administered in accordance with its
terms and the terms of any applicable collective bargaining or other labor
union contract or agreement, and in compliance with applicable laws. The
Company and its subsidiaries have performed all obligations required to be
performed by them under, are not in any respect in default under or in
violation of, and have no knowledge of any default or violation by any party
to, any Company Benefit Plans, except for any defaults or violations which
would not, individually or in the aggregate, have a Company Material Adverse
Effect. With respect to the Company Benefit Plans, no event has occurred and no
condition or set of circumstances exists, in connection with which the Company
or any of its subsidiaries is subject to any liability under the terms of such
Company Benefit Plans, ERISA, the Code or any other applicable Law except as
would not, individually or in the aggregate, have a Company Material Adverse
Effect. No Company Benefit Plan (other than a Multiemployer Plan) is under
audit or investigation by any Governmental Authority nor has the Company or any
subsidiary been notified of any audit or investigation. Neither the Company nor
any member of the same "controlled group"
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(as defined in Section 414(b), (e), (m) or (o) of the Code or Section 4001 of
ERISA) as the Company or any of its subsidiaries (collectively, the "ERISA
Affiliates") has any actual or contingent liability under Title IV of ERISA
(other than the payment of premiums to the Pension Benefit Guaranty
Corporation), including, without limitation, any liability in connection with
(i) the termination or reorganization of any employee benefit plan subject to
Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or
Multiple Employer Plan (within the meaning of Section 4001(a)(3) and 4063,
respectively, of the Code), and no fact or event exists which is reasonably
likely to give rise to any such liability, in each case except as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(c) The Company has made available to Buyer: (i) copies of all employment
agreements with executive officers of the Company and its subsidiaries; (ii)
copies of all severance agreements, programs and policies of the Company or any
of its subsidiaries with or relating to its or its subsidiaries' employees; and
(iii) copies of all plans, programs, agreements and other arrangements of the
Company or any of its subsidiaries with or relating to its or its subsidiaries'
employees which contain change in control provisions. Except as disclosed in
Section 3.10(c) or Section 6.12(e) of the Company Disclosure Schedule, or
except as otherwise contemplated by this Agreement neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, "golden parachute" or
otherwise) becoming due to any director, officer or employee of the Company or
any of its subsidiaries from the Company or any of its affiliates under any
Company Benefit Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any Company Benefit Plan, (iii) result in any
acceleration of the time of payment or vesting of any material benefits, (iv)
result in a restriction on Buyer's ability to amend, modify or terminate any
plan, (v) trigger a requirement for funding or the acceleration of funding of
any material benefits, (vi) commence a period during which a subsequent
termination of employment by an employee of the Company will entitle such
employee to benefits in excess of what would otherwise have been required in
the absence of the transactions contemplated hereby or (vii) result in a
reportable event within the meaning of Section 4043(c) of ERISA for which a
notice requirement has not been waived. Except as contemplated hereby, or as
otherwise disclosed in Sections 3.10(c) or 6.12(e) of the Company Disclosure
Schedule, the Company has taken no action with respect to the Company Options
that would result in any acceleration of vesting of the Company Options in
connection with the execution and delivery of this Agreement or the
consummation of any transactions contemplated hereby or otherwise. Without
limiting the generality of the foregoing, except as set forth in Section
3.10(c) or Section 6.12(e) of the Company Disclosure Schedule, no amount paid
or payable by the Company to any employee of the Company or any of its
subsidiaries in connection with the transactions contemplated hereby (either
solely as a result thereof or as a result of such transactions in conjunction
with any other event) will be an "excess parachute payment" within the meaning
of Section 280G of the Code.
(d) Each Company Benefit Plan that is intended to be qualified under Section
401(a) of the Code or Section 401(k) of the Code has timely received a
favorable determination letter from the IRS covering all of the provisions
applicable to the Plan for which determination letters are currently available
that the Company Benefit Plan is so qualified and each trust established in
connection with any Company Benefit Plan which is intended to be exempt from
Federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event
has occurred since the date of such determination letter or letters from the
IRS which is reasonably likely to adversely affect the qualified status of any
such Company Benefit Plan or the exempt status of any such trust. Each Company
Benefit Plan that is a VEBA meets the requirements of Section 501(c)(9) of the
Code.
(e) Except as set forth in Section 3.10(e) of the Company Disclosure
Schedule, the Company and its subsidiaries have no liability for life, health,
medical or other welfare benefits to former officers, directors or employees or
beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA.
(f) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted, or to Company's knowledge, no set of
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circumstances exists which may reasonably give rise to a claim or lawsuit,
against the Company Benefit Plans, any fiduciaries thereof with respect to
their duties to the Plans or the assets of any of the trusts under any of the
Company Benefit Plans which could reasonably be expected to result in any
liability of the Company or any of the ERISA Affiliates to the Pension Benefit
Guaranty Corporation, the Department of Treasury, the Department of Labor, any
Multiemployer Plan, any Company Benefit Plan or any participant in a Company
Benefit Plan.
(g) The Company has taken reasonable steps to ensure that each individual
classified by the Company or any subsidiary as an independent contractor has
been properly classified as such.
Section 3.11 Labor Matters. There is no labor dispute, strike, work stoppage
or lockout, or, to the knowledge of the Company, threat thereof, by or with
respect to any employee of the Company or any of its subsidiaries, except where
such dispute, strike, work stoppage or lockout individually or in the aggregate
would not have a Company Material Adverse Effect. None of the Company or any of
its subsidiaries has breached or otherwise failed to comply with any provision
of any collective bargaining or other labor union contract applicable to any
employees of the Company or any of its subsidiaries and there are no grievances
or complaints outstanding or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries under any such contract except
for any breaches or failures to comply that, individually or in the aggregate,
would not have a Company Material Adverse Effect.
Section 3.12 Environmental Matters.
(a) Notwithstanding clause (iii) of the introductory paragraph to Article
III hereof, the Company represents and warrants to Buyer that prior to the date
of this Agreement none of the persons set forth on Section 3.12(a) of the
Company Disclosure Schedule have knowingly made to Buyer any materially false
statements with respect to any material fact relating to Excluded Matters;
provided, however, that the foregoing representation shall not apply to any
opinions, estimates, predictions, projections, valuations or matters of
judgment (collectively, "Opinions") made with respect to Excluded Matters,
except to the extent any such Opinion was made by such specified persons with
the willful intent to deceive Buyer.
(b) Except as would not, individually or in the aggregate, have a Company
Material Adverse Effect:
(A) the Company and its subsidiaries (i) are in compliance with all,
and, to the Company's knowledge, are not subject to any asserted liability
or liability (including liability with respect to current or former
subsidiaries or operations), in each case with respect to any Environmental
Laws (as defined below), (ii) hold or have applied for all Environmental
Permits (as defined below) and (iii) are in compliance with their
respective Environmental Permits;
(B) neither the Company nor any Company subsidiary has received any
written notice, demand, letter, claim or request for information alleging
that the Company or any of its subsidiaries or, to the Company's knowledge
as of the date of this Agreement, any of their predecessors in interest, is
or may be in violation of, or liable under, any Environmental Law;
(C) (i) neither the Company nor any of its subsidiaries has entered into
or agreed to any consent decree or order or is subject to any judgment,
decree or judicial order relating to compliance with Environmental Laws,
Environmental Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Materials (as
defined below) and, to the knowledge of the Company, no investigation,
litigation or other proceeding is pending or threatened in writing with
respect thereto, and (ii) neither the Company nor any of its subsidiaries
nor, to the knowledge of the Company as of the date of this Agreement, any
of their predecessors in interest, is an indemnitor in connection with any
threatened or asserted claim by any third-party indemnitee or is the
subject of a claim for personal injury or property damage for any liability
under any Environmental Law or relating to any Hazardous Materials; and
(D) none of the real property owned or leased by the Company or any of
its subsidiaries or, to the knowledge of the Company as of the date of this
Agreement, any of their predecessors in interest, is listed
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or, to the knowledge of the Company, proposed for listing on the "National
Priorities List" under CERCLA, as updated through the date hereof, or any
similar state or foreign list of sites requiring investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended as of the date
hereof.
"Environmental Laws" means any applicable federal, state, local or
foreign statute, law, ordinance, regulation, rule, code, treaty, writ
or order and any enforceable judicial or administrative interpretation
thereof, including any judicial or administrative order, consent
decree, judgment, stipulation, injunction, permit, authorization,
policy, opinion, or agency requirement, in each case having the force
and effect of law, relating to the pollution, protection, investigation
or restoration of the environment, health and safety or natural
resources, including those relating to the use, handling, presence,
transportation, treatment, storage, disposal, release, threatened
release or discharge of Hazardous Materials or noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons
or property or to the siting, construction, operation, closure and
post- closure care of waste disposal, handling and transfer facilities.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under any
Environmental Law.
"Hazardous Materials" means (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-
containing materials or polychlorinated biphenyls and (ii) any
chemical, material or other substance defined or regulated as toxic or
hazardous or as a pollutant or contaminant or waste under any
Environmental Law.
Section 3.13 Trademarks, Patents and Copyrights.
(a) Except as would not have a Company Material Adverse Effect, (i) the
Company and its subsidiaries own, or possess necessary or required licenses, to
be used in each case in the manner currently used, or other necessary or
required rights to use, all patents, patent rights, trademarks, trademark
rights, trade names, trade name rights, copyrights, domain names, service
marks, service mark rights, trade secrets, applications to register, and
registrations for, the foregoing trademarks, know-how and other proprietary
rights and information (the "Intellectual Property Rights") used in connection
with the business of the Company and its subsidiaries as currently conducted
(the "Company Intellectual Property Rights"), and (ii) neither the Company nor
any of its subsidiaries has received any written charge, complaint, claim,
demand or notice challenging the validity of any of the Company Intellectual
Property Rights.
(b) To the Company's knowledge, none of the Company or any of its
subsidiaries has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property Rights or other proprietary
information of any other Person, except for any such interference,
infringement, misappropriation or other conflict that, individually or in the
aggregate, would not have a Company Material Adverse Effect. None of the
Company or any of its subsidiaries has received any written charge, complaint,
claim, demand or notice alleging any such interference, infringement,
misappropriation or other conflict (including any claim that the Company or any
of its subsidiaries must license or refrain from using any Company Intellectual
Property Rights or other proprietary information of any other person) that has
not been settled or otherwise fully resolved, except for any such interference,
infringement, misappropriation or other conflict that, individually or in the
aggregate, would not have a Company Material Adverse Effect. To the Company's
knowledge, no other person has interfered with, infringed upon, misappropriated
or otherwise come into conflict with any Company Intellectual Property Rights,
except for any such interference, infringement, misappropriation or other
conflict that, individually or in the aggregate, would not have a Company
Material Adverse Effect.
Section 3.14 Taxes.
(a) For purposes of this Agreement, (i) "Tax" or "Taxes" means any and all
taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to tax and
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additional amounts imposed with respect thereto) imposed by any governmental or
taxing authority including, without limitation: taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value added, or gains taxes; license, registration and documentation fees; and
customs' duties, tariffs, and similar charges; and liability for the payment of
any of the foregoing as a result of (x) being a member of an affiliated,
consolidated, combined or unitary group, (y) being party to any tax sharing
agreement and (z) any express or implied obligation to indemnify any other
person with respect to the payment of any of the foregoing; and (ii) "Tax
Returns" means returns, reports and information statements, including any
schedule or attachment thereto, with respect to Taxes required to be filed with
the IRS or any other governmental or taxing authority or agency, domestic or
foreign, including consolidated, combined and unitary tax returns.
(b) Except as set forth in Section 3.14(b) of the Company Disclosure
Schedule and except as would not, individually or in the aggregate, have a
Company Material Adverse Effect (unless stated otherwise below): (i) each of
the Company and each of its subsidiaries has timely filed all U.S. Federal,
state, local and non-U.S. Tax Returns required to be filed by it, and all such
Tax Returns are true, correct and complete, and has paid and discharged all
Taxes shown as due thereon and has paid all of such other Taxes as are due,
other than such payments as are being contested in good faith by appropriate
proceedings; (ii) neither the IRS nor any other taxing authority or agency,
domestic or foreign, is now asserting in writing or, to the knowledge of the
Company or its subsidiaries after due inquiry, threatening in writing to assert
against the Company or any of its subsidiaries any deficiency or claim with
respect to Taxes of the Company or any of its subsidiaries; (iii) no waiver of
any statute of limitations with respect to, or any extension of a period for
the assessment of, any Tax has been granted by the Company or any of its
subsidiaries without regard to whether such waiver or extension could have a
Company Material Adverse Effect in connection with Federal, New York State and
California Taxes; (iv) the accruals and reserves for Taxes reflected in the
Company's audited consolidated balance sheet as of December 31, 1999 (and the
notes thereto) (the "1999 Balance Sheet") and the most recent quarterly
financial statements (and the notes thereto) are adequate to cover all Taxes
accruable through the date thereof in accordance with generally accepted
accounting principles; (v) no election under Section 341(f) of the Code has
been made by the Company or any of its subsidiaries; (vi) the Company and each
of its subsidiaries has withheld or collected and paid over to the appropriate
governmental authorities or is properly holding for such payment all Taxes
required by law to be withheld or collected; (vii) there are no liens for Taxes
upon the assets of the Company or any of its subsidiaries, other than liens for
Taxes that are being contested in good faith by appropriate proceedings or are
not yet due, (viii) neither the Company nor any of its subsidiaries have
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code in the
two years prior to the date of this Agreement; (ix) the Federal income Tax
Returns for the Company and each of its subsidiaries have been examined and
settled with the IRS (or the applicable statutes of limitation for the
assessment of Federal income Taxes for such periods have expired) for all years
through 1995; (x) the Company and its subsidiaries have given or otherwise made
available to Buyer correct and complete copies of (A) all Federal income Tax
Returns of the Company, BHC and UTV filed for periods ending after December 31,
1993 and (B) income Tax returns filed on behalf of UTV of San Francisco, Inc.
and affiliates for California and WWOR-TV, Inc. for New Jersey and New York
State for tax years 1997 and 1998; (xi) neither the Company nor any of its
subsidiaries are a party to any agreement relating to the sharing, allocation,
or indemnification of Taxes or any similar contract or arrangement without
regard to whether any such agreement could have a Company Material Adverse
Effect other than agreements between members of the affiliated group of which
the Company is the common parent under Section 1504 of the Code; (xii) neither
the Company nor any of its subsidiaries have agreed, or is required to make,
any adjustment under Section 481 of the Code; (xiii) the Company and each of
its subsidiaries were not, at any time during the period specified in Section
897(c)(1)(A)(ii) of the Code, a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code without regard to whether
such status could give rise to a Company Material Adverse Effect; and (xiv)
there have been no redemptions by the Company or any of its subsidiaries since
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March 31, 1998 without regard to whether such redemptions could give rise to a
Company Material Adverse Effect.
Section 3.15 Tax Matters. None of the Company or any of its affiliates has
taken or agreed to take any action, has failed to take any action or knows of
any fact, agreement, plan or other circumstance that is reasonably likely to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code; provided, however, that the foregoing
representation is made only as of the date hereof in the case of the Reverse
Merger. The preceding sentence excludes all transactions contemplated by this
Agreement.
Section 3.16 Title to Properties; Assets. Neither the Company nor any of its
subsidiaries owns, or has any material interest in, (i) any material assets in
Australia or (ii) any television, media or other broadcasting assets in
Australia. Except as set forth in Section 3.16 of the Company Disclosure
Schedule and, in each case as, individually or in the aggregate, (i) as of the
date of this Agreement, would not materially adversely affect the operation of
the broadcasting facilities of the Company's subsidiaries' New York, Los
Angeles, San Francisco or Minneapolis television stations and (ii) would not
have a Company Material Adverse Effect:
(a) Each of the Company and its subsidiaries has good, marketable fee simple
title to its owned properties and assets or good and valid leasehold interests
in all of its leasehold properties and assets together with full legal and
practical access to all of its properties except for such as are no longer used
or useful in the conduct of its businesses or as have been disposed of in the
ordinary course of business. All such properties and assets, other than
properties and assets in which the Company or any of its subsidiaries has a
leasehold interest, are free and clear of all Liens.
(b) Each of the Company and its subsidiaries has complied with the terms of
all leases to which it is a party and under which it is in occupancy, and all
deeds in respect of property which it owns, and all such leases and deeds are
in full force and effect. Section 3.16(b) of the Company Disclosure Schedule
sets forth a description of (i) each lease to which it is a party relating to
its television broadcasting, (ii) all other leases to which it is a party in
which the annual rental payments exceed $250,000 or which contemplate aggregate
payments in excess of $500,000 and (iii) each deed under which it is the owner;
and a copy of each such lease or deed, as applicable, has previously been
provided to Buyer. The Company and its subsidiaries enjoy peaceful and
undisturbed possession under all such leases. There are no facts that would
prevent Buyer or any of its subsidiaries from using or occupying all of the
leased and owned property referred to in clauses (i), (ii) and (iii) above,
after the Effective Time, in the same manner such leased and owned property is
used or occupied by the Company or its subsidiaries immediately prior to the
Effective Time.
(c) The assets of the Company and each of its subsidiaries constitute all of
the properties, assets and rights forming a part of, used, held or intended to
be used in, and all such properties, assets and rights as are necessary in, the
conduct of the business as it is now being conducted and contemplated to be
conducted by the Company and its subsidiaries. At all times since December 31,
1999, each of the Company and its subsidiaries has caused such assets to be
maintained in accordance with good business practice, and all of such assets
are in good operating condition and repair and are suitable for the purposes
for which they are used and intended.
Section 3.17 Year 2000 Compliance.
(a) The Company has adopted a plan that it believes will cause Company
Systems (as defined below) to be Company Year 2000 Compliant (as defined below)
(such plan, as it may be amended, modified or supplemented from time to time
being, the "Company Year 2000 Plan") in all material respects. The Company has
taken, and between the date of this Agreement and the Effective Time will
continue to take, all reasonable steps to implement the Company Year 2000 Plan
with respect to the Company Systems.
(b) For purposes of this Section 3.17, (i) "Company Systems" shall mean all
computer, hardware, software, systems, and equipment (including embedded
microcontrollers in non-computer equipment)
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embedded within or required to operate the current products of the Company and
its subsidiaries, and/or material to or necessary for the Company and its
subsidiaries to carry on their respective businesses as currently conducted;
and (ii) "Company Year 2000 Compliant" means that Company Systems will (A)
manage, accept, process, store and output data involving dates reasonably
expected to be encountered in the foreseeable future and (B) accurately process
date data from, into and between the 20th and 21st centuries and each date
during the year 2000.
Section 3.18 Opinion of Financial Advisors. The Company has received the
written opinion of Allen & Company Incorporated (the "Company Financial
Advisor") on or prior to the date of this Agreement, to the effect that, as of
the date of such opinion, the Merger Consideration is fair to the stockholders
of the Company from a financial point of view, and the Company will deliver a
copy of such opinion to Buyer promptly after the date of this Agreement.
Section 3.19 Vote Required. At the Stockholders' Meeting, the affirmative
vote of a majority of the votes entitled to be cast by stockholders (including
the holders of the Convertible Preferred Stock) at the Stockholders' Meeting,
voting together as a single class, and the affirmative vote of a majority of
the votes entitled to be cast by holders of the Convertible Preferred Stock at
the Stockholders' Meeting, voting as a separate class, are the only votes of
the holders of any class or series of capital stock of the Company necessary to
adopt this Agreement, after giving effect to the redemption of the Prior
Preferred Stock required pursuant to Section 5.2 hereof.
Section 3.20 Brokers. The Company Financial Advisor has entered into a
letter of engagement with the Company in connection with the Merger, a copy of
which has previously been provided to Buyer. Except as disclosed in Section
3.20 of the Company Disclosure Schedule, no broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of the Company
other than as provided in a letter of engagement previously provided to Buyer.
Section 3.21 State Takeover Statutes. The Board of Directors of the Company
has taken all action necessary to render inapplicable to the Merger and the
transactions contemplated hereby the provisions of Section 203 of Delaware Law.
To the knowledge of the Company, no other state takeover statute or similar
statute or regulation applies or purports to apply to the Merger.
Section 3.22 BHC and UTV.
(a) As of the date of this Agreement, the authorized capital stock of (i)
BHC consists of 200,000,000 shares of Class A Common Stock, par value $0.01 per
share ("BHC Class A Shares"), 200,000,000 shares of Class B Common Stock, par
value $0.01 per share ("BHC Class B Shares"), and 50,000,000 shares of
Preferred Stock, par value $0.01 per share ("BHC Preferred Stock"), and (ii)
UTV consists of 25,000,000 shares of Common Stock, par value $0.10 per share
("UTV Common Shares"), and 1,000,000 shares of Preferred Stock, par value $1.00
per share ("UTV Preferred Stock"). At the close of business on June 30, 2000,
(i) 4,510,823 BHC Class A Shares were issued and outstanding, 18,000,000 BHC
Class B Shares were issued and outstanding, no shares of BHC Preferred Stock
were issued and outstanding, 9,486,173 UTV Common Shares were issued and
outstanding and no shares of UTV Preferred Stock were issued and outstanding;
(ii) (A) no shares were held by BHC in its treasury and (B) no shares were held
by UTV in its treasury; and (iii) (X) no BHC Class A Shares and no BHC Class B
Shares were reserved for issuance upon the exercise of outstanding options to
purchase such shares and (Y) 234,570 UTV Common Shares were reserved for
issuance upon the exercise of outstanding options to purchase such shares.
Since January 31, 2000, no shares of capital stock of BHC or UTV have been
issued except pursuant to exercise of options of UTV outstanding as of
September 30, 1999 in accordance with the terms thereof. As of the date of this
Agreement, except as set forth above, no shares of capital stock or other
voting securities of BHC or UTV are issued, reserved for issuance or
outstanding. As of the date of this Agreement, except as set forth above or in
Section 3.22(a) of the Company Disclosure Schedule, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which BHC or any of its subsidiaries
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or UTV or any of its subsidiaries is a party or by which any of them is bound
obligating BHC or any of its subsidiaries or UTV or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of BHC or any of its
subsidiaries or UTV or of any of its subsidiaries or obligating BHC or any of
its subsidiaries or UTV or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. All outstanding shares of capital stock
of BHC and UTV are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of BHC, UTV or any of their respective
subsidiaries, and no securities or other instruments or obligations of BHC, UTV
or any of their respective subsidiaries the value of which is in any way based
upon or derived from any capital or voting stock of BHC or UTV having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which stockholders of BHC or UTV may vote. Except as
set forth in Section 3.22(a) of the Company Disclosure Schedule, to the
knowledge of the Company, as of the date of this Agreement, there are no
outstanding contractual obligations of BHC or any of its subsidiaries or UTV or
any of its subsidiaries (i) to repurchase, redeem or otherwise acquire any
shares of capital stock of BHC or UTV or (ii) to vote or to dispose of any
shares of the capital stock of any of BHC's or UTV's subsidiaries.
(b) As of the date of this Agreement (i) the Company, directly or
indirectly, owns 10,000 BHC Class A Shares, 18,000,000 BHC Class B Shares and
no shares of BHC Preferred Stock, and (ii) BHC directly or indirectly, owns
5,509,027 UTV Common Shares.
ARTICLE IV
Representations and Warranties of Buyer
Except as disclosed in its Annual Report on Form 20-F filed with the SEC on
October 27, 1999, and the reports on Form 6-K filed with the SEC on November 3,
1999, February 15, 2000 and May 12, 2000, or in a separate disclosure schedule
which has been delivered by Buyer to the Company prior to the execution of this
Agreement (the "Buyer Disclosure Schedule") (each section of which qualifies
the correspondingly numbered representation and warranty or covenant to the
extent specified therein and such other representations and warranties or
covenants to the extent a matter in such section is disclosed in such a way as
to make its relevance to the information called for by such other
representation and warranty or covenant readily apparent), Buyer hereby
represents and warrants to the Company that:
Section 4.1 Organization and Qualification; Subsidiaries. Each of Buyer and
its subsidiaries is a corporation or entity duly incorporated or formed,
validly existing and, as applicable, in good standing, under the laws of its
jurisdiction of incorporation or formation, and has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Buyer Material Adverse Effect (as defined below). Each of Buyer and its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or
in the aggregate, have a Buyer Material Adverse Effect. The term "Buyer
Material Adverse Effect" means any change, effect or circumstance that is or is
reasonably likely to be materially adverse to the business, operations, results
of operations or financial condition of Buyer and its subsidiaries taken as a
whole, other than any change, effect or circumstance relating to or resulting
from (i) general changes in the industry in which Buyer conducts business, (ii)
changes in general economic conditions or securities markets in general or
(iii) this Agreement or the transactions contemplated hereby or the
announcement thereof.
Section 4.2 Charter Documents. Buyer has made available to the Company a
complete and correct copy of the constitution, as amended to date, of Buyer.
The constitution (or equivalent organizational
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documents) of Buyer and its subsidiaries are in full force and effect. Except
as would not have a Buyer Material Adverse Effect, none of Buyer or its
subsidiaries is in violation of any provision of its corporate charter
documents (or equivalent organizational documents).
Section 4.3 Capitalization.
(a) No shares of capital stock of Buyer are owned by any subsidiary of
Buyer. All outstanding shares of capital stock of Buyer are, when issued in
accordance with the terms thereof, duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of Buyer or any of its subsidiaries and
no securities or other instruments or obligations of Buyer or any of its
subsidiaries the value of which is in any way based upon or derived from any
capital or voting stock of Buyer, having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters
on which stockholders of Buyer may vote. Except as set forth above, there are
no contracts of any kind to which Buyer or any of its subsidiaries is a party
or by which Buyer or any of its subsidiaries is bound obligating Buyer or any
of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock of, or other equity or voting
interests in, or securities convertible into, or exchangeable or exercisable
for, shares of capital stock of, or other equity or voting interests in, Buyer
or any of its subsidiaries or obligating Buyer or any of its subsidiaries to
issue, grant, extend or enter into any such security, option, warrant, call,
right or contract. There are not any outstanding contractual obligations of
Buyer or any of its subsidiaries to (i) repurchase, redeem or otherwise acquire
any shares of capital stock of, or other equity or voting interests in, Buyer
or any of its subsidiaries or (ii) vote or dispose of any shares of the capital
stock of, or other equity or voting interests in, any of its subsidiaries. To
the knowledge of Buyer as of the date of this Agreement, there are no
irrevocable proxies and no voting agreements with respect to any shares of the
capital stock or other voting securities of Buyer or any of its subsidiaries.
(b) All shares of Buyer Preferred Stock underlying the Buyer Shares to be
issued in the Merger, when deposited with the Custodian in accordance with
Section 1.5(a) hereof and the terms of the Deposit Agreement, will be duly
authorized, validly issued, fully paid and nonassessable and free and clear of
all Liens. Upon the due issuance by the Depositary of Buyer Shares evidencing
Buyer Preferred Stock against the deposit of Buyer Preferred Stock in
accordance with the terms of the Deposit Agreement, the Buyer Shares to be
issued in the Merger will be duly authorized, validly issued, fully paid and
non-assessable and free and clear of all Liens and persons in whose names the
Buyer Shares are registered will be entitled to the rights of registered
holders of Buyer Shares specified therein and in the Deposit Agreement, and the
Buyer Shares will conform in all material respects to the description of the
Buyer Shares set forth in the proxy statement dated July 10, 1997 of Heritage
Media Corporation, which proxy statement was incorporated by reference into the
Registration Statement on Form F-4 of Buyer. The Deposit Agreement has been
duly and validly authorized by all necessary corporate action of Buyer, has
been duly and validly executed and delivered by Buyer, and constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally and by equitable principles to which the remedies of specific
performance and injunctive and similar forms of relief are subject.
Section 4.4 Authority Relative to Agreement. Buyer and its subsidiaries have
all necessary power and authority to execute and deliver this Agreement, to
perform their obligations hereunder and to consummate the Merger and the other
transactions contemplated hereby. The execution and delivery of this Agreement
by Buyer and the consummation by Buyer and certain of its subsidiaries of the
Merger and the other transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Buyer or any of its subsidiaries are necessary to
authorize the execution and delivery of this Agreement or to consummate the
Merger and the other transactions contemplated hereby (other than any necessary
stockholder approval of Buyer (as provided in Section 4.5(b) hereof) or of any
publicly owned subsidiaries of Buyer in connection with Section 6.18 hereof,
which shall be obtained in accordance with Section 6.2(b) hereof). This
Agreement has been duly and validly executed and delivered by
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Buyer and, assuming the due authorization, execution and delivery by the
Company, this Agreement constitutes a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. The Newco-FTH
Agreement (as hereinafter defined), when executed and delivered by the parties
thereto, will have been duly and validly executed and delivered by such parties
and, will constitute a legal, valid and binding obligation of such parties,
enforceable against such parties in accordance with its terms.
Section 4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Buyer does not, and the
performance of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby by Buyer and its subsidiaries will not, (i)
conflict with or violate the corporate charter documents (or equivalent
organizational documents) of (A) Buyer or (B) any of its subsidiaries, (ii)
assuming the consents, approvals and authorizations specified in Section 4.5(b)
have been received and the waiting periods referred to therein have expired,
and any condition precedent to such consent, approval, authorization, or waiver
has been satisfied, conflict with or violate any Law or the Listing Rules (the
"ASX Listing Rules") of the Australian Stock Exchange Limited ("ASX")
applicable to Buyer or any of its subsidiaries or by which any property or
asset of Buyer or any of its subsidiaries is bound or affected or (iii) result
in any breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of Buyer
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture or
credit agreement, or, to Buyer's knowledge as of the date of this Agreement,
any other, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Buyer or any of its subsidiaries is a party
or by which Buyer or any of its subsidiaries or any property or asset of Buyer
or any of its subsidiaries is bound or affected, except, in the case of clauses
(i)(B), (ii) and (iii), for any such conflicts, violations, breaches, defaults
or other occurrences of the type referred to above which would not have a Buyer
Material Adverse Effect and would not prevent or materially delay the
consummation of the Merger; provided, however, that for purposes of this
Section 4.5(a), the definition of Buyer Material Adverse Effect shall be read
so as not to include clause (iii) of the definition thereof.
(b) The execution and delivery of this Agreement by Buyer do not, and the
performance of this Agreement by Buyer and the consummation of the Merger and
the other transactions contemplated hereby by Buyer and its subsidiaries will
not, require any consent, approval, authorization, waiver or permit of, or
filing with or notification to, any Governmental Authority, except for
applicable requirements of the Exchange Act, the Securities Act, Blue Sky Laws,
the HSR Act, such filings and approvals as may be required under the
Communications Act, filing and recordation of appropriate merger documents as
required by Delaware Law, the rules of the NYSE filings and recordings of
appropriate documents with, and announcements to, the Australian Securities and
Investment Commission and the ASX, and a waiver from the ASX (or, if not
obtained, the approval of Buyer's shareholders at a special meeting of Buyer
shareholders (the "Buyer Shareholder Approval")) with respect to Listing Rule
10.1 of the ASX Listing Rules (the "ASX Waiver") and except where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not have a Buyer Material Adverse Effect and
would not prevent or materially delay the consummation of the Merger; provided,
however, that for purposes of this Section 4.5(b), the definition of Buyer
Material Adverse Effect shall be read so as not to include clause (iii) of the
definition thereof.
Section 4.6 Permits and Licenses. Buyer or its subsidiaries have (i)
operated the television stations and associated facilities for which Buyer or
any of its subsidiaries holds licenses from the FCC, in each case which are
owned or operated by Buyer or its subsidiaries (the "Buyer Licensed
Facilities"), in compliance with the terms of the permits issued by the FCC to
Buyer or its subsidiaries ("Buyer FCC Licenses"), and in compliance with the
Communications Act, and (ii) timely filed or made all applications, reports and
other disclosures required by the FCC to be filed or made with respect to the
Buyer Licensed Facilities and have timely paid all FCC regulatory fees with
respect thereto, in each case except as would not have a Buyer Material Adverse
Effect. As of the date hereof, to Buyer's knowledge, there is not pending or
threatened before
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the FCC any material investigation, proceeding, notice of violation, order of
forfeiture or complaint against Buyer or any of its subsidiaries, relating to
any of the Buyer Licensed Facilities or FCC regulated services conducted by
Buyer or its subsidiaries that, if adversely decided, would have a Buyer
Material Adverse Effect.
Section 4.7 Buyer SEC/ASX Reports. Buyer has filed with the SEC and ASX all
forms, reports, schedules, statements and other documents required to be filed
with the SEC and ASX by Buyer since January 1, 1997 (together with all
information incorporated therein by reference, the "Buyer Reports"). As of
their respective dates, the Buyer Reports complied in all material respects
with the requirements of the Securities Act or the Exchange Act or the ASX
Listing Rules, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Buyer Reports, and none of the Buyer
Reports at the time they were filed contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements (including the related notes) of Buyer included in the Buyer Reports
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or the ASX with
respect thereto, have been prepared in accordance with Australian generally
accepted accounting principles with appropriate reconciliation to GAAP as
required by SEC rules (except, in the case of unaudited statements, as
permitted by forms or rules of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present in all material respects the consolidated financial position of
Buyer and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and recurring year-end
audit adjustments). Buyer and its subsidiaries do not have any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise)
other than liabilities and obligations which, individually or in the aggregate,
would not have a Buyer Material Adverse Effect.
Section 4.8 Absence of Certain Changes or Events.
(a) Since December 31, 1999, except as contemplated by this Agreement, there
has not been any change, event or circumstance which, when taken individually
or together with all other changes, events or circumstances, has had or would
have a Buyer Material Adverse Effect, and (b) since December 31, 1999 to the
date of this Agreement, each of Buyer and its subsidiaries has conducted its
businesses only in the ordinary course and in a manner consistent with past
practice.
Section 4.9 Tax Matters. None of Buyer or any of its affiliates has taken or
agreed to take any action, has failed to take any action or knows of any fact,
agreement, plan or other circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code; provided, however, that the foregoing representation is made only
as the date hereof in the case of the Reverse Merger. The preceding sentence
excludes all transactions contemplated by this Agreement.
Section 4.10 Brokers. No broker, finder or investment banker (other than
Donaldson, Lufkin & Jenrette, Inc.) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of Buyer or any subsidiary of Buyer.
Section 4.11 Interim Operations of Acquisition Sub. In the case of the
Reverse Merger, Acquisition Sub will be a newly formed indirect subsidiary of
Buyer, or a newly formed subsidiary of the Company, will be a Delaware
corporation and, when formed, will have been formed solely for the purpose of
engaging in the transactions contemplated hereby and the Subsidiary Mergers, as
applicable, and will have engaged in no business other than in connection with
such transactions and the transactions contemplated by this Agreement. In the
case of the Forward Merger, Acquisition Sub will be News Publishing Australia
Limited, a Delaware corporation, of which Buyer directly owns and will continue
to own at least 80% of the total combined voting power of all classes of stock
entitled to vote and 80% of the total number of shares of each other class of
stock of such corporation.
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ARTICLE V
Conduct of Business Pending the Merger
Section 5.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time, except (x) as expressly contemplated by this Agreement
(including, without limitation, as set forth in Section 5.1 of the Company
Disclosure Schedule or as set forth as an exception or qualification to
paragraphs (a) through (n) of this Section 5.1), (y) as expressly authorized
pursuant to a Subsidiary Merger Agreement, and (z) as Buyer shall otherwise
agree in advance in writing, the business of the Company and its subsidiaries
shall be conducted only in, and the Company shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice; and the Company and its subsidiaries shall use their reasonable best
efforts to preserve substantially intact the Company's business organization,
to keep available the services of the current officers, employees and
consultants of the Company and its subsidiaries (provided that the foregoing
covenant to use reasonable best efforts shall not require or permit the Company
to offer retention bonuses or other non-ordinary course compensation to such
individuals without Buyer's written consent) and to preserve the current
relationships of the Company and its subsidiaries with customers, distributors,
dealers, suppliers and other persons with which the Company and its
subsidiaries have significant business relations. By way of amplification and
not limitation, between the date of this Agreement and the Effective Time, the
Company will not do, and, subject to the fiduciary duties to BHC and UTV, as
the case may be, of the Company, and, in the case of UTV, of BHC, and in either
case, the members of the Boards of Directors of BHC and UTV, shall not permit
any of its subsidiaries to do, directly or indirectly, any of the following
except in compliance with the exceptions listed above:
(a) amend or otherwise change the Restated Certificate of Incorporation or
By-laws of the Company or, in any material respect, that of any of its
subsidiaries;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, (i) any shares of
its or its subsidiaries' capital stock, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of its or its
subsidiaries' capital stock or any other ownership interest (including any
phantom interest), of the Company or any of its subsidiaries (except for the
issuance of shares issuable pursuant to any Company Options outstanding as of
the date hereof), (ii) any assets except for sales of marketable securities and
investment assets for their fair value and except for sales of other assets in
the ordinary course of business consistent with past practice not in excess of
$500,000 in the aggregate;
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to the Company's or
any of its subsidiaries' capital stock (other than regular cash dividends in
respect of the Company's Convertible Preferred Stock or the Prior Preferred
Stock or cash dividends payable by any wholly owned subsidiary (or by BHC or
UTV (if permitted under the BHC Merger Agreement or the UTV Merger Agreement))
with respect to ordinary course dividends, including dividends designated as
special dividends, in a manner consistent with past practice);
(d) in the case of the Company, reclassify, combine, split, subdivide or
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) (i) except in connection with acquisitions or investments which are made
in the ordinary cause of business consistent with past practice not in excess
of $10,000,000 individually or $25,000,000 in the aggregate and which the Buyer
has not reasonably objected to as presenting any meaningful risk of resulting
in the FCC Consent (with no Adverse Condition) not being obtained or delayed
for more than an immaterial period of time and except with respect to the
reinvestment of marketable securities or investment assets, and the investment
of cash generated by the operations of the Company and its subsidiaries in
marketable securities, in each case in the ordinary course of business
consistent with past practice (A) acquire (including by merger, consolidation,
or
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acquisition of stock or assets), or otherwise make any investment in, any
corporation, partnership, limited liability company, other business
organization or any division thereof, or any material amount of assets, or
acquire any interest in any broadcast radio or television station, daily
English-language newspaper or cable television system, as defined at Note 2 to
47 C.F.R. Section 73.3555; or (B) incur any indebtedness for borrowed money,
issue any debt securities, assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, agree to
amend or otherwise modify in any manner any agreement or instrument pursuant to
which the Company has incurred indebtedness, or make any loans or advances,
except in the ordinary course of business and consistent with past practice,
except the refinancing of existing indebtedness, borrowings under commercial
paper programs in the ordinary course of business or borrowings under existing
bank lines of credit in the ordinary course of business, (ii) enter into any
material contract, agreement or transaction, other than (X) in the ordinary
course of business, and (Y) which would not be reasonably likely to prevent or
materially delay the consummation of the Merger, (iii) authorize any capital
expenditures which are, in the aggregate, in excess of 110% of the amounts
currently budgeted for fiscal year 2000, and with respect to fiscal year 2001,
in excess of 120% of the amount budgeted for fiscal year 2000, in each case for
the Company and its subsidiaries taken as a whole; provided that any amounts
budgeted in respect of DTV may be reallocated between the two years or (iv)
enter into or amend any contract, agreement, commitment or arrangement which
would require the Company to take any action prohibited by this subsection (e);
(f) except as set forth in Section 6.12 hereof or as required by Law or by
the terms of any collective bargaining agreement or other labor union contract
or other agreement currently in effect between the Company or any subsidiary of
the Company and any executive officer or employee thereof (provided, however,
that except as contemplated hereby no actions shall be taken with respect to
the acceleration of vesting or cashing-out of Company Options in connection
with the execution and delivery of this Agreement or the consummation of any
transactions contemplated hereby or otherwise), increase the compensation
payable or to become payable to its executive officers or employees, or grant
any severance or termination pay to, or enter into any employment or severance
agreement with, any director or executive officer or employee of it or any of
its subsidiaries, or establish, adopt, enter into or amend in any respect or
take action to accelerate any rights or benefits under any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, executive officer or employee,
provided that this clause shall not prevent the Company or any of its
subsidiaries from (i) making severance payments to the extent contractually
obligated under contractual arrangements currently existing at the Company or
such subsidiary and previously disclosed to Buyer, (ii) increasing compensation
in accordance with the provisions of agreements with executive officers or
employees in accordance with the terms of such agreements in effect on the date
of this Agreement, provided that if any such agreement does not specify the
amount of such increase, no such increase shall (A) fail to be in the ordinary
course of business and in accordance with the past practices of the Company and
(B) exceed 10 percent of the compensation of such executive officer or employee
in effect on the date of this Agreement, or (iii) increasing compensation for
employees who are not parties to agreements relating to compensation, provided
that each such increase (A) is in the ordinary course of business, and in
accordance with the past practices of the Company and (B) does not exceed, with
respect to any employee, 10 percent of the compensation of such employee on the
date of this Agreement; or (iv) taking any actions necessary and appropriate to
effectuate the provisions of Section 6.12(e) of the Company Disclosure
Schedule;
(g) change (except as required by the SEC or changes in GAAP which become
effective after the date of this Agreement) any accounting methods, policies,
practices or procedures;
(h) enter into any contract, agreement, lease, license, permit, franchise or
other instrument or obligation which if in existence and known to the Company
prior to the date of this Agreement would have resulted in a breach of Section
3.5 hereof;
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(i) settle or compromise any material arbitration, action, suit,
investigation or proceeding (other than those related to Tax matters, which
shall be governed exclusively by the provisions of Section 5.4 hereof), other
than any such matter which, if settled or compromised, would not be materially
detrimental to the Company and its subsidiaries taken as a whole; provided,
however that the Company shall not in any event settle any arbitration action,
suit, investigation or proceeding arising out of this Agreement or the matters
contemplated hereby without Buyer's consent (other than those related to Tax
matters, which shall be governed exclusively by the provisions of Section 5.4
hereof);
(j) settle or discharge any material liability of a type not covered in
subsection (i) above, other than in accordance with its terms or on terms no
less favorable to the Company and its subsidiaries;
(k) amend or waive any right under or enter into any agreement with any
affiliate of the Company (other than its wholly owned subsidiaries or BHC or
UTV in the ordinary course of business consistent with past practice) or with
any stockholder of the Company or any of its subsidiaries or any affiliate of
any such stockholder;
(l) enter into, amend in any material respect or terminate any network
affiliation agreement, retransmission consent agreement or, except in the case
of agreements terminable without cost or penalty by the Company prior to the
Closing or by Buyer within 30 days thereafter, any agreement licensing or
creating any obligations with respect to the use of the digital data stream of
any DTV Station;
(m) enter into, amend or terminate any film or program license or
syndication agreement (each a "Program Agreement") involving aggregate payments
of more than (i) $2,500,000 in the aggregate on a per Program Agreement, per
station basis, (ii) $5,000,000 in the aggregate on a per station basis, (iii)
$500,000 per annum on a per Program Agreement, per station basis and (iv)
barter agreements that expire after December 31, 2001; or
(n) enter into or publicly announce an intention to enter into any contract,
agreement, commitment or arrangement to, do any of the foregoing actions set
forth in this Section 5.1.
Section 5.2 Prior Preferred Stock. The Company shall (i) take all actions
required pursuant to the Restated Certificate of Incorporation to cause a
notice (as defined in paragraph III.A(2) of Article Fourth of the Restated
Certificate of Incorporation) of redemption to be mailed to the holders of the
Prior Preferred Stock not less than 30 days prior to the date fixed for
redemption which date shall be set by the Company to be no fewer than five (5)
or greater than ten (10) days prior to the date set by the Company pursuant to
Section 6.2 hereof for the Stockholders' Meeting and (ii) prior to the
Stockholders' Meeting (a) cause the redemption price (as specified in the
Restated Certificate of Incorporation) to be deposited with the redemption
depository (as specified in the Restated Certificate of Incorporation) and (b)
take all necessary action to effectuate such redemption.
Section 5.3 FCC Matters. During the period from the date of this Agreement
to the Effective Time, the Company shall, and shall cause each of its
subsidiaries: (i) to use its reasonable best efforts to comply with all
material requirements of the FCC applicable to the operation of the Company
Stations; (ii) promptly to deliver to Buyer copies of any material reports,
applications or responses filed with the FCC; (iii) promptly to notify Buyer of
any inquiry, investigation or proceeding initiated by the FCC; (iv) not to make
or revoke any material election with the FCC; and (v) use its reasonable best
efforts to take all actions necessary to complete construction and initiate
operation of the DTV Stations by the relevant deadline established by the FCC,
as it may be extended, and to consult with Buyer about, and keep Buyer
reasonably informed of, the progress of construction of the DTV Stations.
Section 5.4 Certain Tax Matters. During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of its
subsidiaries to: (i) timely file all Tax Returns ("Post-Signing Returns")
required to be filed by it and such Post-Signing Returns shall be prepared in a
manner
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consistent with past practice; (ii) timely pay all Taxes due and payable in
respect of such Post-Signing Returns that are so filed; (iii) accrue a reserve
in its books and records and financial statements in accordance with past
practice for all Taxes payable by it for which no Post-Signing Return is due
prior to the Effective Time; (iv) promptly notify Buyer of any Federal,
California, New Jersey or New York income or franchise tax and any other
material suit, claim, action, investigation, proceeding or audit (collectively,
"Actions") pending against or with respect to the Company or any of its
subsidiaries in respect of any Tax matter, including (without limitation) Tax
liabilities and refund claims, and not settle or compromise any such Tax matter
or Action without Buyer's consent, which consent shall not be unreasonably
withheld; and (v) not make or revoke any material Tax election or adopt or
change a material tax accounting method without Buyer's consent.
ARTICLE VI
Additional Agreements
Section 6.1 Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement, (i)
the Company shall prepare and shall cause to be filed with the SEC a proxy
statement (together with any amendments thereof or supplements thereto, the
"Proxy Statement") relating to the meeting of the Company's stockholders to be
held to consider the adoption of this Agreement and the approval of the Merger,
(ii) Buyer shall prepare and file with the SEC a registration statement on the
appropriate form (together with all amendments thereto, the "Share Registration
Statement") in which the Proxy Statement shall be included as a prospectus, in
connection with the registration under the Securities Act of the Buyer Shares
to be issued to the stockholders of the Company pursuant to the Merger and
(iii) Buyer shall prepare and file with the SEC a registration statement on the
appropriate form (together with all amendments thereto, the "Option
Registration Statement," and together with the Share Registration Statement,
the "Registration Statement") in which the Proxy Statement will be included as
a prospectus, in connection with the registration under the Securities Act of
the Buyer Shares to the issued upon exercise of the Substituted Options, it
being understood that the Option Registration Statement shall be considered
filed as promptly as practicable if it is filed by Buyer within at least two
(2) business days following the Effective Time. In addition to the foregoing,
Buyer shall make such other appropriate filings and deliveries as may be
required by applicable law (including any applicable prospectus delivery
requirements thereof). Each of Buyer and the Company shall use its reasonable
best efforts to cause the Registration Statement to become effective at such
time as they shall agree, and, prior to the effective date of the Registration
Statement, Buyer shall use reasonable best efforts to take all or any action
required under any applicable Federal or state securities Laws in connection
with the issuance of Buyer Shares pursuant to the Merger. If requested by the
SEC, each of the Forward Merger and the Reverse Merger shall be submitted to
the Company's stockholders at the Stockholders' Meeting (as defined in Section
6.2) as separate proposals. Each of Buyer and the Company shall furnish all
information concerning it as may reasonably be requested by the other party in
connection with such actions and the preparation of the Proxy Statement and
Registration Statement. As promptly as practicable after the Registration
Statement shall have become effective, the Company shall mail the Proxy
Statement to its stockholders. Each of Buyer and the Company shall also
promptly file, use reasonable best efforts to cause to become effective as
promptly as practicable and, if required, mail to the Company's stockholders,
any amendment to the Registration Statement or Proxy Statement which may become
necessary after the date the Registration Statement is declared effective.
(b) The Proxy Statement shall include the recommendation of the Board of
Directors of the Company to the stockholders of the Company in favor of the
adoption of this Agreement and the approval of the Merger; provided, however,
that the Board of Directors of the Company may take or disclose to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or make any disclosure required under applicable Law and may,
prior to the date of its Stockholders' Meeting (as defined in Section 6.2
hereof), withdraw, modify, or change any such recommendation to the extent that
the Board of Directors of the Company determines in good faith that such
withdrawal, modification or change is required in order to comply
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with its fiduciary duties under applicable Law after receiving advice to such
effect from independent legal counsel (who may be the Company's regularly
engaged outside legal counsel). Unless this Agreement is previously terminated
in accordance with Article VIII, the Company shall submit this Agreement to its
stockholders at its Stockholders' Meeting even if the Board of Directors of the
Company determines at any time after the date hereof that is no longer
advisable or recommends that the Company's stockholders reject it.
(c) No amendment or supplement to the Proxy Statement or the Registration
Statement will be made by Buyer or the Company without the approval of the
other party, which shall not be unreasonably withheld or delayed. Each of Buyer
and the Company will advise the other, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Buyer Shares issuable in connection with
the Merger for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional
information.
(d) The information supplied by the Company for inclusion in the
Registration Statement and the Proxy Statement (including by incorporation by
reference) shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of the Company, (iii)
the time of the Stockholders' Meeting, and (iv) the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to the Company or any of its subsidiaries, or their
respective officers or directors, should be discovered by the Company which,
pursuant to the Securities Act or Exchange Act, should be set forth in an
amendment or a supplement to the Registration Statement or Proxy Statement, the
Company shall promptly inform Buyer. All documents that the Company is
responsible for filing with the SEC in connection with the Merger will comply
as to form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act.
(e) The information supplied by Buyer for inclusion in the Registration
Statement and the Proxy Statement (including by incorporation by reference)
shall not, at (i) the time the Registration Statement is declared effective,
(ii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the stockholders of the Company, (iii) the time of
the Stockholders' Meeting, and (iv) the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to Buyer or any of its subsidiaries, or their respective
officers or directors, should be discovered by Buyer which, pursuant to the
Securities Act or Exchange Act, should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, Buyer shall
promptly inform the Company. All documents that Buyer is responsible for filing
with the SEC in connection with the Merger will comply as to form in all
material respects with the applicable requirements of the Securities Act and
the Exchange Act.
Section 6.2 Stockholders' Meetings; Approvals.
(a) The Company shall, as promptly as practicable following the date of this
Agreement, establish a record date (which will be set in accordance with
Section 5.2 hereof and as promptly as reasonably practicable following the date
of this Agreement) for, duly call, give notice of, convene and hold a meeting
of its stockholders (the "Stockholders' Meeting"), for the purpose of voting
upon the adoption of this Agreement and approval of the Merger, and the Company
shall hold the Stockholders' Meeting as soon as practicable after the date on
which the Registration Statement becomes effective. The Company shall use its
reasonable best efforts to cause the Stockholders' Meeting to occur on the same
day as the meetings of stockholders are held to consider the Subsidiary
Mergers. The Company shall use its reasonable best efforts to solicit from its
stockholders proxies in favor of the adoption of this Agreement and approval of
the Merger, and shall take all other action necessary or advisable to secure
the vote of its stockholders, required by the NYSE or Delaware
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Law, as applicable, to obtain such approvals; provided, however, that the
Company shall not be obligated to solicit proxies in favor of the adoption of
this Agreement at its Stockholders' Meeting (but shall nonetheless remain
obligated to submit this Agreement to a vote of its stockholders) to the extent
that the Board of Directors of the Company determines in good faith that such
failure to solicit proxies is required in order to comply with its fiduciary
duties under applicable Law after receiving advice to such effect from
independent legal counsel (who may be such party's regularly engaged outside
legal counsel).
(b) Without limiting the provisions of Section 4.4 hereof, Buyer shall, as
promptly as practicable following the date of this Agreement, obtain, and cause
its subsidiaries to obtain, all stockholder and other approvals, including the
Buyer Shareholder Approval if required, necessary to consummate the Merger and
the other transactions contemplated hereby, including, without limitation,
entering into and performing the agreements and transactions contemplated by
Section 6.18 hereof.
Section 6.3 Appropriate Action; Consents; Filings.
(a) Each of the parties hereto shall (i) make promptly its respective
filings, and thereafter make any other required submissions under the HSR Act
with respect to the transactions contemplated herein and (ii) make promptly
filings with or applications to the FCC with respect to the transactions
contemplated herein (the "FCC Application"). The parties hereto will use their
respective reasonable best efforts to consummate and make effective the
transactions contemplated herein and to cause the conditions to the Forward
Merger and, if a Restructuring Trigger has occurred, the Reverse Merger, in
each case as set forth in Article VII to be satisfied (including using
reasonable best efforts to obtain all licenses, permits, consents, approvals,
authorizations, waivers, qualifications and orders of Governmental Authorities
as are necessary for the consummation of the transactions contemplated herein),
and will do so in a manner designed to obtain such regulatory clearance and the
satisfaction of such conditions as expeditiously as reasonably possible;
provided, however, that Buyer and FTH shall have the right to make all
decisions concerning any divestiture commitments necessary to comply with the
FCC's multiple ownership rules set forth at 47 C.F.R. Section 73.3555 as in
effect on the date of this Agreement (the "FCC Multiple Ownership Rules");
provided, that Buyer and FTH shall regularly consult with the Company during
the processes referred to in this Section 6.3 and consider in good faith the
views of the Company with respect thereto; and provided, further, that, in
connection with the Merger, Buyer and FTH shall not seek a waiver of Section
73.3555 of the FCC's rules except for a temporary waiver of subsections (b) and
(e) thereof for a period not to exceed twelve months from the Closing Date for
television divestitures required in order to obtain the FCC Consent (as defined
in Section 7.1(e) hereof) and, with respect to subsection (d) thereof in the
FCC Application when it is filed, Buyer will (1) maintain that no waiver is
required to permit it to own a newspaper and two television stations in the New
York market, and (2) request in the alternative, if that position is rejected
or a permanent waiver is not issued by the FCC, a temporary waiver to hold the
two television stations and newspaper for a period not to extend beyond the
date which is the later of (A) twelve months from the Closing Date and (B) the
conclusion of any then pending FCC rule making proceeding regarding 47 CFR
Section 73.3555(d); provided that the foregoing sentence shall be subject to
the provisions of subsection (b) below. Failure to obtain any of the waivers
set forth above shall not limit Buyer's obligations pursuant to subsection (b)
below.
(b) Notwithstanding anything to the contrary in this Agreement other than
the following sentence, the Company, Buyer and FTH each agree to take promptly
any and all steps necessary to avoid or eliminate each and every impediment and
obtain all consents or waivers under any antitrust, competition or
communications or broadcast Law that may be validly required by any U.S.
federal, state or local antitrust or competition Governmental Authority, or by
the FCC or similar Governmental Authority, or by any Australian Law, in each
case with competent jurisdiction, so as to enable the parties to close the
transactions contemplated by this Agreement as expeditiously as reasonably
possible, including committing to or effecting, by consent decree, hold
separate orders, trust, or otherwise, the sale or disposition of such of its
assets or businesses as are required to be divested in order to obtain the FCC
Consent (as defined below), or to avoid the entry of, or to effect the
dissolution of or vacate or lift, any decree, order, judgment, injunction,
temporary restraining order or
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other order in any suit or proceeding by or with any Governmental Authority
(each, an "Order"), that would otherwise have the effect of preventing or
materially delaying the consummation of the Merger and the other transactions
contemplated by this Agreement. Notwithstanding the foregoing, (i) neither
Buyer nor FTH shall be required to divest any of its material assets or accept
any material limitation on any of its material businesses other than (x) the
divestiture of such broadcast assets (i.e., newspaper and television stations)
as it is required to divest or (y) the material limitation on such broadcast
assets or Buyer's and FTH's operation thereof as it is required to be subject
to, in the case of each of clauses (x) and (y) in order to comply with the FCC
Multiple Ownership Rules or a final Order in an action brought by an antitrust
or competition or FCC or similar Governmental Authority, (ii) notwithstanding
clause (i), neither the Company, Buyer nor FTH shall be required to divest or
to hold separate, or to accept any substantial limitation on the operation of,
or to waive any rights material to, the Los Angeles or San Francisco television
stations of Buyer or the Company (each of the actions described in clause (i)
and (ii) above being an "Adverse Condition"), (iii) neither party shall be
required to take any of the foregoing actions if such action is not conditioned
on the consummation of the Merger and (iv) without limiting Buyer's obligations
set forth herein, the Company shall not agree to any of the foregoing without
Buyer's consent and, at Buyer's request, the Company shall agree to any of the
foregoing so long as such agreement is conditioned upon consummation of the
Merger.
(c) Each of Buyer, FTH and the Company shall give (or shall cause its
respective subsidiaries to give) any notices to third parties, and Buyer, FTH
and the Company shall use, and cause each of its subsidiaries to use, its
reasonable best efforts to obtain any third party consents not covered by
paragraphs (a) and (b) above, necessary, proper or advisable to consummate the
Forward Merger or, if a Restructuring Trigger has occurred, the Reverse Merger;
provided that neither Buyer nor FTH shall be required to pay, and the Company
shall not pay, without Buyer's prior written consent, any material
consideration to obtain any such third party consent. Each of the parties
hereto will furnish to the other such necessary information and reasonable
assistance as the other may request in connection with the preparation of any
required governmental filings or submissions and will cooperate in responding
to any inquiry from a Governmental Authority, including immediately informing
the other party of such inquiry, consulting in advance before making any
presentations or submissions to a Governmental Authority, and supplying each
other with copies of all material correspondence, filings or communications
between either party and any Governmental Authority with respect to this
Agreement.
Section 6.4 Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, Buyer will comply with the
reasonable requests of the Company to make officers available to respond to the
reasonable inquiries of the Company in connection with the transactions
contemplated by this Agreement and to make available information regarding
Buyer and its subsidiaries as the Company may reasonably request.
(b) From the date hereof to the Effective Time, to the extent permitted by
applicable Law and contracts, the Company will provide to Buyer (and its
officers, directors, employees, accountants, consultants, legal counsel, agents
and other representatives, collectively, "Representatives") access to all
employees, sites, properties, information and documents which Buyer may
reasonably request regarding the business, assets, liabilities, employees and
other aspects of the Company; provided, however, that the Company shall not be
required to provide access to any employees, sites, properties, information or
documents which would breach any agreement with any third-party or which would
constitute a waiver of the attorney-client or other privilege by the Company.
(c) Except with respect to matters related to the hiring of employees and
the solicitation for hiring of employees, which matters shall be governed by
the provisions of Section 6.17 hereof, the parties hereto shall comply with,
and shall cause their respective Representatives to comply with all of their
respective obligations under the Confidentiality Agreement dated September 16,
1999 between Buyer and the Company, as supplemented by the Addendum to the
Confidentiality Agreement, dated August 7, 2000 (as so supplemented, the
"Confidentiality Agreement"); provided that, following any termination of this
Agreement, Section 6.17 hereof shall be of no further force or effect.
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(d) No investigation pursuant to this Section 6.4 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
Section 6.5 No Solicitation of Competing Transactions.
(a) The Company shall not, directly or indirectly, through any officer,
director, agent or otherwise, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information), or take any other
action knowingly to facilitate, any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Competing
Transaction (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize any of the officers, directors or employees
of the Company or any investment banker, financial advisor, attorney,
accountant or other agent or representative of the Company to take any such
action, and the Company shall notify Buyer as promptly as practicable of all of
the relevant material details relating to all inquiries and proposals which the
Company or any such officer, director, employee, investment banker, financial
advisor, attorney, accountant or other agent or representative may receive
relating to any of such matters, provided, however, that prior to the adoption
of this Agreement and the approval of the Merger by the stockholders of the
Company, nothing contained in this Section 6.5 shall prohibit the Board of
Directors of the Company from (i) furnishing information to, or entering into
and engaging in discussions or negotiations with, any person that makes an
unsolicited proposal that the Board of Directors of the Company determines in
good faith, after consultation with the Company's financial advisors and
independent legal counsel, can be reasonably expected to result in a Superior
Proposal; provided that prior to furnishing such information to, or entering
into discussions or negotiations with, such person, the Company (1) provides
notice to Buyer to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such Person and provides, in any such
notice to Buyer in reasonable detail the identity of the Person making such
proposal and the material terms and conditions of such proposal, and (2) has
received from such person or entity an executed confidentiality agreement or
(ii) complying with Rule 14e-2 promulgated under the Exchange Act with regard
to a tender or exchange offer or making any disclosure required under
applicable Law.
(b) For purposes of this Agreement, "Competing Transaction" shall mean any
of the following involving the Company: (i) any merger, consolidation, share
exchange, business combination, issuance or purchase of securities or other
similar transaction other than transactions specifically permitted pursuant to
Section 5.1 of this Agreement; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of the assets of the Company in a single
transaction or series of related transactions; (iii) any tender offer or
exchange offer for the Company's securities or the filing of a registration
statement under the Securities Act in connection with any such exchange offer;
in the case of clauses (i), (ii) or (iii) above, which transaction would result
in a third party (or its stockholders) acquiring more than 25% of the voting
power of the capital stock then outstanding or more than 25% of the assets of
the Company and its subsidiaries, taken as a whole; or (iv) any public
announcement of an agreement, proposal, plan or intention to do any of the
foregoing, either during the effectiveness of this Agreement or at any time
thereafter.
For purposes of this Agreement, a "Superior Proposal" means any proposal
made by a third party which would result in such party (or in the case of a
parent-to-parent merger, its stockholders) acquiring, directly or indirectly,
including pursuant to a tender offer, exchange offer, merger, consolidation,
share exchange, business combination, share purchase, asset purchase,
recapitalization, liquidation, dissolution, joint venture or similar
transaction, more than 50% of the voting power of the capital stock then
outstanding or all or substantially all of the assets of the Company and its
subsidiaries, taken as a whole, for consideration which the Board of Directors
of the Company determines in its good faith judgment, after consultation with
independent legal counsel and its financial advisors, to be more favorable to
the Company's stockholders than the Merger.
Section 6.6 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the Restated Certificate of Incorporation and By-laws of
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the Company on the date of this Agreement, which provisions shall not be
amended, repealed or otherwise modified after the Effective Time in any manner
that would adversely affect the rights thereunder of individuals who at any
time prior to the Effective Time were officers, directors or employees of the
Company in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), unless such modification is required by law.
(b) The Surviving Corporation shall maintain (or cause to be maintained) in
effect for six years from the Effective Time directors' and officers' liability
insurance covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy on terms comparable to such
existing insurance coverage; provided, however, that in no event shall the
Surviving Corporation be required to expend pursuant to this Section 6.6 more
than an amount per year equal to 300% of current annual premiums paid by the
Company for such insurance; and provided further that if the annual premiums
exceed such amount, Buyer shall be obligated to obtain a policy with the
greatest coverage available for an annual cost not exceeding such amount.
(c) In addition to the other rights provided for in this Section 6.6 and not
in limitation thereof (but without in any way limiting or modifying the
obligations of any insurance carrier contemplated by Section 6.6(b)), from and
after the Effective Time, Buyer shall, and shall cause the Surviving
Corporation to, to the fullest extent permitted by applicable Law (the
"Indemnifying Party"), (i) indemnify and hold harmless (and release from any
liability to Buyer or the Surviving Corporation or any of their respective
subsidiaries), the individuals who, on or prior to the Effective Time, were
officers, directors or employees of the Company or served on behalf of the
Company as an officer, director or employee of any of the Company's current or
former subsidiaries or affiliates (including, without limitation, those
affiliates listed in Section 6.6(c) of the Company Disclosure Schedule
(collectively, "Covered Affiliates") or any of their predecessors in all of
their capacities (including as stockholder, controlling or otherwise) and the
heirs, executors, trustees, fiduciaries and administrators of such officers,
directors or employees (the "Indemnitees") against all Expenses (as defined
hereinafter), losses, claims, damages, judgments or amounts paid in settlement
("Costs") in respect of any threatened, pending or completed claim, action,
suit or proceeding, whether criminal, civil, administrative or investigative,
based on, or arising out of or relating to the fact that such person is or was
a director, officer, employee or stockholder (controlling or otherwise) of the
Company or any of its current or former subsidiaries or Covered Affiliates or
any of their predecessors arising out of acts or omissions occurring on or
prior to the Effective Time (including, without limitation, in respect of acts
or omissions in connection with this Agreement and the transactions
contemplated hereby) (an "Indemnifiable Claim"; except for acts or omissions
which involve conduct known to such Person at the time to constitute a material
violation of Law); provided that the Surviving Corporation and Buyer shall not
be responsible for any amounts paid in settlement of any Indemnifiable Claim
without the consent of Buyer and the Surviving Corporation; and (ii) advance to
such Indemnitees all Expenses incurred in connection with any Indemnifiable
Claim (including in circumstances where the Indemnifying Party has assumed the
defense of such claim) promptly after receipt of reasonably detailed statements
therefor; provided that the person to whom Expenses are to be advanced provides
an undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification from Buyer or the Surviving
Corporation. Any Indemnifiable Claim shall continue until such Indemnifiable
Claim is disposed of or all judgments, orders, decrees or other rulings in
connection with such Indemnifiable Claim are fully satisfied. Except as
otherwise may be provided pursuant to any Indemnity Agreement, the Indemnitees
as a group may retain only one law firm with respect to each related matter
except to the extent there is, in the opinion of counsel to an Indemnitee,
under applicable standards of professional conduct, a conflict on any
significant issue between positions of any two or more Indemnitees; provided
that any law firm or firms so retained shall be reasonably acceptable to Buyer.
The Indemnifying Party shall be entitled to assume and control the defense of
any potential Indemnifiable Claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to the Indemnified Party
within 30 days of its receipt of notice from the Indemnified Party that a
potential Indemnifiable Claim has been made and so long as it unconditionally
agrees in writing (x) to indemnify fully and indefinitely, subject only to
limitations required by applicable Law, and (y) not to seek repayment of any
Expenses advanced (unless such repayment would otherwise be available pursuant
to clause
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(ii) of the first sentence of this Section 6.6(c) solely because such matter
was excluded from the definition of Indemnifiable Claim pursuant to the
exception contained in the definition thereof appearing immediately prior to
the initial proviso in this subsection) from, the Indemnitees in respect of
such potential Indemnifiable Claim, and acknowledges in writing its obligation
to do so under this Section; provided, however, that, if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Indemnified Party, in its reasonable
discretion, for the same counsel to represent both the Indemnified Party and
the Indemnifying Party, then the Indemnified Party shall be entitled to retain
its own counsel at the expense of the Indemnifying Party. In the event that the
Indemnifying Party exercises the right to undertake any such defense against
any such Indemnifiable Claim as provided above, the Indemnified Party shall
cooperate with the Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against
any such Indemnifiable Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party. No such Indemnifiable Claim may be settled by any Indemnified Party
without the prior written consent of the Indemnifying Party, which consent will
not be unreasonably withheld or delayed. For the purposes of this Section 6.6,
"Expenses" shall include reasonable attorneys' fees and all other reasonable
costs, charges and expenses paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in any Indemnifiable Claim,
but shall exclude damages, losses, claims, judgments and amounts paid in
settlement. The term "Indemnitees" shall exclude persons who both (x) were
serving as officers or directors or employees of the Covered Affiliates listed
on Section 6.6(c) of the Company Disclosure Schedule at the request of an
entity other than the Company or one of its current or former subsidiaries, or
any predecessor thereto, and (y) are not otherwise an Indemnitee.
(d) Notwithstanding anything contained in Section 9.1 hereof to the
contrary, this Section 6.6 shall survive the consummation of the Merger
indefinitely, is intended to benefit each Indemnitee, shall be binding, jointly
and severally, on all successors and assigns of Buyer, the Surviving
Corporation and its subsidiaries, and shall be enforceable by the Indemnitees
and their successors. In the event that Buyer or the Surviving Corporation or
any of its subsidiaries or any of their respective successors or assigns (i)
consolidates with or merges into any other Person or (ii) transfers all or
substantially all of its properties or assets to any Person, then, and in each
case, the successors and assigns of Buyer or the Surviving Corporation or its
subsidiary, as the case may be, shall expressly assume and be bound by the
indemnification obligations set forth in this Section 6.6.
(e) The obligations of the Surviving Corporation, its subsidiaries and Buyer
under this Section 6.6 shall not be terminated or modified in such a manner as
to adversely affect any Indemnitee to whom this Section 6.6 applies without the
consent of such affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 6.6 applies shall be third party beneficiaries
of this Section 6.6).
Section 6.7 Notification of Certain Matters. The Company shall give prompt
notice to Buyer, and Buyer shall give prompt notice to the Company, of (i) the
occurrence, or nonoccurrence, of any event the occurrence, or nonoccurrence, of
which would be likely to cause (x) any representation or warranty contained in
this Agreement to be untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied or
(z) the Forward Merger not to be consummated and (ii) any failure of the
Company or Buyer, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.7
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
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Section 6.8 Tax Matters. Buyer and the Company shall make reasonable best
efforts to obtain the IRS Ruling, the tax opinions set forth in Sections 7.2(f)
and 7.3(c) hereof, and the FCC Consent, including taking any reasonable actions
requested by the IRS or the FCC in connection with obtaining the IRS Ruling and
the FCC Consent and cooperating in preparing and submitting any filings and
documents to the IRS and the FCC in a prompt manner. In the case of the Forward
Merger (a) the Agreement is intended to constitute a "plan of reorganization"
within the meaning of Section 1.368-2(g) of the income tax regulations
promulgated under the Code; (b) neither the Company nor Buyer nor their
affiliates shall directly or indirectly (without the consent of the other) take
any action, that would reasonably be expected to adversely affect the intended
tax treatment of the transactions contemplated by this Agreement; (c) officers
of Buyer, Acquisition Sub and the Company shall execute and deliver to
Squadron, Ellenoff, Plesent & Sheinfeld LLP, tax counsel to Buyer, and Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to the Company, (i) certificates
substantially in the form agreed to by the parties as of the date hereof and
other appropriate representations at such time or times as may be reasonably
requested by such law firms, including contemporaneously with the execution of
this Agreement and at the Effective Time, in connection with their respective
deliveries of opinions, pursuant to Sections 7.2(f) and 7.3(c) hereof, with
respect to the tax treatment of the Merger and (ii) representations required by
the U.S. Internal Revenue Service in order to issue the IRS Ruling; and (d)
none of the Buyer, Acquisition Sub or the Company shall take or cause to be
taken any action which would cause to be untrue (or fail to take or cause not
to be taken any action which would cause to be untrue) any of such certificates
and representations.
Section 6.9 Stock Exchange Listing. Buyer and the Company shall (a) as
promptly as reasonably practicable prepare and submit to the NYSE applications
covering the Buyer Shares to be issued in the Merger and the Buyer Shares
underlying the Company Options outstanding immediately prior to the Effective
Time, and shall use their reasonable best efforts to cause such securities to
be approved for listing on the NYSE prior to the Effective Time, (b) within two
business days after the Effective Time, prepare and submit to the ASX, pursuant
to the applicable listing rules of the ASX, applications covering the Buyer
Preferred Stock underlying the Buyer Shares issued pursuant to the Merger and
cause such securities to be approved for quotation by the ASX, and (c) promptly
seek the ASX Waiver or, if the ASX Waiver is not granted, as soon as possible
thereafter call a special meeting of shareholders to obtain the Buyer
Shareholder Approval and take all actions and prepare all documents and
shareholder materials required in connection therewith.
Section 6.10 Public Announcements. Buyer and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the
other (which consent shall not be unreasonably withheld or delayed), except as
may be required by Law or any listing rules of, or listing agreement or
arrangement with, a national securities exchange or the ASX to which Buyer or
the Company is a party. The parties have agreed on the text of a joint press
release by which Buyer and the Company will announce the execution of this
Agreement.
Section 6.11 Affiliates of the Company. The Company represents and warrants
to Buyer that prior to the date of the Stockholders' Meeting the Company will
deliver to Buyer a letter identifying all persons who may be deemed affiliates
of the Company under Rule 145 of the Securities Act, including, without
limitation, all directors and executive officers of the Company, and the
Company represents and warrants to Buyer that the Company has advised the
persons identified in such letter of the resale restrictions imposed by
applicable securities laws. The Company shall use its reasonable best efforts
to obtain from each person identified in such letter a written agreement,
substantially in the form of Exhibit A. The Company shall use its reasonable
best efforts to obtain as soon as practicable from any person who may be deemed
to have become an affiliate of the Company after the Company's delivery of the
letter referred to above and prior to the Effective Time, a written agreement
substantially in the form of Exhibit A.
Section 6.12 Employee Matters.
(a) During the one-year period commencing on the Effective Date, Buyer shall
provide or shall cause the Surviving Corporation to provide to employees and
former employees of the Company and any of its
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subsidiaries ("Company Employees") employee benefits (including incentive
opportunities but excluding benefits under equity-based plans) that are either
(i) in the aggregate, substantially comparable to the benefits being provided
to Company Employees as of the date of this Agreement under the Company Benefit
Plans or (ii) substantially similar to those being provided to similarly
situated employees of the Buyer (other than for former employees of the
Company).
(b) Without limiting the generality of paragraph (a) of this Section 6.12,
if the Effective Time occurs prior to December 31, 2000, (1) each Company
Employee who either (a) is a participant in the Company's 2000 Management
Incentive Compensation Plan or (b) received an annual bonus in respect of 1999
and is eligible to receive an annual bonus for the year 2000 and who, in either
case, is employed by the Company immediately prior to the Effective Time, shall
be entitled to receive, in lieu of any other bonus to which the participant may
otherwise be entitled under such plan, or for the period from January 1, 2000
through the Effective Time, as the case may be, a prorated bonus (the "Pro-Rata
Bonus"), determined by multiplying (i) the participant's annual bonus in
respect of 1999 by (ii) a fraction, the numerator of which is equal to the
number of days in calendar year 2000 through and including the Effective Time
and the denominator of which is 366 and (2) each such Company Employee (other
than any person who is a party to an Employment Agreement (as defined in
Section 6.12(e) of the Company Disclosure Schedule)) who remains employed with
the Company (or its successor) or any affiliate thereof through December 31,
2000, shall be entitled to receive an additional bonus such that, when added to
such employee's Pro-Rata Bonus, such employee's aggregate annual bonus in
respect of 2000 is not less than such employee's annual bonus in respect of
1999. Such annual bonus with respect of 2000 shall be payable at such time that
annual bonuses are normally paid to similarly situated employees of the
Company. If the Effective Time occurs during the calendar year 2001, then the
process described in (1) of the preceding sentence shall apply in an analogous
manner to the Company's 2001 Bonus Plan and to other employees who receive an
annual bonus in respect of the year 2000, with the references to the year 2000
therein being deemed to be references to the year 2001 and with references to
the year 1999 therein being deemed to be references to the year 2000 and
subject to Section 6.12(a), the process for determining the bonus for those who
remain employed on and after the Effective Time through December 31, 2001 shall
be determined in the discretion of the Buyer.
(c) Without limiting the generality of paragraph (a) of this Section 6.12,
with respect to each Buyer Plan, each Surviving Corporation plan and such other
employee benefit plans as may be maintained for Company Employees from time to
time following the Effective Time by Buyer, the Surviving Corporation or any
subsidiary of the Surviving Corporation (including, without limitation, plans
or policies providing severance benefits and vacation entitlement), and service
with the Company and any of its subsidiaries (or a predecessor to the Company's
or any of its subsidiaries' business or assets) shall be treated as service
with the Buyer, the Surviving Corporation or any of its subsidiaries, as the
case may be, to the extent recognized in the comparable plans of the Company
for purposes of determining eligibility to participate and vesting but not for
purposes of benefit accrual. Such service also shall apply for purposes of
satisfying any waiting periods, evidence of insurability requirements, or the
application of any preexisting condition limitations. In the event Company
Employees are transferred to a new health plan maintained by the Surviving
Corporation effective as of a date within the annual plan year for purposes of
accumulating annual deductibles, copayments and out-of-pocket maximums, Company
Employees shall be given credit for amounts they have paid under a
corresponding benefit plan during the new health plan's year in which the
Company Employees are transferred for purposes of applying deductibles,
copayments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms and conditions of the benefit plan maintained by
Surviving Corporation or any of its subsidiaries. Buyer shall also honor, or
cause the Surviving Corporation to honor, all vacation, personal and sick days
accrued by the Company Employees under the plans, policies, programs and
arrangements of the Company or any of its subsidiaries immediately prior to the
Effective Time to the extent reserved against the Company's financial
statements.
(d) Without limiting the generality of paragraph (a) of this Section 6.12,
Surviving Corporation shall, or shall cause its subsidiaries to, honor, in
accordance with their terms, and shall, or shall cause its subsidiaries to,
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make required payments when due under, all Company Benefit Plans maintained or
contributed to by the Company or any of its subsidiaries or to which the
Company or any of its subsidiaries is a party (including, but not limited to,
employment, incentive and severance agreements and arrangements), that are
applicable with respect to any Company Employee or any director of the Company
or any of its subsidiaries (whether current, former or retired) or their
beneficiaries; provided, however, that, subject to the provisions of Section
6.12(e) of the Company Disclosure Schedule, the foregoing shall not preclude
the Surviving Corporation or any of its subsidiaries from amending or
terminating any Company Benefit Plan in accordance with its terms.
(e) Buyer and the Surviving Corporation agree to the terms and conditions
set forth on Section 6.12(e) of the Company Disclosure Schedule with respect to
certain employee benefit matters.
Section 6.13 Letters of the Company's Accountants. The Company shall use
reasonable best efforts to cause to be delivered to Buyer two "comfort" letters
in customary form from PricewaterhouseCoopers LLP, the Company's independent
public accountants, one dated a date within five business days before the date
on which the Registration Statement shall become effective and one dated a date
within five business days before the Closing Date, each addressed to Buyer.
Section 6.14 Letters of Buyer's Accountants. Buyer shall use reasonable best
efforts to cause to be delivered to the Company two "comfort" letters in
customary form from Arthur Andersen LLP, Buyer's independent public
accountants, one dated a date within five business days before the date on
which the Registration Statement shall become effective and one dated a date
within five business days before the Closing Date, each addressed to the
Company.
Section 6.15 [INTENTIONALLY OMITTED]
Section 6.16 Other Merger Agreements. Buyer shall comply with its
obligations under the BHC Merger Agreement and the UTV Merger Agreement. The
Company shall comply with its obligations under the voting and proxy agreement
related to the BHC Merger and shall cause BHC to comply with its obligations
under the voting and proxy agreement related to the UTV Merger.
Section 6.17 Employee Solicitation. In addition to, and not in limitation of
any restrictions on the parties hereto contained in other documents, the
parties hereto agree that during the period from the date hereof to the earlier
of the termination of this Agreement or the consummation of the Merger, neither
they nor any of their controlled affiliates shall solicit for employment any
current senior management level employees or any of the three (3) highest
compensated on air talent employees at each station of the other party hereto.
This Section 6.17 shall govern in the event of any inconsistency between this
Section 6.17 and Section 6.4 hereof.
Section 6.18 Post-Closing Covenant of Buyer. As of or promptly following the
Effective Time, in the case of the Forward Merger Buyer shall cause such assets
as Buyer shall determine, but at a minimum shall include the broadcast assets
and related liabilities held or previously held by the Company and its
subsidiaries, to be transferred to and assumed by one or more direct or
indirect subsidiaries of Buyer, and shall cause such assets and liabilities to
be ultimately held by, a newly formed subsidiary which is a member of the
consolidated group for U.S. federal income tax purposes of News Publishing
Australia Limited ("Newco") of Fox Entertainment Group, Inc. ("FEG"). As of or
promptly following the Effective Time, Newco and either FTH or a wholly owned
subsidiary thereof will enter into the Newco-FTH Agreement (as hereinafter
defined). The "Newco-FTH Agreement" shall be an agreement prepared by Buyer and
FTH as soon as practicable after the date hereof and in any event no later than
August 31, 2000 which (i) reflects and is consistent with the terms set forth
on Exhibit B hereto and (ii) otherwise is as Buyer and FTH shall determine, but
which is consistent with the objective of obtaining the FCC Consent (without an
Adverse Condition) with respect to the Forward Merger and the IRS Ruling;
provided that it shall not contain any provisions as to which the Company
reasonably objects by reason of concerns as to the Federal income tax treatment
of the Forward Merger or the ability to obtain the FCC Consent (without any
Adverse Condition) or the IRS Ruling for the Forward Merger.
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Buyer and FTH shall comply with this Section 6.18 in a manner deemed
appropriate by Buyer and FTH; provided, that Buyer and FTH shall act in a
manner that preserves (i) the qualification of the Merger as a reorganization
under Section 368(a) of the Code and (ii) the effectiveness and validity of the
FCC Consent (as defined below). In the event of the Reverse Merger, as of or
promptly following the Effective Time, the broadcast assets and related
liabilities held by the Company and its subsidiaries (or the Company and its
subsidiaries themselves by way of merger) will be transferred to and assumed by
FTH or one or more direct or indirect subsidiaries thereof. The foregoing
processes contained in this Section 6.18 and the actions contemplated hereby
shall be deemed to constitute "transactions contemplated by this Agreement" for
purposes of Buyer's representations and warranties herein.
Section 6.19 Form of Merger. In the event that there is a Ruling Failure or
an FCC Failure (each, a "Restructuring Trigger"), then the Merger shall be
effected as the Reverse Merger and not as the Forward Merger and, in lieu of
News Publishing Australia Limited, a newly formed indirect subsidiary of Buyer
shall be Acquisition Sub and Buyer shall cause such Acquisition Sub to execute
a counterpart signature page to this Agreement and become a party hereto. In
the event that following the occurrence of a Restructuring Trigger and prior to
the Effective Time, subsequent events occur such that the conditions to
effecting the Forward Merger are all satisfied, then the Merger shall occur as
if such Triggering Event had never occurred. For purposes of this Agreement, a
"Ruling Failure" shall be deemed to have occurred (i) if the IRS Ruling (as
defined herein) is not obtained on or prior to the seven month anniversary of
the submission of the ruling request to the Internal Revenue Service (unless a
responsible officer of the Internal Revenue Service has indicated to
representatives of both the Company and Buyer that the IRS Ruling is likely to
be issued within the next succeeding three months and such IRS Ruling is so
issued within such three month period) in form and substance reasonably
satisfactory to each of the parties hereto or (ii) a responsible officer of the
Internal Revenue Service has indicated to representatives of both the Company
and Buyer prior to the three month anniversary of this Agreement that the IRS
Ruling, in form and substance reasonably satisfactory to each of the parties
hereto, is not likely to be issued, and such indication shall not have been
reversed or withdrawn prior to the five month anniversary of the date of this
Agreement or (iii) either Skadden, Arps, Slate, Meagher & Flom LLP or Squadron,
Ellenoff, Plesent & Sheinfeld LLP indicates in writing to the Company and Buyer
that it will not be able to deliver its respective opinion pursuant to Section
7.3 or Section 7.2, as the case may be. For purposes of this Agreement, an "FCC
Failure" shall be deemed to have occurred (i) if the FCC Consent (without an
Adverse Condition) is not obtained on or prior to the ten month anniversary of
this Agreement (unless a responsible officer of the FCC has indicated to
representatives of both the Company and Buyer that the FCC Consent (without an
Adverse Condition) will be issued within the next succeeding two months and
such FCC Consent is so issued within such two month period) in form and
substance reasonably satisfactory to each of the parties hereto or (ii) a
responsible officer of the FCC has indicated to representatives of both the
Company and Buyer that the FCC Consent, in form and substance reasonably
satisfactory to each of the parties hereto, will not be issued and, prior to
the three month anniversary of this Agreement, such indication shall not have
been reversed or withdrawn; provided that no FCC Failure shall have occurred if
a responsible officer of the FCC has indicated (and subsequently not withdrawn
or changed such indication) to representatives of both the Company and Buyer
that the sole reason or reasons for the FCC Consent (without an Adverse
Condition) not having been obtained does not relate in any manner to whether
the Merger is the Forward Merger or the Reverse Merger and that there is no
material greater likelihood of obtaining the FCC Consent (without an Adverse
Condition) with respect to the Reverse Merger than the Forward Merger.
Section 6.20 Obligations of FTH. In view of the fact that one or more
subsidiaries of FTH would become the licensees of the Company Stations under
either the Forward Merger or the Reverse Merger and would otherwise benefit
from either merger, FTH agrees that it shall take such actions, and shall cause
its subsidiaries to take such actions, as may be necessary to accomplish the
requirements of FTH under Sections 6.3, 6.18 and 6.19 hereof and any other
requirements of this Agreement relating to the effectuation of, or transactions
to be accomplished immediately following, the Forward Merger or the Reverse
Merger, as the case may be.
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ARTICLE VII
Conditions to the Merger
Section 7.1 Conditions to the Obligations of Each Party. The obligations of
the Company and Buyer to consummate the Merger are subject to the satisfaction
or waiver by the Company and Buyer of the following conditions:
(a) this Agreement shall have been adopted by the affirmative vote of a
majority of the votes entitled to be cast by stockholders (including the
holders of the Convertible Preferred Stock) at the Stockholders' Meeting,
voting together as a single class, and the affirmative vote of a majority of
the votes entitled to be cast by holders of the Convertible Preferred Stock at
the Stockholders' Meeting, voting as a separate class (after giving effect to
the redemption of the Prior Preferred Stock required pursuant to Section 5.2
hereof);
(b) any applicable waiting period under the HSR Act relating to the Merger
shall have expired or been terminated;
(c) no Governmental Authority or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Law, rule, regulation,
executive order or Order which is then in effect and has the effect of making
the Merger illegal or otherwise prohibiting the consummation of the Merger;
(d) the Registration Statement shall have been declared effective, and no
stop order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the SEC;
(e) the FCC Consent (as defined below) shall have been obtained. "FCC
Consent," as used herein, means action by the FCC granting its consent to the
assignment or to the transfer of control of the FCC licenses of the Company and
its subsidiaries to FTH (or a wholly owned subsidiary of FTH), including
transfer of those authorizations, licenses, permits, and other approvals,
issued by the FCC, and used in the operation of the Company Stations, pursuant
to appropriate applications filed by the parties with the FCC, as contemplated
by this Agreement;
(f) all other authorizations, consents, waivers, orders or approvals for the
Merger required to be obtained, and all other filings, notices or declarations
required to be made, by Buyer and the Company prior to the consummation of the
Merger and the transactions contemplated hereunder, shall have been obtained
from, and made with, all required Governmental Authorities, including the ASX
Waiver or, if the ASX Waiver is not granted, the Buyer Shareholder Approval,
and except for such authorizations, consents, waivers, orders, approvals,
filings, notices or declarations the failure to obtain or make which would not,
individually or in the aggregate, have a Company Material Adverse Effect or
Buyer Material Adverse Effect; provided, however, that a party who has failed
to fulfill its obligations under Section 6.3 hereof shall not be entitled to
deem this Section 7.1(e) unsatisfied by reason of such non-fulfillment;
(g) the Buyer Shares issuable to the Company's stockholders in the Merger
and to holders of Company Options outstanding immediately prior to the
Effective Time shall have been authorized for listing on the NYSE, subject to
official notice of issuance; and
(h) all conditions to all parties' obligations to consummate the Subsidiary
Mergers, except completion of the Merger and, in the case of the UTV Merger,
completion of the BHC Merger, shall have been satisfied or waived; provided,
however, that this condition may not be enforced by a party whose actions or
failure to act has prevented the conditions to the consummation of the
Subsidiary Mergers from being satisfied; and provided further that this
condition may not be enforced by the Company by reason of the failure to obtain
the requisite stockholder vote by the stockholders of BHC or UTV, as the case
may be, at a duly held stockholders' meeting called for such purpose or at any
adjournment or postponement thereof.
Section 7.2 Conditions to the Obligations of Buyer. The obligations of Buyer
to consummate the Merger are subject to the satisfaction or waiver by Buyer of
the following further conditions:
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(a) each of the representations and warranties of the Company contained in
this Agreement that is qualified as to materiality shall be true and correct,
and each of the representations and warranties of the Company contained in this
Agreement that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Effective
Time with the same effect as though made as of the Effective Time (except to
the extent expressly made as of an earlier date, in which case as of such
date), and the Buyer shall have received a certificate signed on behalf of the
Company by the chief executive officer or chief financial officer of the
Company to such effect;
(b) the Company shall have performed or complied in all material respects
with all material agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and Buyer
shall have received a certificate signed on behalf of the Company by the chief
executive officer or chief financial officer of the Company to such effect;
(c) Buyer shall have received from each person named in the letter referred
to in Section 6.11 an executed copy of an agreement substantially in the form
of Exhibit A hereto;
(d) Buyer shall have received evidence, in form and substance reasonably
satisfactory to it, that Buyer or the Company shall have obtained (i) all
material consents, approvals, authorizations, qualifications and orders of all
Governmental Authorities legally required for the consummation of the Merger
and (ii) all other consents, approvals, authorizations, qualifications and
orders of Governmental Authorities or third parties required (other than those
set forth in Section 7.2(d) of the Company Disclosure Schedule) for the
consummation of the Merger, except, in the case of this clause (ii), for those
the failure of which to be obtained individually or in the aggregate could not
reasonably be expected to have a Company Material Adverse Effect or a Buyer
Material Adverse Effect; provided, however, that if Buyer has failed to fulfill
its obligations under Section 6.3 hereof it shall not be entitled to deem this
Section 7.2(d) unsatisfied by reason of such non-fulfillment;
(e) the redemption of the Prior Preferred Stock shall have been consummated
in accordance with Section 5.2;
(f) In the case of the Forward Merger, Buyer shall have received (i) the
opinion of Squadron, Ellenoff, Plesent & Sheinfeld LLP, in form and substance
reasonably satisfactory to Buyer, dated as of the Closing Date, on the basis of
facts, representations and assumptions set forth in such opinion, the IRS
Ruling, and certificates obtained from officers of Buyer, Acquisition Sub and
the Company, all of which are consistent with the state of facts existing as of
the Effective Time, to the effect that (A) the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code, (B) for U.S.
federal income tax purposes, no income, gain or loss will be recognized by
Buyer, Acquisition Sub and the Company as a result of the Merger, and (C) for
U.S. federal income tax purposes, no income, gain or loss will be recognized by
the holders of Common Stock Equivalents as a result of the Merger except to the
extent such holders receive cash as Merger Consideration and (ii) a private
letter ruling (the "IRS Ruling") from the IRS, to the effect that the Merger
will satisfy the continuity of business enterprise requirement described in
Treasury Regulations Section 1.368-1(d). In rendering the opinion described in
clause (i) hereof, Squadron, Ellenoff, Plesent & Sheinfeld LLP shall have
received and may rely upon the certificates and representations referred to in
Section 6.8 hereof; and
(g) the FCC Consent shall not contain any Adverse Condition.
Section 7.3 Conditions to the Obligations of the Company. The obligations of
the Company to consummate the Merger are subject to the satisfaction or waiver
by the Company of the following further conditions:
(a) each of the representations and warranties of Buyer contained in this
Agreement that is qualified as to materiality shall be true and correct, and
each of the representations and warranties of Buyer contained in this Agreement
that are not qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Effective Time with
the same effect as though made on and as of the Effective
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Time (except to the extent expressly made as of an earlier date, in which case
as of such date), and the Company shall have received a certificate signed on
behalf of Buyer by the chief executive officer or chief financial officer of
Buyer to such effect;
(b) Buyer and FTH shall have performed or complied in all material respects
with all material agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and the
Company shall have received a certificate signed on behalf of Buyer by the
chief executive officer or chief financial officer of Buyer to such effect; and
(c) In the case of the Forward Merger, the Company shall have received (i)
the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, in form and substance
reasonably satisfactory to the Company, dated as of the Closing Date, on the
basis of facts, representations and assumptions set forth in such opinion, the
IRS Ruling, and certificates obtained from officers of Buyer, Acquisition Sub
and the Company, all of which are consistent with the state of facts existing
as of the Effective Time, to the effect that (A) the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code, (B) for U.S.
federal income tax purposes, no income, gain or loss will be recognized by
Buyer, Acquisition Sub and the Company as a result of the Merger, and (C) for
U.S. federal income tax purposes, no income, gain or loss will be recognized by
the holders of Common Stock Equivalents as a result of the Merger except to the
extent such holders receive cash as Merger Consideration and (ii) the IRS
Ruling. In rendering the opinion described in clause (i) hereof, Skadden, Arps,
Slate, Meagher & Flom LLP shall have received and may rely upon the
certificates and representations referred to in Section 6.8 hereof.
ARTICLE VIII
Termination, Amendment and Waiver
Section 8.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, notwithstanding any
requisite adoption of this Agreement and approval of the Merger, as follows:
(a) by mutual written consent duly authorized by the Boards of Directors of
each of Buyer and the Company;
(b) by either Buyer or the Company, if the Effective Time shall not have
occurred on or before 15 months from the execution of this Agreement (the
"Termination Date");
(c) by the Company, upon a breach of any representation, warranty, covenant
or agreement on the part of Buyer or FTH set forth in this Agreement, or if any
representation or warranty of Buyer shall have become untrue, in either case
such that the conditions set forth in Section 7.3(a) or (b) cannot be satisfied
on or before the Termination Date (a "Terminating Buyer Breach");
(d) by Buyer, upon breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Sections 7.2(a) or (b) cannot be
satisfied on or before the Termination Date ("Terminating Company Breach");
(e) by either Buyer or the Company, if any Governmental Authority of
competent jurisdiction shall have issued an Order or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such Order or other action shall have
become final and nonappealable;
(f) by Buyer or the Company if the approval of the Merger by the
stockholders of the Company required for the consummation of the Merger as set
forth in Section 7.1(a) shall not have been obtained by reason of the
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failure to obtain such required vote at a duly held Stockholders' Meeting or at
any adjournment or postponement thereof; or
(g) by Buyer or the Company if either of the Subsidiary Merger Agreements
shall have been terminated; provided, however, that a party shall not have the
right to terminate this Agreement pursuant to this Section 8.1(g) if its
actions or failure to act shall have prevented the consummation of either such
Subsidiary Merger; and provided further that this condition may not be enforced
by the Company by reason of the failure to obtain the requisite stockholder
vote by the stockholders of BHC or UTV, as the case may be, at a duly held
stockholders' meeting called for such purpose or at any adjournment or
postponement thereof.
Section 8.2 Effect of Termination. Subject to Sections 8.5 and 9.1 hereof,
in the event of termination of this Agreement pursuant to Section 8.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of Buyer, FTH or the Company or any of their respective
officers or directors and all rights and obligations of each party hereto shall
cease; provided, however, that nothing herein shall relieve any party from
liability for the willful breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
Section 8.3 Amendment. This Agreement may be amended by mutual agreement of
the parties hereto by action taken by or on behalf of their respective Boards
of Directors at any time prior to the Effective Time; provided, however, that,
after the adoption of this Agreement and the approval of the Merger by
stockholders of the Company, there shall not be any amendment that by Law
requires further approval by the stockholders of the Company without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto.
Section 8.4 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto
and (c) subject to the proviso of Section 8.3, waive compliance with any
agreement or condition contained herein. Any such extension or waiver shall
only be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
Section 8.5 Expenses. Except as set forth in this Section 8.5, all Expenses
(as defined below) incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses, whether or not the Merger or any other transaction is
consummated, except that the Company and Buyer each shall pay one-half of all
Expenses relating to (i) printing, filing and mailing the Registration
Statement and the Proxy Statement and all SEC and other regulatory filing fees
incurred in connection with the Registration Statement and the Proxy Statement,
(ii) any filing with the FCC or similar authority and (iii) any filing with
antitrust authorities; provided, however, that Buyer shall pay all Expenses
relating to the Exchange Agent and, provided further, that the Company, BHC and
UTV shall not, in the aggregate, pay more than one-half of the Expenses.
"Expenses" as used in this Agreement (other than Section 6.6 hereof) shall
include all reasonable out-of-pocket expenses (including all fees and expenses
of counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and mailing of
the Registration Statement and the Proxy Statement, the solicitation of
stockholder and stockholder approvals, the filing of any required notices under
the HSR Act or other similar regulations, any filings with the SEC or the FCC
and all other matters related to the closing of the Merger and the other
transactions contemplated by this Agreement.
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ARTICLE IX
General Provisions
Section 9.1 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement and any
certificate delivered pursuant hereto by any person shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
8.1, as the case may be, except that this Section 9.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time or after termination of this Agreement,
including, without limitation, those contained in Sections 6.4, 6.6, 6.8, 6.10,
6.11, 6.12, 6.18 and 6.20.
Section 9.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by facsimile, by courier service or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.2):
if to Buyer or to FTH:
The News Corporation Limited
1211 Avenue of the Americas
New York, New York 10036
Telecopier: 212-768-2029
Attention: Arthur M. Siskind, Esq.
Senior Executive Vice President and Group General Counsel
with copies to:
Squadron, Ellenoff, Plesent & Sheinfeld LLP
551 Fifth Avenue
New York, New York 10176
Telecopier No.: (212) 697-6686
Attention: Jeffrey W. Rubin, Esq.
if to the Company:
Chris-Craft Industries, Inc.
767 Fifth Avenue
New York, New York 10153
Telecopier No.: (212) 759-7653
Attention: General Counsel
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Telecopier No.: (212) 735-2000
Attention: Lou R. Kling, Esq.
- and -
Howard L. Ellin, Esq.
Section 9.3 Interpretation, Certain Definitions. When a reference is made in
this Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement, unless otherwise
indicated. The table of contents and headings for this Agreement are for
reference purposes
A-48
<PAGE>
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.
The definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any statute defined or referred to
herein or in any agreement or instrument that is referred to herein means such
statute as from time to time amended, modified or supplemented, including (in
the case of statutes) by succession of comparable successor statutes.
References to a person are also references to its permitted successors and
assigns. References to "$" or "dollars" herein shall be deemed to be references
to US$.
For purposes of this Agreement, the term:
(a) "affiliate," of a specified Person, means a Person who, directly or
indirectly, through one or more intermediaries controls, is controlled by, or
is under common control with, such specified Person;
(b) "business day" means any day on which the principal offices of the SEC
in Washington, D.C. are open to accept filings, or, in the case of determining
a date when any payment is due, any day on which banks are not required or
authorized to close in the City of New York;
(c) "control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly, or as trustee or executor,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "Governmental Authority" means any United States (Federal, state or
local) or foreign government, or governmental, regulatory, judicial or
administrative authority, agency or commission;
(e) "knowledge" means the actual knowledge of the following officers and
employees of the Company and Buyer, without benefit of an independent
investigation of any matter, as to (i) the Company: Herbert J. Siegel, John C.
Siegel, William D. Siegel, Brian C. Kelly, Evan C. Thompson and Joelen K.
Merkel and (ii) Buyer: K.R. Murdoch, D.F. DeVoe, A. Siskind, Peter Chernin and
Chase Carey; and
(f) "subsidiary" or "subsidiaries," of any Person, means any corporation,
partnership, joint venture or other legal entity of which such Person (either
above or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests, the holders
of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
For purposes of this Agreement, FTH and its subsidiaries shall each be deemed
to be a subsidiary of Buyer, of FEG and of all of the entities of which FEG is
itself a subsidiary.
Section 9.4 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the Merger be consummated as originally contemplated to the fullest extent
possible.
Section 9.5 Entire Agreement; Assignment. This Agreement (including the
Exhibits, the Company Disclosure Schedule and the Buyer Disclosure Schedule
which are hereby incorporated herein and made a part
A-49
<PAGE>
hereof for all purposes as if fully set forth herein) and the Confidentiality
Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof. The parties agree to comply with all covenants and
agreements set forth on the Company Disclosure Schedule and the Buyer
Disclosure Schedule as if such covenants and agreements were fully set forth in
this Agreement. This Agreement shall not be assigned by the Company. Buyer
shall not assign this Agreement, other than to an affiliate of Buyer; provided
that no such assignment shall relieve Buyer of any of its obligations
hereunder.
Section 9.6 Parties in Interest. Except as otherwise provided in this
Section 9.6, this Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement
other than Sections 6.6 and 6.11 and as specified in paragraph nine (9) of
Section 6.12(e) of the Company Disclosure Schedule (which are intended to be
for the benefit of the Persons covered thereby and may be enforced by such
Persons), 6.20 and, in the event that the Forward Merger is consummated,
Sections 6.8 and 6.18 (which three sections are intended for the benefit of the
persons who were the stockholders of the Company immediately preceding the
Effective Time).
Section 9.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware.
Section 9.8 Consent to Jurisdiction.
(a) Each of Buyer and the Company hereby irrevocably submits to the
exclusive jurisdiction of the courts of the State of Delaware and to the
jurisdiction of the United States District Court for the State of Delaware, for
the purpose of any action or proceeding arising out of or relating to this
Agreement and each of Buyer and the Company hereby irrevocably agrees that all
claims in respect to such action or proceeding may be heard and determined
exclusively in any Delaware state or federal court. Each of Buyer and the
Company agrees that a final judgment in any action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
(b) Each of Buyer and the Company irrevocably consents to the service of the
summons and complaint and any other process in any other action or proceeding
relating to the transactions contemplated by this Agreement, on behalf of
itself or its property, by personal delivery of copies of such process to such
party in accordance with Section 9.2. Nothing in this Section 9.8 shall affect
the right of any party to serve legal process in any other manner permitted by
law.
Section 9.9 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
Section 9.10 WAIVER OF JURY TRIAL
EACH OF BUYER AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS
OF BUYER OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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In Witness Whereof, Buyer, Acquisition Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
The News Corporation Limited
/s/ Arthur M. Siskind
By:__________________________________
Name: Arthur M. Siskind
Title: Director
News Publishing Australia Limited
/s/ Paula Wardynski
By:__________________________________
Name: Paula Wardynski
Title: Vice President
Fox Television Holdings, Inc.
(solely as to Section 6.3 and
Section 6.20 of this Agreement)
/s/ Paula Wardynski
By:__________________________________
Name: Paula Wardynski
Title: Vice President
Chris-Craft Industries, Inc.
/s/ Herbert J. Siegel
By:__________________________________
Name: Herbert J. Siegel
Title: Chairman and President
A-51
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CONFORMED COPY ANNEX B
AGREEMENT AND PLAN OF MERGER
Among
BHC COMMUNICATIONS, INC.,
THE NEWS CORPORATION LIMITED,
NEWS PUBLISHING AUSTRALIA LIMITED
and
FOX TELEVISION HOLDINGS, INC.
Dated as of August 13, 2000, as Amended
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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ARTICLE I
The Merger
<C> <S> <C>
Section 1.1 The Merger................................................. 2
Section 1.2 Effect on Securities....................................... 2
Section 1.3 Share Election............................................. 5
Section 1.4 Allocation and Proration................................... 7
Section 1.5 Exchange of Certificates................................... 8
Section 1.6 Transfer Taxes; Withholding; Certain Stock................. 10
Section 1.7 Lost Certificates.......................................... 11
Section 1.8 Dissenting Shares.......................................... 11
Section 1.9 Merger Closing............................................. 11
ARTICLE II
The Surviving Corporation
Section 2.1 Certificate of Incorporation............................... 11
Section 2.2 By-laws.................................................... 11
Section 2.3 Officers and Board of Directors............................ 11
ARTICLE III
Representations and Warranties of The Company
Section 3.1 Organization and Qualification; Subsidiaries............... 12
Section 3.2 Restated Certificate of Incorporation and By-Laws.......... 12
Section 3.3 Capitalization............................................. 13
Section 3.4 Authority Relative to Agreement............................ 13
Section 3.5 No Conflict; Required Filings and Consents................. 14
Section 3.6 Permits and Licenses; Contracts; Compliance with Laws...... 14
Section 3.7 SEC Reports................................................ 16
Section 3.8 Absence of Certain Changes or Events....................... 16
Section 3.9 Absence of Litigation...................................... 17
Section 3.10 Employee Benefit Plans..................................... 17
Section 3.11 Labor Matters.............................................. 19
Section 3.12 Environmental Matters...................................... 19
Section 3.13 Trademarks, Patents and Copyrights......................... 20
Section 3.14 Taxes...................................................... 21
Section 3.15 Tax Matters................................................ 22
Section 3.16 Title to Properties; Assets................................ 22
Section 3.17 Year 2000 Compliance....................................... 22
Section 3.18 Opinion of Financial Advisors.............................. 23
Section 3.19 Vote Required.............................................. 23
Section 3.20 Brokers.................................................... 23
Section 3.21 State Takeover Statutes.................................... 23
Section 3.22 UTV........................................................ 23
</TABLE>
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<TABLE>
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ARTICLE IV
Representations and Warranties of Buyer
<C> <S> <C>
Section 4.1 Organization and Qualification; Subsidiaries............... 24
Section 4.2 Charter Documents.......................................... 24
Section 4.3 Capitalization............................................. 24
Section 4.4 Authority Relative to Agreement............................ 25
Section 4.5 No Conflict; Required Filings and Consents................. 25
Section 4.6 Permits and Licenses....................................... 26
Section 4.7 Buyer SEC/ASX Reports...................................... 26
Section 4.8 Absence of Certain Changes or Events....................... 27
Section 4.9 Tax Matters................................................ 27
Section 4.10 Brokers.................................................... 27
Section 4.11 Interim Operations of Acquisition Sub...................... 27
ARTICLE V
Conduct of Business Pending The Merger
Section 5.1 Conduct of Business by the Company Pending the Merger...... 27
Section 5.2 FCC Matters................................................ 30
Section 5.3 Certain Tax Matters........................................ 30
ARTICLE VI
Additional Agreements
Section 6.1 Registration Statement; Proxy Statement.................... 30
Section 6.2 Stockholders' Meetings..................................... 32
Section 6.3 Appropriate Action; Consents; Filings...................... 32
Section 6.4 Access to Information; Confidentiality..................... 34
Section 6.5 No Solicitation of Competing Transactions.................. 34
Section 6.6 Directors' and Officers' Indemnification and Insurance..... 35
Section 6.7 Notification of Certain Matters............................ 37
Section 6.8 Tax Matters................................................ 37
Section 6.9 Stock Exchange Listing..................................... 38
Section 6.10 Public Announcements....................................... 38
Section 6.11 Affiliates of the Company.................................. 38
Section 6.12 Employee Matters........................................... 38
Section 6.13 Letters of the Company's Accountants....................... 39
Section 6.14 Letters of Buyer's Accountants............................. 39
Section 6.15 [INTENTIONALLY OMITTED].................................... 39
Section 6.16 Other Merger Agreements.................................... 39
Section 6.17 Employee Solicitation...................................... 40
Section 6.18 Post-Closing Covenant of Buyer............................. 40
Section 6.19 Form of Merger............................................. 40
Section 6.20 Advance of Funds........................................... 41
Section 6.21 Obligations of FTH......................................... 41
</TABLE>
B-ii
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<TABLE>
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ARTICLE VII
Conditions to the Merger
<C> <S> <C>
Section 7.1 Conditions to the Obligations of Each Party............... 41
Section 7.2 Conditions to the Obligations of Buyer.................... 42
Section 7.3 Conditions to the Obligations of the Company.............. 43
ARTICLE VIII
Termination, Amendment and Waiver
Section 8.1 Termination............................................... 44
Section 8.2 Effect of Termination..................................... 45
Section 8.3 Amendment................................................. 45
Section 8.4 Waiver.................................................... 45
Section 8.5 Expenses.................................................. 45
ARTICLE IX
General Provisions
Non-Survival of Representations, Warranties and
Section 9.1 Agreements................................................ 45
Section 9.2 Notices................................................... 46
Section 9.3 Interpretation, Certain Definitions....................... 46
Section 9.4 Severability.............................................. 47
Section 9.5 Entire Agreement; Assignment.............................. 47
Section 9.6 Parties in Interest....................................... 48
Section 9.7 Governing Law............................................. 48
Section 9.8 Consent to Jurisdiction................................... 48
Section 9.9 Counterparts.............................................. 48
Section 9.10 WAIVER OF JURY TRIAL...................................... 48
EXHIBITS
Exhibit A Voting Agreement
Exhibit B Form of Written Agreement with Company Affiliate
Exhibit C Terms of Newco-FTH Agreement
</TABLE>
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TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
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<S> <C>
1999 Balance Sheet......................................................... 21
Acquisition Sub............................................................ 1
Actions.................................................................... 30
Adverse Condition.......................................................... 33
Agreement.................................................................. 1
All Cash Election.......................................................... 5
All Cash Election Shares................................................... 7
Blue Sky Laws.............................................................. 14
Buyer...................................................................... 1
Buyer Disclosure Schedule.................................................. 24
Buyer FCC Licenses......................................................... 26
Buyer Licensed Facilities.................................................. 26
Buyer Preferred Stock...................................................... 3
Buyer SEC Reports.......................................................... 26
Buyer Shares............................................................... 3
Buyer Shares Trust......................................................... 9
Cash Amount................................................................ 8
Cash Election Shares....................................................... 3
Cash Fraction.............................................................. 7
Certificate of Merger...................................................... 2
Certificates............................................................... 8
Chris-Craft................................................................ 1
Chris-Craft Merger......................................................... 1
Chris-Craft Merger Agreement............................................... 1
Class A Common Stock....................................................... 1
Class B Common Stock....................................................... 1
Closing.................................................................... 11
Closing Date............................................................... 11
Closing Price.............................................................. 8
Code....................................................................... 1
Communications Act......................................................... 14
Company.................................................................... 1
Company Benefit Plans...................................................... 17
Company Common Stock....................................................... 1
Company Disclosure Schedule................................................ 12
Company Employees.......................................................... 17
Company FCC Licenses....................................................... 15
Company Financial Advisor.................................................. 23
Company Financial Property Rights.......................................... 20
Company Permits............................................................ 14
Company SEC Reports........................................................ 16
Company Stations........................................................... 15
Company Year 2000 Plan..................................................... 22
Confidentiality Agreement.................................................. 34
Costs...................................................................... 36
Covered Affiliates......................................................... 36
Delaware Law............................................................... 1
Deposit Agreement.......................................................... 8
Dissenting Shares.......................................................... 11
</TABLE>
B-iv
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<TABLE>
<CAPTION>
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<S> <C>
DTV...................................................................... 16
Effective Time........................................................... 2
Election Deadline........................................................ 6
Elections................................................................ 5
ERISA.................................................................... 17
ERISA Affiliate.......................................................... 17
Excess Buyer Shares...................................................... 9
Exchange Act............................................................. 10
Exchange Agent........................................................... 5
Exchange Fund............................................................ 10
FCC...................................................................... 14
FCC Multiple Ownership Rules............................................. 33
FEG...................................................................... 40
Form of Election......................................................... 5
Forward Merger........................................................... 1
FTH...................................................................... 40
GAAP..................................................................... 16
Holders.................................................................. 5
HSR Act.................................................................. 14
Indemnifiable Claim...................................................... 36
Indemnifying Party....................................................... 35
Indemnitees.............................................................. 36
Intellectual Property Rights............................................. 20
IRS...................................................................... 17, 43
IRS Ruling............................................................... 43
Laws..................................................................... 14
Merger................................................................... 1
Merger Consideration..................................................... 2
Multiemployer Plans...................................................... 17
Newco.................................................................... 40
Non-Election............................................................. 5
Non-Election Fraction.................................................... 7
Non-Election Shares...................................................... 7
NYSE..................................................................... 6
Order.................................................................... 33
Partial Cash Election.................................................... 3
Partial Cash Election Shares............................................. 3
Partial Exchange Ratio................................................... 3
Post-Signing Returns..................................................... 30
Preferred Stock.......................................................... 13
Pro-Rata Bonus........................................................... 52
Program Agreement........................................................ 30
Proxy Statement.......................................................... 31
Registration Statement................................................... 31
Representatives.......................................................... 46
Restructuring Trigger.................................................... 40
Reverse Merger........................................................... 1
Reverse Merger Exchange Ratio............................................ 3
Secretary of State....................................................... 2
Securities Act........................................................... 14
Special Committee........................................................ 1
</TABLE>
B-v
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<TABLE>
<CAPTION>
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<S> <C>
Stock Election............................................................. 5
Stock Election Shares...................................................... 7
Stock Fraction............................................................. 7
Stockholders' Meeting...................................................... 32
Surviving Corporation...................................................... 2
Terminating Buyer Breach................................................... 44
Terminating Company Breach................................................. 44
Termination Date........................................................... 44
Tota1 Consideration........................................................ 8
UTV........................................................................ 1
UTV Common Stock........................................................... 13
UTV Merger................................................................. 1
UTV Merger Agreement....................................................... 1
UTV Preferred Stock........................................................ 23
Valuation Period........................................................... 4
VEBA....................................................................... 17
Voting Agreement........................................................... 1
</TABLE>
B-vi
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of August 13, 2000, as amended (this
"Agreement") by and among BHC COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), THE NEWS CORPORATION LIMITED, a South Australian corporation
("Buyer"), NEWS PUBLISHING AUSTRALIA LIMITED, a Delaware corporation and a
subsidiary of Buyer ("Acquisition Sub") and FOX TELEVISION HOLDINGS, INC., a
Delaware corporation (but solely as to Section 6.3 and Section 6.21 of this
Agreement).
Whereas, in furtherance of the acquisition of the Company by Buyer, the
respective Boards of Directors of the Company, Buyer and Acquisition Sub, and
Buyer, as the sole stockholder of Acquisition Sub, have each approved this
Agreement and the merger of (A) the Company with and into Acquisition Sub (the
"Forward Merger") and (B) in the event a Restructuring Trigger (as defined
herein) has occurred, the merger of Acquisition Sub with and into the Company
(the "Reverse Merger" and, together with the Forward Merger, as applicable, the
"Merger"), in each case upon the terms and subject to the conditions and
limitations set forth herein and in accordance with the General Corporation Law
of the State of Delaware ("Delaware Law");
Whereas, each of the Board of Directors of the Company and the special
committee of the Board of Directors of the Company (the "Special Committee")
(i) has determined that the Merger is fair to, advisable and in the best
interests of, the Company and its stockholders and has approved and adopted
this Agreement, the Merger and the other transactions contemplated by this
Agreement and (ii) has recommended the approval of this Agreement by the
stockholders of the Company;
Whereas, for Federal income tax purposes, it is intended that the Forward
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code");
Whereas, simultaneously with the execution and delivery of this Agreement,
Buyer, Acquisition Sub and Chris-Craft Industries, Inc. ("Chris-Craft"), a
Delaware corporation and the parent corporation of the Company, are entering
into an agreement and plan of merger (the "Chris-Craft Merger Agreement"),
providing for the merger of Chris-Craft with and into Acquisition Sub, or, if a
Restructuring Trigger (as defined for purposes of such agreement) has occurred,
the merger of a direct or indirect owned subsidiary of Buyer with and into
Chris-Craft, in each case upon the terms and subject to the conditions set
forth in the Chris-Craft Merger Agreement (the "Chris-Craft Merger");
Whereas, simultaneously with the execution and delivery of this Agreement,
Buyer, Acquisition Sub and United Television, Inc. ("UTV"), a Delaware
corporation and a direct, majority-owned subsidiary of the Company, are
entering into an agreement and plan of merger (the "UTV Merger Agreement"),
providing for the merger of UTV with and into Acquisition Sub, or, if a
Restructuring Trigger (as defined for purposes of such agreement) has occurred,
the merger of a direct or indirect owned subsidiary of Buyer (or of BHC) with
and into UTV, in each case upon the terms and subject to the conditions set
forth in the UTV Merger Agreement (the "UTV Merger");
Whereas, it is intended that the mergers heretofore referred to shall be
completed in the following order: first, the Chris-Craft Merger; second, the
Merger; and third, the UTV Merger; and
Whereas, as a condition and inducement to Buyer to enter into this Agreement
and incur the obligations set forth herein, concurrently with the execution and
delivery of this Agreement, Buyer is entering into a Voting Agreement,
substantially in the form of Exhibit A attached hereto (the "Voting
Agreement"), with Chris-Craft pursuant to which, among other things, Chris-
Craft has agreed, subject to the terms and conditions contained therein, to
vote all shares of Class A Common Stock of the Company, par value $.01 per
share (the "Class A Common Stock"), and all shares of Class B Common Stock of
the Company, par value $.01 per share (the "Class B Common Stock" and together
with the Class A Common Stock, the "Company Common Stock"), owned by it in
favor of this Agreement and the Merger and, to the extent provided for therein,
against any conflicting transaction.
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<PAGE>
Now, Therefore, in consideration of the foregoing and the mutual covenants
and agreements herein contained and contained in the Voting Agreement and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
The Merger
Section 1.1 The Merger.
(a) Upon the terms and subject to the conditions of this Agreement, and in
accordance with Delaware Law, at the Effective Time (as defined below), in the
case of the Forward Merger, the Company shall be merged with and into
Acquisition Sub, whereupon the separate existence of the Company shall cease,
and Acquisition Sub shall continue as the surviving corporation and, in the
case of the Reverse Merger, Acquisition Sub shall be merged with and into the
Company, whereupon the separate corporate existence of Acquisition Sub shall
cease, and the Company shall continue as the surviving corporation (the
surviving corporation in the Merger is sometimes referred to herein as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware and shall continue under the name "News Publishing Australia
Limited." Whether the Forward Merger or the Reverse Merger is to be effected
shall be determined in accordance with Section 6.19 hereof.
(b) Concurrently with the Closing (as defined in Section 1.9 hereof), the
Company, Buyer and Acquisition Sub shall cause a certificate of merger (the
"Certificate of Merger") with respect to the Merger to be executed and filed
with the Secretary of State of the State of Delaware (the "Secretary of State")
as provided under Delaware Law. The Merger shall become effective on the date
and time at which the Certificate of Merger has been duly filed with the
Secretary of State or at such other date and time as are agreed between the
parties and specified in the Certificate of Merger, and such date and time is
hereinafter referred to as the "Effective Time."
(c) From and after the Effective Time, the Surviving Corporation shall
possess all rights, privileges, immunities, powers and franchises and be
subject to all of the obligations, restrictions, disabilities, liabilities,
debts and duties of the Company and Acquisition Sub.
Section 1.2 Effect on Securities. At the Effective Time:
(a) Cancellation of Securities. In the case of the Forward Merger, each
share of Company Common Stock held by the Company as treasury stock or held by
Buyer or its subsidiaries or by Chris-Craft (unless the Chris-Craft Merger
shall not have occurred prior to the Effective Time) immediately prior to the
Effective Time shall automatically be cancelled and revert to the status of
authorized but unissued shares, and no consideration or payment shall be
delivered therefor or in respect thereto. In the case of the Reverse Merger,
each share of Company Common Stock held by Chris-Craft (unless the Chris-Craft
Merger shall not have occurred prior to the Effective Time) immediately prior
to the Effective Time shall remain outstanding and continue to represent one
share of common stock of the Company.
(b) Conversion of Securities. Except as otherwise provided in this Agreement
and subject to Section 1.4 hereof, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares
cancelled pursuant to Section 1.2(a) hereof and Dissenting Shares (as defined
in Section 1.8 hereof)) shall be converted into the following (the "Merger
Consideration"):
Either (X) in the case of the Forward Merger:
(i) for each share of Company Common Stock with respect to which an
election to receive only cash (to the extent available) has been
effectively made and not revoked or lost, pursuant to Section 1.3
hereof, the right to receive in cash from Buyer the Per Share Amount
(as defined below), subject
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to Sections 1.2(f) and 1.4(f) and to the allocation and proration
procedures set forth in Section 1.4 hereof; and
(ii) for each share of Company Common Stock with respect to which an
election to receive forty percent (40%) of the Cash Merger Price in
cash and the remainder of the Merger Consideration in American
Depositary Shares of Buyer ("Buyer Shares"), each of which represents
four (4) fully paid and nonassessable Preferred Limited Voting Ordinary
Shares of Buyer ("Buyer Preferred Stock"), has been effectively made
and not revoked or lost, pursuant to Section 1.3 hereof (a "Partial
Cash Election"), (A) the right to receive from Buyer an amount in cash
equal to $66 and (B) 2.2278 (the "Partial Exchange Ratio") Buyer Shares
(such shares of Company Common Stock being, collectively, "Partial Cash
Election Shares" and, together with the All Cash Election Shares (as
defined herein), "Cash Election Shares"); provided, however, that the
foregoing shall be subject to Sections 1.2(f) and 1.4(f) hereof. The
Buyer Preferred Stock allotted and issued in accordance with this
Agreement shall on and from its date of allotment rank pari passu with
all existing Buyer Preferred Stock on issue at that date, including as
to all dividend entitlements (in respect of which they shall receive
the same entitlement as any previously issued Buyer Preferred Stock);
and
(iii) for each other share of Company Common Stock, the right to
receive from Buyer, the number of Buyer Shares equal to the Exchange
Ratio (as defined below), subject to Sections 1.2(f) and 1.4(f) and to
the allocation and proration procedures set forth in Section 1.4
hereof; or,
(Y) in the case of the Reverse Merger, subject to Section 1.2(f), for
each share of Company Common Stock, (A) the right to receive from Buyer an
amount in cash equal to $69.30 and (B) 2.3392 Buyer Shares (the "Reverse
Merger Exchange Ratio").
(c) Cancellation of Company Common Stock. All shares of Company Common Stock
to be converted into the Merger Consideration pursuant to this Section 1.2
shall, by virtue of the Merger and without any action on the part of the
holders thereof, cease to be outstanding, be cancelled and retired and cease to
exist; and each holder of a certificate representing prior to the Effective
Time any such shares of Company Common Stock shall thereafter cease to have any
rights with respect to such securities, except the right to receive (i) the
Merger Consideration, (ii) any dividends and other distributions in accordance
with Section 1.5(c) hereof and (iii) any cash to be paid in lieu of any
fractional Buyer Share in accordance with Section 1.5(d) hereof.
(d) [INTENTIONALLY OMITTED]
(e) Capital Stock of Acquisition Sub. In the Forward Merger, no shares of
Acquisition Sub stock will be issued directly or indirectly and each share of
common stock of Acquisition Sub issued and outstanding immediately prior to the
Effective Time shall remain outstanding following the Effective Time. In the
case of the Reverse Merger, each share of common stock of Acquisition Sub shall
be converted into one fully paid and nonassessable share of the Surviving
Corporation.
(f) Adjustments to Exchange Ratio.
(i) Subject to clause (ii) below, in the event that Buyer declares or
effects a stock split, stock or cash dividend (other than ordinary course
cash dividends declared and paid consistent with past practice) or other
reclassification, acquisition, exchange or distribution with respect to the
Buyer Shares or Buyer Preferred Stock, in each case with a record or ex-
dividend date or effective date occurring after the date hereof and on or
prior to the date of the Effective Time, there will be an appropriate
adjustment made to the Merger Consideration so as to provide for the
inclusion therein of the cash, property, securities or combination thereof
that each holder of Company Common Stock who has the right to receive the
Merger Consideration pursuant to Section 1.2 hereof would have received had
such Company Common Stock been converted into Buyer Shares or Buyer
Preferred Stock as of the date hereof.
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(ii) If either (A) in the case of the Forward Merger, the tax opinion to
the Company referred to in Section 7.3(c) hereof as to the Merger
qualifying as a reorganization cannot be rendered (as reasonably determined
by Kaye, Scholer, Fierman, Hays & Handler, LLP), (B) in the case of the
Forward Merger, the tax opinion to Buyer referred to in Section 7.2(f) as
to the Merger qualifying as a reorganization cannot be rendered (as
reasonably determined by Squadron, Ellenoff, Plesent & Sheinfeld LLP), (C)
in the case of the Forward Merger, in the reasonable judgment of the
Company or Buyer, based on the advice of their respective counsel, there is
a meaningful risk that the receipt of the cash, property, securities or
combination thereof referred to in clause (i) above would be taxable or
have an adverse tax consequence to the holders of Company Common Stock or
(D) in the case of either the Forward Merger or the Reverse Merger, the
adjustment referred to in clause (i) above is not possible or not possible
without materially changing the tax treatment of the transaction referred
to in clause (i) in question, then, in each case, Buyer (but only if
requested by the Company in the case of clause (C) above) shall make an
appropriate adjustment to the Merger Consideration that (x) conveys an
equivalent value (taking into account, among other things, the impact of
the transaction referred to in clause (i) above on the trading price of
Company Common Stock, Buyer Shares, Buyer Preferred Stock and any newly
issued securities) to the holders of Company Common Stock as the
adjustments contemplated in paragraph (i) above, (y) in the case of the
Forward Merger, allows such tax opinions to be delivered and (z) in the
case of the Forward Merger, avoids the consequences referred to in clause
(C) above; it being understood that, by way of illustration and not
limitation, the Company's written agreement that clause (x) is satisfied
shall constitute conclusive evidence as to such fact.
(g) Certain Definitions. For purposes of this Agreement, or, in the case of
clause (xii) below, solely for purposes of Sections 1.2, 1.3 and 1.4 hereof,
the following terms shall have the following meanings:
(i) "Aggregate Buyer Share Amount" means (A) 60% of the product of (x)
the number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time, less the number of outstanding
shares of Company Common Stock cancelled pursuant to Section 1.2(a) hereof,
and (y) 3.7131, less (B) the number of Buyer Shares to be paid in respect
of Partial Cash Election Shares (other than Dissenting Shares), in each
case subject to adjustment as described in Section 1.4(f) hereof.
(ii) "Aggregate Cash Amount" means (A) 40% of the product of (x) the
number of shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time, less the number of outstanding shares of
Company Common Stock cancelled pursuant to Section 1.2(a) hereof and (y)
the Cash Merger Price, less (B) the amount of cash to be paid in respect of
Partial Cash Election Shares (other than Dissenting Shares), in each case
subject to adjustment as described in Section 1.4(f) hereof.
(iii) "All Cash Election Number" means (A) that number of shares of
Company Common Stock as shall be equal to the quotient obtained by dividing
the Aggregate Cash Amount by the Per Share Amount, less (B) the number of
Dissenting Shares, subject to adjustment as described in Section 1.4(f)
hereof.
(iv) "Cash Merger Price" means $165.
(v) "Closing Buyer Share Value" means the volume weighted average sales
price for all trades of Buyer Shares reported on the New York Stock
Exchange (the "NYSE") for each of the five trading days immediately
preceding but not including the Closing Date (the "Valuation Period");
provided, however, if necessary to comply with any requirements of the
Securities and Exchange Commission (the "SEC"), the term Closing Date in
this clause (iv) shall be deemed to mean the date which is the closest in
time but prior to the Closing Date which complies with such rules and
regulations. Buyer agrees that during the Valuation Period neither Buyer
nor its affiliates shall (x) purchase or acquire, or offer to purchase or
acquire, or announce any intention to purchase or acquire, any Buyer Shares
or Buyer Preferred Stock or other outstanding securities of Buyer or its
affiliates convertible into Buyer Shares or Buyer Preferred Stock (other
than purchases at market value of Buyer Shares (in accordance with all
applicable laws) by a broker who has full discretion as to the amount and
timing of such purchases pursuant to a pre-existing stock buyback program)
or (y) announce or effect any material corporate transaction.
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(vi) "Closing Transaction Value" means the sum of (A) the Aggregate Cash
Amount and (B) the product obtained by multiplying the Aggregate Buyer
Share Amount by the Closing Buyer Share Value.
(vii) "Exchange Ratio" means that number of Buyer Shares as shall be
obtained by dividing the Per Share Amount by the Closing Buyer Share Value.
(viii) "Exchangeable Shares" means the aggregate number of shares of
Company Common Stock issued and outstanding immediately prior to the
Effective Time less the number of such shares cancelled pursuant to Section
1.2(a) hereof and less the aggregate number of Partial Cash Election Shares
(other than Dissenting Shares).
(ix) "Exchanged Shares" means the aggregate number of shares of Company
Common Stock issued and outstanding immediately prior to the Effective Time
less the number of such shares (A) cancelled pursuant to Section 1.2(a)
hereof and (B) that are Dissenting Shares.
(x) "Per Share Amount" means the amount obtained by dividing the Closing
Transaction Value by the number of Exchangeable Shares.
(xi) "Stock Election Number" means that number of shares of Company
Common Stock as shall be equal to (A) the number of Exchanged Shares less
(B) the sum of (i) the All Cash Election Number and (ii) the aggregate
number of Partial Cash Election Shares (other than Dissenting Shares),
subject to adjustment as described in Section 1.4(f) hereof.
(xii) "Dissenting Shares" means shares of Company Common Stock that are
potentially Dissenting Shares within the meaning of Section 1.8 hereof in
respect of which the holder thereof shall have taken all steps necessary to
exercise and perfect properly his or her demand for appraisal under Section
262 of the Delaware Law to the extent that such steps are required to have
been taken by the applicable date of determination.
Section 1.3 Share Election. In the case of the Forward Merger (and, with
respect to clauses (b) and, unless a Restructuring Trigger has theretofore
occurred, (c) and (e) below, in the case of the Reverse Merger to the extent
applicable):
(a) Each Person (as defined in Section 1.3(b) hereof) who, on or prior to
the Election Deadline referred to in subsection (c) below is a record holder of
shares of Company Common Stock (collectively, "Holders") shall have the right,
with respect to the Merger Consideration, (i) to elect to receive only cash for
such shares pursuant to Section 1.2(b)(X)(i) hereof (an "All Cash Election"),
(ii) to make a Partial Cash Election, (iii) to elect to receive Buyer Shares
for such shares pursuant to Section 1.2(b)(X)(iii) hereof (a "Stock Election"),
(iv) to indicate that such record holder has no preference as to the receipt of
cash or Buyer Shares for such shares (a "Non-Election") or (v) to make a mixed
election, specifying the number of shares of Company Common Stock corresponding
with each such Election (the All Cash Election, the Partial Cash Election, the
Stock Election, and the Non-Election are collectively referred to as the
"Elections"). Holders who hold such shares as nominees, trustees or in other
representative capacities may submit multiple Forms of Election (as defined
below).
(b) Prior to the mailing of the Proxy Statement (as defined in Section 6.1
hereof), The Bank of New York or such other bank, trust company, Person or
Persons shall be designated by Buyer and reasonably acceptable to the Company
to act as exchange agent (the "Exchange Agent") for payment of the Merger
Consideration. The Exchange Agent shall act as the agent for the Company's
stockholders for the purpose of receiving and holding their Forms of Election
and Certificates (as defined below) and shall obtain no rights or interests
(beneficial or otherwise) in such shares. For purposes of this Agreement,
"Person" means any natural person, firm, individual, corporation, limited
liability company, partnership, association, joint venture, company, business
trust, trust or any other entity or organization, whether incorporated or
unincorporated, including a government or political subdivision or any agency
or instrumentality thereof.
(c) All Elections shall be made on a form designed for that purpose, which
shall include a letter of transmittal and election form (together, a "Form of
Election"). Elections shall be made by Holders by mailing
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to the Exchange Agent a Form of Election, which shall specify that delivery
shall be effected, and risk of loss and title to any Certificates) shall pass,
only upon proper delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Buyer, in consultation with
the Company, may reasonably specify. Buyer and the Company will announce the
Exchange Ratio and the Per Share Amount when known and will announce the
anticipated Closing Date at least three business days, but not more than five
business days, prior thereto; provided, however, that the Closing Date (A)
shall occur immediately following the Chris-Craft Merger or (B) in the event
that the Chris-Craft Merger Agreement is terminated and this Agreement is not
also terminated, shall not be earlier than the second business day after the
satisfaction or waiver of all conditions set forth in Article VII hereof (other
than the conditions set forth in Sections 7.1(h), 7.2(a), 7.2(b) 7.2(f),
7.3(a), 7.3(b), 7.3(c) and, in so far as it relates to the accuracy of
representations and warranties and the performance of covenants, Section
7.1(i), so long as the foregoing enumerated conditions are anticipated by the
parties hereto to be satisfied on the Closing Date); provided, further that the
Closing Date shall not be earlier than the satisfaction of the condition set
forth in Section 7.1(h) . All Certificates so surrendered shall be subject to
the exchange procedures set forth in Section 1.5 hereof. To be effective, a
Form of Election must be properly completed, signed and submitted to the
Exchange Agent and accompanied by the Certificates as to which the election is
being made (or by an appropriate guarantee of delivery of such Certificates as
set forth in such Form of Election from a firm which is a member of the NYSE or
another registered national securities exchange or a commercial bank or trust
company having an office or correspondent in the United States, provided such
Certificates are in fact delivered to the Exchange Agent within five NYSE
trading days after the Election Deadline (as defined below)). Buyer will have
the discretion, which it may delegate in whole or in part to the Exchange
Agent, to determine whether Forms of Election have been properly completed,
signed and submitted or revoked and to disregard immaterial defects in Forms of
Election. The decision of Buyer (or the Exchange Agent) in such matters, absent
manifest error, shall be conclusive and binding. Neither Buyer nor the Exchange
Agent will be under any obligation to notify any person of any defect in a Form
of Election submitted to the Exchange Agent. The Exchange Agent and Buyer shall
also make all computations contemplated by this Section 1.3 and by Section 1.4
hereof and all such computations shall be conclusive and binding on the Holders
absent manifest error. The Form of Election and the accompanying Certificates
(or appropriate guarantee of delivery in respect thereof) must be received by
the Exchange Agent prior to 10:00 a.m New York City time on the day on which
the Closing occurs (the "Election Deadline") in order to be effective. If the
Closing is delayed to a subsequent date, the Election Deadline shall be
similarly delayed and Buyer will promptly announce such rescheduled Election
Deadline and Closing. An election may be revoked, but only by written notice
received by the Exchange Agent prior to the Election Deadline. Upon any such
revocation, unless a duly completed Election Form, accompanied by a
Certificate, is thereafter submitted in accordance with this paragraph (c),
such shares shall be deemed to be Non-Election Shares (as defined in Section
1.4 hereof). If a Form of Election is revoked, or in the event that this
Agreement is terminated pursuant to the provisions hereof, and any Certificates
(or guarantee(s) of delivery, as appropriate), have been transmitted to the
Exchange Agent pursuant to the provisions hereof, such Certificates (and, in
the case of a revoked Form of Election, guarantee(s) of delivery, as
appropriate), shall promptly be returned without charge to the Person
submitting the same.
(d) For the purposes hereof, Company Common Stock as to which the Holder has
not made a valid Election prior to the Election Deadline, including as a result
of revocation, shall be deemed to be Non-Election Shares. If Buyer or the
Exchange Agent shall determine that any purported All Cash Election, Partial
Cash Election or Stock Election was not properly made, such purported All Cash
Election, Partial Cash Election or Stock Election shall be deemed to be of no
force and effect and the Holder making such purported All Cash Election,
Partial Cash Election or Stock Election shall for purposes hereof be deemed to
have made a Non-Election. Shares in respect of which a Non-Election shall have
been made or deemed made shall be treated as Non-Election Shares.
(e) Concurrently with the mailing of the Proxy Statement, Buyer and the
Company shall mail the Form of Election to each person who is a Holder on the
record date for the Stockholders' Meeting (as defined in Section 6.2 hereof)
and shall each use its reasonable best efforts to mail the Form of Election to
all persons who
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become Holders during the period between (i) such record date and (ii) the date
seven calendar days prior to the anticipated Effective Time, and to make the
Form of Election available to all persons who become Holders subsequent to the
date described in clause (ii) but not later than 5:00 p.m. New York City time
on the last business day prior to the Effective Time. The Exchange Agent may,
with the mutual agreement of Buyer and the Company, make such rules as are
consistent with this Section 1.3 for the implementation of the Elections
provided for herein as shall be necessary or desirable to effect such Elections
fully.
Section 1.4 Allocation and Proration.
(a) Notwithstanding anything in this Agreement to the contrary, the maximum
number of shares of Company Common Stock which shall be converted into the
right to receive cash in the Merger (other than pursuant to Partial Cash
Elections and other than Dissenting Shares) shall be equal to the All Cash
Election Number. The maximum number of shares of Company Common Stock to be
converted into the right to receive Buyer Shares in the Merger (other than
pursuant to Partial Cash Elections (other than Dissenting Shares)) shall be
equal to the Stock Election Number.
(b) If the aggregate number of shares of Company Common Stock covered by All
Cash Elections (the "All Cash Election Shares") (other than Dissenting Shares)
exceeds the All Cash Election Number, all shares of Company Common Stock
covered by Stock Elections (the "Stock Election Shares") and all shares of
Company Common Stock covered by Non-Elections (the "Non-Election Shares") shall
be converted into the right to receive Buyer Shares, and the All Cash Election
Shares shall be converted into the right to receive Buyer Shares and cash in
the following manner:
each All Cash Election Share shall be converted into the right to
receive (i) an amount in cash, without interest, equal to the product
of (x) the Per Share Amount and (y) a fraction (the "Cash Fraction"),
the numerator of which shall be the All Cash Election Number and the
denominator of which shall be the total number of All Cash Election
Shares (other than Dissenting Shares), and (ii) a number of shares of
Buyer Shares equal to the product of (x) the Exchange Ratio and (y) a
fraction equal to one minus the Cash Fraction.
(c) If the aggregate number of Stock Election Shares (other than Dissenting
Shares) exceeds the Stock Election Number, all All Cash Election Shares and all
Non-Election Shares shall be converted into the right to receive cash, and the
Stock Election Shares shall be converted into the right to receive Buyer Shares
and cash in the following manner:
each Stock Election Share shall be converted into the right to receive
(i) a number of Buyer Shares equal to the product of (x) the Exchange
Ratio and (y) a fraction (the "Stock Fraction"), the numerator of which
shall be the Stock Election Number and the denominator of which shall
be the total number of Stock Election Shares (other than Dissenting
Shares), and (ii) an amount in cash, without interest, equal to the
product of (x) the Per Share Amount and (y) a fraction equal to one
minus the Stock Fraction.
(d) In the event that neither Section 1.4(b) nor 1.4(c) above is applicable,
all All Cash Election Shares shall be converted into the right to receive cash,
all Stock Election Shares shall be converted into the right to receive Buyer
Shares and the Non-Election Shares shall be converted into the right to receive
Buyer Shares and cash in the following manner:
each Non-Election Share shall be converted into the right to receive
(i) an amount in cash, without interest, equal to the product of (x)
the Per Share Amount and (y) a fraction (the "Non-Election Fraction"),
the numerator of which shall be the excess of the All Cash Election
Number over the total number of All Cash Election Shares (other than
Dissenting Shares) and the denominator of which shall be the excess of
(A) the number of Exchanged Shares over (B) the sum of the total number
of All Cash Election Shares (other than Dissenting Shares) and the
total number of Stock
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Election Shares (other than Dissenting Shares) and (ii) a number of
Buyer Shares equal to the product of (x) the Exchange Ratio and (y) a
fraction equal to one minus the Non-Election Fraction.
(e) Partial Cash Election Shares (other than Dissenting Shares) shall not be
subject to proration and shall be converted into the right to receive the
Merger Consideration pursuant to Section 1.2(b)(X)(ii) hereof, subject to
Section 1.4(f) hereof.
(f) If the sum of (i) the Aggregate Cash Amount (without giving effect to
the reference therein to this subsection (f)) and (ii) 40% of the Cash Merger
Price multiplied by the number of Partial Cash Election Shares (such sum being
the "Cash Amount") exceeds 55% of the sum of (x) the Cash Amount and (y) the
product of (A) the closing price of Buyer Shares reported on the NYSE Composite
Tape on the trading day immediately preceding the Closing Date (the "Closing
Price") multiplied by (B) 3.7131 multiplied by (C) 60% of the excess of the
number of shares of Company Common Stock outstanding immediately prior to the
Effective Time over the number of outstanding shares of Company Common Stock
cancelled pursuant to Section 1.2(a) hereof (such sum of (x) and (y) being the
"Tota1 Consideration"), then the components of the Merger Consideration shall
be modified (1) first, in the case of shares of Company Common Stock (other
than Dissenting Shares) as to which All Cash Elections shall have been made, by
reducing the cash portion of the Merger Consideration to the minimum extent
necessary, and in no event below 40% of the Cash Merger Price, and issuing in
lieu thereof additional Buyer Shares in an amount equal to the result obtained
by dividing (x) the amount of such per share cash reduction by (y) the Closing
Price and (2) second, in the event that the foregoing reduction is not
sufficient to result in the Cash Amount not exceeding 55% of the Total
Consideration, in the case of shares of Company Common Stock as to which an All
Cash Election or a Partial Cash Election shall have been made, by further
reducing the amount of the cash portion of the Merger Consideration to the
minimum extent necessary to satisfy the 55% limitation referred to above and to
issue in lieu thereof additional Buyer Shares, in amount equal to the result
obtained by dividing (u) the amount of such per share reduction by (v) the
Closing Price. In the case of the Forward Merger, if either (i) the tax opinion
referred to in Section 7.3(c) hereof cannot be rendered (as reasonably
determined by Kaye, Scholer, Fierman, Hays & Handler, LLP), or (ii) the tax
opinion to Buyer referred to in Section 7.2(f) cannot be rendered (as
reasonably determined by Squadron, Ellenoff, Plesent & Sheinfeld LLP), then the
foregoing adjustments shall be similarly made, in each case to the minimum
extent necessary to enable the relevant tax opinion or opinions, as the case
may be, to be rendered. For purposes of this Section 1.4(f), holders of
Dissenting Shares shall be deemed to be Persons making All Cash Elections
notwithstanding, and in lieu of, any election they have or have not made.
Section 1.5 Exchange of Certificates.
(a) As of the Effective Time, Buyer shall (i) deposit, or cause to be
deposited with (A) the Exchange Agent for the benefit of holders of shares of
Company Common Stock, cash to the extent it constitutes Merger Consideration
and (B) pursuant to the terms of the Deposit Agreement (as defined below) the
Custodian (as defined in the Deposit Agreement) certificates representing the
Buyer Preferred Stock underlying the Buyer Shares to the extent they constitute
Merger Consideration and (ii) pursuant to the terms of the Deposit Agreement,
instruct the Depositary to deposit the Buyer Shares to be issued in the Merger
with the Exchange Agent for the benefit of holders of shares of Company Common
Stock for exchange in the Merger. For purposes of this Agreement, "Depositary"
shall mean Citibank, N.A., as Depositary, pursuant to the Amended and Restated
Deposit Agreement, dated as of December 3, 1996, among Buyer, the Depositary
and the holders from time to time of Buyer Shares (the "Deposit Agreement"). In
addition, Buyer shall make available to the Exchange Agent on a daily basis
sufficient cash to permit prompt payment to all Holders entitled to receive the
Merger Consideration in the form of cash. The Buyer shall pay, or cause one of
its affiliates to pay, any transfer taxes and all other charges and fees
(including all fees for the depositary, registry or custodian for the ADRs).
(b) As of or promptly following the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail (and to make available for
collection by hand) to each holder of record of a certificate or certificates,
which immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates") (other than in the case of the
Forward Merger those who had not
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previously properly delivered their Certificates to the Exchange Agent along
with a Form of Election), (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange Agent
and which shall be in the form and have such other provisions as Buyer and the
Company may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for (A) a certificate or certificates
representing that number of whole Buyer Shares, if any, into which the number
of shares of Company Common Stock previously represented by such Certificate
shall have been converted pursuant to this Agreement and (B) the amount of
cash, if any, into which all or a portion of the number of shares of Company
Common Stock previously represented by such Certificate shall have been
converted pursuant to this Agreement (which instructions shall provide that at
the election of the surrendering holder, Certificates may be surrendered, and
the Merger Consideration in exchange therefor collected, by hand delivery).
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with a letter of transmittal duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration for each
share of Company Common Stock formerly represented by such Certificate, to be
mailed (or made available for collection by hand if so elected by the
surrendering holder) within five business days following the later to occur of
(i) the Effective Time or (ii) the Exchange Agent's receipt of such
Certificates, and the Certificate so surrendered shall be forthwith cancelled.
The Exchange Agent shall accept such Certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. No
interest shall be paid or accrued for the benefit of holders of the
Certificates on the Merger Consideration (or the cash pursuant to subsections
(c) and (d) below) payable upon the surrender of the Certificates.
(c) Buyer may retain any dividends or other distributions with respect to
Buyer Shares with a record date on or after the Effective Time in respect of
the holder of any unsurrendered Certificate with respect to the Buyer Shares
represented thereby by reason of the conversion of shares of Company Common
Stock pursuant to Sections 1.2(b), 1.3 and 1.4 hereof and no cash payment in
lieu of fractional Buyer Shares shall be paid to any such holder pursuant to
Section 1.5(d) hereof until such Certificate is surrendered in accordance with
this Article 1. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be released and paid, without interest, to
the Person in whose name the Buyer Shares representing such securities are
registered (i) at the time of such surrender or as promptly as practicable
after the sale of the Excess Buyer Shares (as defined in Section 1.5(d)
hereof), the amount of any cash payable in lieu of fractional Buyer Shares to
which such holder is entitled pursuant to Section 1.5(d) hereof and the
proportionate amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to the Buyer Shares
issued upon conversion of Company Common Stock, and (ii) at the appropriate
payment date or as promptly as practicable thereafter, the proportionate amount
of dividends or other distributions with a record date after the Effective Time
but prior to such surrender and a payment date subsequent to such surrender
payable with respect to such Buyer Shares.
(d) Notwithstanding any other provision of this Agreement, no fraction of a
Buyer Share will be issued and no dividend or other distribution, stock split
or interest with respect to Buyer Shares shall relate to any fractional Buyer
Share, and such fractional interest shall not entitle the owner thereof to vote
or to any rights as a security holder of the Buyer Shares. In lieu of any such
fractional security, each holder of shares of Company Common Stock otherwise
entitled to a fraction of a Buyer Share will be entitled to receive in
accordance with the provisions of this Section 1.5 from the Exchange Agent a
cash payment representing such holder's proportionate interest in the net
proceeds from the sale by the Exchange Agent on behalf of all such holders of
the aggregate of the fractions of Buyer Shares which would otherwise be issued
(the "Excess Buyer Shares"). The sale of the Excess Buyer Shares by the
Exchange Agent shall be executed on the NYSE through one or more member firms
of the NYSE and shall be executed in round lots to the extent practicable.
Until the net proceeds of such sale or sales have been distributed to the
holders of shares of Company Common Stock, the Exchange Agent will, subject to
Section 1.5(e) hereof, hold such proceeds in trust for the holders of such
shares (the "Buyer Shares Trust"). Subject to its right to withhold for taxes
as described in Section 1.6 hereof, the Surviving Corporation shall pay all
commissions, transfer taxes (other than those transfer taxes for which the
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Company's former stockholders are solely liable) and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent incurred in connection with such sale of the Excess Buyer Shares. As soon
as practicable after the determination of the amount of cash, if any, to be
paid to holders of shares of Company Common Stock in lieu of any fractional
Buyer Share interests, the Exchange Agent shall make available such amounts to
such holders of shares of Company Common Stock without interest.
(e) Any portion of the Merger Consideration deposited with the Exchange
Agent pursuant to this Section 1.5 (the "Exchange Fund") which remains
undistributed to the holders of the Certificates for six months after the
Effective Time shall be delivered to Buyer, upon demand, and any holders of
shares of Company Common Stock prior to the Merger who have not theretofore
complied with this Article I shall thereafter look for payment of their claim,
as general creditors thereof, only to Buyer for their claim for (1) cash, if
any, without interest, (2) Buyer Shares, if any, (3) any cash without interest,
to be paid, in lieu of any fractional Buyer Shares and (4) any dividends or
other distributions with respect to Buyer Shares to which such holders may be
entitled. None of Buyer, Acquisition Sub, the Company, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect of
any Buyer Shares or cash held in the Exchange Fund (and any cash, dividends and
other distributions payable in respect thereof) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) None of Buyer, Acquisition Sub, the Company, the Surviving Corporation
or the Exchange Agent shall be liable to any Person in respect of any Buyer
Shares or cash held in the Exchange Fund (and any cash, dividends and other
distributions payable in respect thereof) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to one year after the
Effective Time (or immediately prior to such earlier date on which (i) any
cash, (ii) any Buyer Shares, (iii) any cash in lieu of fractional Buyer Shares
or (iv) any dividends or distributions with respect to Buyer Shares in respect
of such Certificate would otherwise escheat to or become the property of any
Governmental Authority (as defined in Section 9.3 hereof)), any such Buyer
Shares, cash, dividends or distributions in respect of such Certificate shall,
to the extent permitted by applicable law, become the property of Buyer, free
and clear of all claims or interest of any Person previously entitled thereto.
(g) The Exchange Agent shall invest any cash included in the Exchange Fund,
as directed by Buyer on a daily basis. Any interest and any other income
resulting from such investments shall be paid to Buyer. Nothing contained in
this Section 1.5(g) shall relieve Buyer or the Exchange Agent from making the
payments required by this Article I to be made to the holders of shares of
Company Common Stock.
Section 1.6 Transfer Taxes; Withholding; Certain Stock.
(a) If any certificate for a Buyer Share is to be issued to, or cash is to
be remitted to, a Person who holds shares of Company Common Stock (other than
the Person in whose name the Certificate surrendered in exchange therefor is
registered), it shall be a condition of such exchange that the Company
Certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the Person requesting such exchange shall (i) pay to
the Exchange Agent any transfer or other Taxes (as defined in Section 3.14
hereof) required by reason of the payment of the Merger Consideration to a
Person other than the registered holder of the Certificate so surrendered, or
(ii) establish to the satisfaction of the Exchange Agent that such Tax either
has been paid or is not applicable. Buyer or the Exchange Agent shall be
entitled to deduct and withhold from the Buyer Shares (or cash in lieu of
fractional Buyer Shares) otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as Buyer or the Exchange
Agent are required to deduct and withhold under the Code, or any provision of
state, local or foreign Tax law, with respect to the making of such payment. To
the extent that amounts are so withheld by Buyer or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of shares of Company Common Stock in respect of whom
such deduction and withholding was made by Buyer or the Exchange Agent.
(b) Prior to the Effective Time, Buyer and the Company shall take all steps
reasonably necessary to cause the transactions contemplated hereby and any
other dispositions of equity securities of the Company (including
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derivative securities) or acquisitions of Buyer equity securities (including
derivative securities) in connection with this Agreement by each individual who
(a) is a director or officer of the Company or (b) at the Effective Time, will
become a director or officer of Buyer, to be exempt under Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") to the extent Section 16 of the Exchange Act is applicable to
such person.
Section 1.7 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration to which the holder thereof is entitled
pursuant to this Article I.
Section 1.8 Dissenting Shares. Notwithstanding Sections 1.2 and 1.4 hereof,
to the extent that holders thereof are entitled to appraisal rights under
Section 262 of Delaware Law, shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time and held by a holder who
has properly exercised and perfected his or her demand for appraisal rights
under Section 262 of Delaware Law (the "Dissenting Shares"), shall not be
converted into the right to receive the Merger Consideration, but the holders
of Dissenting Shares shall be entitled to receive such consideration as shall
be determined pursuant to Section 262 of Delaware Law; provided, however, that
if any such holder shall have failed to perfect or shall have effectively
withdrawn or lost his or her right to appraisal and payment under Delaware Law,
such holder's shares of Company Common Stock shall thereupon be deemed to have
been converted as of the Effective Time into the right to receive the Merger
Consideration, without any interest thereon, and such shares shall not be
deemed to be Dissenting Shares. Any payments required to be made with respect
to the Dissenting Shares shall be made by Buyer (and not the Company or
Acquisition Sub).
Section 1.9 Merger Closing. Subject to the satisfaction or, if permissible,
waiver of the conditions set forth in Article VII hereof, the closing of the
Merger (the "Closing") will take place at 9:00 a.m., New York City time, on a
date determined in accordance with, in the case of the Forward Merger, the
third sentence of Section 1.3(c) hereof and, in the case of the Reverse Merger,
the proviso of the third sentence of Section 1.3(c) hereof, and in each case at
the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New
York, New York, unless another time, date or place is agreed to in writing by
the parties hereto (such date being the "Closing Date").
ARTICLE II
The Surviving Corporation
Section 2.1 Certificate of Incorporation. The certificate of incorporation
of Acquisition Sub in the case of the Forward Merger, as in effect immediately
prior to the Effective Time, shall be the certificate of incorporation of the
Surviving Corporation until thereafter amended in accordance with applicable
law. The certificate of incorporation of the Company in the case of the Reverse
Merger shall be the certificate of incorporation of the Surviving Corporation,
amended at the Effective Time to read in its entirety as the certificate of
incorporation of Acquisition Sub as in effect immediately prior to the
Effective Time, until thereafter amended in accordance with applicable law.
Section 2.2 By-laws. The By-laws of Acquisition Sub in effect at the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter amended in accordance with applicable law, the articles of formation
of such entity and the By-laws of such entity.
Section 2.3 Officers and Board of Directors.
(a) From and after the Effective Time, the officers of Acquisition Sub at
the Effective Time shall be the officers of the Surviving Corporation, until
their respective successors are duly elected or appointed and qualified in
accordance with applicable law.
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(b) The Board of Directors of the Surviving Corporation effective as of, and
immediately following, the Effective Time shall consist of the members of the
Board of Directors of Acquisition Sub immediately prior to the Effective Time.
ARTICLE III
Representations and Warranties of the Company
Except (i) as disclosed in the report on Form 10-K dated March 30, 2000 for
the year ended December 31, 1999, the reports on Form 10-Q and Form 8-K filed
by the Company since December 31, 1999 or the proxy statement dated April 5,
2000, in each case in the form filed by the Company with the SEC prior to the
date of this Agreement or in such similar forms filed by the Company's
subsidiaries for such periods or, to the extent it is readily apparent that
such disclosure would be applicable hereto, in the disclosure schedules to the
Chris-Craft Merger Agreement or the UTV Merger Agreement, and (ii) as disclosed
in a separate disclosure schedule which has been delivered by the Company to
Buyer prior to the execution of this Agreement (the "Company Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein and
such other representations and warranties or covenants to the extent a matter
in such section is disclosed in such a way as to make its relevance to the
information called for by such other representation and warranty or covenant
readily apparent), the Company hereby represents and warrants to Buyer:
Section 3.1 Organization and Qualification; Subsidiaries.
(a) Each of the Company and its subsidiaries is a corporation or entity duly
incorporated or formed, validly existing and in good standing under the laws of
its jurisdiction of incorporation or formation and has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Company Material Adverse Effect (as defined below). Each of the Company and its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing as would not, individually or in
the aggregate, have a Company Material Adverse Effect. The term "Company
Material Adverse Effect" means any change, effect or circumstance that is or is
reasonably likely to be materially adverse to the business, operations, results
of operations or financial condition of Chris-Craft and its subsidiaries taken
as a whole, other than any change, effect or circumstance relating to or
resulting from (i) general changes in the television broadcasting industry,
(ii) changes in general economic conditions or securities markets in general,
or (iii) this Agreement or the transactions contemplated hereby or the
announcement thereof.
(b) Other than with respect to UTV (the capitalization of which is described
in Section 3.22 hereof) and its subsidiaries, all the outstanding shares of
capital stock or other equity or voting interests of each subsidiary of the
Company are owned by the Company, by another wholly owned subsidiary of the
Company or by the Company and another wholly owned subsidiary of the Company,
free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively, "Liens"),
and are duly authorized, validly issued, fully paid and nonassessable. Except
as set forth above or in Section 3.1(b) of the Company Disclosure Schedule and
except for the capital stock of, or other equity or voting interests in, its
subsidiaries, the Company does not own, directly or indirectly, any capital
stock of, or other equity or voting interests in, any corporation, partnership,
joint venture, association or other entity.
Section 3.2 Restated Certificate of Incorporation and By-Laws. The Company
has made available to Buyer a complete and correct copy of the Restated
Certificate of Incorporation and the By-laws, each as amended to date, of the
Company. The Restated Certificate of Incorporation and By-laws (or equivalent
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organizational documents) of the Company and its subsidiaries are in full force
and effect. None of the Company or its subsidiaries is in material violation of
any provision of its Restated Certificate of Incorporation or By-laws (or
equivalent organizational documents).
Section 3.3 Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of the
Company consists of 200,000,000 shares of Class A Common Stock, 200,000,000
shares of Class B Common Stock, and 50,000,000 shares of Preferred Stock, par
value $0.01 per share ("Preferred Stock"). At the close of business on June 30,
2000, (i) 4,510,823 shares of Class A Common Stock were issued and outstanding,
18,000,000 shares of Class B Common Stock were issued and outstanding, and no
shares of Preferred Stock were issued and outstanding; (ii) no shares of Class
A Common Stock, Class B Common Stock or Preferred Stock were held by the
Company in its treasury; and (iii) no shares of Class A Common Stock or Class B
Common Stock were reserved for issuance upon the exercise of outstanding
options to purchase such shares. Since January 31, 2000, no shares of capital
stock of the Company have been issued. As of the date of this Agreement, except
as set forth above, no shares of capital stock or other voting securities of
the Company are issued, reserved for issuance or outstanding. As of the date of
this Agreement, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them is bound
obligating the Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or any of its subsidiaries or obligating
the Company or any of its subsidiaries to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. All outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of the Company or any of its subsidiaries, and no securities
or other instruments or obligations of the Company or any of its subsidiaries
the value of which is in any way based upon or derived from any capital or
voting stock of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except as set forth in Section 3.3(a) of
the Company Disclosure Schedule, to the knowledge of the Company, as of the
date of this Agreement, there are no outstanding contractual obligations of the
Company or any of its subsidiaries (i) to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or (ii) to vote or to
dispose of any shares of the capital stock of any of the Company.
(b) As of the date of this Agreement the Company, directly or indirectly,
owns 5,509,027 shares of Common Stock of UTV, par value $.10 per share (the
"UTV Common Stock").
Section 3.4 Authority Relative to Agreement.
(a) The Company has all necessary power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Merger and the other transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company
of the Merger and the other transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement or to consummate the Merger and the other
transactions contemplated hereby (other than, with respect to the Merger, the
adoption of this Agreement and the approval of the Merger by the affirmative
vote of a majority of the votes cast by all stockholders entitled to vote at
the Stockholders' Meeting (as defined in Section 6.2 hereof) voting together as
a single class. This Agreement has been duly and validly executed and delivered
by the Company and, assuming the due authorization, execution and delivery by
Buyer, this Agreement constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(b) The Special Committee has been duly authorized and constituted. The
Special Committee, at a meeting thereof duly called and held on August 13,
2000, (A) determined that this Agreement and the Merger are fair to and in the
best interests of the Company and its stockholders (other than Buyer and its
affiliates), (B)
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determined that this Agreement and the Merger should be approved and declared
advisable and (C) resolved to recommend that the stockholders of the Company
approve the Merger and adopt this Agreement. The Board of Directors of the
Company, at a meeting thereof duly called and held on August 13, 2000, in
reliance upon the advice of the Special Committee (X) determined that this
Agreement and the Merger are fair to and in the best interests of the Company
and its stockholders (other than Buyer and its affiliates), (Y) approved and
declared the advisability of this Agreement and the Merger and (Z) resolved to
recommend that the stockholders of the Company approve the Merger and adopt
this Agreement.
Section 3.5 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 3.5 of the Company Disclosure Schedule,
the execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby by the Company and its subsidiaries will not,
(i) conflict with or violate the Restated Certificate of Incorporation or By-
Laws (or equivalent organizational documents) of (A) the Company or (B) any of
its subsidiaries, (ii) assuming the consents, approvals and authorizations
specified in Section 3.5(b) have been received and the waiting periods referred
to therein have expired, and any condition precedent to such consent, approval,
authorization, or waiver has been satisfied, conflict with or violate any
domestic (Federal, state or local) or foreign law, rule, regulation, order,
judgment or decree (collectively, "Laws") applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration, or cancellation of, or result in the creation of a
lien or other encumbrance on any property or asset of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture or credit
agreement, or any other contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any property or asset of the Company or any of its subsidiaries is bound or
affected, except, in the case of clauses (ii) and (iii) above, for any such
conflicts, violations, breaches, defaults or other occurrences of the type
referred to above which would not, individually or in the aggregate, have a
Company Material Adverse Effect and would not prevent or materially delay the
consummation of the Merger or the UTV Merger; provided, however, that for
purposes of this Section 3.5(a), the definition of "Company Material Adverse
Effect" shall be read so as not to include clause (iii) thereof.
(b) Except as set forth in Section 3.5 of the Company Disclosure Schedule,
the execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company and the consummation of the Merger
and the other transactions contemplated hereby by the Company and its
subsidiaries will not, require any consent, approval, authorization, waiver or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic, foreign or supranational, except for applicable
requirements of the Exchange Act, the Securities Act of 1933, as amended (the
"Securities Act"), state securities or "blue sky" laws ("Blue Sky Laws"), the
pre-merger notification arrangements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), any filings and approvals and waivers of the Federal
Communications Commission or any successor entity (the "FCC") as may be
required under the Communications Act of 1934, as amended, and the rules,
regulations and published orders of the FCC thereunder (collectively, the
"Communications Act"), filing and recordation of appropriate merger documents
as required by Delaware Law and the rules of the NYSE and except where failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate, have a
Company Material Adverse Effect and would not prevent or materially delay the
consummation of the Merger or the UTV Merger; provided, however, that for
purposes of this Section 3.5(b), the definition of "Company Material Adverse
Effect" shall be read so as not to include clause (iii) thereof.
Section 3.6 Permits and Licenses; Contracts; Compliance with Laws.
(a) Each of the Company and its subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders necessary for the
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Company or any of its subsidiaries to own, lease and operate the properties of
the Company and its subsidiaries or to carry on its business as it is now being
conducted and contemplated to be conducted (the "Company Permits"), and no
suspension or cancellation of any of the Company Permits is pending or, to the
knowledge of the Company, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Company Permits would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Except as set forth in Section 3.6(a) of the Company Disclosure Schedule, none
of the Company or any of its subsidiaries is in conflict with, or in default or
violation of, (i) any Laws applicable to the Company or any of its subsidiaries
or by which any property or asset of the Company or any of its subsidiaries is
bound or affected, (ii) any of the Company Permits or (iii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or any property
or asset of the Company or any of its subsidiaries is bound or affected, except
for any such conflicts, defaults or violations that would not, individually or
in the aggregate, have a Company Material Adverse Effect.
(b) Except as set forth in Section 3.6(b) of the Company Disclosure
Schedule, none of the Company or any of its subsidiaries is a party to, or to
the knowledge of the Company is bound by, any contract or agreement that
contains a covenant restricting the ability of the Company or any of its
subsidiaries or, after the Effective Time, could restrict the ability of Buyer
or any of its subsidiaries or affiliates, to compete in any line of business or
with any person or engage in any business in any geographic area.
(c) The Company and its subsidiaries have operated their respective
television stations and associated facilities (the "Company Stations"), in
compliance with the terms of the Company Permits issued by the FCC to the
Company and its subsidiaries ("Company FCC Licenses"), and in compliance with
the Communications Act, and the Company and its subsidiaries have timely filed
or made all applications, reports and other disclosures required by the FCC to
be filed or made with respect to the Company Stations and have timely paid all
FCC regulatory fees with respect thereto, in each case except as, individually
or in the aggregate, (i) as of the date of this Agreement, would not materially
adversely affect the operation of any of the broadcasting facilities of the
Company's subsidiaries' New York or Los Angeles television stations and would
not have a Company Material Adverse Effect and (ii) would not result in the
loss of the Company's subsidiaries' main station license issued by the FCC with
respect to any of the Company's subsidiaries' New York or Los Angeles
television stations and would not have a Company Material Adverse Effect. (i)
There is not, as of the date of this Agreement, pending or, to the Company's
knowledge, threatened before the FCC any material proceeding, notice of
violation, order of forfeiture or complaint or, to the knowledge of the
Company, investigation against the Company or any of its subsidiaries, relating
to any of the Company Stations or FCC regulated services conducted by the
Company or any of its subsidiaries and (ii) there is not pending or, to the
Company's knowledge, threatened before the FCC any proceeding, notice of
violation, order of forfeiture or complaint or, to the knowledge of the
Company, investigation against the Company or any of its subsidiaries, relating
to any of the Company Stations or FCC regulated services conducted by the
Company or any of its subsidiaries, except for any such proceedings, notices,
orders, complaints or investigations that would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(d) Except as disclosed in Section 3.6(d) of the Company Disclosure
Schedule, as of the date of this Agreement, there are no contracts or
agreements that are material to the business, properties, assets, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries taken as a whole. Neither the Company nor any of its subsidiaries
is in violation or default of, nor has the Company or, to the knowledge of the
Company, any subsidiary or affiliate thereof received written notice from any
third party alleging that the Company or any of its subsidiaries is in
violation of or in default under, nor, to the knowledge of the Company, does
there exist any condition which upon the passage of time or the giving of
notice would cause such a violation of or default under any loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties
or assets is bound, except for any such violations or defaults which would not,
individually or in the aggregate, have a Company Material Adverse Effect and
would not prevent or materially delay the consummation of the Merger or the UTV
Merger.
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(e) Set forth in Section 3.6(e) of the Company Disclosure Schedule is a
list, as of the date of this Agreement, of all (i) network affiliation
agreements, (ii) employment agreements involving payments in excess of $100,000
per annum or $300,000 in the aggregate, (iii) talent agreements involving
payments in excess of $250,000 per annum or $500,000 in the aggregate, (iv)
program or film syndication or license agreements requiring remaining payments
after the date hereof of more than $500,000 per annum or $2,500,000 in the
aggregate or, in the case of barter agreements, having a term ending more than
one year from the date hereof, (v) retransmission consent agreements entered
into with any direct satellite providers and each of the top 10 (ranked by
number of subscribers) multiple system operators, and (vi) agreements licensing
or creating any obligations with respect to the current or future use of the
digital data stream of any digital television ("DTV") station owned or to be
constructed by the Company or any of its subsidiaries that would be in effect
following the Effective Time, to which, in each case, the Company or any of its
subsidiaries is a party, and the Company has made available to Buyer true and
complete copies of the agreements described in this Section 3.6(e). Also set
forth in Section 3.6(e) of the Company Disclosure Schedule are the most recent
syndicated program and feature film inventory reports for each of the Company
Stations.
(f) Section 3.6(f) of the Company Disclosure Schedules sets forth a list, as
of the date of this Agreement, of all material licenses and construction
permits held by the Company with respect to the construction and operation of
DTV stations in each of the markets in which the Company and its subsidiaries
operate broadcast television stations (the "DTV Stations"). Except as set forth
in Section 3.6(f) of the Company Disclosure Schedule, to the knowledge of the
Company, there are no facts or circumstances existing as of the date of this
Agreement that would prevent the construction and operation of the DTV Stations
by the relevant deadline established by the FCC.
(g) Set forth in Section 3.6(g) of the Company Disclosure Schedule is a list
of all attributable interests, as defined at Note 2 to 47 C.F.R. Section
73.3555, of the Company and its subsidiaries in any broadcast radio or
television station, daily English language newspaper or cable television
system.
Section 3.7 SEC Reports. The Company and UTV have filed with the SEC, and
have heretofore made available to Buyer true and complete copies of, all forms,
reports, schedules, statements and other documents required to be filed with
the SEC by the Company and UTV since January 1, 1997 (together with all
information incorporated therein by reference, the "Company SEC Reports").
Except for UTV, no subsidiary of the Company is required to file any form,
report, schedule, statement or other document with the SEC. As of their
respective dates, the Company SEC Reports complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Reports, and none of the Company SEC Reports at
the time they were filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements (including the related
notes) included in the Company SEC Reports comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with U.S. generally accepted accounting principles ("GAAP") (except, in the
case of unaudited statements, as permitted by forms or rules of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and UTV and their respective
consolidated subsidiaries as of the dates thereof and their respective
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and recurring year-end
audit adjustments). Except as and to the extent set forth in Section 3.7 of the
Company Disclosure Schedule, the Company and its subsidiaries do not have any
liability or obligation of any nature (whether accrued, absolute, contingent or
otherwise) other than liabilities and obligations which would not, individually
or in the aggregate, have a Company Material Adverse Effect.
Section 3.8 Absence of Certain Changes or Events.
(a) Since December 31, 1999, except as contemplated by this Agreement, there
has not been any change, event or circumstance which, when taken individually
or together with all other changes, events or
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circumstances, has had or would have a Company Material Adverse Effect,
including, to the extent covered by the definition of such term set forth in
Section 3.1 hereof, any adverse effect on the Company's investment in UTV, and
(b) since December 31, 1999 to the date of this Agreement, (i) each of the
Company and its subsidiaries has conducted its businesses only in the ordinary
course and in a manner consistent with past practice and (ii) there has not
been (A) any material change by the Company or any of its subsidiaries in its
material accounting policies, practices and procedures, (B) any entry by the
Company or any of its subsidiaries into any commitment or transaction material
to the Company and its subsidiaries taken as a whole other than in the ordinary
course of business consistent with past practice, (C) any declaration, setting
aside or payment of any dividend or distribution in respect of any capital
stock of the Company or any of its subsidiaries (other than cash dividends
payable by any wholly owned subsidiary to another subsidiary or the Company,
the Company's special dividend which was paid in February 2000 and the UTV
regular annual cash dividend paid in April 2000), (D) any increase in the
compensation payable or to become payable to any corporate officers or heads of
divisions of the Company or any of its subsidiaries, except in the ordinary
course of business consistent with past practice, or (E) any action, event,
occurrence or transaction that would have been prohibited by Section 5.1 hereof
if this Agreement had been in effect since December 31, 1999.
Section 3.9 Absence of Litigation. Except as disclosed in Section 3.9 of the
Company Disclosure Schedule, there is no claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or any property or asset of the Company
or any of its subsidiaries, before any court, arbitrator or Governmental
Authority, in each case except as would not, individually or in the aggregate,
have a Company Material Adverse Effect. None of the Company, any of its
subsidiaries nor any property or asset of the Company or any of its
subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award imposed by any court, arbitration or Governmental
Authority, in each case except as would not, individually or in the aggregate,
have a Company Material Adverse Effect.
Section 3.10 Employee Benefit Plans.
(a) Section 3.10(a) of the Company Disclosure Schedule lists each employee
benefit plan, program, arrangement and contract (including, without limitation,
any "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and any
"multiemployer plans" within the meaning of Section 3(37) of ERISA
("Multiemployer Plans")), maintained, contributed or required to be contributed
to by the Company, any of its subsidiaries or any trade or business (whether or
not incorporated) under common control with the Company within the meaning of
Section 414(b), (c), (m) or (o) of the Code ("ERISA Affiliate"), or with
respect to which the Company, any of its subsidiaries or any ERISA Affiliate
could incur liability under Section 4069 of ERISA (the "Company Benefit
Plans"), each, with respect to which current and former employees of the
Company and any of its subsidiaries (the "Company Employees") participate. No
Company Benefit Plan has ever been or is currently subject to or governed by
the Laws of any jurisdiction other than the United States or any State or
Commonwealth of the United States. The Company has provided to Buyer a true and
correct copy of each of the following documents, including any amendments
thereto, with respect to each Company Benefit Plan, other than Multiemployer
Plans: (i) the most recent annual report (Form 5500) filed with the Internal
Revenue Service (the "IRS"), (ii) all plan documents for such Company Benefit
Plan, (iii) each trust agreement, insurance contract or other funding vehicle
relating to such Company Benefit Plan, (iv) the most recent summary plan
description for each Company Benefit Plan for which a summary plan description
is required, (v) the most recent actuarial report or valuation relating to a
Company Benefit Plan subject to Title IV of ERISA, if any, and (vi) the most
recent determination letter, if any, issued by the IRS with respect to any
Company Benefit Plan qualified under Section 401(a) of the Code or voluntary
employees' benefit association ("VEBA") qualified under Section 501(c)(9) of
the Code. Except as specifically provided in the foregoing documents delivered
to Buyer or except as otherwise contemplated by this Agreement or except as
disclosed in Section 3.10(a) of the Company Disclosure Schedule, there are no
amendments to any Company Benefit Plan that have been adopted or approved nor
has the Company or any of its subsidiaries undertaken to make any such
amendments or to adopt or approve any new Plan. The Company will, promptly
following the date of this
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Agreement, request a copy of each Company Benefit Plan that is a multiemployer
plan within the meaning of Section 3(37) of ERISA from the trustees of such
multiemployer plan and the Company shall deliver such copy of the plan to Buyer
promptly upon its receipt thereof.
(b) Each Company Benefit Plan has been administered in accordance with its
terms and the terms of any applicable collective bargaining or other labor
union contract or agreement, and in compliance with applicable laws. The
Company, its subsidiaries and each ERISA Affiliate have performed all
obligations required to be performed by them under, are not in any respect in
default under or in violation of, and have no knowledge of any default or
violation by any party to, any Company Benefit Plans, except for any defaults
or violations which would not, individually or in the aggregate, have a Company
Material Adverse Effect. With respect to the Company Benefit Plans, no event
has occurred and no condition or set of circumstances exists, in connection
with which the Company, any of its subsidiaries or any ERISA Affiliate is
subject to any liability under the terms of such Company Benefit Plans, ERISA,
the Code or any other applicable Law except as would not, individually or in
the aggregate, have a Company Material Adverse Effect. No Company Benefit Plan
(other than a Multiemployer Plan) is under audit or investigation by any
Governmental Authority nor has the Company, any subsidiary or any ERISA
Affiliate been notified of any audit or investigation. Neither the Company nor
any ERISA Affiliate has any actual or contingent liability under Title IV of
ERISA (other than the payment of premiums to the Pension Benefit Guaranty
Corporation), including, without limitation, any liability in connection with
(i) the termination or reorganization of any employee benefit plan subject to
Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or
Multiple Employer Plan (within the meaning of Section 400l(a)(3) and 4063,
respectively, of the Code), and no fact or event exists which is reasonably
likely to give rise to any such liability, in each case except as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(c) The Company has made available to Buyer: (i) copies of all employment
agreements with executive officers of the Company and its subsidiaries; (ii)
copies of all severance agreements, programs and policies of the Company, any
of its subsidiaries or any ERISA Affiliate with or relating to the Company
Employees; and (iii) copies of all plans, programs, agreements and other
arrangements of the Company, any of its subsidiaries or any ERISA Affiliate
with or relating to the Company Employees which contain change in control
provisions. Except as disclosed in Section 3.10(c) of the Company Disclosure
Schedule, or except as otherwise contemplated by this Agreement neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, "golden parachute" or
otherwise) becoming due to any director, officer or employee of the Company or
any of its subsidiaries from the Company or any of its affiliates under any
Company Benefit Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any Company Benefit Plan, (iii) result in any
acceleration of the time of payment or vesting of any material benefits, (iv)
result in a restriction on Buyer's ability to amend, modify or terminate any
plan, (v) trigger a requirement for funding or the acceleration of funding of
any material benefits, (vi) commence a period during which a subsequent
termination of employment by a Company Employee will entitle such Company
Employee to benefits in excess of what would otherwise have been required in
the absence of the transactions contemplated hereby or (vii) result in a
reportable event within the meaning of Section 4043(c) of ERISA for which a
notice requirement has not been waived. There are no outstanding options to
purchase Company Common Stock or any other equity security of the Company and
there are no other awards or grants outstanding that relate to the Company
Common Stock or other equity securities of the Company. Without limiting the
generality of the foregoing, except as set forth in Section 3.10(c) of the
Company Disclosure Schedule, no amount paid or payable by the Company to any
employee of the Company or any of its subsidiaries in connection with the
transactions contemplated hereby (either solely as a result thereof or as a
result of such transactions in conjunction with any other event) will be an
"excess parachute payment" within the meaning of Section 280G of the Code.
(d) Each Company Benefit Plan that is intended to be qualified under Section
401(a) of the Code or Section 401(k) of the Code has timely received a
favorable determination letter from the IRS covering all of
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<PAGE>
the provisions applicable to the Plan for which determination letters are
currently available that the Company Benefit Plan is so qualified and each
trust established in connection with any Company Benefit Plan which is intended
to be exempt from Federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event has occurred since the date of such determination letter or letters
from the IRS which is reasonably likely to adversely affect the qualified
status of any such Company Benefit Plan or the exempt status of any such trust.
Each Company Benefit Plan that is a VEBA meets the requirements of Section
501(c)(9) of the Code.
(e) The Company and its subsidiaries have no liability for life, health,
medical or other welfare benefits to former officers, directors or employees or
beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA.
(f) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted, or to Company's knowledge, no set of circumstances
exists which may reasonably give rise to a claim or lawsuit, against the
Company Benefit Plans, any fiduciaries thereof with respect to their duties to
the Plans or the assets of any of the trusts under any of the Company Benefit
Plans which could reasonably be expected to result in any liability of the
Company or any of the ERISA Affiliates to the Pension Benefit Guaranty
Corporation, the Department of Treasury, the Department of Labor, any
Multiemployer Plan, any Company Benefit Plan or any participant in a Company
Benefit Plan.
(g) The Company has taken reasonable steps to ensure that each individual
classified by the Company or any subsidiary as an independent contractor has
been properly classified as such.
Section 3.11 Labor Matters. There is no labor dispute, strike, work stoppage
or lockout, or, to the knowledge of the Company, threat thereof, by or with
respect to any employee of the Company or any of its subsidiaries, except where
such dispute, strike, work stoppage or lockout individually or in the aggregate
would not have a Company Material Adverse Effect. None of the Company or any of
its subsidiaries has breached or otherwise failed to comply with any provision
of any collective bargaining or other labor union contract applicable to any
employees of the Company or any of its subsidiaries and there are no grievances
or complaints outstanding or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries under any such contract except
for any breaches or failures to comply that, individually or in the aggregate,
would not have a Company Material Adverse Effect.
Section 3.12 Environmental Matters. Except as would not, individually or in
the aggregate, have a Company Material Adverse Effect:
(a) the Company and its subsidiaries (i) are in compliance with all, and, to
the Company's knowledge, are not subject to any asserted liability or liability
(including liability with respect to current or former subsidiaries or
operations), in each case with respect to any Environmental Laws (as defined
below), (ii) hold or have applied for all Environmental Permits (as defined
below) and (iii) are in compliance with their respective Environmental Permits;
(b) neither the Company nor any Company subsidiary has received any written
notice, demand, letter, claim or request for information alleging that the
Company or any of its subsidiaries or, to the Company's knowledge as of the
date of this Agreement, any of their predecessors in interest, is or may be in
violation of, or liable under, any Environmental Law;
(c) (i) neither the Company nor any of its subsidiaries has entered into or
agreed to any consent decree or order or is subject to any judgment, decree or
judicial order relating to compliance with Environmental Laws, Environmental
Permits or the investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials (as defined below) and, to the
knowledge of the Company, no investigation, litigation or other proceeding is
pending or threatened in writing with respect thereto, and (ii) neither the
Company nor any of its subsidiaries nor, to the knowledge of the Company as of
the date of this Agreement, any of their predecessors in interest, is an
indemnitor in connection with any threatened or asserted claim by any third-
party
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indemnitee or is the subject of a claim for personal injury or property damage
for any liability under any Environmental Law or relating to any Hazardous
Materials; and
(d) none of the real property owned or leased by the Company or any of its
subsidiaries or, to the knowledge of the Company as of the date of this
Agreement, any of their predecessors in interest, is listed or, to the
knowledge of the Company, proposed for listing on the "National Priorities
List" under CERCLA, as updated through the date hereof, or any similar state or
foreign list of sites requiring investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any applicable federal, state, local or
foreign statute, law, ordinance, regulation, rule, code, treaty, writ or
order and any enforceable judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree,
judgment, stipulation, injunction, permit, authorization, policy, opinion,
or agency requirement, in each case having the force and effect of law,
relating to the pollution, protection, investigation or restoration of the
environment, health and safety or natural resources, including those
relating to the use, handling, presence, transportation, treatment,
storage, disposal, release, threatened release or discharge of Hazardous
Materials or noise, odor, wetlands, pollution, contamination or any injury
or threat of injury to persons or property or to the siting, construction,
operation, closure and post-closure care of waste disposal, handling and
transfer facilities.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under any Environmental
Law.
"Hazardous Materials" means (i) any petroleum, petroleum products, by-
products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls and (ii) any chemical, material or
other substance defined or regulated as toxic or hazardous or as a
pollutant or contaminant or waste under any Environmental Law.
Section 3.13 Trademarks, Patents and Copyrights.
(a) Except as would not have a Company Material Adverse Effect, (i) the
Company and its subsidiaries own, or possess necessary or required licenses, to
be used in each case in the manner currently used, or other necessary or
required rights to use, all patents, patent rights, trademarks, trademark
rights, trade names, trade name rights, copyrights, domain names, service
marks, service mark rights, trade secrets, applications to register, and
registrations for, the foregoing trademarks, know-how and other proprietary
rights and information (the "Intellectual Property Rights") used in connection
with the business of the Company and its subsidiaries as currently conducted
(the "Company Intellectual Property Rights"), and (ii) neither the Company nor
any of its subsidiaries has received any written charge, complaint, claim,
demand or notice challenging the validity of any of the Company Intellectual
Property Rights.
(b) To the Company's knowledge, none of the Company or any of its
subsidiaries has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property Rights or other proprietary
information of any other Person, except for any such interference,
infringement, misappropriation or other conflict that, individually or in the
aggregate, would not have a Company Material Adverse Effect. None of the
Company or any of its subsidiaries has received any written charge, complaint,
claim, demand or notice alleging any such interference, infringement,
misappropriation or other conflict (including any claim that the Company or any
of its subsidiaries must license or refrain from using any Company Intellectual
Property Rights or other proprietary information of any other person) that has
not been settled or otherwise fully resolved, except for any such interference,
infringement, misappropriation or other conflict that, individually or in the
aggregate, would not have a Company Material Adverse Effect. To the Company's
knowledge, no other person has interfered with, infringed upon, misappropriated
or otherwise come into conflict with any Company
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Intellectual Property Rights, except for any such interference, infringement,
misappropriation or other conflict that, individually or in the aggregate,
would not have a Company Material Adverse Effect.
Section 3.14 Taxes.
(a) For purposes of this Agreement, (i) "Tax" or "Taxes" means any and all
taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any governmental or taxing
authority including, without limitation: taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value added, or gains taxes; license, registration and documentation fees; and
customs' duties, tariffs, and similar charges; and liability for the payment of
any of the foregoing as a result of (x) being a member of an affiliated,
consolidated, combined or unitary group, (y) being party to any tax sharing
agreement and (z) any express or implied obligation to indemnify any other
person with respect to the payment of any of the foregoing; and (ii) "Tax
Returns" means returns, reports and information statements, including any
schedule or attachment thereto, with respect to Taxes required to be filed with
the IRS or any other governmental or taxing authority or agency, domestic or
foreign, including consolidated, combined and unitary tax returns.
(b) Except as set forth in Section 3.14(b) of the Company Disclosure
Schedule and except as would not, individually or in the aggregate, have a
Company Material Adverse Effect (unless stated otherwise below): (i) each of
the Company and each of its subsidiaries has timely filed all U.S. Federal,
state, local and non-U.S. Tax Returns required to be filed by it, and all such
Tax Returns are true, correct and complete, and has paid and discharged all
Taxes shown as due thereon and has paid all of such other Taxes as are due,
other than such payments as are being contested in good faith by appropriate
proceedings; (ii) neither the IRS nor any other taxing authority or agency,
domestic or foreign, is now asserting in writing or, to the knowledge of the
Company or its subsidiaries after due inquiry, threatening in writing to assert
against the Company or any of its subsidiaries any deficiency or claim with
respect to Taxes of the Company or any of its subsidiaries; (iii) no waiver of
any statute of limitations with respect to, or any extension of a period for
the assessment of, any Tax has been granted by the Company or any of its
subsidiaries without regard to whether such waiver or extension could have a
Company Material Adverse Effect in connection with Federal, New York State and
California Taxes; (iv) the accruals and reserves for Taxes reflected in the
Company's audited consolidated balance sheet as of December 31, 1999 (and the
notes thereto) (the "1999 Balance Sheet") and the most recent quarterly
financial statements (and the notes thereto) are adequate to cover all Taxes
accruable through the date thereof in accordance with generally accepted
accounting principles; (v) no election under Section 341(f) of the Code has
been made by the Company or any of its subsidiaries; (vi) the Company and each
of its subsidiaries has withheld or collected and paid over to the appropriate
governmental authorities or is properly holding for such payment all Taxes
required by law to be withheld or collected; (vii) there are no liens for Taxes
upon the assets of the Company or any of its subsidiaries, other than liens for
Taxes that are being contested in good faith by appropriate proceedings or are
not yet due, (viii) neither the Company nor any of its subsidiaries have
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code in the
two years prior to the date of this Agreement; (ix) the Federal income Tax
Returns for the Company and each of its subsidiaries have been examined and
settled with the IRS (or the applicable statutes of limitation for the
assessment of Federal income Taxes for such periods have expired) for all years
through 1995; (x) the Company and its subsidiaries have given or otherwise made
available to Buyer correct and complete copies of (A) all Federal income Tax
Returns of the Company and UTV filed for periods ending after December 31, 1993
and (B) income Tax returns filed on behalf of KCOP Television, Inc. and
affiliates for California and WWOR-TV, Inc. for New Jersey and New York State
for tax years 1997 and 1998; (xi) neither the Company nor any of its
subsidiaries are a party to any agreement relating to the sharing, allocation,
or indemnification of Taxes or any similar contract or arrangement without
regard to whether any such agreement could have a Company Material Adverse
Effect other than agreements between members of the affiliated group
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of which the Company is the common parent under Section 1504 of the Code; (xii)
neither the Company nor any of its subsidiaries have agreed, or is required to
make, any adjustment under Section 481 of the Code; (xiii) the Company and each
of its subsidiaries were not, at any time during the period specified in
Section 897(c)(1)(A)(ii) of the Code, a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code without regard
to whether such status could give rise to a Company Material Adverse Effect;
and (xiv) there have been no redemptions by the Company or any of its
subsidiaries since March 31, 1998 without regard to whether such redemptions
could give rise to a Company Material Adverse Effect.
Section 3.15 Tax Matters. None of the Company or any of its affiliates has
taken or agreed to take any action, has failed to take any action or knows of
any fact, agreement, plan or other circumstance that is reasonably likely to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code; provided, however, that the foregoing
representation is made only as of the date hereof in the case of the Reverse
Merger. The preceding sentence excludes all transactions contemplated by this
Agreement.
Section 3.16 Title to Properties; Assets. Neither the Company nor any of its
subsidiaries owns, or has any material interest in, (i) any material assets in
Australia or (ii) any television, media or other broadcasting assets in
Australia. Except in each case as, individually or in the aggregate, (i) as of
the date of this Agreement, would not materially adversely affect the operation
of the broadcasting facilities of the Company's subsidiaries' New York or Los
Angeles television stations and (ii) would not have a Company Material Adverse
Effect:
(a) Each of the Company and its subsidiaries has good, marketable fee simple
title to its owned properties and assets or good and valid leasehold interests
in all of its leasehold properties and assets together with full legal and
practical access to all of its properties except for such as are no longer used
or useful in the conduct of its businesses or as have been disposed of in the
ordinary course of business. All such properties and assets, other than
properties and assets in which the Company or any of its subsidiaries has a
leasehold interest, are free and clear of all Liens.
(b) Each of the Company and its subsidiaries has complied with the terms of
all leases to which it is a party and under which it is in occupancy, and all
deeds in respect of property which it owns, and all such leases and deeds are
in full force and effect. Section 3.16(b) of the Company Disclosure Schedule
sets forth a description of (i) each lease to which it is a party relating to
its television broadcasting, (ii) all other leases to which it is a party in
which the annual rental payments exceed $250,000 or which contemplate aggregate
payments in excess of $500,000 and (iii) each deed under which it is the owner;
and a copy of each such lease or deed, as applicable, has previously been
provided to Buyer. The Company and its subsidiaries enjoy peaceful and
undisturbed possession under all such leases. There are no facts that would
prevent Buyer or any of its subsidiaries from using or occupying all of the
leased and owned property referred to in clauses (i), (ii) and (iii) above,
after the Effective Time, in the same manner such leased and owned property is
used or occupied by the Company or its subsidiaries immediately prior to the
Effective Time.
(c) The assets of the Company and each of its subsidiaries constitute all of
the properties, assets and rights forming a part of, used, held or intended to
be used in, and all such properties, assets and rights as are necessary in, the
conduct of the business as it is now being conducted and contemplated to be
conducted by the Company and its subsidiaries. At all times since December 31,
1999, each of the Company and its subsidiaries has caused such assets to be
maintained in accordance with good business practice, and all of such assets
are in good operating condition and repair and are suitable for the purposes
for which they are used and intended.
Section 3.17 Year 2000 Compliance.
(a) The Company has adopted a plan that it believes will cause Company
Systems (as defined below) to be Company Year 2000 Compliant (as defined below)
(such plan, as it may be amended, modified or supplemented from time to time
being, the "Company Year 2000 Plan") in all material respects. The Company has
taken, and between the date of this Agreement and the Effective Time will
continue to take, all reasonable steps to implement the Company Year 2000 Plan
with respect to the Company Systems.
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(b) For purposes of this Section 3.17, (i) "Company Systems" shall mean all
computer, hardware, software, systems, and equipment (including embedded
microcontrollers in non-computer equipment) embedded within or required to
operate the current products of the Company and its subsidiaries, and/or
material to or necessary for the Company and its subsidiaries to carry on their
respective businesses as currently conducted; and (ii) "Company Year 2000
Compliant" means that Company Systems will (A) manage, accept, process, store
and output data involving dates reasonably expected to be encountered in the
foreseeable future and (B) accurately process date data from, into and between
the 20th and 21st centuries and each date during the year 2000.
Section 3.18 Opinion of Financial Advisors. The Special Committee has
received the written opinion of Wasserstein Perella & Co. (the "Company
Financial Advisor") on or prior to the date of this Agreement, to the effect
that, as of the date of such opinion, the Merger Consideration is fair to the
stockholders of the Company (other than Chris-Craft) from a financial point of
view, and the Company will deliver a copy of such opinion to Buyer promptly
after the date of this Agreement.
SECTION 3.19 Vote Required. At the Stockholders' Meeting, the affirmative
vote of the holders of a majority of the voting power of the outstanding Common
Stock voting together as a single class are the only votes of the holders of
any class or series of capital stock of the Company necessary to adopt this
Agreement.
SECTION 3.20 Brokers. The Company Financial Advisor has entered into a
letter of engagement with the Special Committee in connection with the Merger,
a copy of which has previously been provided to Buyer. Except as disclosed in
Section 3.20 of the Company Disclosure Schedule, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger based upon arrangements made by or on
behalf of the Company other than as provided in a letter of engagement
previously provided to Buyer.
SECTION 3.21 State Takeover Statutes. The Board of Directors of the Company
has taken all action necessary to render inapplicable to the Merger and the
Voting Agreement and the transactions contemplated hereby and thereby the
provisions of Section 203 of Delaware Law. To the knowledge of the Company, no
other state takeover statute or similar statute or regulation applies or
purports to apply to the Merger.
SECTION 3.22 UTV.
(a) As of the date of this Agreement, the authorized capital stock of UTV
consists of 25,000,000 shares of UTV Common Stock and 1,000,000 shares of
Preferred Stock, par value $1.00 per share ("UTV Preferred Stock"). At the
close of business on June 30, 2000, (i) 9,486,173 shares of UTV Common Stock
were issued and outstanding and no shares of UTV Preferred Stock were issued
and outstanding; (ii) no shares were held by UTV in its treasury; and (iii)
234,570 shares of UTV Common Stock were reserved for issuance upon the exercise
of outstanding options to purchase such shares. Since January 31, 2000, no
shares of capital stock of UTV have been issued except pursuant to exercise of
options of UTV outstanding as of September 30, 1999 in accordance with the
terms thereof. As of the date of this Agreement, except as set forth above, no
shares of capital stock or other voting securities of UTV are issued, reserved
for issuance or outstanding. As of the date of this Agreement, except as set
forth above or in Section 3.22(a) of the Company Disclosure Schedule, there are
no securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which UTV or any of its
subsidiaries is a party or by which any of them is bound obligating UTV or any
of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other voting securities of UTV
or of any of its subsidiaries or obligating UTV or any of its subsidiaries to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. All outstanding
shares of capital stock of UTV are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of UTV or any of its subsidiaries, and
no securities or other instruments or obligations of UTV or any of its
subsidiaries the value of which is in any way based upon or derived from any
capital or voting stock of UTV having the right to vote (or convertible into,
or exchangeable for, securities
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having the right to vote) on any matters on which stockholders of UTV may vote.
Except as set forth in Section 3.22(a) of the Company Disclosure Schedule, to
the knowledge of the Company, as of the date of this Agreement, there are no
outstanding contractual obligations of UTV or any of its subsidiaries (i) to
repurchase, redeem or otherwise acquire any shares of capital stock of UTV or
(ii) to vote or to dispose of any shares of the capital stock of any of UTV's
subsidiaries.
(b) As of the date of this Agreement, the Company, directly or indirectly,
owns 5,509,027 shares of UTV Common Stock.
ARTICLE IV
Representations and Warranties of Buyer
Except as disclosed in its Annual Report on Form 20-F filed with the SEC on
October 27, 1999 and the reports on Form 6-K filed with the SEC on November 3,
1999, February 15, 2000 and May 12, 2000, or in a separate disclosure schedule
which has been delivered by Buyer to the Company prior to the execution of this
Agreement (the "Buyer Disclosure Schedule") (each section of which qualifies
the correspondingly numbered representation and warranty or covenant to the
extent specified therein and such other representations and warranties or
covenants to the extent a matter in such section is disclosed in such a way as
to make its relevance to the information called for by such other
representation and warranty or covenant readily apparent), Buyer hereby
represents and warrants to the Company that:
Section 4.1 Organization and Qualification; Subsidiaries. Each of Buyer and
its subsidiaries is a corporation or entity duly incorporated or formed,
validly existing and in good standing, under the laws of its jurisdiction of
incorporation or formation, and has the requisite corporate power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to have such power, authority and governmental approvals
would not, individually or in the aggregate, have a Buyer Material Adverse
Effect (as defined below). Each of Buyer and its subsidiaries is duly qualified
or licensed as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not, individually or in the aggregate, have a
Buyer Material Adverse Effect. The term "Buyer Material Adverse Effect" means
any change, effect or circumstance that is or is reasonably likely to be
materially adverse to the business, operations, results of operations or
financial condition of Buyer and its subsidiaries taken as a whole, other than
any change, effect or circumstance relating to or resulting from (i) general
changes in the industry in which Buyer conducts business, (ii) changes in
general economic conditions or securities markets in general or (iii) this
Agreement or the transactions contemplated hereby or the announcement thereof.
Section 4.2 Charter Documents. Buyer has made available to the Company a
complete and correct copy of the constitution, as amended to date, of Buyer.
The constitution (or equivalent organizational documents) of Buyer and its
subsidiaries are in full force and effect. Except as would not have a Buyer
Material Adverse Effect, none of Buyer or its subsidiaries is in violation of
any provision of its corporate charter documents (or equivalent organizational
documents).
Section 4.3 Capitalization. (a) No shares of capital stock of Buyer are
owned by any subsidiary of Buyer. All outstanding shares of capital stock of
Buyer are, when issued in accordance with the terms thereof, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are no bonds, debentures, notes or other indebtedness of Buyer or
any of its subsidiaries, and no securities or other instruments or obligations
of Buyer or any of its subsidiaries the value of which is in any way based upon
or derived from any capital or voting stock of Buyer, having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of Buyer may vote. Except as set forth
above, there are no contracts of any kind to which Buyer or any of its
subsidiaries is a party or by which
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Buyer or any of its subsidiaries is bound obligating Buyer or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of, or other equity or voting
interests in, or securities convertible into, or exchangeable or exercisable
for, shares of capital stock of, or other equity or voting interests in, Buyer
or any of its subsidiaries or obligating Buyer or any of its subsidiaries to
issue, grant, extend or enter into any such security, option, warrant, call,
right or contract. There are not any outstanding contractual obligations of
Buyer or any of its subsidiaries to (i) repurchase, redeem or otherwise acquire
any shares of capital stock of, or other equity or voting interests in, Buyer
or any of its subsidiaries or (ii) vote or dispose of any shares of the capital
stock of, or other equity or voting interests in, any of its subsidiaries. To
the knowledge of Buyer as of the date of this Agreement, there are no
irrevocable proxies and no voting agreements with respect to any shares of the
capital stock or other voting securities of Buyer or any of its subsidiaries.
(b) All shares of Buyer Preferred Stock underlying the Buyer Shares to be
issued in the Merger, when deposited with the Custodian in accordance with
Section 1.5(a) hereof and the terms of the Deposit Agreement, will be duly
authorized, validly issued, fully paid and nonassessable and free and clear of
all Liens. Upon the due issuance by the Depositary of Buyer Shares evidencing
Preferred Stock against the deposit of Buyer Preferred Stock in accordance with
the terms of the Deposit Agreement, the Buyer Shares to be issued in the Merger
will be duly authorized, validly issued, fully paid and non-assessable and free
and clear of all Liens, and the persons in whose names the Buyer Shares are
registered will be entitled to the rights of registered holders of Buyer Shares
specified in the Deposit Agreement, and the Buyer Shares will conform in all
material respects to the description of the Buyer Shares set forth on the proxy
statement dated July 10, 1997 of Heritage Media Corporation, which proxy
statement was incorporated by reference into the Registration Statement on Form
F-4 of Buyer. The Deposit Agreement has been duly and validly authorized by all
necessary corporate action of Buyer, has been duly and validly executed and
delivered by Buyer, and, constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and by equitable
principles to which the remedies of specific performance and injunctive and
similar forms of relief are subject.
Section 4.4 Authority Relative to Agreement. Buyer and its subsidiaries have
all necessary power and authority to execute and deliver this Agreement, to
perform their obligations hereunder and to consummate the Merger and the other
transactions contemplated hereby. The execution and delivery of this Agreement
by Buyer and the consummation by Buyer and certain of its subsidiaries of the
Merger and the other transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Buyer or any of its subsidiaries are necessary to
authorize the execution and delivery of this Agreement or to consummate the
Merger and the other transactions contemplated hereby (other than any necessary
stockholder approval of Buyer (as provided in Section 4.5(b) hereof) or of any
publicly owned subsidiaries of Buyer in connection with Section 6.18 hereof,
which shall be obtained in accordance with Section 6.2(b) hereof). This
Agreement has been duly and validly executed and delivered by Buyer and,
assuming the due authorization, execution and delivery by the Company, this
Agreement constitutes a legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. The Newco-FTH Agreement
(as hereinafter defined), when executed and delivered by the parties thereto,
will have been duly and validly executed and delivered by such parties and will
constitute a legal, valid and binding obligation of such parties, enforceable
against such parties in accordance with its terms.
Section 4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Buyer does not, and the
performance of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby by Buyer and its subsidiaries will not, (i)
conflict with or violate the corporate charter documents (or equivalent
organizational documents) of (A) Buyer or (B) any of its subsidiaries, (ii)
assuming the consents, approvals and authorizations specified in Section 4.5(b)
have been received and the waiting periods referred to therein have expired,
and any condition precedent to such consent, approval, authorization, or waiver
has been satisfied,
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conflict with or violate any Law or the Listing Rules (the "ASX Listing Rules")
of the Australian Stock Exchange Limited ("ASX") applicable to Buyer or any of
its subsidiaries or by which any property or asset of Buyer or any of its
subsidiaries is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Buyer or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture or credit
agreement, or, to Buyer's knowledge as of the date of this Agreement, any
other, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Buyer or any of its subsidiaries is a party
or by which Buyer or any of its subsidiaries or any property or asset of Buyer
or any of its subsidiaries is bound or affected, except, in the case of clauses
(i)(B), (ii) and (iii), for any such conflicts, violations, breaches, defaults
or other occurrences of the type referred to above which would not have a Buyer
Material Adverse Effect and would not prevent or materially delay the
consummation of the Merger; provided, however, that for purposes of this
Section 4.5(a), the definition of Buyer Material Adverse Effect shall be read
so as not to include clause (iii) of the definition thereof.
(b) The execution and delivery of this Agreement by Buyer do not, and the
performance of this Agreement by Buyer and the consummation of the Merger and
the other transactions contemplated hereby by Buyer and its subsidiaries will
not, require any consent, approval, authorization, waiver or permit of, or
filing with or notification to, any Governmental Authority, except for
applicable requirements of the Exchange Act, the Securities Act, Blue Sky Laws,
the HSR Act, such filings and approvals as may be required under the
Communications Act, filing and recordation of appropriate merger documents as
required by Delaware Law and the rules of the NYSE filings and recordings of
appropriate documents with, and announcements to, the Australian Securities and
Investment Commission and the ASX, and a waiver from the ASX (or, if not
obtained, the approval of Buyer's shareholders at a special meeting of Buyer
shareholders (the "Buyer Shareholder Approval") with respect to the Listing
Rule 10.1 of the ASX Listing Rules (the "ASX Waiver") and except where failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not have a Buyer Material Adverse Effect and
would not prevent or materially delay the consummation of the Merger; provided,
however, that for purposes of this Section 4.5(b), the definition of Buyer
Material Adverse Effect shall be read so as not to include clause (iii) of the
definition thereof.
Section 4.6 Permits and Licenses. Buyer or its subsidiaries have (i)
operated the television stations and associated facilities for which Buyer or
any of its subsidiaries holds licenses from the FCC, in each case which are
owned or operated by Buyer or its subsidiaries (the "Buyer Licensed
Facilities"), in compliance with the terms of the permits issued by the FCC to
Buyer or its subsidiaries ("Buyer FCC Licenses"), and in compliance with the
Communications Act, and (ii) timely filed or made all applications, reports and
other disclosures required by the FCC to be filed or made with respect to the
Buyer Licensed Facilities and have timely paid all FCC regulatory fees with
respect thereto, in each case except as would not have a Buyer Material Adverse
Effect. As of the date hereof, to Buyer's knowledge, there is not pending or
threatened before the FCC any material investigation, proceeding, notice of
violation, order of forfeiture or complaint against Buyer or any of its
subsidiaries, relating to any of the Buyer Licensed Facilities or FCC regulated
services conducted by Buyer or its subsidiaries that, if adversely decided,
would have a Buyer Material Adverse Effect.
Section 4.7 Buyer SEC/ASX Reports. Buyer has filed with the SEC and ASX all
forms, reports, schedules, statements and other documents required to be filed
with the SEC and ASX by Buyer since January 1, 1997 (together with all
information incorporated therein by reference, the "Buyer Reports"). As of
their respective dates, the Buyer Reports complied in all material respects
with the requirements of the Securities Act or the Exchange Act or the ASX
Listing Rules, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Buyer Reports, and none of the Buyer
Reports at the time they were filed contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements (including the related notes) of Buyer included in the Buyer Reports
comply as to form in all material respects with applicable accounting
requirements and the
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published rules and regulations of the SEC or the ASX with respect thereto,
have been prepared in accordance with Australian generally accepted accounting
principles with appropriate reconciliation to GAAP as required by SEC rules
(except, in the case of unaudited statements, as permitted by forms or rules of
the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present in all material
respects the consolidated financial position of Buyer and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal and recurring year-end audit adjustments).
Buyer and its subsidiaries do not have any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) other than
liabilities and obligations which, individually or in the aggregate, would not
have a Buyer Material Adverse Effect.
Section 4.8 Absence of Certain Changes or Events.
(a) Since December 31, 1999, except as contemplated by this Agreement, there
has not been any change, event or circumstance which, when taken individually
or together with all other changes, events or circumstances, has had or would
have a Buyer Material Adverse Effect, and (b) since December 31, 1999 to the
date of this Agreement, each of Buyer and its subsidiaries has conducted its
businesses only in the ordinary course and in a manner consistent with past
practice.
Section 4.9 Tax Matters. None of Buyer or any of its affiliates has taken or
agreed to take any action, has failed to take any action or knows of any fact,
agreement, plan or other circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code; provided, however, that the foregoing representation is made only
as of the date hereof in the case of the Reverse Merger. The preceding sentence
excludes all transactions contemplated by this Agreement.
Section 4.10 Brokers. No broker, finder or investment banker (other than
Donaldson, Lufkin & Jenrette, Inc.) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of Buyer.
Section 4.11 Interim Operations of Acquisition Sub. In the case of the
Reverse Merger, Acquisition Sub will be a newly formed indirect subsidiary of
Buyer or a newly formed subsidiary of Chris-Craft (unless the Chris-Craft
Merger has not occurred prior to the Effective Time), will be a Delaware
corporation and, when formed, will have been formed solely for the purpose of
engaging in the transactions contemplated hereby, the Chris-Craft Merger and
the UTV Merger, as applicable, and will have engaged in no business other than
in connection with such transactions and the transactions contemplated by this
Agreement. In the case of the Forward Merger, Acquisition Sub will be News
Publishing Australia Limited, a Delaware corporation, of which Buyer directly
owns and will continue to own at least 80% of the total combined voting power
of all classes of stock entitled to vote and 80% of the total number of shares
of each other class of stock of such corporation.
ARTICLE V
Conduct of Business Pending the Merger
Section 5.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time, except (x) as expressly contemplated by this Agreement
(including, without limitation, as set forth in Section 5.1 of the Company
Disclosure Schedule or as set forth as an exception or qualification to
paragraphs (a) through (n) of this Section 5.1), (y) as expressly authorized
pursuant to the Chris-Craft Merger Agreement, and (z) as Buyer shall otherwise
agree in advance in writing, the business of the Company and its subsidiaries
shall be conducted only in, and the Company shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice; and the Company and its subsidiaries shall use their reasonable best
efforts to preserve substantially intact the Company's business organization,
to keep available the services of the current officers, employees and
consultants of the Company and its subsidiaries (provided that the foregoing
covenant to use
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reasonable best efforts shall not require or permit the Company to offer
retention bonuses or other non-ordinary course compensation to such individuals
without Buyer's written consent) and to preserve the current relationships of
the Company and its subsidiaries with customers, distributors, dealers,
suppliers and other persons with which the Company and its subsidiaries have
significant business relations. By way of amplification and not limitation,
between the date of this Agreement and the Effective Time, the Company will not
do, and, subject to the fiduciary duties of the Company to UTV and the members
of the Board of Directors of UTV, shall not permit any of its subsidiaries to
do, directly or indirectly, any of the following except in compliance with the
exceptions listed above:
(a) amend or otherwise change the Restated Certificate of Incorporation or
By-laws of the Company or, in any material respect, that of any of its
subsidiaries;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, (i) any shares of
its or its subsidiaries' capital stock, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of its or its
subsidiaries' capital stock or any other ownership interest (including any
phantom interest), of the Company or any of its subsidiaries, (ii) any assets
except for sales of marketable securities and investment assets for their fair
value and except for sales of other assets in the ordinary course of business
consistent with past practice not in excess of $500,000 in the aggregate
(including, for purposes of calculating such $500,000 aggregate limitation, any
action taken by or on behalf of Chris-Craft, the Company or UTV pursuant to
Section 5.1(b) of the Chris-Craft Merger Agreement or by or on behalf of UTV
pursuant to Section 5.1(b) of the UTV Merger Agreement);
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to the Company's or
any of its subsidiaries' capital stock (other than cash dividends payable by
any wholly owned subsidiary (or by UTV if permitted under the UTV Merger
Agreement)) with respect to ordinary course dividends, including dividends
designated as special dividends, in a manner consistent with past practice);
(d) in the case of the Company, reclassify, combine, split, subdivide or
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) (i) except in connection with acquisitions or investments which are made
in the ordinary cause of business consistent with past practice not in excess
of $10,000,000 individually or $25,000,000 in the aggregate (including, for
purposes of calculating such $25,000,000 aggregate limitation, any action taken
by or on behalf of Chris-Craft, the Company or UTV pursuant to Section 5.1(e)
of the Chris-Craft Merger Agreement or by or on behalf of UTV pursuant to
Section 5.1(e) of the UTV Merger Agreement) and which the Buyer has not
reasonably objected to as presenting any meaningful risk of resulting in the
FCC Consent (with no Adverse Condition) not being obtained or delayed for more
than an immaterial period of time and except with respect to the reinvestment
of marketable securities or investment assets, and the investment of cash
generated by the operations of the Company and its subsidiaries in marketable
securities, in each case in the ordinary course of business consistent with
past practice (A) acquire (including by merger, consolidation, or acquisition
of stock or assets), or otherwise make any investment in, any corporation,
partnership, limited liability company, other business organization or any
division thereof, or any material amount of assets, or acquire any interest in
any broadcast radio or television station, daily English-language newspaper or
cable television system, as defined at Note 2 to 47 C.F.R. Section 73.3555; or
(B) incur any indebtedness for borrowed money, issue any debt securities,
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, agree to amend or otherwise
modify in any manner any agreement or instrument pursuant to which the Company
has incurred indebtedness, or make any loans or advances, except in the
ordinary course of business and consistent with past practice, except the
refinancing of existing indebtedness, borrowings under commercial paper
programs in the ordinary course of business or borrowings under existing bank
lines of credit in the ordinary course of business, (ii) enter into any
material contract, agreement or transaction, other than (X) in the ordinary
course of business, and (Y) which would not be reasonably likely to prevent or
materially delay the consummation of the Merger, (iii) authorize any capital
expenditures which are,
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in the aggregate, in excess of 110% of the amounts currently budgeted for
fiscal year 2000, and with respect to fiscal year 2001, in excess of 120% of
the amount budgeted for fiscal year 2000, in each case for the Company and its
subsidiaries taken as a whole; provided that any amounts budgeted in respect of
DTV may be reallocated between the two years or (iv) enter into or amend any
contract, agreement, commitment or arrangement which would require the Company
to take any action prohibited by this subsection (e);
(f) except as set forth in Section 6.12 hereof or as required by Law or by
the terms of any collective bargaining agreement or other labor union contract
or other agreement currently in effect between the Company or any subsidiary of
the Company and any executive officer or employee thereof, (provided, however,
that except as contemplated hereby no actions shall be taken with respect to
the acceleration of vesting or cashing-out of Company Options in connection
with the execution and delivery of this Agreement or the consummation of any
transactions contemplated hereby or otherwise), increase the compensation
payable or to become payable to its executive officers or employees, or grant
any severance or termination pay to, or enter into any employment or severance
agreement with, any director or executive officer or employee of it or any of
its subsidiaries, or establish, adopt, enter into or amend in any respect or
take action to accelerate any rights or benefits under any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, executive officer or employee,
provided that this clause shall not prevent the Company or any of its
subsidiaries from (i) making severance payments to the extent contractually
obligated under contractual arrangements currently existing at the Company or
such subsidiary and previously disclosed to Buyer, (ii) increasing compensation
in accordance with the provisions of agreements with executive officers or
employees in accordance with the terms of such agreements in effect on the date
of this Agreement, provided that if any such agreement does not specify the
amount of such increase, no such increase shall (A) fail to be in the ordinary
course of business and in accordance with the past practices of the Company and
(B) exceed 10 percent of the compensation of such executive officer or employee
in effect on the date of this Agreement, or (iii) increasing compensation for
employees who are not parties to agreements relating to compensation, provided
that each such increase (A) is in the ordinary course of business, and in
accordance with the past practices of the Company and (B) does not exceed, with
respect to any employee, 10 percent of the compensation of such employee on the
date of this Agreement;
(g) change (except as required by the SEC or changes in GAAP which become
effective after the date of this Agreement) any accounting methods, policies,
practices or procedures;
(h) enter into any contract, agreement, lease, license, permit, franchise or
other instrument or obligation which if in existence and known to the Company
prior to the date of this Agreement would have resulted in a breach of Section
3.4 hereof;
(i) settle or compromise any material arbitration, action, suit,
investigation or proceeding (other than those related to Tax matters, which
shall be governed exclusively by the provisions of Section 5.3 hereof), other
than in the ordinary course of business consistent with past practice not in
excess of $2,500,000 in the aggregate (including for purposes of calculating
such $2,500,000 aggregate limitation, any action taken by or on behalf of
Chris-Craft (other than in respect of Excluded Matters) (as defined in the
Chris-Craft Merger Agreement), UTV or the Company pursuant to Section 5.1(i) of
the Chris-Craft Merger Agreement or by or on behalf of UTV pursuant to Section
5.1(i) of the UTV Merger Agreement); provided, however that the Company shall
not in any event settle any arbitration action, suit, investigation or
proceeding arising out of this Agreement, the Voting Agreement or the matters
contemplated hereby or thereby without Buyer's consent (other than those
related to Tax matters, which shall be governed exclusively by the provisions
of Section 5.3 hereof);
(j) settle or discharge any material liability of a type not covered in
subsection (i) above, other than in accordance with its terms or on terms no
less favorable to the Company and its subsidiaries;
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(k) amend or waive any right under or enter into any agreement with any
affiliate of the Company (other than its wholly owned subsidiaries or UTV in
the ordinary course of business consistent with past practice) or with any
stockholder of the Company or any of its subsidiaries or any affiliate of any
such stockholder;
(l) enter into, amend in any material respect or terminate any network
affiliation agreement, retransmission consent agreement or, except in the case
of agreements terminable without cost or penalty by the Company prior to the
Closing or by Buyer within 30 days thereafter, any agreement licensing or
creating any obligations with respect to the use of the digital data stream of
any DTV Station;
(m) enter into, amend or terminate any film or program license or
syndication agreement (each a "Program Agreement") involving aggregate payments
of more than (i) $2,500,000 in the aggregate on a per Program Agreement, per
station basis (including, for purposes of calculating such $2,500,000 aggregate
limitation, any action taken by or on behalf of Chris-Craft, the Company or UTV
pursuant to Section 5.1(m) of the Chris-Craft Merger Agreement or by or on
behalf of UTV pursuant to Section 5.1(m) of the UTV Merger Agreement), (ii)
$5,000,000 in the aggregate (including, for purposes of calculating such
$500,000 aggregate limitation, any action taken by or on behalf of Chris-Craft,
the Company or UTV pursuant to Section 5.1(m) of the Chris-Craft Merger
Agreement or by or on behalf of UTV pursuant to Section 5.1(m) of the UTV
Merger Agreement) on a per station basis, (iii) $500,000 per annum on a per
Program Agreement, per station basis and (iv) barter agreements that expire
after December 31, 2001; or
(n) enter into or publicly announce an intention to enter into any contract,
agreement, commitment or arrangement to, do any of the foregoing actions set
forth in this Section 5.1.
Section 5.2 FCC Matters. During the period from the date of this Agreement
to the Effective Time, the Company shall, and shall cause each of its
subsidiaries: (i) to use its reasonable best efforts to comply with all
material requirements of the FCC applicable to the operation of the Company
Stations; (ii) promptly to deliver to Buyer copies of any material reports,
applications or responses filed with the FCC; (iii) promptly to notify Buyer of
any inquiry, investigation or proceeding initiated by the FCC; (iv) not to make
or revoke any material election with the FCC; and (v) use its reasonable best
efforts to take all actions necessary to complete construction and initiate
operation of the DTV Stations by the relevant deadline established by the FCC,
as it may be extended, and to consult with Buyer about, and keep Buyer
reasonably informed of, the progress of construction of the DTV Stations.
Section 5.3 Certain Tax Matters. During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of its
subsidiaries to: (i) timely file all Tax Returns ("Post-Signing Returns")
required to be filed by it and such Post-Signing Returns shall be prepared in a
manner consistent with past practice; (ii) timely pay all Taxes due and payable
in respect of such Post-Signing Returns that are so filed; (iii) accrue a
reserve in its books and records and financial statements in accordance with
past practice for all Taxes payable by it for which no Post-Signing Return is
due prior to the Effective Time; (iv) promptly notify Buyer of any Federal,
California, New Jersey or New York income or franchise tax and any other
material suit, claim, action, investigation, proceeding or audit (collectively,
"Actions") pending against or with respect to the Company or any of its
subsidiaries in respect of any Tax matter, including (without limitation) Tax
liabilities and refund claims, and not settle or compromise any such Tax matter
or Action without Buyer's consent, which consent shall not be unreasonably
withheld; and (v) not make or revoke any material Tax election or adopt or
change a material tax accounting method without Buyer's consent.
ARTICLE VI
Additional Agreements
Section 6.1 Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement, (i)
the Company shall prepare and shall cause to be filed with the SEC a proxy
statement (together with any amendments thereof or supplements
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thereto, the "Proxy Statement") relating to the meeting of the Company's
stockholders to be held to consider the adoption of this Agreement and the
approval of the Merger and (ii) Buyer shall prepare and file with the SEC a
registration statement on the appropriate form (together with all amendments
thereto, the "Registration Statement") in which the Proxy Statement shall be
included as a prospectus, in connection with the registration under the
Securities Act of the Buyer Shares to be issued to the stockholders of the
Company pursuant to the Merger. In addition to the foregoing, Buyer shall make
such other appropriate filings and deliveries as may be required by applicable
law (including any applicable prospectus delivery requirements thereof). Each
of Buyer and the Company shall use its reasonable best efforts to cause the
Registration Statement to become effective at such time as they shall agree,
and, prior to the effective date of the Registration Statement, Buyer shall use
reasonable best efforts to take all or any action required under any applicable
Federal or state securities Laws in connection with the issuance of Buyer
Shares pursuant to the Merger. If requested by the SEC, each of the Forward
Merger and the Reverse Merger shall be submitted to the Company's stockholders
at the Stockholders' Meeting (as defined in Section 6.2) as separate proposals.
Each of Buyer and the Company shall furnish all information concerning it as
may reasonably be requested by the other party in connection with such actions
and the preparation of the Proxy Statement and Registration Statement. As
promptly as practicable after the Registration Statement shall have become
effective, the Company shall mail the Proxy Statement to its stockholders. Each
of Buyer and the Company shall also promptly file, use reasonable best efforts
to cause to become effective as promptly as practicable and, if required, mail
to the Company's stockholders, any amendment to the Registration Statement or
Proxy Statement which may become necessary after the date the Registration
Statement is declared effective.
(b) The Proxy Statement shall include the recommendations of the Special
Committee and the Board of Directors of the Company to the stockholders of the
Company in favor of the adoption of this Agreement and the approval of the
Merger; provided, however, that the Special Committee and the Board of
Directors of the Company may take or disclose to the stockholders of the
Company a position contemplated by Rule 14e-2(a) promulgated under the Exchange
Act or make any disclosure required under applicable Law and may, prior to the
date of its Stockholders' Meeting (as defined in Section 6.2 hereof), withdraw,
modify, or change any such recommendation to the extent that the Special
Committee or the Board of Directors of the Company determines in good faith
that such withdrawal, modification or change is required in order to comply
with its fiduciary duties under applicable Law after receiving advice to such
effect from independent legal counsel (who may be the Company's regularly
engaged outside legal counsel). Unless this Agreement is previously terminated
in accordance with Article VIII, the Company shall submit this Agreement to its
stockholders at its Stockholders' Meeting even if the Special Committee or the
Board of Directors of the Company determines at any time after the date hereof
that is no longer advisable or recommends that the Company's stockholders
reject it.
(c) No amendment or supplement to the Proxy Statement or the Registration
Statement will be made by Buyer or the Company without the approval of the
other party, which shall not be unreasonably withheld or delayed. Each of Buyer
and the Company will advise the other, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Buyer Shares issuable in connection with
the Merger for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional
information.
(d) The information supplied by the Company for inclusion in the
Registration Statement and the Proxy Statement (including by incorporation by
reference) shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of the Company, (iii)
the time of the Stockholders' Meeting, and (iv) the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to the Company or any of its subsidiaries, or their
respective officers or directors, should be discovered by the Company which,
pursuant to the Securities Act or Exchange Act,
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should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, the Company shall promptly inform Buyer. All
documents that the Company is responsible for filing with the SEC in connection
with the Merger will comply as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
(e) The information supplied by Buyer for inclusion in the Registration
Statement and the Proxy Statement (including by incorporation by reference)
shall not, at (i) the time the Registration Statement is declared effective,
(ii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the stockholders of the Company, (iii) the time of
the Stockholders' Meeting, and (iv) the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to Buyer or any of its subsidiaries, or their respective
officers or directors, should be discovered by Buyer which, pursuant to the
Securities Act or Exchange Act, should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, Buyer shall
promptly inform the Company. All documents that Buyer is responsible for filing
with the SEC in connection with the Merger will comply as to form in all
material respects with the applicable requirements of the Securities Act and
the Exchange Act.
Section 6.2 Stockholders' Meetings.
(a) The Company shall, as promptly as practicable following the date of this
Agreement establish a record date (which will be as promptly as reasonably
practicable following the date of this Agreement) for, duly call, give notice
of, convene and hold a meeting of its stockholders (the "Stockholders'
Meeting"), for the purpose of voting upon the adoption of this Agreement and
approval of the Merger, and the Company shall hold the Stockholders' Meeting as
soon as practicable after the date on which the Registration Statement becomes
effective. The Company shall use its reasonable best efforts to cause the
Stockholders' Meeting to occur on the same day as the meetings of stockholders
are held to consider the Chris-Craft Merger and the UTV Merger. The Company
shall use its reasonable best efforts to solicit from its stockholders proxies
in favor of the adoption of this Agreement and approval of the Merger, and
shall take all other action necessary or advisable to secure the vote of its
stockholders, required by the NYSE or Delaware Law, as applicable, to obtain
such approvals; provided, however, that the Company shall not be obligated to
solicit proxies in favor of the adoption of this Agreement at its Stockholders'
Meeting (but shall nonetheless remain obligated to submit this Agreement to a
vote of its stockholders) to the extent that the Board of Directors of the
Company determines in good faith that such failure to solicit proxies is
required in order to comply with its fiduciary duties under applicable Law
after receiving advice to such effect from independent legal counsel (who may
be such party's regularly engaged outside legal counsel).
(b) Without limiting the provisions of Section 4.4 hereof, Buyer shall, as
promptly as practicable following the date of this Agreement, obtain, and cause
its subsidiaries to obtain, all stockholder and other approvals, including the
Buyer Shareholder Approval if required, necessary to consummate the Merger and
the other transactions contemplated hereby, including, without limitation,
entering into and performing the agreements and transactions contemplated by
Section 6.18 hereof.
Section 6.3 Appropriate Action; Consents; Filings.
(a) Each of the parties hereto shall (i) make promptly its respective
filings, and thereafter make any other required submissions under the HSR Act
with respect to the transactions contemplated herein and (ii) make promptly
filings with or applications to the FCC with respect to the transactions
contemplated herein (the "FCC Application"). The parties hereto will use their
respective reasonable best efforts to consummate and make effective the
transactions contemplated herein and to cause the conditions to the Forward
Merger and, if a Restructuring Trigger has occurred, the Reverse Merger, in
each case as set forth in Article VII to be satisfied (including using
reasonable best efforts to obtain all licenses, permits, consents, approvals,
authorizations, waivers, qualifications and orders of Governmental Authorities
as are necessary for the consummation of the
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transactions contemplated herein), and will do so in a manner designed to
obtain such regulatory clearance and the satisfaction of such conditions as
expeditiously as reasonably possible; provided, however, that Buyer and FTH
shall have the right to make all decisions concerning any divestiture
commitments necessary to comply with the FCC's multiple ownership rules set
forth at 47 C.F.R. Section 73.3555) as in effect on the date of this Agreement
(the "FCC Multiple Ownership Rules"); provided, that Buyer and FTH shall
regularly consult with the Company during the processes referred to in this
Section 6.3 and consider in good faith the views of the Company with respect
thereto; and provided, further, that, in connection with the Merger, Buyer and
FTH shall not seek a waiver of Section 73.3555 of the FCC's rules except for a
temporary waiver of subsections (b), and (e) thereof for a period not to exceed
twelve months from the Closing Date for television divestitures required in
order to obtain the FCC Consent (as defined in Section 7.1(e) hereof) and, with
respect to subsection (d) thereof, in the FCC Application when it is filed,
Buyer will (1) maintain that no waiver is required to permit it to own a
newspaper and two television stations in the New York market, and (2) request
in the alternative, if that position is rejected or a permanent waiver is not
issued by the FCC, a temporary waiver to hold the two television stations and
newspaper for a period not to extend beyond the date which is the later of (A)
twelve months from the Closing Date and (B) the conclusion of any then pending
FCC rule making proceeding regarding 47 C.F.R. Section 73.3555(d); provided,
that the foregoing sentence shall be subject to the provisions of subsection
(b) below. Failure to obtain any of the waivers set forth above shall not limit
Buyer's obligations pursuant to subsection (b) below.
(b) Notwithstanding anything to the contrary in this Agreement other than
the following sentence, the Company and Buyer and FTH each agree to take
promptly any and all steps necessary to avoid or eliminate each and every
impediment and obtain all consents or waivers under any antitrust, competition
or communications or broadcast Law that may be validly required by any U.S.
federal, state or local antitrust or competition Governmental Authority, or by
the FCC or similar Governmental Authority, or by any Australian Law, in each
case with competent jurisdiction, so as to enable the parties to close the
transactions contemplated by this Agreement as expeditiously as reasonably
possible, including committing to or effecting, by consent decree, hold
separate orders, trust, or otherwise, the sale or disposition of such of its
assets or businesses as are required to be divested in order to obtain the FCC
Consent (as defined below), or to avoid the entry of, or to effect the
dissolution of or vacate or lift, any decree, order, judgment, injunction,
temporary restraining order or other order in any suit or proceeding by or with
any Governmental Authority (each, an "Order"), that would otherwise have the
effect of preventing or materially delaying the consummation of the Merger and
the other transactions contemplated by this Agreement. Notwithstanding the
foregoing, (i) neither Buyer nor FTH shall be required to divest any of its
material assets or accept any material limitation on any of its material
businesses other than (x) the divestiture of such broadcast assets (i.e.,
newspaper and television stations) as it is required to divest or (y) the
material limitation on such broadcast assets or Buyer's and FTH's operation
thereof as it is required to be subject to, in the case of each of clauses (x)
and (y) in order to comply with the FCC Multiple Ownership Rules or a final
Order in an action brought by an antitrust or competition or FCC or similar
Governmental Authority, (ii) notwithstanding clause (i), neither the Company,
Buyer nor FTH shall be required to divest or to hold separate, or to accept any
substantial limitation on the operation of, or to waive any rights material to,
the Los Angeles television station of Buyer or the Company (each of the actions
described in clause (i) and (ii) above being an "Adverse Condition"), (iii)
neither party shall be required to take any of the foregoing actions if such
action is not conditioned on the consummation of the Merger and (iv) without
limiting Buyer's obligations set forth herein, the Company shall not agree to
any of the foregoing without Buyer's consent and, at Buyer's request, the
Company shall agree to any of the foregoing so long as such agreement is
conditioned upon consummation of the Merger.
(c) Each of Buyer, FTH and the Company shall give (or shall cause its
respective subsidiaries to give) any notices to third parties, and Buyer, FTH
and the Company shall use, and cause each of its subsidiaries to use, its
reasonable best efforts to obtain any third party consents not covered by
paragraphs (a) and (b) above, necessary, proper or advisable to consummate the
Forward Merger or, if a Restructuring Trigger has occurred, the Reverse Merger;
provided that neither Buyer nor FTH shall be required to pay, and the Company
shall not pay, without Buyer's prior written consent, any material
consideration to obtain any such third party consent.
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Each of the parties hereto will furnish to the other such necessary information
and reasonable assistance as the other may request in connection with the
preparation of any required governmental filings or submissions and will
cooperate in responding to any inquiry from a Governmental Authority, including
immediately informing the other party of such inquiry, consulting in advance
before making any presentations or submissions to a Governmental Authority, and
supplying each other with copies of all material correspondence, filings or
communications between either party and any Governmental Authority with respect
to this Agreement.
Section 6.4 Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, Buyer will comply with the
reasonable requests of the Company to make officers available to respond to the
reasonable inquiries of the Company in connection with the transactions
contemplated by this Agreement and to make available information regarding
Buyer and its subsidiaries as the Company may reasonably request.
(b) From the date hereof to the Effective Time, to the extent permitted by
applicable Law and contracts, the Company will provide to Buyer (and its
officers, directors, employees, accountants, consultants, legal counsel, agents
and other representatives, collectively, "Representatives") access to all
employees, sites, properties, information and documents which Buyer may
reasonably request regarding the business, assets, liabilities, employees and
other aspects of the Company; provided, however, that the Company shall not be
required to provide access to any employees, sites, properties, information or
documents which would breach any agreement with any third-party or which would
constitute a waiver of the attorney-client or other privilege by the Company.
(c) Except with respect to matters related to the hiring of employees and
the solicitation for hiring of employees, which matters shall be governed by
the provisions of Section 6.17 hereof, the parties hereto shall comply with,
and shall cause their respective Representatives to comply with all of their
respective obligations under the Confidentiality Agreement dated September 16,
1999 between Buyer and Chris-Craft, as supplemented by the Addendum to the
Confidentiality Agreement, dated August 7, 2000 (as so supplemented, the
"Confidentiality Agreement"); provided that, following any termination of this
Agreement, Section 6.17 hereof shall be of no further force or effect.
(d) No investigation pursuant to this Section 6.4 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
Section 6.5 No Solicitation of Competing Transactions.
(a) The Company shall not, directly or indirectly, through any officer,
director, agent or otherwise, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information), or take any other
action knowingly to facilitate, any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Competing
Transaction (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize any of the officers, directors or employees
of the Company or any investment banker, financial advisor, attorney,
accountant or other agent or representative of the Company to take any such
action, and the Company shall notify Buyer as promptly as practicable of all of
the relevant material details relating to all inquiries and proposals which the
Company or any such officer, director, employee, investment banker, financial
advisor, attorney, accountant or other agent or representative may receive
relating to any of such matters, provided, however, that prior to the adoption
of this Agreement and the approval of the Merger by the stockholders of the
Company, nothing contained in this Section 6.5 shall prohibit the Board of
Directors of the Company from (i) furnishing information to, or entering into
and engaging in discussions or negotiations with, any person that makes an
unsolicited proposal that the Board of Directors of the Company determines in
good faith, after consultation with the Company's financial advisors and
independent legal counsel, can be reasonably expected to result in a Superior
Proposal; provided that prior to furnishing such information to, or entering
into discussions or negotiations with, such person, the
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Company (1) provides notice to Buyer to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such Person
and provides, in any such notice to Buyer in reasonable detail the identity of
the Person making such proposal and the material terms and conditions of such
proposal, and (2) has received from such person or entity an executed
confidentiality agreement or (ii) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to a tender or exchange offer or making any
disclosure required under applicable Law.
(b) For purposes of this Agreement, "Competing Transaction" shall mean any
of the following involving the Company: (i) any merger, consolidation, share
exchange, business combination, issuance or purchase of securities or other
similar transaction other than transactions specifically permitted pursuant to
Section 5.1 of this Agreement; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of the assets of the Company in a single
transaction or series of related transactions; (iii) any tender offer or
exchange offer for the Company's securities or the filing of a registration
statement under the Securities Act in connection with any such exchange offer;
in the case of clauses (i), (ii) or (iii) above, which transaction would result
in a third party (or its stockholders) acquiring more than 25% of the voting
power of the capital stock then outstanding or more than 25% of the assets of
the Company and its subsidiaries, taken as a whole; or (iv) any public
announcement of an agreement, proposal, plan or intention to do any of the
foregoing, either during the effectiveness of this Agreement or at any time
thereafter.
For purposes of this Agreement, a "Superior Proposal" means any proposal
made by a third party which would result in such party (or in the case of a
parent-to-parent merger, its stockholders) acquiring, directly or indirectly,
including pursuant to a tender offer, exchange offer, merger, consolidation,
share exchange, business combination, share purchase, asset purchase,
recapitalization, liquidation, dissolution, joint venture or similar
transaction, more than 50% of the voting power of the capital stock then
outstanding or all or substantially all of the assets of the Company and its
subsidiaries, taken as a whole, for consideration which the Board of Directors
of the Company determines in its good faith judgment, after consultation with
independent legal counsel and its financial advisors, to be more favorable to
the Company's stockholders than the Merger.
Section 6.6 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the Restated Certificate of Incorporation and By-laws of the Company
on the date of this Agreement, which provisions shall not be amended, repealed
or otherwise modified after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were officers, directors or employees of the Company in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by law.
(b) The Surviving Corporation shall maintain (or cause to be maintained) in
effect for six years from the Effective Time directors' and officers' liability
insurance covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy on terms comparable to such
existing insurance coverage; provided, however, that in no event shall the
Surviving Corporation be required to expend pursuant to this Section 6.6 more
than an amount per year equal to 300% of current annual premiums paid by the
Company for such insurance; and provided further that if the annual premiums
exceed such amount, Buyer shall be obligated to obtain a policy with the
greatest coverage available for an annual cost not exceeding such amount.
(c) In addition to the other rights provided for in this Section 6.6 and not
in limitation thereof (but without in any way limiting or modifying the
obligations of any insurance carrier contemplated by Section 6.6(b)), from and
after the Effective Time, Buyer shall, and shall cause the Surviving
Corporation to, to the fullest extent permitted by applicable Law (the
"Indemnifying Party"), (i) indemnify and hold harmless (and release from any
liability to Buyer or the Surviving Corporation or any of their respective
subsidiaries), the individuals who, on or prior to the Effective Time, were
officers, directors or employees of the Company or served on behalf of
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the Company as an officer, director or employee of any of the Company's current
or former subsidiaries or affiliates (including, without limitation, those
affiliates listed in Section 6.6(c) of the Company Disclosure Schedule
(collectively, "Covered Affiliates") or any of their predecessors in all of
their capacities (including as stockholder, controlling or otherwise) and the
heirs, executors, trustees, fiduciaries and administrators of such officers,
directors or employees (the "Indemnitees") against all Expenses (as defined
hereinafter), losses, claims, damages, judgments or amounts paid in settlement
("Costs") in respect of any threatened, pending or completed claim, action,
suit or proceeding, whether criminal, civil, administrative or investigative,
based on, or arising out of or relating to the fact that such person is or was
a director, officer, employee or stockholder (controlling or otherwise) of the
Company or any of its current or former subsidiaries or Covered Affiliates or
any of their predecessors arising out of acts or omissions occurring on or
prior to the Effective Time (including, without limitation, in respect of acts
or omissions in connection with this Agreement and the transactions
contemplated hereby (an "Indemnifiable Claim"; except for acts or omissions
which involve conduct known to such Person at the time to constitute a material
violation of Law); provided that the Surviving Corporation and Buyer shall not
be responsible for any amounts paid in settlement of any Indemnifiable Claim
without the consent of Buyer and the Surviving Corporation; and (ii) advance to
such Indemnitees all Expenses incurred in connection with any Indemnifiable
Claim (including in circumstances where the Indemnifying Party has assumed the
defense of such claim) promptly after receipt of reasonably detailed statements
therefor; provided that, the person to whom Expenses are to be advanced
provides an undertaking to repay such advances if it is ultimately determined
that such person is not entitled to indemnification from Buyer or the Surviving
Corporation. Any Indemnifiable Claim shall continue until such Indemnifiable
Claim is disposed of or all judgments, orders, decrees or other rulings in
connection with such Indemnifiable Claim are fully satisfied. Except as
otherwise may be provided pursuant to any Indemnity Agreement, the Indemnitees
as a group may retain only one law firm with respect to each related matter
except to the extent there is, in the opinion of counsel to an Indemnitee,
under applicable standards of professional conduct, a conflict on any
significant issue between positions of any two or more Indemnitees; provided
that any law firm or firms so retained shall be reasonably acceptable to Buyer.
The Indemnifying Party shall be entitled to assume and control the defense of
any potential Indemnifiable Claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to the Indemnified Party
within 30 days of its receipt of notice from the Indemnified Party that a
potential Indemnifiable Claim has been made and so long as it unconditionally
agrees in writing (x) to indemnify fully and indefinitely, subject only to
limitations required by applicable Law, and (y) not to seek repayment of any
Expenses advanced (unless such repayment would otherwise be available pursuant
to clause (ii) of the first sentence of this Section 6.6(c) solely because such
matter was excluded from the definition of Indemnifiable Claim pursuant to the
exception contained in the definition thereof appearing immediately prior to
the initial proviso in this subsection) from, the Indemnitees in respect of
such potential Indemnifiable Claim, and acknowledges in writing its obligation
to do so under this Section; provided, however, that, if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Indemnified Party, in its reasonable
discretion, for the same counsel to represent both the Indemnified Party and
the Indemnifying Party, then the Indemnified Party shall be entitled to retain
its own counsel at the expense of the Indemnifying Party. In the event that the
Indemnifying Party exercises the right to undertake any such defense against
any such Indemnifiable Claim as provided above, the Indemnified Party shall
cooperate with the Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against
any such Indemnifiable Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party. No such Indemnifiable Claim may be settled by any Indemnified Party
without the prior written consent of the Indemnifying Party, which consent will
not be unreasonably withheld or delayed. For the purposes of this Section 6.6,
"Expenses" shall include reasonable attorneys' fees and all other reasonable
costs, charges and expenses paid or incurred in connection with investigating,
defending, being a witness in or participating in
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(including on appeal), or preparing to defend, be a witness in or participate
in any Indemnifiable Claim, but shall exclude damages, losses, claims,
judgments and amounts paid in settlement. The term "Indemnitees" shall exclude
persons who both (x) were serving as officers or directors or employees of the
Covered Affiliates listed on Section 6.6(c) of the Company Disclosure Schedule
at the request of an entity other than the Company or one of its current or
former subsidiaries, or any predecessor thereto, and (y) are not otherwise an
Indemnitee.
(d) Notwithstanding anything contained in Section 9.1 hereof to the
contrary, this Section 6.6 shall survive the consummation of the Merger
indefinitely, is intended to benefit each Indemnitee, shall be binding, jointly
and severally, on all successors and assigns of Buyer, the Surviving
Corporation and its subsidiaries, and shall be enforceable by the Indemnitees
and their successors. In the event that Buyer or the Surviving Corporation or
any of its subsidiaries or any of their respective successors or assigns (i)
consolidates with or merges into any other Person or (ii) transfers all or
substantially all of its properties or assets to any Person, then, and in each
case, the successors and assigns of Buyer or the Surviving Corporation or its
subsidiary, as the case may be, shall expressly assume and be bound by the
indemnification obligations set forth in this Section 6.6.
(e) The obligations of the Surviving Corporation, its subsidiaries and Buyer
under this Section 6.6 shall not be terminated or modified in such a manner as
to adversely affect any Indemnitee to whom this Section 6.6 applies without the
consent of such affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 6.6 applies shall be third party beneficiaries
of this Section 6.6).
Section 6.7 Notification of Certain Matters. The Company shall give prompt
notice to Buyer, and Buyer shall give prompt notice to the Company, of (i) the
occurrence, or nonoccurrence, of any event the occurrence, or nonoccurrence, of
which would be likely to cause (x) any representation or warranty contained in
this Agreement to be untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied or
(z) the Forward Merger not to be consummated and (ii) any failure of the
Company or Buyer, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.7
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 6.8 Tax Matters. Buyer and Chris-Craft shall submit any filings or
documents necessary to obtain the IRS Ruling and shall engage, through their
representatives in any communications with the IRS and Buyer and, on behalf of
the Company, Chris-Craft shall control the process of obtaining the IRS Ruling.
Buyer and the Company shall make reasonable best efforts to obtain the IRS
Ruling, the tax opinions set forth in Sections 7.2(f) and 7.3(c) hereof, and
the FCC Consent, including taking any reasonable actions requested by the IRS
or the FCC in connection with obtaining the IRS Ruling and the FCC Consent and
cooperating in preparing and submitting any filings and documents to the IRS
and the FCC in a prompt manner. In the case of the Forward Merger (a) the
Agreement is intended to constitute a "plan of reorganization" within the
meaning of Section 1.368-2(g) of the income tax regulations promulgated under
the Code; (b) neither the Company nor Buyer nor their affiliates shall directly
or indirectly (without the consent of the other) take any action, that would
reasonably be expected to adversely affect the intended tax treatment of the
transactions contemplated by this Agreement; (c) officers of Buyer, Acquisition
Sub and the Company shall execute and deliver to (i) Squadron, Ellenoff,
Plesent & Sheinfeld LLP, tax counsel to Buyer, and Kaye, Scholer, Fierman, Hays
& Handler, LLP, counsel to the Company, certificates substantially in the form
agreed to by the parties as of the date hereof and other appropriate
representations at such time or times as may be reasonably requested by such
law firms, including contemporaneously with the execution of this Agreement and
at the Effective Time, in connection with their respective deliveries of
opinions, pursuant to Sections 7.2(f) and 7.3(c) hereof, with respect to the
tax treatment of the Merger and (ii) Squadron, Ellenoff, Plesent & Sheinfeld
LLP, counsel to Buyer and Skadden, Arps, Slate, Meagher & Flom LLP, counsel to
Chris-Craft, such representations as are required by the IRS in order to issue
the IRS Ruling; and (d) none of the Buyer, Acquisition Sub or the Company shall
take or cause to be taken any action which would cause to be untrue (or fail to
take or cause not to be taken any action which would cause to be untrue) any of
such certificates and representations.
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Section 6.9 Stock Exchange Listing. Buyer and the Company shall (a) as
promptly as reasonably practicable prepare and submit to the NYSE an
application covering the Buyer Shares to be issued in the Merger, and shall use
their reasonable best efforts to cause such securities to be approved for
listing on the NYSE prior to the Effective Time, (b) within two business days
after the Effective Time, prepare and submit to ASX, pursuant to the applicable
listing rules of the ASX, applications covering the Buyer Preferred Stock
underlying the Buyer Shares issued pursuant to the Merger and cause such
securities to be approved for quotation by the ASX, and (c) promptly seek the
ASX Waiver or, if the ASX Waiver is not granted, as soon as possible thereafter
call a special meeting of shareholders to obtain the Buyer Shareholder
Approval) and take all actions and prepare all documents and shareholder
materials required in connection therewith.
Section 6.10 Public Announcements. Buyer and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the
other (which consent shall not be unreasonably withheld or delayed), except as
may be required by Law or any listing rules of, or listing agreement or
arrangement with, a national securities exchange or the ASX to which Buyer or
the Company is a party. The parties have agreed on the text of a joint press
release by which Buyer and the Company will announce the execution of this
Agreement.
Section 6.11 Affiliates of the Company. The Company represents and warrants
to Buyer that prior to the date of the Stockholders' Meeting the Company will
deliver to Buyer a letter identifying all persons who may be deemed affiliates
of the Company under Rule 145 of the Securities Act, including, without
limitation, all directors and executive officers of the Company, and the
Company represents and warrants to Buyer that the Company has advised the
persons identified in such letter of the resale restrictions imposed by
applicable securities laws. The Company shall use its reasonable best efforts
to obtain from each person identified in such letter a written agreement,
substantially in the form of Exhibit A. The Company shall use its reasonable
best efforts to obtain as soon as practicable from any person who may be deemed
to have become an affiliate of the Company after the Company's delivery of the
letter referred to above and prior to the Effective Time, a written agreement
substantially in the form of Exhibit A.
Section 6.12 Employee Matters.
(a) During the one-year period commencing on the Effective Date, Buyer shall
provide or shall cause the Surviving Corporation to provide to each Company
Employee employee benefits (including incentive opportunities but excluding
benefits under equity-based plans) that are either (i) in the aggregate,
substantially comparable to the benefits being provided to Company Employees as
of the date of this Agreement under the Company Benefit Plans or (ii)
substantially similar to those being provided to similarly situated employees
of the Buyer (other than for former employees of the Company).
(b) Without limiting the generality of paragraph (a) of this Section 6.12,
if the Effective Time occurs prior to December 31, 2000, (1) each Company
Employee who received an annual bonus in respect of 1999 and is eligible to
receive an annual bonus for the year 2000 and who, is employed by the Company
immediately prior to the Effective Time, shall be entitled to receive, in lieu
of any other bonus to which the participant may otherwise be entitled under
such plan, or for the period from January 1, 2000 through the Effective Time,
as the case may be, a prorated bonus (the "Pro-Rata Bonus"), determined by
multiplying (i) the participant's annual bonus in respect of 1999 by (ii) a
fraction, the numerator of which is equal to the number of days in calendar
year 2000 through and including the Effective Time and the denominator of which
is 366 and (2) each such Company Employee who remains employed with the Company
(or its successor) or any affiliate thereof through December 31, 2000, shall be
entitled to receive an additional bonus such that, when added to such
employee's Pro-Rata Bonus, such employee's aggregate annual bonus in respect of
2000 is not less than such employee's annual bonus in respect of 1999. Such
annual bonus with respect of 2000 shall be payable at such time that annual
bonuses are normally paid to similarly situated employees of the Company. If
the Effective Time occurs during the calendar year 2001, then the process
described in (i) of the preceding sentence shall apply in an analogous manner
to the Company's 2001 Bonus Plan and to other employees who receive an
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annual bonus in respect of the year 2000, with the references to the year 2000
therein being deemed to be references to the year 2001 and with references to
the year 1999 therein being deemed to be references to the year 2000 and
subject to Section 6.12(a), the process for determining the bonus for those who
remain employed on and after the Effective Time through December 31, 2001 shall
be determined in the discretion of the Buyer.
(c) Without limiting the generality of paragraph (a) of this Section 6.12,
with respect to each Surviving Corporation plan and such other employee benefit
plans as may be maintained for Company Employees from time to time following
the Effective Time by Buyer, the Surviving Corporation or any subsidiary of the
Surviving Corporation (including, without limitation, plans or policies
providing severance benefits and vacation entitlement), and service with the
Company and any of its subsidiaries (or a predecessor to the Company's or any
of its subsidiaries' business or assets) shall be treated as service with the
Buyer, the Surviving Corporation or any of its subsidiaries, as the case may
be, to the extent recognized in the comparable plans of the Company for
purposes of determining eligibility to participate and vesting but not for
purposes of benefit accrual. Such service also shall apply for purposes of
satisfying any waiting periods, evidence of insurability requirements, or the
application of any preexisting condition limitations. In the event Company
Employees are transferred to a new health plan maintained by the Surviving
Corporation effective as of a date within the annual plan year for purposes of
accumulating annual deductibles, copayments and out-of-pocket maximums, Company
Employees shall be given credit for amounts they have paid under a
corresponding benefit plan during the new health plan's year in which the
Company Employees are transferred for purposes of applying deductibles,
copayments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms and conditions of the benefit plan maintained by
Surviving Corporation or any of its subsidiaries. Buyer shall also honor, or
cause the Surviving Corporation to honor, all vacation, personal and sick days
accrued by the Company Employees under the plans, policies, programs and
arrangements of the Company or any of its subsidiaries immediately prior to the
Effective Time to the extent reserved against the Company's financial
statements.
(d) Without limiting the generality of paragraph (a) of this Section 6.12,
the Surviving Corporation shall, or shall cause its subsidiaries to, honor, in
accordance with their terms, and shall, or shall cause its subsidiaries to,
make required payments when due under, all Company Benefit Plans maintained or
contributed to by the Company or any of its subsidiaries or to which the
Company or any of its subsidiaries is a party (including, but not limited to,
employment, incentive and severance agreements and arrangements), that are
applicable with respect to any Company Employee or any director of the Company
or any of its subsidiaries (whether current, former or retired) or their
beneficiaries; provided, however, that, subject to the provisions of Section
6.12(e) of the Chris-Craft Disclosure Schedule, the foregoing shall not
preclude the Surviving Corporation or any of its subsidiaries from amending or
terminating any Company Benefit Plan in accordance with its terms.
Section 6.13 Letters of the Company's Accountants. The Company shall use
reasonable best efforts to cause to be delivered to Buyer two "comfort" letters
in customary form from PricewaterhouseCoopers LLP, the Company's independent
public accountants, one dated a date within five business days before the date
on which the Registration Statement shall become effective and one dated a date
within five business days before the Closing Date, each addressed to Buyer.
Section 6.14 Letters of Buyer's Accountants. Buyer shall use reasonable best
efforts to cause to be delivered to the Company two "comfort" letters in
customary form from Arthur Andersen LLP, Buyer's independent public
accountants, one dated a date within five business days before the date on
which the Registration Statement shall become effective and one dated a date
within five business days before the Closing Date, each addressed to the
Company.
Section 6.15 [INTENTIONALLY OMITTED].
Section 6.16 Other Merger Agreements. Buyer shall comply with its
obligations under the Chris-Craft Merger Agreement and the UTV Merger
Agreement. The Company shall comply with its obligations under the Voting
Agreement related to the UTV Merger.
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Section 6.17 Employee Solicitation. In addition to, and not in limitation of
any restrictions on the parties hereto contained in other documents, the
parties hereto agree that during the period from the date hereof to the earlier
of the termination of this Agreement or the consummation of the Merger, neither
they nor any of their controlled affiliates shall solicit for employment any
current senior management level employees or any of the three (3) highest
compensated on air talent employees at each station of the other party hereto.
This Section 6.17 shall govern in the event of any inconsistency between this
Section 6.17 and Section 6.4 hereof.
Section 6.18 Post-Closing Covenant of Buyer. As of or promptly following the
Effective Time, in the event of the Forward Merger (as defined in the Chris-
Craft Merger Agreement) under the Chris-Craft Merger Agreement Buyer shall
cause such assets as Buyer shall determine, but at a minimum shall include the
broadcast assets and related liabilities held or previously held by the Company
and its subsidiaries, to be transferred to and assumed by one or more direct or
indirect subsidiaries of Buyer, and shall cause such assets and liabilities to
be ultimately held by a newly formed subsidiary which is controlled by Buyer
within the meaning of Section 368(c) of the Code ("Newco") of Fox Entertainment
Group, Inc. ("FEG"). As of or promptly following the Effective Time, Newco and
either FTH or a wholly owned subsidiary will enter into the Newco-FTH Agreement
(as hereinafter defined). The Newco-FTH Agreement shall be an agreement
prepared by Buyer and FTH as soon as practicable after the date hereof and in
any event no later than August 31, 2000 which (i) reflects and is consistent
with the terms set forth on Exhibit C hereto and (ii) otherwise is as Buyer and
FTH shall determine, but which is consistent with the objective of obtaining
the FCC Consent (without an Adverse Condition) with respect to the Forward
Merger and, if the Chris-Craft Merger is to be effected as a Forward Merger (as
defined in the Chris-Craft Merger Agreement), with respect to the Chris-Craft
Merger, and the IRS Ruling; provided that it shall not contain any provisions
as to which Chris-Craft or, if the Merger is to be effected as a Forward
Merger, the Company reasonably objects by reason of concerns as to the Federal
income tax treatment of the Chris-Craft Merger or, if the Merger is a Forward
Merger, the Forward Merger, or the ability to obtain the FCC Consent (without
any Adverse Condition) or the IRS Ruling for the Forward Merger or, if the
Chris-Craft Merger is to be effected as a Forward Merger (as defined in the
Chris-Craft Merger Agreement), for the Chris-Craft Merger. Buyer and FTH shall
comply with this Section 6.18 in a manner deemed appropriate by Buyer and FTH;
provided, that Buyer and FTH shall act in a manner that preserves (i) the
qualification of the Merger or the Chris-Craft Merger, as the case may be, as a
reorganization under Section 368(a) of the Code and (ii) the effectiveness and
validity of the FCC Consent (as defined below). In the event (and only in the
event) that the Merger is a Reverse Merger and the Chris-Craft Merger is a
Reverse Merger (as defined in the Chris-Craft Merger Agreement), as of or
promptly following the Effective Time, the broadcast assets and related
liabilities held by the Company and its subsidiaries (or the Company and its
subsidiaries themselves by way of merger) will be transferred to and assumed by
FTH or one or more direct or indirect subsidiaries thereof. The foregoing
processes contained in this Section 6.18 and the actions contemplated hereby
shall be deemed to constitute "transactions contemplated by this Agreement" for
purposes of Buyer's representations and warranties herein.
Section 6.19 Form of Merger. In the event that there is a Ruling Failure or
an FCC Failure (each, a "Restructuring Trigger"), then the Merger shall be
effected as the Reverse Merger and not as the Forward Merger and, in lieu of
News Publishing Australia Limited, a newly formed indirect subsidiary of Buyer
(which could, at the election of Buyer, be a subsidiary of Chris-Craft unless
the Chris-Craft Merger has not occurred prior to the Effective Time) shall be
Acquisition Sub and Buyer shall cause such Acquisition Sub to execute a
counterpart signature page to this Agreement and become a party hereto;
provided, that, notwithstanding the foregoing, if the Chris-Craft Merger is to
be effected as a Forward Merger (as defined in the Chris-Craft Merger
Agreement), then such Acquisition Sub shall be a first-tier subsidiary of Buyer
that is controlled by Buyer within the meaning of Section 368(c) of the Code.
In the event that, following the occurrence of a Restructuring Trigger and
prior to the Effective Time, subsequent events occur such that the conditions
to effecting the Forward Merger are all satisfied, then the Merger shall occur
as if such Triggering Event had never occurred. For purposes of this Agreement,
a "Ruling Failure" shall be deemed to have occurred (i) if the IRS Ruling (as
defined herein) is not obtained on or prior to the seven-month anniversary of
the submission of the ruling request to the IRS (unless a responsible officer
of the IRS has indicated to representatives of both the
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Company and Buyer that the IRS Ruling is likely to be issued within the next
succeeding three months and such IRS Ruling is so issued within such three-
month period) in form and substance reasonably satisfactory to each of the
parties hereto or (ii) a responsible officer of the IRS has indicated to
representatives of both Chris-Craft and Buyer prior to the three-month
anniversary of this Agreement that the IRS Ruling, in form and substance
reasonably satisfactory to each of the parties hereto, is not likely to be
issued, and such indication shall not have been reversed or withdrawn prior to
the five-month anniversary of the date of this Agreement or (iii) either Kaye,
Scholer, Fierman, Hays & Handler, LLP or Squadron, Ellenoff, Plesent &
Sheinfeld LLP indicates in writing to Chris-Craft and Buyer that it will not be
able to deliver its respective opinion pursuant to Section 7.3 or Section 7.2,
as the case may be. For purposes of this Agreement, an "FCC Failure" shall be
deemed to have occurred (i) if the FCC Consent (without an Adverse Condition)
is not obtained on or prior to the ten-month anniversary of this Agreement
(unless a responsible officer of the FCC has indicated to representatives of
both the Company and Buyer that the FCC Consent (without an Adverse Condition)
will be issued within the next succeeding two months and such FCC Consent is so
issued within such two-month period) in form and substance reasonably
satisfactory to each of the parties hereto or (ii) a responsible officer of the
FCC has indicated to representatives of both the Company and Buyer that the FCC
Consent, in form and substance reasonably satisfactory to each of the parties
hereto, will not be issued and, prior to the three- month anniversary of this
Agreement, such indication shall not have been reversed or withdrawn; provided
that no FCC Failure shall have occurred if a responsible officer of the FCC has
indicated (and subsequently not withdrawn or changed such indication) to
representatives of both the Company and Buyer that the sole reason or reasons
for the FCC Consent (without an Adverse Condition) not having been obtained
does not relate in any manner to whether the Merger is the Forward Merger or
the Reverse Merger and that there is no material greater likelihood of
obtaining the FCC Consent (without an Adverse Condition) with respect to the
Reverse Merger than the Forward Merger.
Section 6.20 Advance of Funds. Notwithstanding anything to the contrary
contained in this Agreement, the Company shall (and shall be permitted to)
advance funds to Chris-Craft on an as needed basis, including, without
limitation, to pay any and all fees and expenses payable by Chris-Craft in
connection with the Chris-Craft Merger; provided, however, that any such
advances shall be made pursuant to short term loans on arms-length terms and
must be repaid no later than 30 days after consummation of the Merger, unless
the Chris-Craft Merger has also been consummated.
Section 6.21 Obligations of FTH. In view of the fact that one or more
subsidiaries of FTH would become the licensees of the Company Stations under
either the Forward Merger or the Reverse Merger and would otherwise benefit
from either merger, FTH agrees that it shall take such actions, and shall cause
its subsidiaries to take such actions, as may be necessary to accomplish the
requirements of FTH under Sections 6.3, 6.18 and 6.19 hereof and any other
requirements of this Agreement relating to the effectuation of, or transactions
to be accomplished immediately following, the Forward Merger and the Reverse
Merger, as the case may be.
ARTICLE VII
Conditions to the Merger
Section 7.1 Conditions to the Obligations of Each Party. The obligations of
the Company and Buyer to consummate the Merger are subject to the satisfaction
or waiver by the Company and Buyer of the following conditions:
(a) this Agreement shall have been adopted by the affirmative vote of a
majority of the votes cast by all stockholders entitled to vote at the
Stockholders' Meeting voting together as a single class;
(b) any applicable waiting period under the HSR Act relating to the Merger
shall have expired or been terminated;
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(c) no Governmental Authority or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Law, rule, regulation,
executive order or Order which is then in effect and has the effect of making
the Merger illegal or otherwise prohibiting the consummation of the Merger;
(d) the Registration Statement shall have been declared effective, and no
stop order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the SEC;
(e) the FCC Consent (as defined below) shall have been obtained. "FCC
Consent," as used herein, means action by the FCC granting its consent to the
assignment or to the transfer of control of the FCC licenses of the Company and
UTV to FTH (or a wholly owned subsidiary of FTH), including transfer of those
authorizations, licenses, permits, and other approvals, issued by the FCC, and
used in the operation of the Company Stations, pursuant to appropriate
applications filed by the parties with the FCC, as contemplated by this
Agreement;
(f) all other authorizations, consents, waivers, orders or approvals for the
Merger required to be obtained, and all other filings, notices or declarations
required to be made, by Buyer and the Company prior to the consummation of the
Merger and the transactions contemplated hereunder, shall have been obtained
from, and made with, all required Governmental Authorities, including the ASX
Waiver or, if the ASX Waiver is not granted, the Buyer Shareholder Approval,
and except for such authorizations, consents, waivers, orders, approvals,
filings, notices or declarations the failure to obtain or make which would not,
individually or in the aggregate, have a Company Material Adverse Effect or
Buyer Material Adverse Effect; provided, however, that a party who has failed
to fulfill its obligations under Section 6.3 hereof shall not be entitled to
deem this Section 7.1(e) unsatisfied by reason of such non-fulfillment;
(g) the Buyer Shares issuable to the Company's stockholders in the Merger
shall have been authorized for listing on the NYSE, subject to official notice
of issuance;
(h) the Chris-Craft Merger shall have occurred or the stockholders of Chris-
Craft shall have failed to approve the Chris-Craft Merger at a duly held
stockholders' meeting called for such purpose or at any adjournment or
postponement thereof; and
(i) all conditions to all parties' obligations to consummate the UTV Merger,
except completion of the UTV Merger, shall have been satisfied or waived;
provided, however, that this condition may not be enforced by a party if such
party's actions or failure to act has prevented the conditions to the
consummation of the UTV Merger from being satisfied; and provided further that
this condition may not be enforced by the Company by reason of the failure to
obtain the requisite stockholder vote by the stockholders of UTV at a duly held
stockholders' meeting called for such purpose or at any adjournment or
postponement thereof.
Section 7.2 Conditions to the Obligations of Buyer. The obligations of Buyer
to consummate the Merger are subject to the satisfaction or waiver by Buyer of
the following further conditions:
(a) each of the representations and warranties of the Company contained in
this Agreement that is qualified as to materiality shall be true and correct,
and each of the representations and warranties of the Company contained in this
Agreement that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Effective
Time with the same effect as though made as of the Effective Time (except to
the extent expressly made as of an earlier date, in which case as of such
date), and the Buyer shall have received a certificate signed on behalf of the
Company by the chief executive officer or chief financial officer of the
Company to such effect;
(b) the Company shall have performed or complied in all material respects
with all material agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and Buyer
shall have received a certificate signed on behalf of the Company by the chief
executive officer or chief financial officer of the Company to such effect;
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(c) Buyer shall have received from each person named in the letter referred
to in Section 6.11 an executed copy of an agreement substantially in the form
of Exhibit B hereto;
(d) Buyer shall have received evidence, in form and substance reasonably
satisfactory to it, that Buyer or the Company shall have obtained (i) all
material consents, approvals, authorizations, qualifications and orders of all
Governmental Authorities legally required for the consummation of the Merger
and (ii) all other consents, approvals, authorizations, qualifications and
orders of Governmental Authorities or third parties required (other than those
set forth in Section 7.2(d) of the Company Disclosure Schedule) for the
consummation of the Merger, except, in the case of this clause (ii), for those
the failure of which to be obtained individually or in the aggregate could not
reasonably be expected to have a Company Material Adverse Effect or a Buyer
Material Adverse Effect; provided, however, that if Buyer has failed to fulfill
its obligations under Section 6.3 hereof it shall not be entitled to deem this
Section 7.2(d) unsatisfied by reason of such non-fulfillment;
(e) [INTENTIONALLY OMITTED]
(f) In the case of the Forward Merger, Buyer shall have received (i) the
opinion of Squadron, Ellenoff, Plesent & Sheinfeld LLP, in form and substance
reasonably satisfactory to Buyer, dated as of the Closing Date, on the basis of
facts, representations and assumptions set forth in such opinion, the IRS
Ruling, and certificates obtained from officers of Buyer, Acquisition Sub and
the Company, all of which are consistent with the state of facts existing as of
the Effective Time, to the effect that (A) the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code, (B) for U.S.
federal income tax purposes, no income, gain or loss will be recognized by
Buyer, Acquisition Sub and the Company as a result of the Merger, and (C) for
U.S. federal income tax purposes, no income, gain or loss will be recognized by
the holders of Company Common Stock as a result of the Merger except to the
extent such holders receive cash as Merger Consideration and (ii) a private
letter ruling (the "IRS Ruling") from the IRS, to the effect that the Merger
will satisfy the continuity of business enterprise requirement described in
Treasury Regulations Section 1.368-1(d). In rendering the opinion described in
clause (i) hereof, Squadron, Ellenoff, Plesent & Sheinfeld LLP shall have
received and may rely upon the certificates and representations referred to in
Section 6.8 hereof; and
(g) the FCC Consent shall not contain any Adverse Condition.
Section 7.3 Conditions to the Obligations of the Company. The obligations of
the Company to consummate the Merger are subject to the satisfaction or waiver
by the Company of the following further conditions:
(a) each of the representations and warranties of Buyer contained in this
Agreement that is qualified as to materiality shall be true and correct, and
each of the representations and warranties of Buyer contained in this Agreement
that are not qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Effective Time with
the same effect as though made on and as of the Effective Time (except to the
extent expressly made as of an earlier date, in which case as of such date),
and the Company shall have received a certificate signed on behalf of Buyer by
the chief executive officer or chief financial officer of Buyer to such effect;
(b) Buyer and FTH shall have performed or complied in all material respects
with all material agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and the
Company shall have received a certificate signed on behalf of Buyer by the
chief executive officer or chief financial officer of Buyer to such effect; and
(c) in the case of the Forward Merger, the Company shall have received (i)
the opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP, in form and
substance reasonably satisfactory to the Company, dated as of the Closing Date,
on the basis of facts, representations and assumptions set forth in such
opinion, the IRS Ruling, and certificates obtained from officers of Buyer,
Acquisition Sub and the Company, all of which are consistent with the state of
facts existing as of the Effective Time, to the effect that (A) the Merger will
qualify as a
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reorganization within the meaning of Section 368(a) of the Code, (B) for U.S.
federal income tax purposes, no income, gain or loss will be recognized by
Buyer, Acquisition Sub and the Company as a result of the Merger, and (C) for
U.S. federal income tax purposes, no income, gain or loss will be recognized by
the holders of Company Common Stock as a result of the Merger except to the
extent such holders receive cash as Merger Consideration and (ii) the IRS
Ruling. In rendering the opinion described in clause (i) hereof, Kaye, Scholer,
Fierman, Hays & Handler, LLP shall have received and may rely upon the
certificates and representations referred to in Section 6.8 hereof.
ARTICLE VIII
Termination, Amendment and Waiver
Section 8.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, notwithstanding any
requisite adoption of this Agreement and approval of the Merger, as follows:
(a) by mutual written consent duly authorized by the Boards of Directors of
each of Buyer and the Company;
(b) by either Buyer or the Company, if the Effective Time shall not have
occurred on or before 15 months from the execution of this Agreement (the
"Termination Date");
(c) by the Company, upon a breach of any representation, warranty, covenant
or agreement on the part of Buyer or FTH set forth in this Agreement, or if any
representation or warranty of Buyer shall have become untrue, in either case
such that the conditions set forth in Section 7.3(a) or (b) cannot be satisfied
on or before the Termination Date (a "Terminating Buyer Breach");
(d) by Buyer, upon breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Sections 7.2(a) or (b) cannot be
satisfied on or before the Termination Date ("Terminating Company Breach");
(e) by either Buyer or the Company, if any Governmental Authority of
competent jurisdiction shall have issued an Order or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such Order or other action shall have
become final and nonappealable;
(f) by Buyer or the Company if the approval of the Merger by the
stockholders of the Company required for the consummation of the Merger as set
forth in Section 7.1(a) shall not have been obtained by reason of the failure
to obtain such required vote at a duly held Stockholders' Meeting or at any
adjournment or postponement thereof provided, however, the Company shall not
have the right to terminate this Agreement pursuant to this Section 8.1(f) if
the breach by Chris-Craft of the Voting Agreement is the reason for such
failure;
(g) by Buyer or the Company if the Chris-Craft Merger Agreement shall have
been terminated; provided, however, that a party shall not have the right to
terminate the Agreement pursuant to this Section 8.1(g) if its actions or
failure to act shall have prevented the consummation of the Chris-Craft Merger;
provided, further, that the Company shall not have the right to terminate the
Agreement pursuant to this Section 8.1(g) if the Chris-Craft Merger shall have
been terminated as a result of the failure of the Chris-Craft stockholders to
approve the Chris-Craft Merger at a duly held stockholders meeting called for
such purpose or at any adjournment or postponement thereof; or
(h) by Buyer or the Company if the UTV Merger Agreement shall have been
terminated; provided, however, that a party shall not have the right to
terminate this Agreement pursuant to this Section 8.1(h) if its
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actions or failure to act shall have prevented the consummation of UTV Merger;
and provided further that the right to terminate this Agreement pursuant to
this Section 8.1(h) may not be enforced by the Company by reason of the failure
to obtain the requisite stockholder vote by the stockholders of UTV at a duly
held stockholders' meeting called for such purpose or at any adjournment or
postponement thereof.
Section 8.2 Effect of Termination. Subject to Sections 8.5 and 9.1 hereof,
in the event of termination of this Agreement pursuant to Section 8.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of Buyer, FTH or the Company or any of their respective
officers or directors and all rights and obligations of each party hereto shall
cease; provided, however, that nothing herein shall relieve any party from
liability for the willful breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
Section 8.3 Amendment. This Agreement may be amended by mutual agreement of
the parties hereto by action taken by or on behalf of their respective Boards
of Directors at any time prior to the Effective Time; provided, however, that,
after the adoption of this Agreement and the approval of the Merger by
stockholders of the Company, there shall not be any amendment that by Law
requires further approval by the stockholders of the Company without the
further approval of such stockholders and provided further that any such
amendment must also be approved by the Special Committee. This Agreement may
not be amended except by an instrument in writing signed by the parties hereto.
Section 8.4 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto
and (c) subject to the proviso of Section 8.3, waive compliance with any
agreement or condition contained herein. Any such extension or waiver shall
only be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
Section 8.5 Expenses. Except as set forth in this Section 8.5, all Expenses
(as defined below) incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses, whether or not the Merger or any other transaction is
consummated, except that the Company and Buyer each shall pay one-half of all
Expenses relating to (i) printing, filing and mailing the Registration
Statement and the Proxy Statement and all SEC and other regulatory filing fees
incurred in connection with the Registration Statement and the Proxy Statement,
(ii) any filing with the FCC or similar authority and (iii) any filing with
antitrust authorities; provided, however, that Buyer shall pay all Expenses
relating to the Exchange Agent and, provided further, that the Company, Chris-
Craft and UTV shall not, in the aggregate, pay more than one-half of the
Expenses. "Expenses" as used in this Agreement (other than Section 6.6 hereof)
shall include all reasonable out-of-pocket expenses (including all fees and
expenses of counsel, accountants, investment bankers, experts and consultants
to a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing of the Registration Statement and the Proxy Statement, the
solicitation of stockholder and stockholder approvals, the filing of any
required notices under the HSR Act or other similar regulations, any filings
with the SEC or the FCC and all other matters related to the closing of the
Merger and the other transactions contemplated by this Agreement.
ARTICLE IX
General Provisions
Section 9.1 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement and any
certificate delivered pursuant hereto by any person shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
8.1, as the case may be, except that this Section 9.1 shall not limit any
covenant or agreement of the parties which by its terms
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contemplates performance after the Effective Time or after termination of this
Agreement, including, without limitation, those contained in Sections 6.4, 6.6,
6.8, 6.10, 6.11, 6.12, 6.18 and 6.21.
Section 9.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by facsimile, by courier service or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.2):
if to Buyer or FTH:
The News Corporation Limited
1211 Avenue of the Americas
New York, New York 10036
Telecopier No.: (212) 768-2029
Attention: Arthur M. Siskind, Esq.
Senior Executive Vice President and Group General Counsel
with copies to:
Squadron, Ellenoff, Plesent & Sheinfeld LLP
551 Fifth Avenue
New York, New York 10176
Telecopier No.: (212) 697-6686
Attention: Jeffrey W. Rubin, Esq.
if to the Company:
BHC Communications, Inc.
767 Fifth Avenue
New York, New York 10153
Telecopier No.: (212) 759-7653
Attention: General Counsel
with copies to:
Swidler Berlin Shereff Friedman, LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Telecopier No.: (212) 891-9598
Attention: Charles I. Weissman, Esq.
with copies to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Telecopier No.: (212) 836-8689
Attention: Lynn Toby Fisher, Esq.
Section 9.3 Interpretation, Certain Definitions. When a reference is made in
this Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement, unless otherwise
indicated. The table of contents and headings for this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the
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words "without limitation." The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
statute defined or referred to herein or in any agreement or instrument that is
referred to herein means such statute as from time to time amended, modified or
supplemented, including (in the case of statutes) by succession of comparable
successor statutes. References to a person are also references to its permitted
successors and assigns. References of "$" or "dollars" herein shall be deemed
to be references to U.S. $.
For purposes of this Agreement, the term:
(a) "affiliate," of a specified Person, means a Person who, directly or
indirectly, through one or more intermediaries controls, is controlled by,
or is under common control with, such specified Person;
(b) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(d) "Governmental Authority" means any United States (Federal, state or
local) or foreign government, or governmental, regulatory, judicial or
administrative authority, agency or commission;
(e) "knowledge" means the actual knowledge of the following officers and
employees of the Company (or Chris-Craft) and Buyer, without benefit of an
independent investigation of any matter, as to (i) the Company: Herbert J.
Siegel, John C. Siegel, William D. Siegel, Brian C. Kelly, Evan C. Thompson
and Joelen K. Merkel and (ii) Buyer: K.R. Murdoch, D.F. DeVoe, A. Siskind,
Peter Chernin and Chase Carey; and
(f) "subsidiary" or "subsidiaries," of any Person, means any
corporation, partnership, joint venture or other legal entity of which such
Person (either above or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% of the stock or other equity
interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity. For purposes of this Agreement, FTH and
its subsidiaries shall each be deemed to be a subsidiary of Buyer, of FEG
and of all of the entities of which FEG is itself a subsidiary.
Section 9.4 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the Merger be consummated as originally contemplated to the fullest extent
possible.
Section 9.5 Entire Agreement; Assignment. This Agreement (including the
Exhibits, the Company Disclosure Schedule and the Buyer Disclosure Schedule
which are hereby incorporated herein and made a part hereof for all purposes as
if fully set forth herein), the Voting Agreement, and the Confidentiality
Agreement constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
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subject matter hereof. The parties agree to comply with all covenants and
agreements set forth on the Company Disclosure Schedule and the Buyer
Disclosure Schedule as if such covenants and agreements were fully set forth in
this Agreement. This Agreement shall not be assigned by the Company. Buyer
shall not assign this Agreement, other than to an affiliate of Buyer; provided
that no such assignment shall relieve Buyer of any of its obligations
hereunder.
Section 9.6 Parties in Interest. Except as otherwise provided in this
Section 9.6, this Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement
other than Sections 6.6, 6.8, 6.12, 6.18 and 6.21 (which are intended to be for
the benefit of the Persons covered thereby and may be enforced by such Persons
(including Chris-Craft in respect of Sections 6.8, 6.9, 6.18 and 6.21)). In the
event that the Forward Merger is consummated, Sections 6.8, 6.18 and 6.21 are
intended for the benefit of the persons who were the stockholders of the
Company immediately preceding the Effective Time.
Section 9.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware.
Section 9.8 Consent to Jurisdiction.
(a) Each of Buyer and the Company hereby irrevocably submits to the
exclusive jurisdiction of the courts of the State of Delaware and to the
jurisdiction of the United States District Court for the State of Delaware, for
the purpose of any action or proceeding arising out of or relating to this
Agreement and each of Buyer and the Company hereby irrevocably agrees that all
claims in respect to such action or proceeding may be heard and determined
exclusively in any Delaware state or federal court. Each of Buyer and the
Company agrees that a final judgment in any action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
(b) Each of Buyer and the Company irrevocably consents to the service of the
summons and complaint and any other process in any other action or proceeding
relating to the transactions contemplated by this Agreement, on behalf of
itself or its property, by personal delivery of copies of such process to such
party in accordance with Section 9.2. Nothing in this Section 9.8 shall affect
the right of any party to serve legal process in any other manner permitted by
law.
Section 9.9 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
Section 9.10 WAIVER OF JURY TRIAL. EACH OF BUYER AND THE COMPANY HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF BUYER OR THE COMPANY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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In Witness Whereof, Buyer, Acquisition Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
The News Corporation Limited
/s/ Arthur M. Siskind
By: _________________________________
Name:Arthur M. Siskind
Title:Director
News Publishing Australia Limited
/s/ Paula Wardynski
By: _________________________________
Name:Paula Wardynski
Title:Vice President
BHC Communications, Inc.
/s/ William D. Siegel
By: _________________________________
Name:William D. Siegel
Title:President and Chief
Executive Officer
Fox Television Holdings, Inc.
(solely as to Section 6.3 and
Section 6.21 of this Agreement)
/s/ Paula Wardynski
By: _________________________________
Name:Paula Wardynski
Title:Vice President
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--------------------------------------------------------------------------------
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CONFORMED COPY
ANNEX C
AGREEMENT AND PLAN OF MERGER
Among
UNITED TELEVISION, INC.,
THE NEWS CORPORATION LIMITED,
NEWS PUBLISHING AUSTRALIA LIMITED
and
FOX TELEVISION HOLDINGS, INC.
Dated as of August 13, 2000, as Amended
--------------------------------------------------------------------------------
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TABLE OF CONTENTS
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ARTICLE I
The Merger
Section 1.1 The Merger................................................. C-2
Section 1.2 Effect on Securities....................................... C-2
Section 1.3 Share Election............................................. C-5
Section 1.4 Allocation and Proration................................... C-6
Section 1.5 Exchange of Certificates................................... C-8
Section 1.6 Transfer Taxes; Withholding................................ C-10
Section 1.7 Stock Options and Other Stock.............................. C-10
Section 1.8 Lost Certificates.......................................... C-11
Section 1.9 Dissenting Shares.......................................... C-12
Section 1.10 Merger Closing............................................. C-12
ARTICLE II
The Surviving Corporation
Section 2.1 Certificate of Incorporation............................... C-12
Section 2.2 By-laws.................................................... C-12
Section 2.3 Officers and Board of Directors............................ C-12
ARTICLE III
Representations and Warranties of the Company
Section 3.1 Organization and Qualification; Subsidiaries............... C-13
Section 3.2 Restated Certificate of Incorporation and By-Laws.......... C-13
Section 3.3 Capitalization............................................. C-13
Section 3.4 Authority Relative to Agreement............................ C-14
Section 3.5 No Conflict; Required Filings and Consents................. C-14
Section 3.6 Permits and Licenses; Contracts; Compliance with Laws...... C-15
Section 3.7 SEC Reports................................................ C-17
Section 3.8 Absence of Certain Changes or Events....................... C-17
Section 3.9 Absence of Litigation...................................... C-18
Section 3.10 Employee Benefit Plans..................................... C-18
Section 3.11 Labor Matters.............................................. C-20
Section 3.12 Environmental Matters...................................... C-20
Section 3.13 Trademarks, Patents and Copyrights......................... C-21
Section 3.14 Taxes...................................................... C-21
Section 3.15 Tax Matters................................................ C-22
Section 3.16 Title to Properties; Assets................................ C-23
Section 3.17 Year 2000 Compliance....................................... C-23
Section 3.18 Opinion of Financial Advisors.............................. C-24
Section 3.19 Vote Required.............................................. C-24
Section 3.20 Brokers.................................................... C-24
Section 3.21 State Takeover Statutes.................................... C-24
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ARTICLE IV
Representations and Warranties of Buyer
Section 4.1 Organization and Qualification; Subsidiaries............... C-24
Section 4.2 Charter Documents.......................................... C-25
Section 4.3 Capitalization............................................. C-25
Section 4.4 Authority Relative to Agreement............................ C-25
Section 4.5 No Conflict; Required Filings and Consents................. C-26
Section 4.6 Permits and Licenses....................................... C-26
Section 4.7 Buyer SEC/ASX Reports...................................... C-27
Section 4.8 Absence of Certain Changes or Events....................... C-27
Section 4.9 Tax Matters................................................ C-27
Section 4.10 Brokers.................................................... C-27
Section 4.11 Interim Operations of Acquisition Sub...................... C-27
ARTICLE V
Conduct of Business Pending the Merger
Section 5.1 Conduct of Business by the Company Pending the Merger...... C-28
Section 5.2 FCC Matters................................................ C-30
Section 5.3 Certain Tax Matters........................................ C-30
ARTICLE VI
Additional Agreements
Section 6.1 Registration Statement; Proxy Statement.................... C-31
Section 6.2 Stockholders' Meetings..................................... C-32
Section 6.3 Appropriate Action; Consents; Filings...................... C-33
Section 6.4 Access to Information; Confidentiality..................... C-34
Section 6.5 No Solicitation of Competing Transactions.................. C-34
Section 6.6 Directors' and Officers' Indemnification and Insurance..... C-35
Section 6.7 Notification of Certain Matters............................ C-37
Section 6.8 Tax Matters................................................ C-37
Section 6.9 Stock Exchange Listing..................................... C-38
Section 6.10 Public Announcements....................................... C-38
Section 6.11 Affiliates of the Company.................................. C-38
Section 6.12 Employee Matters........................................... C-38
Section 6.13 Letters of the Company's Accountants....................... C-40
Section 6.14 Letters of Buyer's Accountants............................. C-40
Section 6.15 [INTENTIONALLY OMITTED].................................... C-40
Section 6.16 Other Merger Agreements.................................... C-40
Section 6.17 Employee Solicitation...................................... C-40
Section 6.18 Post-Closing Covenant of Buyer............................. C-40
Section 6.19 Form of Merger............................................. C-41
Section 6.20 Advance of Funds........................................... C-41
Section 6.21 Obligations................................................ C-41
ARTICLE VII
Conditions to the Merger
Section 7.1 Conditions to the Obligations of Each Party................ C-42
Section 7.2 Conditions to the Obligations of Buyer..................... C-43
Section 7.3 Conditions to the Obligations of the Company............... C-43
</TABLE>
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ARTICLE VIII
Termination, Amendment and Waiver
Section 8.1 Termination............................................. C-44
Section 8.2 Effect of Termination................................... C-45
Section 8.3 Amendment............................................... C-45
Section 8.4 Waiver.................................................. C-45
Section 8.5 Expenses................................................ C-45
ARTICLE IX
General Provisions
Section 9.1 Non-Survival of Representations, Warranties and
Agreements............................................. C-46
Section 9.2 Notices................................................. C-46
Section 9.3 Interpretation, Certain Definitions..................... C-47
Section 9.4 Severability............................................ C-48
Section 9.5 Entire Agreement; Assignment............................ C-48
Section 9.6 Parties in Interest..................................... C-48
Section 9.7 Governing Law........................................... C-48
Section 9.8 Consent to Jurisdiction................................. C-48
Section 9.9 Counterparts............................................ C-48
Section 9.10 WAIVER OF JURY TRIAL.................................... C-49
EXHIBITS
Exhibit A Voting Agreement
Exhibit B Form of Written Agreement with Company Affiliate
Exhibit C Terms of Newco--FTH Agreement
</TABLE>
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INDEX OF DEFINED TERMS
<TABLE>
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1999 Balance Sheet......................................................... 22
Acquisition Sub............................................................ 1
Actions.................................................................... 30
Adverse Condition.......................................................... 34
affiliate.................................................................. 47
Aggregate Buyer Share Amount............................................... 4
Aggregate Cash Amount...................................................... 4
Agreement.................................................................. 1
All Cash Election.......................................................... 5
All Cash Election Number................................................... 4
All Cash Election Shares................................................... 7
ASX........................................................................ 10
ASX Waiver................................................................. 28
BHC........................................................................ 1
BHC Merger................................................................. 1
BHC Merger Agreement....................................................... 1
Blue Sky Laws.............................................................. 15
business day............................................................... 47
Buyer...................................................................... 1
Buyer Disclosure Schedule.................................................. 24
Buyer FCC Licenses......................................................... 26
Buyer Licensed Facilities.................................................. 26
Buyer Material Adverse Effect.............................................. 24
Buyer Preferred Stock...................................................... 3
Buyer SEC Reports.......................................................... 27
Buyer Shareholder Approval................................................. 26
Buyer Shares............................................................... 3
Buyer Shares Trust......................................................... 9
Cash Amount................................................................ 7
Cash Election Shares....................................................... 3
Cash Fraction.............................................................. 7
Cash Merger Price.......................................................... 4
CERCLA..................................................................... 20
Certificate of Merger...................................................... 2
Certificates............................................................... 8
change in control.......................................................... 11
Chris-Craft................................................................ 1
Chris-Craft Merger......................................................... 1
Chris-Craft Merger Agreement............................................... 1
Closing.................................................................... 12
Closing Buyer Share Value.................................................. 4
Closing Date............................................................... 12
Closing Price.............................................................. 7
Closing Transaction Value.................................................. 4
Code....................................................................... 1
Communications Act......................................................... 15
Company.................................................................... 1
Company Benefit Plans...................................................... 18
</TABLE>
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Company Common Stock..................................................... 1
Company Disclosure Schedule.............................................. 13
Company Employees........................................................ 18
Company FCC Licenses..................................................... 16
Company Financial Advisor................................................ 24
Company Intellectual Property Rights..................................... 21
Company Material Adverse Effect.......................................... 13, 15
Company Options.......................................................... 10
Company Permits.......................................................... 15
Company Preferred Stock.................................................. 13
Company SEC Reports...................................................... 17
Company Stations......................................................... 16
Company Systems.......................................................... 23
Company Year 2000 Compliant.............................................. 23
Company Year 2000 Plan................................................... 23
Competing Transaction.................................................... 35
Confidentiality Agreement................................................ 34
control.................................................................. 47
controlled by............................................................ 47
Costs.................................................................... 36
Covered Affiliates....................................................... 36
Delaware Law............................................................. 1
Deposit Agreement........................................................ 8
Depositary............................................................... 8
Dissenting Shares........................................................ 5, 12
DTV...................................................................... 16
DTV Stations............................................................. 17
Effective Time........................................................... 2
Election Deadline........................................................ 6
Elections................................................................ 5
Environmental Laws....................................................... 21
Environmental Permits.................................................... 21
ERISA.................................................................... 18
ERISA Affiliate.......................................................... 18
Excess Buyer Shares...................................................... 9
excess parachute payment................................................. 19
Exchange Act............................................................. 11
Exchange Agent........................................................... 5
Exchange Fund............................................................ 9
Exchange Ratio........................................................... 5
Exchangeable Shares...................................................... 5
Exchanged Shares......................................................... 5
Expenses................................................................. 37, 45
FCC...................................................................... 15
FCC Consent.............................................................. 42
FCC Failure.............................................................. 41
FCC Multiple Ownership Rules............................................. 33
FEG...................................................................... 40
Form of Election......................................................... 5
Forward Merger........................................................... 1
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FTH...................................................................... 40
GAAP..................................................................... 17
Governmental Authority................................................... 47
Hazardous Materials...................................................... 21
herein................................................................... 47
hereof................................................................... 47
hereunder................................................................ 47
Holders.................................................................. 5
HSR Act.................................................................. 15
incentive stock options.................................................. 11
include.................................................................. 47
includes................................................................. 47
including................................................................ 47
Indemnifiable Claim...................................................... 36
Indemnifying Party....................................................... 36
Indemnitees.............................................................. 36, 37
Intellectual Property Rights............................................. 21
IRS...................................................................... 18, 43
IRS Ruling............................................................... 43
knowledge................................................................ 47
Laws..................................................................... 15
Liens.................................................................... 13
Merger................................................................... 1
Merger Consideration..................................................... 2
Multiemployer Plans...................................................... 18
National Priorities List................................................. 29
Newco.................................................................... 40
Non-Election............................................................. 5
Non-Election Fraction.................................................... 7
Non-Election Shares...................................................... 7
NYSE..................................................................... 4
Option Registration Statement............................................ 31
Order.................................................................... 33
Partial Cash Election.................................................... 3
Partial Cash Election Shares............................................. 3
Partial Exchange Ratio................................................... 3
Per Share Amount......................................................... 5
Person................................................................... 5
Post-Signing Returns..................................................... 43
Pro-Rata Bonus........................................................... 39
Program Agreement........................................................ 43
Proxy Statement.......................................................... 31
Registration Statement................................................... 31
Representatives.......................................................... 34
Restructuring Trigger.................................................... 41
Reverse Merger........................................................... 1
Reverse Merger Exchange Ratio............................................ 3
Ruling Failure........................................................... 41
SEC...................................................................... 4
Secretary of State....................................................... 2
</TABLE>
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Securities Act............................................................. 15
Share Registration Statement............................................... 31
Special Committee.......................................................... 1
Stock Election............................................................. 5
Stock Election Number...................................................... 5
Stock Election Shares...................................................... 7
Stock Fraction............................................................. 7
Stockholders Meeting ...................................................... 32
subsidiaries............................................................... 47
subsidiary................................................................. 47
Substituted Option......................................................... 10
Superior Proposal.......................................................... 34
Surviving Corporation...................................................... 2
Tax........................................................................ 21
Tax Returns................................................................ 22
Taxes...................................................................... 21
Terminating Buyer Breach................................................... 44
Terminating Company Breach................................................. 44
Termination Date........................................................... 44
Total Consideration........................................................ 7
Valuation Period........................................................... 4
VEBA....................................................................... 18
Voting and Proxy Agreement................................................. 1
</TABLE>
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AGREEMENT AND PLAN OF MERGER dated as of August 13, 2000, as amended (this
"Agreement") by and among UNITED TELEVISION, INC., a Delaware corporation (the
"Company"), THE NEWS CORPORATION LIMITED, a South Australian corporation
("Buyer"), NEWS PUBLISHING AUSTRALIA LIMITED, a Delaware corporation and a
subsidiary of Buyer ("Acquisition Sub") and FOX TELEVISION HOLDINGS, INC., a
Delaware corporation and an indirect subsidiary of Buyer ("FTH") (but solely as
to Section 6.3 and Section 6.21 of this Agreement).
Whereas, in furtherance of the acquisition of the Company by Buyer, the
respective Boards of Directors of the Company, Buyer and Acquisition Sub, and
Buyer, as the sole stockholder of Acquisition Sub, have each approved this
Agreement and the merger of (A) the Company with and into Acquisition Sub (the
"Forward Merger") and (B) in the event a Restructuring Trigger (as defined
herein) has occurred, the merger of Acquisition Sub with and into the Company
(the "Reverse Merger" and, together with the Forward Merger, as applicable, the
"Merger"), in each case upon the terms and subject to the conditions and
limitations set forth herein and in accordance with the General Corporation Law
of the State of Delaware ("Delaware Law");
Whereas, each of the Board of Directors of the Company and the special
committee of the Board of Directors of the Company (the "Special Committee")
(i) has determined that the Merger is fair to, advisable and in the best
interests of, the Company and its stockholders and has approved and adopted
this Agreement, the Merger and the other transactions contemplated by this
Agreement and (ii) has recommended the approval of this Agreement by the
stockholders of the Company;
Whereas, for Federal income tax purposes, it is intended that the Forward
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code");
Whereas, simultaneously with the execution and delivery of this Agreement,
Buyer, Acquisition Sub and Chris-Craft Industries, Inc. ("Chris-Craft"), a
Delaware corporation and the indirect parent corporation of the Company, are
entering into an agreement and plan of merger (the "Chris-Craft Merger
Agreement"), providing for the merger of Chris-Craft with and into Acquisition
Sub, or, if a Restructuring Trigger (as defined for purposes of such agreement)
has occurred, the merger of a direct or indirect owned subsidiary of Buyer with
and into Chris-Craft, in each case upon the terms and subject to the conditions
set forth in the Chris-Craft Merger Agreement (the "Chris-Craft Merger");
Whereas, simultaneously with the execution and delivery of this Agreement,
Buyer, Acquisition Sub and BHC Communications, Inc. ("BHC"), a Delaware
corporation and the direct parent of the Company, are entering into an
agreement and plan of merger (the "BHC Merger Agreement"), providing for the
merger of BHC with and into Acquisition Sub, or, if a Restructuring Trigger (as
defined for purposes of such agreement) has occurred, the merger of a direct or
indirect owned subsidiary of Buyer (or of Chris-Craft) with and into BHC, in
each case upon the terms and subject to the conditions set forth in the BHC
Merger Agreement (the "BHC Merger");
Whereas , it is intended that the mergers heretofore referred to shall be
completed in the following order: first, the Chris-Craft Merger; second, the
BHC Merger; and third, the Merger; and
Whereas, as a condition and inducement to Buyer to enter into this Agreement
and incur the obligations set forth herein, concurrently with the execution and
delivery of this Agreement, Buyer is entering into a Voting Agreement,
substantially in the form of Exhibit A attached hereto (the "Voting
Agreement"), with BHC pursuant to which, among other things, it has agreed,
subject to the terms and conditions contained therein, to vote all shares of
Common Stock of the Company, par value $.10 per share (the "Company Common
Stock"), owned by it in favor of this Agreement and the Merger and, to the
extent provided for therein, against any conflicting transaction.
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Now, Therefore, in consideration of the foregoing and the mutual covenants
and agreements herein contained and contained in the Voting Agreement and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
The Merger
Section 1.1 The Merger.
(a) Upon the terms and subject to the conditions of this Agreement, and in
accordance with Delaware Law, at the Effective Time (as defined below), in the
case of the Forward Merger, the Company shall be merged with and into
Acquisition Sub, whereupon the separate existence of the Company shall cease,
and Acquisition Sub shall continue as the surviving corporation and, in the
case of the Reverse Merger, Acquisition Sub shall be merged with and into the
Company, whereupon the separate corporate existence of Acquisition Sub shall
cease, and the Company shall continue as the surviving corporation (the
surviving corporation in the Merger is sometimes referred to herein as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware and shall continue under the name "News Publishing Australia
Limited." Whether the Forward Merger or the Reverse Merger is to be effected
shall be determined in accordance with Section 6.19 hereof.
(b) Concurrently with the Closing (as defined in Section 1.10 hereof), the
Company, Buyer and Acquisition Sub shall cause a certificate of merger (the
"Certificate of Merger") with respect to the Merger to be executed and filed
with the Secretary of State of the State of Delaware (the "Secretary of State")
as provided under Delaware Law. The Merger shall become effective on the date
and time at which the Certificate of Merger has been duly filed with the
Secretary of State or at such other date and time as are agreed between the
parties and specified in the Certificate of Merger, and such date and time is
hereinafter referred to as the "Effective Time."
(c) From and after the Effective Time, the Surviving Corporation shall
possess all rights, privileges, immunities, powers and franchises and be
subject to all of the obligations, restrictions, disabilities, liabilities,
debts and duties of the Company and Acquisition Sub.
Section 1.2 Effect on Securities. At the Effective Time:
(a) Cancellation of Securities. In the case of the Forward Merger, each
share of Company Common Stock held by the Company as treasury stock or held by
Buyer or its subsidiaries or by BHC (unless the BHC Merger shall not have
occurred prior to the Effective Time) immediately prior to the Effective Time
shall automatically be cancelled and revert to the status of authorized but
unissued shares, and no consideration or payment shall be delivered therefor or
in respect thereto. In the case of the Reverse Merger, each share of Company
Common Stock held by BHC (unless the BHC Merger shall not have occurred prior
to the Effective Time) immediately prior to the Effective Time shall remain
outstanding and continue to represent one share of common stock of the Company.
(b) Conversion of Securities. Except as otherwise provided in this Agreement
and subject to Section 1.4 hereof, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares
cancelled pursuant to Section 1.2(a) hereof and Dissenting Shares (as defined
in Section 1.9 hereof)) shall be converted into the following (the "Merger
Consideration"):
Either (X) in the case of the Forward Merger:
(i) for each share of Company Common Stock with respect to which an
election to receive only cash (to the extent available) has been
effectively made and not revoked or lost, pursuant to 1.3 hereof, the
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right to receive in cash from Buyer the Per Share Amount (as defined
below), subject to Sections 1.2(f) and 1.4(f) and to the allocation and
proration procedures set forth in Section 1.4 hereof; and
(ii) for each share of Company Common Stock with respect to which an
election to receive forty percent (40%) of the Cash Merger Price in cash
and the remainder of the Merger Consideration American Depositary Shares of
Buyer ("Buyer Shares"), each of which represents four (4) fully paid and
nonassessable Preferred Limited Voting Ordinary Shares of Buyer ("Buyer
Preferred Stock") has been effectively made and not revoked or lost,
pursuant to Section 1.3 hereof (a "Partial Cash Election"), (A) the right
to receive from Buyer an amount in cash equal to $60 and (B) 2.0253 (the
"Partial Exchange Ratio") Buyer Shares (such shares of Company Common Stock
being, collectively, "Partial Cash Election Shares" and, together with the
All Cash Election Shares (as defined herein), "Cash Election Shares");
provided, however, that the foregoing shall be subject to Sections 1.2(f)
and 1.4(f) hereof. The Buyer Preferred Stock allotted and issued in
accordance with this Agreement shall on and from its date of allotment rank
pari passu with all existing Buyer Preferred Stock on issue at that date,
including as to all dividend entitlements (in respect of which they shall
receive the same entitlement as any previously issued Buyer Preferred
Stock); and
(iii) for each other share of Company Common Stock, the right to receive
from Buyer, the number of Buyer Shares equal to the Exchange Ratio (as
defined below), subject to Sections 1.2(f) and 1.4(f) and to the allocation
and proration procedures set forth in Section 1.4 hereof; or,
(Y) in the case of the Reverse Merger, subject to Section 1.2(f), for each
share of Company Common Stock, (A) the right to receive from Buyer an amount in
cash equal to $63 and (B) 2.1266 Buyer Shares (the "Reverse Merger Exchange
Ratio").
(c) Cancellation of Company Common Stock. All shares of Company Common Stock
to be converted into the Merger Consideration pursuant to this Section 1.2
shall, by virtue of the Merger and without any action on the part of the
holders thereof, cease to be outstanding, be cancelled and retired and cease to
exist; and each holder of a certificate representing prior to the Effective
Time any such shares of Company Common Stock shall thereafter cease to have any
rights with respect to such securities, except the right to receive (i) the
Merger Consideration, (ii) any dividends and other distributions in accordance
with Section 1.5(c) hereof and (iii) any cash to be paid in lieu of any
fractional Buyer Share in accordance with Section 1.5(d) hereof.
(d) [INTENTIONALLY OMITTED]
(e) Capital Stock of Acquisition Sub. In the Forward Merger, no shares of
Acquisition Sub stock will be issued directly or indirectly and each share of
common stock of Acquisition Sub issued and outstanding immediately prior to the
Effective Time shall remain outstanding following the Effective Time. In the
case of the Reverse Merger, each share of common stock of Acquisition Sub shall
be converted into one fully paid and nonassessable share of the Surviving
Corporation.
(f) Adjustments to Exchange Ratio.
(i) Subject to clause (ii) below, in the event that Buyer declares or
effects a stock split, stock or cash dividend (other than ordinary course
cash dividends declared and paid consistent with past practice) or other
reclassification, acquisition, exchange or distribution with respect to the
Buyer Shares or Buyer Preferred Stock, in each case with a record or ex-
dividend date or effective date occurring after the date hereof and on or
prior to the date of the Effective Time, there will be an appropriate
adjustment made to the Merger Consideration so as to provide for the
inclusion therein of the cash, property, securities or combination thereof
that each holder of Company Common Stock who has the right to receive the
Merger Consideration pursuant to Section 1.2 hereof would have received had
such Company Common Stock been converted into Buyer Shares or Buyer
Preferred Stock as of the date hereof.
(ii) If either (A) in the case of the Forward Merger, the tax opinion to
the Company referred to in Section 7.3(c) hereof as to the Merger
qualifying as a reorganization cannot be rendered (as reasonably
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determined by Kaye, Scholer, Fierman, Hays & Handler, LLP), (B) in the case
of the Forward Merger, the tax opinion to Buyer referred to in Section
7.2(f) as to the Merger qualifying as a reorganization cannot be rendered
(as reasonably determined by Squadron, Ellenoff, Plesent & Sheinfeld LLP),
(C) in the case of the Forward Merger, in the reasonable judgment of the
Company or Buyer, based on the advice of their respective counsel, there is
a meaningful risk that the receipt of the cash, property, securities or
combination thereof referred to in clause (i) above would be taxable or
have an adverse tax consequence to the holders of Company Common Stock or
(D) in the case of either the Forward Merger or the Reverse Merger, the
adjustment referred to in clause (i) above is not possible or not possible
without materially changing the tax treatment of the transaction referred
to in clause (i) in question, then, in each case, Buyer (but only if
requested by the Company in the case of clause (C) above) shall make an
appropriate adjustment to the Merger Consideration that (x) conveys an
equivalent value (taking into account, among other things, the impact of
the transaction referred to in clause (i) above on the trading price of
Company Common Stock, Buyer Shares, Buyer Preferred Stock and any newly
issued securities) to the holders of Company Common Stock as the
adjustments contemplated in paragraph (i) above, (y) in the case of the
Forward Merger, allows such tax opinions to be delivered and (z) in the
case of the Forward Merger, avoids the consequences referred to in clause
(C) above; it being understood that, by way of illustration and not
limitation, the Company's written agreement that clause (x) is satisfied
shall constitute conclusive evidence as to such fact.
(g) Certain Definitions. For purposes of this Agreement, or, in the case of
clause (xii) below, solely for purposes of Sections 1.2, 1.3 and 1.4 hereof,
the following terms shall have the following meanings:
(i) "Aggregate Buyer Share Amount" means (A) 60% of the product of (x)
the number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time, less the number of outstanding
shares of Company Common Stock cancelled pursuant to Section 1.2(a) hereof,
and (y) 3.3755, less (B) the number of Buyer Shares to be paid in respect
of Partial Cash Election Shares (other than Dissenting Shares), in each
case subject to adjustment as described in Section 1.4(f) hereof.
(ii) "Aggregate Cash Amount" means (A) 40% of the product of (x) the
number of shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time, less the number of outstanding shares of
Company Common Stock cancelled pursuant to Section 1.2(a) hereof and (y)
the Cash Merger Price, less (B) the amount of cash to be paid in respect of
Partial Cash Election Shares (other than Dissenting Shares), in each case
subject to adjustment as described in Section 1.4(f) hereof.
(iii) "All Cash Election Number" means (A) that number of shares of
Company Common Stock as shall be equal to the quotient obtained by dividing
the Aggregate Cash Amount by the Per Share Amount, less (B) the number of
Dissenting Shares, subject to adjustment as described in Section 1.4(f)
hereof.
(iv) "Cash Merger Price" means $150.
(v) "Closing Buyer Share Value" means the volume weighted average sales
price for all trades of Buyer Shares reported on the New York Stock
Exchange (the "NYSE") for each of the five trading days immediately
preceding but not including the Closing Date (the "Valuation Period");
provided, however, if necessary to comply with any requirements of the
Securities and Exchange Commission (the "SEC"), the term Closing Date in
this clause (iv) shall be deemed to mean the date which is the closest in
time but prior to the Closing Date which complies with such rules and
regulations. Buyer agrees that during the Valuation Period neither Buyer
nor its affiliates shall (x) purchase or acquire, or offer to purchase or
acquire, or announce any intention to purchase or acquire, any Buyer Shares
or Buyer Preferred Stock or other outstanding securities of Buyer or its
affiliates convertible into Buyer Shares or Buyer Preferred Stock (other
than purchases at market value of Buyer Shares (in accordance with all
applicable laws) by a broker who has full discretion as to the amount and
timing of such purchases pursuant to a pre-existing stock buyback program)
or (y) announce or effect any material corporate transaction.
(vi) "Closing Transaction Value" means the sum of (A) the Aggregate Cash
Amount and (B) the product obtained by multiplying the Aggregate Buyer
Share Amount by the Closing Buyer Share Value.
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(vii) "Exchange Ratio" means that number of Buyer Shares as shall be
obtained by dividing the Per Share Amount by the Closing Buyer Share Value.
(viii) "Exchangeable Shares" means the aggregate number of shares of
Company Common Stock issued and outstanding immediately prior to the
Effective Time less the number of such shares cancelled pursuant to Section
1.2(a) hereof and less the aggregate number of Partial Cash Election Shares
(other than Dissenting Shares).
(ix) "Exchanged Shares" means the aggregate number of shares of Company
Common Stock issued and outstanding immediately prior to the Effective Time
less the number of such shares (A) cancelled pursuant to Section 1.2(a)
hereof and (B) that are Dissenting Shares.
(x) "Per Share Amount" means the amount obtained by dividing the Closing
Transaction Value by the number of Exchangeable Shares.
(xi) "Stock Election Number" means that number of shares of Company
Common Stock as shall be equal to (A) the number of Exchanged Shares less
(B) the sum of (i) the All Cash Election Number and (ii) the aggregate
number of Partial Cash Election Shares (other than Dissenting Shares),
subject to adjustment as described in Section 1.4(f) hereof.
(xii) "Dissenting Shares" means shares of Company Common Stock that are
potentially Dissenting Shares within the meaning of Section 1.9 hereof in
respect of which the holder thereof shall have taken all steps necessary to
exercise and perfect properly his or her demand for appraisal under Section
262 of the Delaware Law to the extent that such steps are required to have
been taken by the applicable date of determination.
Section 1.3 Share Election. In the case of the Forward Merger (and, with
respect to clauses (b) and, unless a Restructuring Trigger has theretofore
occurred, (c) and (e) below, in the case of the Reverse Merger to the extent
applicable):
(a) Each Person (as defined in Section 1.3(b) hereof) who, on or prior to
the Election Deadline referred to in subsection (c) below is a record holder of
shares of Company Common Stock (collectively, "Holders") shall have the right,
with respect to the Merger Consideration, (i) to elect to receive only cash for
such shares pursuant to Section 1.2(b)(X)(i) hereof (an "All Cash Election"),
(ii) to make a Partial Cash Election, (iii) to elect to receive Buyer Shares
for such shares pursuant to Section 1.2(b)(X)(iii) hereof (a "Stock Election"),
(iv) to indicate that such record holder has no preference as to the receipt of
cash or Buyer Shares for such shares (a "Non-Election") or (v) to make a mixed
election, specifying the number of shares of Company Common Stock corresponding
with each such Election (the All Cash Election, the Partial Cash Election, the
Stock Election, and the Non-Election are collectively referred to as the
"Elections"). Holders who hold such shares as nominees, trustees or in other
representative capacities may submit multiple Forms of Election (as defined
below).
(b) Prior to the mailing of the Proxy Statement (as defined in Section 6.1
hereof), The Bank of New York or such other bank, trust company, Person or
Persons shall be designated by Buyer and reasonably acceptable to the Company
to act as exchange agent (the "Exchange Agent") for payment of the Merger
Consideration. The Exchange Agent shall act as the agent for the Company's
stockholders for the purpose of receiving and holding their Forms of Election
and Certificates (as defined below) and shall obtain no rights or interests
(beneficial or otherwise) in such shares. For purposes of this Agreement,
"Person" means any natural person, firm, individual, corporation, limited
liability company, partnership, association, joint venture, company, business
trust, trust or any other entity or organization, whether incorporated or
unincorporated, including a government or political subdivision or any agency
or instrumentality thereof.
(c) All Elections shall be made on a form designed for that purpose, which
shall include a letter of transmittal and election form (together, a "Form of
Election"). Elections shall be made by Holders by mailing to the Exchange Agent
a Form of Election, which shall specify that delivery shall be effected, and
risk of loss and title to any Certificates) shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and shall be in such form
and have such other provisions as Buyer, in consultation with the Company, may
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reasonably specify. Buyer and the Company will announce the Exchange Ratio and
the Per Share Amount when known and will announce the anticipated Closing Date
at least three business days, but not more than five business days, prior
thereto; provided, however, that the Closing Date shall occur immediately
following the closing of the BHC Merger. All Certificates so surrendered shall
be subject to the exchange procedures set forth in Section 1.5 hereof. To be
effective, a Form of Election must be properly completed, signed and submitted
to the Exchange Agent and accompanied by the Certificates as to which the
election is being made (or by an appropriate guarantee of delivery of such
Certificates as set forth in such Form of Election from a firm which is a
member of the NYSE or another registered national securities exchange or a
commercial bank or trust company having an office or correspondent in the
United States, provided such Certificates are in fact delivered to the Exchange
Agent within five NYSE trading days after the Election Deadline (as defined
below)). Buyer will have the discretion, which it may delegate in whole or in
part to the Exchange Agent, to determine whether Forms of Election have been
properly completed, signed and submitted or revoked and to disregard immaterial
defects in Forms of Election. The decision of Buyer (or the Exchange Agent) in
such matters, absent manifest error, shall be conclusive and binding. Neither
Buyer nor the Exchange Agent will be under any obligation to notify any person
of any defect in a Form of Election submitted to the Exchange Agent. The
Exchange Agent and Buyer shall also make all computations contemplated by this
Section 1.3 and by Section 1.4 hereof and all such computations shall be
conclusive and binding on the Holders absent manifest error. The Form of
Election and the accompanying Certificates (or appropriate guarantee of
delivery in respect thereof) must be received by the Exchange Agent prior to
10:00 a.m. New York City time on the day on which the Closing occurs (the
"Election Deadline") in order to be effective. If the Closing is delayed to a
subsequent date, the Election Deadline shall be similarly delayed and Buyer
will promptly announce such rescheduled Election Deadline and Closing. An
election may be revoked, but only by written notice received by the Exchange
Agent prior to the Election Deadline. Upon any such revocation, unless a duly
completed Election Form, accompanied by a Certificate, is thereafter submitted
in accordance with this paragraph (c), such shares shall be deemed to be Non-
Election Shares (as defined in Section 1.4 hereof). If a Form of Election is
revoked, or in the event that this Agreement is terminated pursuant to the
provisions hereof, and any Certificates (or guarantee(s) of delivery, as
appropriate), have been transmitted to the Exchange Agent pursuant to the
provisions hereof, such Certificates (and, in the case of a revoked Form of
Election, guarantee(s) of delivery, as appropriate), shall promptly be returned
without charge to the Person submitting the same.
(d) For the purposes hereof, Company Common Stock as to which the Holder has
not made a valid Election prior to the Election Deadline, including as a result
of revocation, shall be deemed to be Non-Election Shares. If Buyer or the
Exchange Agent shall determine that any purported All Cash Election, Partial
Cash Election or Stock Election was not properly made, such purported All Cash
Election, Partial Cash Election or Stock Election shall be deemed to be of no
force and effect and the Holder making such purported All Cash Election,
Partial Cash Election or Stock Election shall for purposes hereof be deemed to
have made a Non-Election. Shares in respect of which a Non-Election shall have
been made or deemed made shall be treated as Non-Election Shares.
(e) Concurrently with the mailing of the Proxy Statement, Buyer and the
Company shall mail the Form of Election to each person who is a Holder on the
record date for the Stockholders' Meeting (as defined in Section 6.2 hereof)
and shall each use its reasonable best efforts to mail the Form of Election to
all persons who become Holders during the period between (i) such record date
and (ii) the date seven calendar days prior to the anticipated Effective Time,
and to make the Form of Election available to all persons who become Holders
subsequent to the date described in clause (ii) but not later than 5:00 p.m.
New York City time on the last business day prior to the Effective Time. The
Exchange Agent may, with the mutual agreement of Buyer and the Company, make
such rules as are consistent with this Section 1.3 for the implementation of
the Elections provided for herein as shall be necessary or desirable to effect
such Elections fully.
Section 1.4 Allocation and Proration.
(a) Notwithstanding anything in this Agreement to the contrary, the maximum
number of shares of Company Common Stock which shall be converted into the
right to receive cash in the Merger (other than
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pursuant to Partial Cash Elections and other than Dissenting Shares) shall be
equal to the All Cash Election Number. The maximum number of shares of Company
Common Stock to be converted into the right to receive Buyer Shares in the
Merger (other than pursuant to Partial Cash Elections (other than Dissenting
Shares)) shall be equal to the Stock Election Number.
(b) If the aggregate number of shares of Company Common Stock covered by All
Cash Elections (the "All Cash Election Shares") (other than Dissenting Shares)
exceeds the All Cash Election Number, all shares of Company Common Stock
covered by Stock Elections (the "Stock Election Shares") and all shares of
Company Common Stock covered by Non-Elections (the "Non-Election Shares") shall
be converted into the right to receive Buyer Shares, and the All Cash Election
Shares shall be converted into the right to receive Buyer Shares and cash in
the following manner:
each All Cash Election Share shall be converted into the right to
receive (i) an amount in cash, without interest, equal to the product
of (x) the Per Share Amount and (y) a fraction (the "Cash Fraction"),
the numerator of which shall be the All Cash Election Number and the
denominator of which shall be the total number of All Cash Election
Shares (other than Dissenting Shares), and (ii) a number of shares of
Buyer Shares equal to the product of (x) the Exchange Ratio and (y) a
fraction equal to one minus the Cash Fraction.
(c) If the aggregate number of Stock Election Shares (other than Dissenting
Shares) exceeds the Stock Election Number, all All Cash Election Shares and all
Non-Election Shares shall be converted into the right to receive cash, and the
Stock Election Shares shall be converted into the right to receive Buyer Shares
and cash in the following manner:
each Stock Election Share shall be converted into the right to receive
(i) a number of Buyer Shares equal to the product of (x) the Exchange
Ratio and (y) a fraction (the "Stock Fraction"), the numerator of which
shall be the Stock Election Number and the denominator of which shall
be the total number of Stock Election Shares (other than Dissenting
Shares), and (ii) an amount in cash, without interest, equal to the
product of (x) the Per Share Amount and (y) a fraction equal to one
minus the Stock Fraction.
(d) In the event that neither Section 1.4(b) nor 1.4(c) above is applicable,
all Cash Election Shares shall be converted into the right to receive cash, all
Stock Election Shares shall be converted into the right to receive Buyer Shares
and the Non-Election Shares shall be converted into the right to receive Buyer
Shares and cash in the following manner:
each Non-Election Share shall be converted into the right to receive
(i) an amount in cash, without interest, equal to the product of (x)
the Per Share Amount and (y) a fraction (the "Non-Election Fraction"),
the numerator of which shall be the excess of the All Cash Election
Number over the total number of All Cash Election Shares (other than
Dissenting Shares) and the denominator of which shall be the excess of
(A) the number of Exchanged Shares over (B) the sum of the total number
of All Cash Election Shares (other than Dissenting Shares) and the
total number of Stock Election Shares (other than Dissenting Shares)
and (ii) a number of Buyer Shares equal to the product of (x) the
Exchange Ratio and (y) a fraction equal to one minus the Non-Election
Fraction.
(e) Partial Cash Election Shares (other than Dissenting Shares) shall not be
subject to proration and shall be converted into the right to receive the
Merger Consideration pursuant to Section 1.2(b)(X)(ii) hereof, subject to
Section 1.4(f) hereof.
(f) If the sum of (i) the Aggregate Cash Amount (without giving effect to
the reference therein to this subsection (f)) and (ii) 40% of the Cash Merger
Price multiplied by the number of Partial Cash Election Shares (such sum being
the "Cash Amount") exceeds 55% of the sum of (x) the Cash Amount and (y) the
product of (A) the closing price of Buyer Shares reported on the NYSE Composite
Tape on the trading day immediately preceding the Closing Date (the "Closing
Price") multiplied by (B) 3.3755 multiplied by (C) 60% of the
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excess of the number of shares of Company Common Stock outstanding immediately
prior to the Effective Time over the number of outstanding shares of Company
Common Stock cancelled pursuant to Section 1.2(a) hereof (such sum of (x) and
(y) being the "Total Consideration"), then the components of the Merger
Consideration shall be modified (1) first, in the case of shares of Company
Common Stock (other than Dissenting Shares) as to which All Cash Elections
shall have been made, by reducing the cash portion of the Merger Consideration
to the minimum extent necessary, and in no event below 40% of the Cash Merger
Price, and issuing in lieu thereof additional Buyer Shares in an amount equal
to the result obtained by dividing (x) the amount of such per share cash
reduction by (y) the Closing Price and (2) second, in the event that the
foregoing reduction is not sufficient to result in the Cash Amount not
exceeding 55% of the Total Consideration, in the case of shares of Company
Common Stock as to which an All Cash Election or a Partial Cash Election shall
have been made, by further reducing the amount of the cash portion of the
Merger Consideration to the minimum extent necessary to satisfy the 55%
limitation referred to above and to issue in lieu thereof additional Buyer
Shares, in amount equal to the result obtained by dividing (u) the amount of
such per share reduction by (v) the Closing Price. In the case of the Forward
Merger, if either (i) the tax opinion referred to in Section 7.3(c) hereof
cannot be rendered (as reasonably determined by Kaye, Scholer, Fierman, Hays &
Handler, LLP), or (ii) the tax opinion to Buyer referred to in Section 7.2(f)
cannot be rendered (as reasonably determined by Squadron, Ellenoff, Plesent &
Sheinfeld LLP), then the foregoing adjustments shall be similarly made, in each
case to the minimum extent necessary to enable the relevant tax opinion or
opinions, as the case may be, to be rendered. For purposes of this Section
1.4(f), holders of Dissenting Shares shall be deemed to be Persons making All
Cash Elections notwithstanding, and in lieu of, any election they have or have
not made.
Section 1.5 Exchange of Certificates.
(a) As of the Effective Time Buyer shall (i) deposit, or cause to be
deposited with (A) the Exchange Agent for the benefit of holders of shares of
Company Common Stock, cash to the extent it constitutes Merger Consideration
and (B) pursuant to the terms of the Deposit Agreement (as defined below) the
Custodian (as defined in the Deposit Agreement) certificates representing the
Buyer Preferred Stock underlying the Buyer Shares to the extent they constitute
Merger Consideration and (ii) pursuant to the terms of the Deposit Agreement,
instruct the Depositary to deposit the Buyer Shares to be issued in the Merger
with the Exchange Agent for the benefit of the holders of shares of Company
Common Stock for exchange in the Merger. For purposes of this Agreement,
"Depositary" shall mean Citibank, N.A., as Depositary, pursuant to the Amended
and Restated Deposit Agreement, dated as of December 3, 1996, among Buyer, the
Depositary and the holders from time to time of Buyer Shares (the "Deposit
Agreement"). In addition, Buyer shall make available to the Exchange Agent on a
daily basis sufficient cash to permit prompt payment to all Holders entitled to
receive the Merger Consideration in the form of cash. The Buyer shall pay, or
cause one of its affiliates to pay, any transfer taxes and all other charges
and fees (including all fees for the depositary, registry or custodian for the
ADRs).
(b) As of or promptly following the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail (and to make available for
collection by hand) to each holder of record of a certificate or certificates,
which immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates") (other than in the case of the
Forward Merger those who had not previously properly delivered their
Certificates to the Exchange Agent along with a Form of Election), (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent and which shall be in the form and have
such other provisions as Buyer and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for (A) a certificate or certificates representing that number of whole Buyer
Shares, if any, into which the number of shares of Company Common Stock
previously represented by such Certificate shall have been converted pursuant
to this Agreement and (B) the amount of cash, if any, into which all or a
portion of the number of shares of Company Common Stock previously represented
by such Certificate shall have been converted pursuant to this Agreement (which
instructions shall provide that at the election of the surrendering holder,
Certificates may be surrendered, and the Merger Consideration in exchange
therefor collected, by hand delivery). Upon surrender of a Certificate for
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cancellation to the Exchange Agent, together with a letter of transmittal duly
completed and validly executed in accordance with the instructions thereto, and
such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each share of Company Common Stock formerly
represented by such Certificate, to be mailed (or made available for collection
by hand if so elected by the surrendering holder) within five business days
following the later to occur of (i) the Effective Time or (ii) the Exchange
Agent's receipt of such Certificates, and the Certificate so surrendered shall
be forthwith cancelled. The Exchange Agent shall accept such Certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange
practices. No interest shall be paid or accrued for the benefit of holders of
the Certificates on the Merger Consideration (or the cash pursuant to
subsections (c) and (d) below) payable upon the surrender of the Certificates.
(c) Buyer may retain any dividends or other distributions with respect to
Buyer Shares with a record date on or after the Effective Time in respect of
the holder of any unsurrendered Certificate with respect to the Buyer Shares
represented thereby by reason of the conversion of shares of Company Common
Stock pursuant to Sections 1.2(b), 1.3 and 1.4 hereof and no cash payment in
lieu of fractional Buyer Shares shall be paid to any such holder pursuant to
Section 1.5(d) hereof until such Certificate is surrendered in accordance with
this Article I. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be released and paid, without interest, to
the Person in whose name the Buyer Shares representing such securities are
registered (i) at the time of such surrender or as promptly as practicable
after the sale of the Excess Buyer Shares (as defined in Section 1.5(d)
hereof), the amount of any cash payable in lieu of fractional Buyer Shares to
which such holder is entitled pursuant to Section 1.5(d) hereof and the
proportionate amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to the Buyer Shares
issued upon conversion of Company Common Stock, and (ii) at the appropriate
payment date or as promptly as practicable thereafter, the proportionate amount
of dividends or other distributions with a record date after the Effective Time
but prior to such surrender and a payment date subsequent to such surrender
payable with respect to such Buyer Shares.
(d) Notwithstanding any other provision of this Agreement, no fraction of a
Buyer Share will be issued and no dividend or other distribution, stock split
or interest with respect to Buyer Shares shall relate to any fractional Buyer
Share, and such fractional interest shall not entitle the owner thereof to vote
or to any rights as a security holder of the Buyer Shares. In lieu of any such
fractional security, each holder of shares of Company Common Stock otherwise
entitled to a fraction of a Buyer Share will be entitled to receive in
accordance with the provisions of this Section 1.5 from the Exchange Agent a
cash payment representing such holder's proportionate interest in the net
proceeds from the sale by the Exchange Agent on behalf of all such holders of
the aggregate of the fractions of Buyer Shares which would otherwise be issued
(the "Excess Buyer Shares"). The sale of the Excess Buyer Shares by the
Exchange Agent shall be executed on the NYSE through one or more member firms
of the NYSE and shall be executed in round lots to the extent practicable.
Until the net proceeds of such sale or sales have been distributed to the
holders of shares of Company Common Stock, the Exchange Agent will, subject to
Section 1.5(e) hereof, hold such proceeds in trust for the holders of such
shares (the "Buyer Shares Trust"). Subject to its right to withhold for taxes
as described in Section 1.6 hereof, the Surviving Corporation shall pay all
commissions, transfer taxes (other than those transfer taxes for which the
Company's former stockholders are solely liable) and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent incurred in connection with such sale of the Excess Buyer Shares. As soon
as practicable after the determination of the amount of cash, if any, to be
paid to holders of shares of Company Common Stock in lieu of any fractional
Buyer Share interests, the Exchange Agent shall make available such amounts to
such holders of shares of Company Common Stock without interest.
(e) Any portion of the Merger Consideration deposited with the Exchange
Agent pursuant to this Section 1.5 (the "Exchange Fund") which remains
undistributed to the holders of the Certificates for six months after the
Effective Time shall be delivered to Buyer, upon demand, and any holders of
shares of Company Common Stock prior to the Merger who have not theretofore
complied with this Article I shall thereafter look for payment of their claim,
as general creditors thereof, only to Buyer for their claim for (1) cash, if
any, without
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interest, (2) Buyer Shares, if any, (3) any cash without interest, to be paid,
in lieu of any fractional Buyer Shares and (4) any dividends or other
distributions with respect to Buyer Shares to which such holders may be
entitled. None of the Buyer, Acquisition Sub, the Company, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect of
any Buyer Shares or cash held in the Exchange Fund (and any cash, dividends and
other distributions payable in respect thereof) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) None of Buyer, Acquisition Sub, the Company, the Surviving Corporation
or the Exchange Agent shall be liable to any Person in respect of any Buyer
Shares or cash held in the Exchange Fund (and any cash, dividends and other
distributions payable in respect thereof) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates shall not have been surrendered prior to one year after the
Effective Time (or immediately prior to such earlier date on which (i) any
cash, (ii) any Buyer Shares, (iii) any cash in lieu of fractional Buyer Shares
or (iv) any dividends or distributions with respect to Buyer Shares in respect
of such Certificate would otherwise escheat to or become the property of any
Governmental Authority (as defined in Section 9.3 hereof)), any such Buyer
Shares, cash, dividends or distributions in respect of such Certificate shall,
to the extent permitted by applicable law, become the property of Buyer, free
and clear of all claims or interest of any Person previously entitled thereto.
(g) The Exchange Agent shall invest any cash included in the Exchange Fund,
as directed by Buyer on a daily basis. Any interest and any other income
resulting from such investments shall be paid to Buyer. Nothing contained in
this Section 1.5(g) shall relieve Buyer or the Exchange Agent from making the
payments required by this Article I to be made to the holders of shares of
Company Common Stock.
Section 1.6 Transfer Taxes; Withholding. If any certificate for a Buyer
Share is to be issued to, or cash is to be remitted to, a Person who holds
shares of Company Common Stock (other than the Person in whose name the
Certificate surrendered in exchange therefor is registered), it shall be a
condition of such exchange that the Company Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the Person
requesting such exchange shall (i) pay to the Exchange Agent any transfer or
other Taxes (as defined in Section 3.14 hereof) required by reason of the
payment of the Merger Consideration to a Person other than the registered
holder of the Certificate so surrendered, or (ii) establish to the satisfaction
of the Exchange Agent that such Tax either has been paid or is not applicable.
Buyer or the Exchange Agent shall be entitled to deduct and withhold from the
Buyer Shares (or cash in lieu of fractional Buyer Shares) otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as Buyer or the Exchange Agent are required to deduct and withhold
under the Code, or any provision of state, local or foreign Tax law, with
respect to the making of such payment. To the extent that amounts are so
withheld by Buyer or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of shares
of Company Common Stock in respect of whom such deduction and withholding was
made by Buyer or the Exchange Agent.
Section 1.7 Stock Options and Other Stock.
(a) Prior to the Effective Time, Buyer and the Company shall take such
action as may be necessary (including, without limitation, enacting such
amendments, if any, to the Company stock plans as necessary to comply with the
requirements of the Australian Stock Exchange ("ASX") or Australian Law;
provided, however, that any such amendments shall not affect in any respect the
number of Buyer Shares issuable upon exercise of Substituted Options (as
defined below) or the exercise price thereof) to cause each unexpired and
unexercised option to purchase shares of Common Stock which is outstanding
immediately prior to the Effective Time (collectively, "Company Options"), to
be automatically converted at the Effective Time into an option (collectively,
a "Substituted Option") to purchase a number of Buyer Shares equal to the
number of shares of Common Stock that could have been purchased under such
Company Option multiplied by the Exchange Ratio in the case of the Forward
Merger and by the product of one and two-thirds and the Reverse Merger Exchange
Ratio in the case of the Reverse Merger (in each case, rounded to the nearest
whole number of Buyer Shares) at a price per Buyer Share equal to the per-share
option exercise price specified in the Company Option divided by the Exchange
Ratio in the case of the Forward Merger and by the product of one
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and two-thirds and the Reverse Merger Exchange Ratio in the case of the Reverse
Merger (in each case, rounded down to the nearest whole cent). Except as
otherwise provided in this Agreement, such Substituted Option shall otherwise
be subject to the same terms and conditions as were applicable to such Company
Option, except as mandated by the requirements of the ASX or Australian Law;
provided, however, that clarification of the terms of the Substitute Options
shall be made so as to make clear that, to the extent permitted by applicable
law (without the need for obtaining additional Buyer shareholder approval), the
optionee may use shares of capital stock of Buyer that have been held for six
months by the option holder (including any period prior to the Effective Time
during which such stock was stock of the Company) as payment of the exercise
price thereof and in respect of the legally required withholding obligation.
The date of the grant of the Substituted Option shall be the date on which the
corresponding Company Option was granted and at the Effective Time all
references in the related stock option agreements to the Company shall be
deemed to refer to Buyer. Except as otherwise provided herein or in the
applicable plan or program, employee deferrals and all other equity based
compensation that reference Common Stock will, as of and after the Effective
Time, be deemed to refer to Buyer Shares (as adjusted to reflect the Exchange
Ratio or one and two-thirds multiplied by the Reverse Merger Exchange Ratio, as
applicable). The adjustments provided for herein with respect to any options
which are "incentive stock options" (as defined in Section 422 of the Code)
shall be effected in a manner consistent with the requirements of Section
424(a) of the Code. Nothing contained herein shall alter or affect any
provision providing for the accelerated vesting of Company Options in the event
of a termination of employment following a "change in control" of the Company
contained in any severance plans of the Company in effect as of the date
hereof, as such terms are set forth in such plans, and Buyer agrees not to
amend such provisions of any such plans following the Closing.
(b) Buyer shall take such corporate action as may be necessary or
appropriate within two (2) business days following the Effective Time, file
with the SEC a registration statement on Form S-8 (or any successor or other
appropriate form) with respect to the Buyer Shares subject to the Substituted
Options to the extent such registration is required under applicable law in
order for such Buyer Shares to be sold without restriction in the United
States, and Buyer shall use its reasonable best efforts to obtain and maintain
the effectiveness of such registration statement for so long as such
Substituted Options remain outstanding. Buyer shall promptly prepare and submit
to the NYSE applications covering the Buyer Shares subject to the Substituted
Options and use commercially reasonable efforts to cause such securities to be
approved for listing on the NYSE prior to the Effective Time, subject to
official notice of issuance, and within ten days after the Effective Time,
prepare and submit to the ASX, pursuant to the applicable listing rules of the
ASX, applications covering the Buyer Preferred Stock underlying the Buyer
Shares to be issued upon the exercise of Substituted Options.
(c) Prior to the Effective Time, Buyer and the Company shall take all steps
reasonably necessary to cause the transactions contemplated hereby and any
other dispositions of equity securities of the Company (including derivative
securities) or acquisitions of Buyer equity securities (including derivative
securities) in connection with this Agreement by each individual who (a) is a
director or officer of the Company or (b) at the Effective Time, will become a
director or officer of Buyer, to be exempt under Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") to the
extent Section 16 of the Exchange Act is applicable to such persons.
(d) At the time that a Substituted Option is exercised in accordance with
the terms hereof, Buyer shall, pursuant to the terms of the Deposit Agreement,
(x) deposit with the Custodian the shares of Buyer Preferred Stock underlying
the Buyer Shares to be issued upon such exercise and (y) instruct the
Depositary to deliver the Buyer Shares to be issued upon such exercise in
accordance with the written instructions of the holder of such Substituted
Option so exercised.
Section 1.8 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to
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such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration to which the holder
thereof is entitled pursuant to this Article I.
Section 1.9 Dissenting Shares. Notwithstanding Sections 1.2 and 1.4 hereof,
to the extent that holders thereof are entitled to appraisal rights under
Section 262 of Delaware Law, shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time and held by a holder who
has properly exercised and perfected his or her demand for appraisal rights
under Section 262 of Delaware Law (the "Dissenting Shares"), shall not be
converted into the right to receive the Merger Consideration, but the holders
of Dissenting Shares shall be entitled to receive such consideration as shall
be determined pursuant to Section 262 of Delaware Law; provided, however, that
if any such holder shall have failed to perfect or shall have effectively
withdrawn or lost his or her right to appraisal and payment under Delaware Law,
such holder's shares of Company Common Stock shall thereupon be deemed to have
been converted as of the Effective Time into the right to receive the Merger
Consideration, without any interest thereon, and such shares shall not be
deemed to be Dissenting Shares. Any payments required to be made with respect
to the Dissenting Shares shall be made by Buyer (and not the Company or
Acquisition Sub).
Section 1.10 Merger Closing. Subject to the satisfaction or, if permissible,
waiver of the conditions set forth in Article VII hereof, the closing of the
Merger (the "Closing") will take place at 9:00 a.m., New York City time, on a
date determined in accordance with, in the case of the Forward Merger, the
third sentence of Section 1.3(c) hereof and, in the case of the Reverse Merger,
the proviso of the third sentence of Section 1.3(c) hereof, and in each case at
the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New
York, New York, unless another time, date or place is agreed to in writing by
the parties hereto (such date being the "Closing Date").
ARTICLE II
The Surviving Corporation
Section 2.1 Certificate of Incorporation. The certificate of incorporation
of Acquisition Sub in the case of the Forward Merger and, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended in
accordance with applicable law. The certificate of incorporation of the Company
in the case of the Reverse Merger shall be the certificate of incorporation of
the Surviving Corporation, amended at the Effective Time to read in its
entirety as the certificate of incorporation of Acquisition Sub as in effect
immediately prior to the Effective Time, until thereafter amended in accordance
with applicable law.
Section 2.2 By-laws. The By-laws of Acquisition Sub in effect at the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter amended in accordance with applicable law, the articles of formation
of such entity and the By-laws of such entity.
Section 2.3 Officers and Board of Directors. (a) From and after the
Effective Time, the officers of the Acquisition Sub at the Effective Time shall
be the officers of the Surviving Corporation, until their respective successors
are duly elected or appointed and qualified in accordance with applicable law.
(b) The Board of Directors of the Surviving Corporation effective as of, and
immediately following, the Effective Time shall consist of the members of the
Board of Directors of Acquisition Sub immediately prior to the Effective Time.
ARTICLE III
Representations and Warranties of the Company
Except (i) as disclosed in the report on Form 10-K dated March 30, 2000 for
the year ended December 31, 1999, the reports on Form 10-Q and Form 8-K filed
by the Company since December 31, 1999 or the proxy
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statement dated April 5, 2000, in each case in the form filed by the Company
with the SEC prior to the date of this Agreement or, to the extent it is
readily apparent that such disclosure would be applicable hereto, in the
disclosure schedules to the Chris-Craft Merger Agreement or the BHC Merger
Agreement, and (ii) as disclosed in a separate disclosure schedule which has
been delivered by the Company to Buyer prior to the execution of this Agreement
(the "Company Disclosure Schedule") (each section of which qualifies the
correspondingly numbered representation and warranty or covenant to the extent
specified therein and such other representations and warranties or covenants to
the extent a matter in such section is disclosed in such a way as to make its
relevance to the information called for by such other representation and
warranty or covenant readily apparent), the Company hereby represents and
warrants to Buyer:
Section 3.1 Organization and Qualification; Subsidiaries.
(a) Each of the Company and its subsidiaries is a corporation or entity duly
incorporated or formed, validly existing and in good standing under the laws of
its jurisdiction of incorporation or formation and has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Company Material Adverse Effect (as defined below). Each of the Company and its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing as would not, individually or in
the aggregate, have a Company Material Adverse Effect. The term "Company
Material Adverse Effect" means any change, effect or circumstance that is or is
reasonably likely to be materially adverse to the business, operations, results
of operations or financial condition of Chris-Craft and its subsidiaries taken
as a whole, other than any change, effect or circumstance relating to or
resulting from (i) general changes in the television broadcasting industry,
(ii) changes in general economic conditions or securities markets in general,
or (iii) this Agreement or the transactions contemplated hereby or the
announcement thereof.
(b) All the outstanding shares of capital stock or other equity or voting
interests of each subsidiary of the Company are owned by the Company, by
another wholly owned subsidiary of the Company or by the Company and another
wholly owned subsidiary of the Company, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"), and are duly authorized, validly issued,
fully paid and nonassessable. Except as set forth above or in Section 3.1(b) of
the Company Disclosure Schedule and except for the capital stock of, or other
equity or voting interests in, its subsidiaries, the Company does not own,
directly or indirectly, any capital stock of, or other equity or voting
interests in, any corporation, partnership, joint venture, association or other
entity.
Section 3.2 Restated Certificate of Incorporation and By-Laws. The Company
has made available to Buyer a complete and correct copy of the Restated
Certificate of Incorporation and the By-laws, each as amended to date, of the
Company. The Restated Certificate of Incorporation and By-laws (or equivalent
organizational documents) of the Company and its subsidiaries are in full force
and effect. None of the Company or its subsidiaries is in material violation of
any provision of its Restated Certificate of Incorporation or By-laws (or
equivalent organizational documents).
Section 3.3 Capitalization. As of the date of this Agreement, the authorized
capital stock of the Company consists of 25,000,000 shares of Company Common
Stock and 1,000,000 shares of Preferred Stock, par value $1.00 per share
("Company Preferred Stock"). At the close of business on June 30, 2000, (i)
9,486,173 shares of Company Common Stock were issued and outstanding and no
shares of Company Preferred Stock were issued and outstanding; (ii) no shares
were held by the Company in its treasury; and (iii) 234,570 shares of Company
Common Stock were reserved for issuance upon the exercise of outstanding
options to purchase such shares. Since January 31, 2000, no shares of capital
stock of Company have been issued except pursuant to exercise of options of
Company outstanding as of September 30, 1999 in accordance
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with the terms thereof. As of the date of this Agreement, except as set forth
above, no shares of capital stock or other voting securities of the Company are
issued, reserved for issuance or outstanding. As of the date of this Agreement,
other than the options referred to in clause (iii) above, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the Company
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of the Company or of any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. All outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other indebtedness
of the Company or any of its subsidiaries, and no securities or other
instruments or obligations of the Company or any of its subsidiaries the value
of which is in any way based upon or derived from any capital or voting stock
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which stockholders
of the Company may vote. Except as set forth in Section 3.3(a) of the Company
Disclosure Schedule, to the knowledge of the Company, as of the date of this
Agreement, there are no outstanding contractual obligations of the Company or
any of its subsidiaries (i) to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or (ii) to vote or to dispose of any
shares of the capital stock of any of the Company's subsidiaries.
Section 3.4 Authority Relative to Agreement.
(a) The Company has all necessary power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Merger and the other transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company
of the Merger and the other transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement or to consummate the Merger and the other
transactions contemplated hereby (other than, with respect to the Merger, the
adoption of this Agreement and the approval of the Merger by the affirmative
vote of a majority of the votes cast by all stockholders entitled to vote at
the Stockholders' Meeting (as defined in Section 6.2 hereof) voting together as
a single class. This Agreement has been duly and validly executed and delivered
by the Company and, assuming the due authorization, execution and delivery by
Buyer, this Agreement constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(b) The Special Committee has been duly authorized and constituted. The
Special Committee, at a meeting thereof duly called and held on August 13,
2000, (A) determined that this Agreement and the Merger are fair to and in the
best interests of the Company and its stockholders (other than Buyer and its
affiliates), (B) determined that this Agreement and the Merger should be
approved and declared advisable and (C) resolved to recommend that the
stockholders of the Company approve the Merger and adopt this Agreement. The
Board of Directors of the Company, at a meeting thereof duly called and held on
August 13, 2000, in reliance upon the advice of the Special Committee (X)
determined that this Agreement and the Merger are fair to and in the best
interests of the Company and its stockholders (other than Buyer and its
affiliates), (Y) approved and declared the advisability of this Agreement and
the Merger and (Z) resolved to recommend that the stockholders of the Company
approve the Merger and adopt this Agreement.
Section 3.5 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 3.5 of the Company Disclosure Schedule,
the execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby by the Company and its subsidiaries will not,
(i) conflict with or violate the Restated Certificate of Incorporation or By-
Laws (or equivalent organizational documents) of (A) the Company or (B) any of
its subsidiaries, (ii) assuming the consents, approvals and
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authorizations specified in Section 3.5(b) have been received and the waiting
periods referred to therein have expired, and any condition precedent to such
consent, approval, authorization, or waiver has been satisfied, conflict with
or violate any domestic (Federal, state or local) or foreign law, rule,
regulation, order, judgment or decree (collectively, "Laws") applicable to the
Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration, or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture or
credit agreement, or any other contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any property or asset of the Company or any of its subsidiaries is bound or
affected, except, in the case of clauses (ii) and (iii) above, for any such
conflicts, violations, breaches, defaults or other occurrences of the type
referred to above which would not, individually or in the aggregate, have a
Company Material Adverse Effect and would not prevent or materially delay the
consummation of the Merger; provided, however, that for purposes of this
Section 3.5(a), the definition of "Company Material Adverse Effect" shall be
read so as not to include clause (iii) thereof.
(b) Except as set forth in Section 3.5 of the Company Disclosure Schedule,
the execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company and the consummation of the Merger
and the other transactions contemplated hereby by the Company and its
subsidiaries will not, require any consent, approval, authorization, waiver or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic, foreign or supranational, except for applicable
requirements of the Exchange Act, the Securities Act of 1933, as amended (the
"Securities Act"), state securities or "blue sky" laws ("Blue Sky Laws"), the
pre-merger notification arrangements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), any filings and approvals and waivers of the Federal
Communications Commission or any successor entity (the "FCC") as may be
required under the Communications Act of 1934, as amended, and the rules,
regulations and published orders of the FCC thereunder (collectively, the
"Communications Act"), filing and recordation of appropriate merger documents
as required by Delaware Law and the rules of the NYSE and except where failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate, have a
Company Material Adverse Effect and would not prevent or materially delay the
consummation of the Merger; provided, however, that for purposes of this
Section 3.5(b), the definition of "Company Material Adverse Effect" shall be
read so as not to include clause (iii) thereof.
Section 3.6 Permits And Licenses; Contracts; Compliance With Laws.
(a) Each of the Company and its subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders necessary for the
Company or any of its subsidiaries to own, lease and operate the properties of
the Company and its subsidiaries or to carry on its business as it is now being
conducted and contemplated to be conducted (the "Company Permits"), and no
suspension or cancellation of any of the Company Permits is pending or, to the
knowledge of the Company, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Company Permits would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Except as set forth in Section 3.6(a) of the Company Disclosure Schedule, none
of the Company or any of its subsidiaries is in conflict with, or in default or
violation of, (i) any Laws applicable to the Company or any of its subsidiaries
or by which any property or asset of the Company or any of its subsidiaries is
bound or affected, (ii) any of the Company Permits or (iii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or any property
or asset of the Company or any of its subsidiaries is bound or affected, except
for any such conflicts, defaults or violations that would not, individually or
in the aggregate, have a Company Material Adverse Effect.
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(b) Except as set forth in Section 3.6(b) of the Company Disclosure
Schedule, none of the Company or any of its subsidiaries is a party to, or to
the knowledge of the Company is bound by, any contract or agreement that
contains a covenant restricting the ability of the Company or any of its
subsidiaries or, after the Effective Time, could restrict the ability of Buyer
or any of its subsidiaries or affiliates, to compete in any line of business or
with any person or engage in any business in any geographic area.
(c) The Company and its subsidiaries have operated their respective
television stations and associated facilities (the "Company Stations"), in
compliance with the terms of the Company Permits issued by the FCC to the
Company and its subsidiaries ("Company FCC Licenses"), and in compliance with
the Communications Act, and the Company and its subsidiaries have timely filed
or made all applications, reports and other disclosures required by the FCC to
be filed or made with respect to the Company Stations and have timely paid all
FCC regulatory fees with respect thereto, in each case except as, individually
or in the aggregate, (i) as of the date of this Agreement, would not materially
adversely affect the operation of any of the broadcasting facilities of the
Company's subsidiaries' San Francisco or Minneapolis television stations and
would not have a Company Material Adverse Effect and (ii) would not result in
the loss of the Company's subsidiaries' main station license issued by the FCC
with respect to the Company's subsidiaries' San Francisco or Minneapolis
television stations and would not have a Company Material Adverse Effect.
Except as set forth in Section 3.6(c) of the Company Disclosure Schedule, (i)
there is not, as of the date of this Agreement, pending or, to the Company's
knowledge, threatened before the FCC any material proceeding, notice of
violation, order of forfeiture or complaint or, to the knowledge of the
Company, investigation against the Company or any of its subsidiaries, relating
to any of the Company Stations or FCC regulated services conducted by the
Company or any of its subsidiaries and, (ii) there is not pending or, to the
Company's knowledge, threatened before the FCC any proceeding, notice of
violation, order of forfeiture or complaint or, to the knowledge of the
Company, investigation against the Company or any of its subsidiaries, relating
to any of the Company Stations or FCC regulated services conducted by the
Company or any of its subsidiaries, except for any such proceedings, notices,
orders, complaints or investigations that would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(d) Except as disclosed in Section 3.6(d) of the Company Disclosure
Schedule, as of the date of this Agreement, there are no contracts or
agreements that are material to the business, properties, assets, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries taken as a whole. Neither the Company nor any of its subsidiaries
is in violation or default of, nor has the Company or, to the knowledge of the
Company, any subsidiary or affiliate thereof received written notice from any
third party alleging that the Company or any of its subsidiaries is in
violation of or in default under, nor, to the knowledge of the Company, does
there exist any condition which upon the passage of time or the giving of
notice would cause such a violation of or default under any loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties
or assets is bound, except for any such violations or defaults which would not,
individually or in the aggregate, have a Company Material Adverse Effect and
would not prevent or materially delay the consummation of the Merger.
(e) Set forth in Section 3.6(e) of the Company Disclosure Schedule is a
list, as of the date of this Agreement, of all (i) network affiliation
agreements, (ii) employment agreements involving payments in excess of $100,000
per annum or $300,000 in the aggregate, (iii) talent agreements involving
payments in excess of $250,000 per annum or $500,000 in the aggregate, (iv)
program or film syndication or license agreements requiring remaining payments
after the date hereof of more than $500,000 per annum or $2,500,000 in the
aggregate or, in the case of barter agreements, having a term ending more than
one year from the date hereof, (v) retransmission consent agreements entered
into with any direct satellite providers and each of the top 10 (ranked by
number of subscribers) multiple system operators, and (vi) agreements licensing
or creating any obligations with respect to the current or future use of the
digital data stream of any digital television ("DTV") station owned or to be
constructed by the Company or any of its subsidiaries that would be in effect
following the Effective Time, to which, in each case, the Company or any of its
subsidiaries is a party, and the Company
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has made available to Buyer true and complete copies of the agreements
described in this Section 3.6(e). Also set forth in Section 3.6(e) of the
Company Disclosure Schedule are the most recent syndicated program and feature
film inventory reports for each of the Company Stations.
(f) Section 3.6(f) of the Company Disclosure Schedules sets forth a list, as
of the date of this Agreement, of all material licenses and construction
permits held by the Company with respect to the construction and operation of
DTV stations in each of the markets in which the Company and its subsidiaries
operate broadcast television stations (the "DTV Stations"). Except as set forth
in Section 3.6(f) of the Company Disclosure Schedule, to the knowledge of the
Company, there are no facts or circumstances existing as of the date of this
Agreement that would prevent the construction and operation of the DTV Stations
by the relevant deadline established by the FCC.
(g) Set forth in Section 3.6(g) of the Company Disclosure Schedule is a list
of all attributable interests, as defined at Note 2 to 47 C.F.R. Section
73.3555, of the Company and its subsidiaries in any broadcast radio or
television station, daily English-language newspaper or cable television
system.
Section 3.7 SEC Reports. The Company has filed with the SEC, and has
heretofore made available to Buyer true and complete copies of, all forms,
reports, schedules, statements and other documents required to be filed with
the SEC by the Company since January 1, 1997 (together with all information
incorporated therein by reference, the "Company SEC Reports"). No subsidiary of
the Company is required to file any form, report, schedule, statement or other
document with the SEC. As of their respective dates, the Company SEC Reports
complied in all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such Company SEC Reports, and none of
the Company SEC Reports at the time they were filed contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The financial
statements (including the related notes) included in the Company SEC Reports
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP") (except, in the case of unaudited statements, as
permitted by forms or rules of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof and their
respective consolidated results of operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal and
recurring year-end audit adjustments). Except as and to the extent set forth in
Section 3.7 of the Company Disclosure Schedule, the Company and its
subsidiaries do not have any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise) other than liabilities and
obligations which would not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 3.8 Absence of Certain Changes or Events.
(a) Since December 31, 1999, except as contemplated by this Agreement, there
has not been any change, event or circumstance which, when taken individually
or together with all other changes, events or circumstances, has had or would
have a Company Material Adverse Effect, and (b) since December 31, 1999 to the
date of this Agreement, (i) each of the Company and its subsidiaries has
conducted its businesses only in the ordinary course and in a manner consistent
with past practice and (ii) there has not been (A) any material change by the
Company or any of its subsidiaries in its material accounting policies,
practices and procedures, (B) any entry by the Company or any of its
subsidiaries into any commitment or transaction material to the Company and its
subsidiaries taken as a whole other than in the ordinary course of business
consistent with past practice, (C) any declaration, setting aside or payment of
any dividend or distribution in respect of any capital stock of the Company or
any of its subsidiaries (other than cash dividends payable by any wholly owned
subsidiary to another subsidiary or the Company and other than the Company's
regular annual cash dividend paid in April 2000), (D) any increase in the
compensation payable or to become payable to any
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corporate officers or heads of divisions of the Company or any of its
subsidiaries, except in the ordinary course of business consistent with past
practice, or (E) any action, event, occurrence or transaction that would have
been prohibited by Section 5.1 hereof if this Agreement had been in effect
since December 31, 1999.
Section 3.9 Absence of Litigation. Except as disclosed in Section 3.9 of the
Company Disclosure Schedule, there is no claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or any property or asset of the Company
or any of its subsidiaries, before any court, arbitrator or Governmental
Authority, in each case except as would not, individually or in the aggregate,
have a Company Material Adverse Effect. None of the Company, any of its
subsidiaries nor any property or asset of the Company or any of its
subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award imposed by any court, arbitration or Governmental
Authority, in each case except as would not, individually or in the aggregate,
have a Company Material Adverse Effect.
Section 3.10 Employee Benefit Plans.
(a) Section 3.10(a) of the Company Disclosure Schedule lists each employee
benefit plan, program, arrangement and contract (including, without limitation,
any "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and any
"multiemployer plans" within the meaning of Section 3(37) of ERISA
("Multiemployer Plans")), maintained, contributed or required to be contributed
to by the Company, any of its subsidiaries or any trade or business (whether or
not incorporated) under common control with the Company within the meaning of
Section 414(b), (c), (m) or (o) of the Code ("ERISA Affiliate"), or with
respect to which the Company, any of its subsidiaries or any ERISA Affiliate
could incur liability under Section 4069 of ERISA (the "Company Benefit
Plans"), each, with respect to which current and former employees of the
Company and any of its subsidiaries (the "Company Employees") participate. No
Company Benefit Plan has ever been or is currently subject to or governed by
the Laws of any jurisdiction other than the United States or any State or
Commonwealth of the United States. The Company has provided to Buyer a true and
correct copy of each of the following documents, including any amendments
thereto, with respect to each Company Benefit Plan, other than Multiemployer
Plans: (i) the most recent annual report (Form 5500) filed with the Internal
Revenue Service (the "IRS"), (ii) all plan documents for such Company Benefit
Plan, (iii) each trust agreement, insurance contract or other funding vehicle
relating to such Company Benefit Plan, (iv) the most recent summary plan
description for each Company Benefit Plan for which a summary plan description
is required, (v) the most recent actuarial report or valuation relating to a
Company Benefit Plan subject to Title IV of ERISA, if any, and (vi) the most
recent determination letter, if any, issued by the IRS with respect to any
Company Benefit Plan qualified under Section 401(a) of the Code or voluntary
employees' benefit association ("VEBA") qualified under Section 501(c)(9) of
the Code. Except as specifically provided in the foregoing documents delivered
to Buyer or except as otherwise contemplated by this Agreement or except as
disclosed in Section 3.10(a) of the Company Disclosure Schedule, there are no
amendments to any Company Benefit Plan that have been adopted or approved nor
has the Company or any of its subsidiaries undertaken to make any such
amendments or to adopt or approve any new Plan. The Company will, promptly
following the date of this Agreement, request a copy of each Company Benefit
Plan that is a multiemployer plan within the meaning of Section 3(37) of ERISA
from the trustees of such multiemployer plan and the Company shall deliver such
copy of the plan to Buyer promptly upon its receipt thereof.
(b) Each Company Benefit Plan has been administered in accordance with its
terms and the terms of any applicable collective bargaining or other labor
union contract or agreement, and in compliance with applicable laws. The
Company, its subsidiaries and each ERISA Affiliate have performed all
obligations required to be performed by them under, are not in any respect in
default under or in violation of, and have no knowledge of any default or
violation by any party to, any Company Benefit Plans, except for any defaults
or violations which would not, individually or in the aggregate, have a Company
Material Adverse Effect. With respect to the Company Benefit Plans, no event
has occurred and no condition or set of circumstances exists, in
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connection with which the Company, any of its subsidiaries or any ERISA
Affiliate is subject to any liability under the terms of such Company Benefit
Plans, ERISA, the Code or any other applicable Law except as would not,
individually or in the aggregate, have a Company Material Adverse Effect. No
Company Benefit Plan (other than a Multiemployer Plan) is under audit or
investigation by any Governmental Authority nor has the Company, any subsidiary
or any ERISA Affiliate been notified of any audit or investigation. Neither the
Company nor any ERISA Affiliate has any actual or contingent liability under
Title IV of ERISA (other than the payment of premiums to the Pension Benefit
Guaranty Corporation), including, without limitation, any liability in
connection with (i) the termination or reorganization of any employee benefit
plan subject to Title IV of ERISA or (ii) the withdrawal from any Multiemployer
Plan or Multiple Employer Plan (within the meaning of Section 4001(a)(3) and
4063, respectively, of the Code), and no fact or event exists which is
reasonably likely to give rise to any such liability, in each case except as
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
(c) The Company has made available to Buyer: (i) copies of all employment
agreements with executive officers of the Company and its subsidiaries; (ii)
copies of all severance agreements, programs and policies of the Company, any
of its subsidiaries or any ERISA Affiliate with or relating to the Company
Employees; and (iii) copies of all plans, programs, agreements and other
arrangements of the Company, any of its subsidiaries or any ERISA Affiliate
with or relating to the Company Employees which contain change in control
provisions. Except as disclosed in Section 3.10(c) of the Company Disclosure
Schedule, or except as otherwise contemplated by this Agreement neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including,
without limitation, severance, unemployment compensation, "golden parachute" or
otherwise) becoming due to any director, officer or employee of the Company or
any of its subsidiaries from the Company or any of its affiliates under any
Company Benefit Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any Company Benefit Plan, (iii) result in any
acceleration of the time of payment or vesting of any material benefits, (iv)
result in a restriction on Buyer's ability to amend, modify or terminate any
plan, (v) trigger a requirement for funding or the acceleration of funding of
any material benefits, (vi) commence a period during which a subsequent
termination of employment by a Company Employee will entitle such Company
Employee to benefits in excess of what would otherwise have been required in
the absence of the transactions contemplated hereby or (vii) result in a
reportable event within the meaning of Section 4043(c) of ERISA for which a
notice requirement has not been waived. Except as contemplated hereby, or as
otherwise disclosed in Section 3.10(c) of the Company Disclosure Schedule, the
Company has taken no action with respect to the Company Options that would
result in any acceleration of vesting of the Company Options in connection with
the execution and delivery of this Agreement or the consummation of any
transactions contemplated hereby or otherwise. Without limiting the generality
of the foregoing, except as set forth in Section 3.10(c) of the Company
Disclosure Schedule, no amount paid or payable by the Company to any employee
of the Company or any of its subsidiaries in connection with the transactions
contemplated hereby (either solely as a result thereof or as a result of such
transactions in conjunction with any other event) will be an "excess parachute
payment" within the meaning of Section 280G of the Code.
(d) Each Company Benefit Plan that is intended to be qualified under Section
401(a) of the Code or Section 401(k) of the Code has timely received a
favorable determination letter from the IRS covering all of the provisions
applicable to the Plan for which determination letters are currently available
that the Company Benefit Plan is so qualified and each trust established in
connection with any Company Benefit Plan which is intended to be exempt from
Federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event
has occurred since the date of such determination letter or letters from the
IRS which is reasonably likely to adversely affect the qualified status of any
such Company Benefit Plan or the exempt status of any such trust. Each Company
Benefit Plan that is a VEBA meets the requirements of Section 501(c)(9) of the
Code.
(e) The Company and its subsidiaries have no liability for life, health,
medical or other welfare benefits to former officers, directors or employees or
beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA.
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(f) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted, or to Company's knowledge, no set of circumstances
exists which may reasonably give rise to a claim or lawsuit, against the
Company Benefit Plans, any fiduciaries thereof with respect to their duties to
the Plans or the assets of any of the trusts under any of the Company Benefit
Plans which could reasonably be expected to result in any liability of the
Company or any of the ERISA Affiliates to the Pension Benefit Guaranty
Corporation, the Department of Treasury, the Department of Labor, any
Multiemployer Plan, any Company Benefit Plan or any participant in a Company
Benefit Plan.
(g) The Company has taken reasonable steps to ensure that each individual
classified by the Company or any subsidiary as an independent contractor has
been properly classified as such.
Section 3.11 Labor Matters. There is no labor dispute, strike, work stoppage
or lockout, or, to the knowledge of the Company, threat thereof, by or with
respect to any employee of the Company or any of its subsidiaries, except where
such dispute, strike, work stoppage or lockout individually or in the aggregate
would not have a Company Material Adverse Effect. None of the Company or any of
its subsidiaries has breached or otherwise failed to comply with any provision
of any collective bargaining or other labor union contract applicable to any
employees of the Company or any of its subsidiaries and there are no grievances
or complaints outstanding or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries under any such contract except
for any breaches or failures to comply that, individually or in the aggregate,
would not have a Company Material Adverse Effect.
Section 3.12 Environmental Matters. Except as would not, individually or in
the aggregate, have a Company Material Adverse Effect:
(a) the Company and its subsidiaries (i) are in compliance with all, and, to
the Company's knowledge, are not subject to any asserted liability or liability
(including liability with respect to current or former subsidiaries or
operations), in each case with respect to any Environmental Laws (as defined
below), (ii) hold or have applied for all Environmental Permits (as defined
below) and (iii) are in compliance with their respective Environmental Permits;
(b) neither the Company nor any Company subsidiary has received any written
notice, demand, letter, claim or request for information alleging that the
Company or any of its subsidiaries or, to the Company's knowledge as of the
date of this Agreement, any of their predecessors in interest, is or may be in
violation of, or liable under, any Environmental Law;
(c) (i) neither the Company nor any of its subsidiaries has entered into or
agreed to any consent decree or order or is subject to any judgment, decree or
judicial order relating to compliance with Environmental Laws, Environmental
Permits or the investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials (as defined below) and, to the
knowledge of the Company, no investigation, litigation or other proceeding is
pending or threatened in writing with respect thereto, and (ii) neither the
Company nor any of its subsidiaries nor, to the knowledge of the Company as of
the date of this Agreement, any of their predecessors in interest, is an
indemnitor in connection with any threatened or asserted claim by any third-
party indemnitee or is the subject of a claim for personal injury or property
damage for any liability under any Environmental Law or relating to any
Hazardous Materials; and
(d) none of the real property owned or leased by the Company or any of its
subsidiaries or, to the knowledge of the Company as of the date of this
Agreement, any of their predecessors in interest, is listed or, to the
knowledge of the Company, proposed for listing on the "National Priorities
List" under CERCLA, as updated through the date hereof, or any similar state or
foreign list of sites requiring investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended as of the date hereof.
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"Environmental Laws" means any applicable federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, treaty, writ or order and any
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree, judgment, stipulation,
injunction, permit, authorization, policy, opinion, or agency requirement, in
each case having the force and effect of law, relating to the pollution,
protection, investigation or restoration of the environment, health and safety
or natural resources, including those relating to the use, handling, presence,
transportation, treatment, storage, disposal, release, threatened release or
discharge of Hazardous Materials or noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to persons or property or to
the siting, construction, operation, closure and post-closure care of waste
disposal, handling and transfer facilities.
"Environmental Permits" means any permit, approval, identification number,
license and other authorization required under any Environmental Law.
"Hazardous Materials" means (i) any petroleum, petroleum products, by-
products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls and (ii) any chemical, material or other
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any Environmental Law.
Section 3.13 Trademarks, Patents and Copyrights.
(a) Except as would not have a Company Material Adverse Effect, (i) the
Company and its subsidiaries own, or possess necessary or required licenses, to
be used in each case in the manner currently used, or other necessary or
required rights to use, all patents, patent rights, trademarks, trademark
rights, trade names, trade name rights, copyrights, domain names, service
marks, service mark rights, trade secrets, applications to register, and
registrations for, the foregoing trademarks, know-how and other proprietary
rights and information (the "Intellectual Property Rights") used in connection
with the business of the Company and its subsidiaries as currently conducted
(the "Company Intellectual Property Rights"), and (ii) neither the Company nor
any of its subsidiaries has received any written charge, complaint, claim,
demand or notice challenging the validity of any of the Company Intellectual
Property Rights.
(b) To the Company's knowledge, none of the Company or any of its
subsidiaries has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property Rights or other proprietary
information of any other Person, except for any such interference,
infringement, misappropriation or other conflict that, individually or in the
aggregate, would not have a Company Material Adverse Effect. None of the
Company or any of its subsidiaries has received any written charge, complaint,
claim, demand or notice alleging any such interference, infringement,
misappropriation or other conflict (including any claim that the Company or any
of its subsidiaries must license or refrain from using any Company Intellectual
Property Rights or other proprietary information of any other person) that has
not been settled or otherwise fully resolved, except for any such interference,
infringement, misappropriation or other conflict that, individually or in the
aggregate, would not have a Company Material Adverse Effect. To the Company's
knowledge, no other person has interfered with, infringed upon, misappropriated
or otherwise come into conflict with any Company Intellectual Property Rights,
except for any such interference, infringement, misappropriation or other
conflict that, individually or in the aggregate, would not have a Company
Material Adverse Effect.
Section 3.14 Taxes.
(a) For purposes of this Agreement, (i) "Tax" or "Taxes" means any and all
taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any governmental or taxing
authority including, without limitation: taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value added, or gains taxes; license, registration and documentation fees; and
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customs' duties, tariffs, and similar charges; and liability for the payment of
any of the foregoing as a result of (x) being a member of an affiliated,
consolidated, combined or unitary group, (y) being party to any tax sharing
agreement and (z) any express or implied obligation to indemnify any other
person with respect to the payment of any of the foregoing; and (ii) "Tax
Returns" means returns, reports and information statements, including any
schedule or attachment thereto, with respect to Taxes required to be filed with
the IRS or any other governmental or taxing authority or agency, domestic or
foreign, including consolidated, combined and unitary tax returns.
(b) Except as set forth in Section 3.14(b) of the Company Disclosure
Schedule and except as would not, individually or in the aggregate, have a
Company Material Adverse Effect (unless stated otherwise below): (i) each of
the Company and each of its subsidiaries has timely filed all U.S. Federal,
state, local and non-U.S. Tax Returns required to be filed by it, and all such
Tax Returns are true, correct and complete, and has paid and discharged all
Taxes shown as due thereon and has paid all of such other Taxes as are due,
other than such payments as are being contested in good faith by appropriate
proceedings; (ii) neither the IRS nor any other taxing authority or agency,
domestic or foreign, is now asserting in writing or, to the knowledge of the
Company or its subsidiaries after due inquiry, threatening in writing to assert
against the Company or any of its subsidiaries any deficiency or claim with
respect to Taxes of the Company or any of its subsidiaries; (iii) no waiver of
any statute of limitations with respect to, or any extension of a period for
the assessment of, any Tax has been granted by the Company or any of its
subsidiaries without regard to whether such waiver or extension could have a
Company Material Adverse Effect in connection with Federal, New York State and
California Taxes; (iv) the accruals and reserves for Taxes reflected in the
Company's audited consolidated balance sheet as of December 31, 1999 (and the
notes thereto) (the "1999 Balance Sheet") and the most recent quarterly
financial statements (and the notes thereto) are adequate to cover all Taxes
accruable through the date thereof in accordance with generally accepted
accounting principles; (v) no election under Section 341(f) of the Code has
been made by the Company or any of its subsidiaries; (vi) the Company and each
of its subsidiaries has withheld or collected and paid over to the appropriate
governmental authorities or is properly holding for such payment all Taxes
required by law to be withheld or collected; (vii) there are no liens for Taxes
upon the assets of the Company or any of its subsidiaries, other than liens for
Taxes that are being contested in good faith by appropriate proceedings or are
not yet due, (viii) neither the Company nor any of its subsidiaries have
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code in the
two years prior to the date of this Agreement; (ix) the Federal income Tax
Returns for the Company and each of its subsidiaries have been examined and
settled with the IRS (or the applicable statutes of limitation for the
assessment of Federal income Taxes for such periods have expired) for all years
through 1996; (x) the Company and its subsidiaries have given or otherwise made
available to Buyer correct and complete copies of (A) all Federal income Tax
Returns of the Company filed for periods ending after December 31, 1993 and (B)
income Tax returns filed on behalf of KCOP Television, Inc. and affiliates for
California for tax years 1997 and 1998; (xi) neither the Company nor any of its
subsidiaries is a party to any agreement relating to the sharing, allocation,
or indemnification of Taxes or any similar contract or arrangement without
regard to whether any such agreement could have a Company Material Adverse
Effect other than agreements between members of the affiliated group of which
the Company is the common parent under Section 1504 of the Code; (xii) neither
the Company nor any of its subsidiaries have agreed, or is required to make,
any adjustment under Section 481 of the Code; (xiii) the Company and each of
its subsidiaries were not, at any time during the period specified in Section
897(c)(1)(A)(ii) of the Code, a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code without regard to whether
such status could give rise to a Company Material Adverse Effect; and (xiv)
there have been no redemptions by the Company or any of its subsidiaries since
March 31, 1998 without regard to whether such redemptions could give rise to a
Company Material Adverse Effect.
Section 3.15 Tax Matters. None of the Company or any of its affiliates has
taken or agreed to take any action, has failed to take any action or knows of
any fact, agreement, plan or other circumstance that is reasonably likely to
prevent the Merger from qualifying as a reorganization within the meaning of
Section
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368(a) of the Code; provided, however, that the foregoing representation is
made only as of the date hereof in the case of the Reverse Merger. The
preceding sentence excludes all transactions contemplated by this Agreement.
Section 3.16 Title to Properties; Assets. Neither the Company nor any of its
subsidiaries owns, or has any material interest in, (i) any material assets in
Australia or (ii) any television, media or other broadcasting assets in
Australia. Except in each case as, individually or in the aggregate, (i) as of
the date of this Agreement, would not materially adversely affect the operation
of the broadcasting facilities of the Company's subsidiaries' San Francisco or
Minneapolis television stations and (ii) would not have a Company Material
Adverse Effect:
(a) Each of the Company and its subsidiaries has good, marketable fee simple
title to its owned properties and assets or good and valid leasehold interests
in all of its leasehold properties and assets together with full legal and
practical access to all of its properties except for such as are no longer used
or useful in the conduct of its businesses or as have been disposed of in the
ordinary course of business. All such properties and assets, other than
properties and assets in which the Company or any of its subsidiaries has a
leasehold interest, are free and clear of all Liens.
(b) Each of the Company and its subsidiaries has complied with the terms of
all leases to which it is a party and under which it is in occupancy, and all
deeds in respect of property which it owns, and all such leases and deeds are
in full force and effect. Section 3.16(b) of the Company Disclosure Schedule
sets forth a description of (i) each lease to which it is a party relating to
its television broadcasting, (ii) all other leases to which it is a party in
which the annual rental payments exceed $250,000 or which contemplate aggregate
payments in excess of $500,000 and (iii) each deed under which it is the owner;
and a copy of each such lease or deed, as applicable, has previously been
provided to Buyer. The Company and its subsidiaries enjoy peaceful and
undisturbed possession under all such leases. There are no facts that would
prevent Buyer or any of its subsidiaries from using or occupying all of the
leased and owned property referred to in clauses (i), (ii) and (iii) above,
after the Effective Time, in the same manner such leased and owned property is
used or occupied by the Company or its subsidiaries immediately prior to the
Effective Time.
(c) The assets of the Company and each of its subsidiaries constitute all of
the properties, assets and rights forming a part of, used, held or intended to
be used in, and all such properties, assets and rights as are necessary in, the
conduct of the business as it is now being conducted and contemplated to be
conducted by the Company and its subsidiaries. At all times since December 31,
1999, each of the Company and its subsidiaries has caused such assets to be
maintained in accordance with good business practice, and all of such assets
are in good operating condition and repair and are suitable for the purposes
for which they are used and intended.
Section 3.17 Year 2000 Compliance.
(a) The Company has adopted a plan that it believes will cause Company
Systems (as defined below) to be Company Year 2000 Compliant (as defined below)
(such plan, as it may be amended, modified or supplemented from time to time
being, the "Company Year 2000 Plan") in all material respects. The Company has
taken, and between the date of this Agreement and the Effective Time will
continue to take, all reasonable steps to implement the Company Year 2000 Plan
with respect to the Company Systems.
(b) For purposes of this Section 3.17, (i) "Company Systems" shall mean all
computer, hardware, software, systems, and equipment (including embedded
microcontrollers in non-computer equipment) embedded within or required to
operate the current products of the Company and its subsidiaries, and/or
material to or necessary for the Company and its subsidiaries to carry on their
respective businesses as currently conducted; and (ii) "Company Year 2000
Compliant" means that Company Systems will (A) manage, accept, process, store
and output data involving dates reasonably expected to be encountered in the
foreseeable future and (B) accurately process date data from, into and between
the 20th and 21st centuries and each date during the year 2000.
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Section 3.18 Opinion of Financial Advisors. The Special Committee has
received the written opinion of Bear, Stearns & Co. Inc. (the "Company
Financial Advisor") on or prior to the date of this Agreement, to the effect
that, as of the date of such opinion, the Merger Consideration is fair to the
stockholders of the Company (other than BHC) from a financial point of view,
and the Company will deliver a copy of such opinion to Buyer promptly after the
date of this Agreement.
Section 3.19 Vote Required. At the Stockholders' Meeting, the affirmative
vote of the holders of a majority of the outstanding Common Stock voting
together as a single class are the only votes of the holders of any class or
series of capital stock of the Company necessary to adopt this Agreement.
Section 3.20 Brokers. The Company Financial Advisor has entered into a
letter of engagement with the Special Committee in connection with the Merger,
a copy of which has previously been provided to Buyer. Except as disclosed in
Section 3.20 of the Company Disclosure Schedule, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger based upon arrangements made by or on
behalf of the Company other than as provided in a letter of engagement
previously provided to Buyer.
Section 3.21 State Takeover Statutes. The Board of Directors of the Company
has taken all action necessary to render inapplicable to the Merger and the
Voting Agreement and the transactions contemplated hereby and thereby
(including the proxy with respect to the Common Stock delivered by BHC
concurrently with the delivery of the Voting Agreement) the provisions of
Section 203 of Delaware Law. To the knowledge of the Company, no other state
takeover statute or similar statute or regulation applies or purports to apply
to the Merger.
ARTICLE IV
Representations and Warranties of Buyer
Except as disclosed in its Annual Report on Form 20-F filed with the SEC on
October 27, 1999 and the reports on Form 6-K filed with the SEC on November 3,
1999, February 15, 2000 and May 12, 2000, or in a separate disclosure schedule
which has been delivered by Buyer to the Company prior to the execution of this
Agreement (the "Buyer Disclosure Schedule") (each section of which qualifies
the correspondingly numbered representation and warranty or covenant to the
extent specified therein and such other representations and warranties or
covenants to the extent a matter in such section is disclosed in such a way as
to make its relevance to the information called for by such other
representation and warranty or covenant readily apparent), Buyer hereby
represents and warrants to the Company that:
Section 4.1 Organization and Qualification; Subsidiaries. Each of Buyer and
its subsidiaries is a corporation or entity duly incorporated or formed,
validly existing and, as applicable, in good standing, under the laws of its
jurisdiction of incorporation or formation, and has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Buyer Material Adverse Effect (as defined below). Each of Buyer and its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or
in the aggregate, have a Buyer Material Adverse Effect. The term "Buyer
Material Adverse Effect" means any change, effect or circumstance that is or is
reasonably likely to be materially adverse to the business, operations, results
of operations or financial condition of Buyer and its subsidiaries taken as a
whole, other than any change, effect or circumstance relating to or resulting
from (i) general changes in the industry in which Buyer conducts business, (ii)
changes in general economic conditions or securities markets in general or
(iii) this Agreement or the transactions contemplated hereby or the
announcement thereof.
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Section 4.2 Charter Documents. Buyer has made available to the Company a
complete and correct copy of the constitution, as amended to date, of Buyer.
The constitution (or equivalent organizational documents) of Buyer and its
subsidiaries are in full force and effect. Except as would not have a Buyer
Material Adverse Effect, none of Buyer or its subsidiaries is in violation of
any provision of its corporate charter documents (or equivalent organizational
documents).
Section 4.3 Capitalization. (a) No shares of capital stock of Buyer are
owned by any subsidiary of Buyer. All outstanding shares of capital stock of
Buyer are, when issued in accordance with the terms thereof, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are no bonds, debentures, notes or other indebtedness of Buyer or
any of its subsidiaries, and no securities or other instruments or obligations
of Buyer or any of its subsidiaries the value of which is in any way based upon
or derived from any capital or voting stock of Buyer, having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of Buyer may vote. Except as set forth
above, there are no contracts of any kind to which Buyer or any of its
subsidiaries is a party or by which Buyer or any of its subsidiaries is bound
obligating Buyer or any of its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock of, or
other equity or voting interests in, or securities convertible into, or
exchangeable or exercisable for, shares of capital stock of, or other equity or
voting interests in, Buyer or any of its subsidiaries or obligating Buyer or
any of its subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right or contract. There are not any
outstanding contractual obligations of Buyer or any of its subsidiaries to (i)
repurchase, redeem or otherwise acquire any shares of capital stock of, or
other equity or voting interests in, Buyer or any of its subsidiaries or (ii)
vote or dispose of any shares of the capital stock of, or other equity or
voting interests in, any of its subsidiaries. To the knowledge of Buyer as of
the date of this Agreement, there are no irrevocable proxies and no voting
agreements with respect to any shares of the capital stock or other voting
securities of Buyer or any of its subsidiaries.
(b) All shares of Buyer Preferred Stock underlying the Buyer Shares to be
issued in the Merger, when deposited with the Custodian in accordance with
Section 1.5(a) hereof and the terms of the Deposit Agreement, will be duly
authorized, validly issued, fully paid and nonassessable and free and clear of
all Liens. Upon the due issuance by the Depositary of Buyer Shares evidencing
Buyer Preferred Stock against the deposit of Buyer Preferred Stock in
accordance with the terms of the Deposit Agreement, the Buyer Shares to be
issued in the Merger will be duly authorized, validly issued, fully paid and
nonassessable and free and clear of all Liens, and the persons in whose names
the Buyer Shares are registered will be entitled to the rights of registered
holders of Buyer Shares specified in the Deposit Agreement, and the Buyer
Shares will conform in all material respects to the description of the Buyer
Shares set forth in the proxy statement dated July 10, 1997 of Heritage Media
Corporation, which proxy statement was incorporated by reference into the
Registration Statement on Form F-4 of Buyer. The Deposit Agreement has been
duly and validly authorized by all necessary corporate action of Buyer, has
been duly and validly executed and delivered by Buyer and constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally and by equitable principles to which the remedies of specific
performance and injunctive and similar forms of relief are subject.
Section 4.4 Authority Relative to Agreement. Buyer and its subsidiaries have
all necessary power and authority to execute and deliver this Agreement, to
perform their obligations hereunder and to consummate the Merger and the other
transactions contemplated hereby. The execution and delivery of this Agreement
by Buyer and the consummation by Buyer and certain of its subsidiaries of the
Merger and the other transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Buyer or any of its subsidiaries are necessary to
authorize the execution and delivery of this Agreement or to consummate the
Merger and the other transactions contemplated hereby (other than any necessary
stockholder approval of Buyer (as provided in Section 4.5(b) hereof) or of any
publicly owned subsidiaries of Buyer in connection with Section 6.18 hereof,
which shall be obtained in
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accordance with Section 6.2(b) hereof). This Agreement has been duly and
validly executed and delivered by Buyer and, assuming the due authorization,
execution and delivery by the Company, this Agreement constitutes a legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms. The Newco-FTH Agreement (as hereinafter defined), when executed
and delivered by the parties thereto, will have been duly and validly executed
and delivered by such parties and will constitute a legal, valid and binding
obligation of such parties, enforceable against such parties in accordance with
its terms.
Section 4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Buyer does not, and the
performance of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby by Buyer and its subsidiaries will not, (i)
conflict with or violate the corporate charter documents (or equivalent
organizational documents) of (A) Buyer or (B) any of its subsidiaries, (ii)
assuming the consents, approvals and authorizations specified in Section 4.5(b)
have been received and the waiting periods referred to therein have expired,
and any condition precedent to such consent, approval, authorization, or waiver
has been satisfied, conflict with or violate any Law or the Listing Rules (the
"ASX Listing Rules") of the Australian Stock Exchange Limited ("ASX")
applicable to Buyer or any of its subsidiaries or by which any property or
asset of Buyer or any of its subsidiaries is bound or affected or (iii) result
in any breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of Buyer
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture or
credit agreement, or, to Buyer's knowledge as of the date of this Agreement,
any other, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Buyer or any of its subsidiaries is a party
or by which Buyer or any of its subsidiaries or any property or asset of Buyer
or any of its subsidiaries is bound or affected, except, in the case of clauses
(i)(B), (ii) and (iii), for any such conflicts, violations, breaches, defaults
or other occurrences of the type referred to above which would not have a Buyer
Material Adverse Effect and would not prevent or materially delay the
consummation of the Merger; provided, however, that for purposes of this
Section 4.5(a), the definition of Buyer Material Adverse Effect shall be read
so as not to include clause (iii) of the definition thereof.
(b) The execution and delivery of this Agreement by Buyer do not, and the
performance of this Agreement by Buyer and the consummation of the Merger and
the other transactions contemplated hereby by Buyer and its subsidiaries will
not, require any consent, approval, authorization, waiver or permit of, or
filing with or notification to, any Governmental Authority, except for
applicable requirements of the Exchange Act, the Securities Act, Blue Sky Laws,
the HSR Act, such filings and approvals as may be required under the
Communications Act, filing and recordation of appropriate merger documents as
required by Delaware Law, the rules of the NYSE filings and recordings of
appropriate documents with, and announcements to, the Australian Securities and
Investment Commission and the ASX, and a waiver from the ASX (or, if not
obtained, the approval of Buyer's shareholders at a special meeting of Buyer
shareholders (the "Buyer Shareholder Approval")) with respect to Listing Rule
10.1 of the ASX Listing Rules (the "ASX Waiver") and except where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not have a Buyer Material Adverse Effect and
would not prevent or materially delay the consummation of the Merger; provided,
however, that for purposes of this Section 4.5(b), the definition of Buyer
Material Adverse Effect shall be read so as not to include clause (iii) of the
definition thereof.
Section 4.6 Permits and Licenses. Buyer or its subsidiaries have (i)
operated the television stations and associated facilities for which Buyer or
any of its subsidiaries holds licenses from the FCC, in each case which are
owned or operated by Buyer or its subsidiaries (the "Buyer Licensed
Facilities"), in compliance with the terms of the permits issued by the FCC to
Buyer or its subsidiaries ("Buyer FCC Licenses"), and in compliance with the
Communications Act, and (ii) timely filed or made all applications, reports and
other disclosures required by the FCC to be filed or made with respect to the
Buyer Licensed Facilities and have timely paid all FCC regulatory fees with
respect thereto, in each case except as would not have a Buyer Material Adverse
Effect. As of the date hereof, to Buyer's knowledge, there is not pending or
threatened before
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the FCC any material investigation, proceeding, notice of violation, order of
forfeiture or complaint against Buyer or any of its subsidiaries, relating to
any of the Buyer Licensed Facilities or FCC regulated services conducted by
Buyer or its subsidiaries that, if adversely decided, would have a Buyer
Material Adverse Effect.
Section 4.7 Buyer SEC/ASX Reports. Buyer has filed with the SEC and ASX all
forms, reports, schedules, statements and other documents required to be filed
with the SEC by Buyer since January 1, 1997 (together with all information
incorporated therein by reference, the "Buyer Reports"). As of their respective
dates, the Buyer Reports complied in all material respects with the
requirements of the Securities Act or the Exchange Act or the ASX Listing
Rules, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Buyer Reports, and none of the Buyer Reports at
the time they were filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements (including the related
notes) of Buyer included in the Buyer Reports comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC or the ASX with respect thereto, have been prepared in
accordance with Australian generally accepted accounting principles with
appropriate reconciliation to GAAP as required by SEC rules (except, in the
case of unaudited statements, as permitted by forms or rules of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position of Buyer and its consolidated subsidiaries as
of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal and recurring year-end audit adjustments). Buyer and its subsidiaries
do not have any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) other than liabilities and obligations
which, individually or in the aggregate, would not have a Buyer Material
Adverse Effect.
Section 4.8 Absence of Certain Changes or Events.
(a) Since December 31, 1999, except as contemplated by this Agreement, there
has not been any change, event or circumstance which, when taken individually
or together with all other changes, events or circumstances, has had or would
have a Buyer Material Adverse Effect, and
(b) since December 31, 1999 to the date of this Agreement, each of Buyer and
its subsidiaries has conducted its businesses only in the ordinary course and
in a manner consistent with past practice.
Section 4.9 Tax Matters. None of Buyer or any of its affiliates has taken or
agreed to take any action, has failed to take any action or knows of any fact,
agreement, plan or other circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code; provided, however, that the foregoing representation is made only
as of the date hereof in the case of the Reverse Merger. The preceding sentence
excludes all transactions contemplated by this Agreement.
Section 4.10 Brokers. No broker, finder or investment banker (other than
Donaldson, Lufkin & Jenrette, Inc. is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of Buyer.
Section 4.11 Interim Operations of Acquisition Sub. In the case of the
Reverse Merger, Acquisition Sub will be a newly formed indirect subsidiary of
Buyer or a newly formed subsidiary of BHC (unless the BHC Merger has not
occurred prior to the Effective Time of the Merger), will be a Delaware
corporation and, when formed, will have been formed solely for the purpose of
engaging in the transactions contemplated hereby, the Chris-Craft Merger and
the BHC Merger, as applicable, and will have engaged in no business other than
in connection with such transactions and the transactions contemplated by this
Agreement. In the case of the Forward Merger, Acquisition Sub will be News
Publishing Australia Limited, a Delaware corporation, of which Buyer directly
owns and will continue to own at least 80% of the total combined voting power
of all classes of stock entitled to vote and 80% of the total number of shares
of each other class of stock of such corporation.
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ARTICLE V
Conduct of Business Pending the Merger
Section 5.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time, except (x) as expressly contemplated by this Agreement
(including, without limitation, as set forth in Section 5.1 of the Company
Disclosure Schedule or as set forth as an exception or qualification to
paragraphs (a) through (n) of this Section 5.1), (y) as expressly authorized
pursuant to the Chris-Craft Merger Agreement and (z) as Buyer shall otherwise
agree in advance in writing, the business of the Company and its subsidiaries
shall be conducted only in, and the Company shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice; and the Company and its subsidiaries shall use their reasonable best
efforts to preserve substantially intact the Company's business organization,
to keep available the services of the current officers, employees and
consultants of the Company and its subsidiaries (provided that the foregoing
covenant to use reasonable best efforts shall not require or permit the Company
to offer retention bonuses or other non-ordinary course compensation to such
individuals without Buyer's written consent) and to preserve the current
relationships of the Company and its subsidiaries with customers, distributors,
dealers, suppliers and other persons with which the Company and its
subsidiaries have significant business relations. By way of amplification and
not limitation, between the date of this Agreement and the Effective Time, the
Company will not do, and shall not permit any of its subsidiaries to do,
directly or indirectly, any of the following except in compliance with the
exceptions listed above:
(a) amend or otherwise change the Restated Certificate of Incorporation or
By-laws of the Company or, in any material respect, that of any of its
subsidiaries;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, (i) any shares of
its or its subsidiaries' capital stock, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of its or its
subsidiaries' capital stock or any other ownership interest (including any
phantom interest), of the Company or any of its subsidiaries (except for the
issuance of shares issuable pursuant to any Company Options outstanding as of
the date hereof), (ii) any assets except for sales of marketable securities and
investment assets for their fair value and except for sales of other assets in
the ordinary course of business consistent with past practice not in excess of
$500,000 in the aggregate (including, for purposes of calculating such $500,000
aggregate limitation, any action taken by or on behalf of Chris-Craft, BHC or
the Company pursuant to Section 5.1(b) of the Chris-Craft Merger Agreement or
by or on behalf of BHC pursuant to Section 5.1(b) of the BHC Merger Agreement);
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to the Company's or
any of its subsidiaries' capital stock (other than cash dividends payable by
any wholly owned subsidiary with respect to ordinary course dividends,
including dividends designated as special dividends, in a manner consistent
with past practice);
(d) in the case of the Company, reclassify, combine, split, subdivide or
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) (i) except in connection with acquisitions or investments which are made
in the ordinary cause of business consistent with past practice not in excess
of $10,000,000 individually or $25,000,000 in the aggregate (including for
purposes of calculating such $25,000,000 aggregate limitation, any action taken
by or on behalf of Chris-Craft, BHC or the Company pursuant to Section 5.1(e)
of the Chris-Craft Merger Agreement or by or on behalf of BHC pursuant to
Section 5.1(e) of the BHC Merger Agreement) and which the Buyer has not
reasonably objected to as presenting any meaningful risk of resulting in the
FCC Consent (with no Adverse Condition) not being obtained or delayed for more
than an immaterial period of time and except with respect to the reinvestment
of marketable securities or investment assets, and the investment of cash
generated by the operations of the Company and its subsidiaries in marketable
securities, in each case in the ordinary course of
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business consistent with past practice (A) acquire (including by merger,
consolidation, or acquisition of stock or assets), or otherwise make any
investment in, any corporation, partnership, limited liability company, other
business organization or any division thereof, or any material amount of
assets, or acquire any interest in any broadcast radio or television station,
daily English-language newspaper or cable television system, as defined at Note
2 to 47 C.F.R. Section 73.3555; or (B) incur any indebtedness for borrowed
money, issue any debt securities, assume, guarantee or endorse, or otherwise as
an accommodation become responsible for, the obligations of any person, agree
to amend or otherwise modify in any manner any agreement or instrument pursuant
to which the Company has incurred indebtedness, or make any loans or advances,
except in the ordinary course of business and consistent with past practice,
except the refinancing of existing indebtedness, borrowings under commercial
paper programs in the ordinary course of business or borrowings under existing
bank lines of credit in the ordinary course of business, (ii) enter into any
material contract, agreement or transaction, other than (X) in the ordinary
course of business, and (Y) which would not be reasonably likely to prevent or
materially delay the consummation of the Merger, (iii) authorize any capital
expenditures which are, in the aggregate, in excess of 110% of the amounts
currently budgeted for fiscal year 2000, and with respect to fiscal year 2001,
in excess of 120% of the amount budgeted for fiscal year 2000, in each case for
the Company and its subsidiaries taken as a whole; provided that any amounts
budgeted in respect of DTV may be reallocated between the two years or (iv)
enter into or amend any contract, agreement, commitment or arrangement which
would require the Company to take any action prohibited by this subsection (e);
(f) except as set forth in Section 6.12 hereof or as required by Law or by
the terms of any collective bargaining agreement or other labor union contract
or other agreement currently in effect between the Company or any subsidiary of
the Company and any executive officer or employee thereof, (provided, however,
that except as contemplated hereby no actions shall be taken with respect to
the acceleration of vesting or cashing-out of Company Options in connection
with the execution and delivery of this Agreement or the consummation of any
transactions contemplated hereby or otherwise), increase the compensation
payable or to become payable to its executive officers or employees, or grant
any severance or termination pay to, or enter into any employment or severance
agreement with, any director or executive officer or employee of it or any of
its subsidiaries, or establish, adopt, enter into or amend in any respect or
take action to accelerate any rights or benefits under any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, executive officer or employee,
provided that this clause shall not prevent the Company or any of its
subsidiaries from (i) making severance payments to the extent contractually
obligated under contractual arrangements currently existing at the Company or
such subsidiary and previously disclosed to Buyer, (ii) increasing compensation
in accordance with the provisions of agreements with executive officers or
employees in accordance with the terms of such agreements in effect on the date
of this Agreement, provided that if any such agreement does not specify the
amount of such increase, no such increase shall (A) fail to be in the ordinary
course of business and in accordance with the past practices of the Company and
(B) exceed 10 percent of the compensation of such executive officer or employee
in effect on the date of this Agreement, (iii) increasing compensation for
employees who are not parties to agreements relating to compensation, provided
that each such increase (A) is in the ordinary course of business, and in
accordance with the past practices of the Company and (B) does not exceed, with
respect to any employee, 10 percent of the compensation of such employee on the
date of this Agreement;
(g) change (except as required by the SEC or changes in GAAP which become
effective after the date of this Agreement) any accounting methods, policies,
practices or procedures;
(h) enter into any contract, agreement, lease, license, permit, franchise or
other instrument or obligation which if in existence and known to the Company
prior to the date of this Agreement would have resulted in a breach of Section
3.4 hereof;
(i) settle or compromise any material arbitration, action, suit,
investigation or proceeding (other than those related to Tax matters, which
shall be governed exclusively by the provisions of Section 5.3 hereof), other
than
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in the ordinary course of business consistent with past practice not in excess
of $2,500,000 in the aggregate (including for purposes of calculating such
$2,500,000 aggregate limitation, any action taken by or on behalf of Chris-
Craft (other than in respect of Excluded Matters) (as defined in the Chris-
Craft Merger Agreement), BHC or the Company pursuant to Section 5.1(i) of the
Chris-Craft Merger Agreement or by or on behalf of BHC pursuant to Section
5.1(i) of the BHC Merger Agreement); provided, however, that the Company shall
not in any event settle any arbitration action, suit, investigation or
proceeding arising out of this Agreement, the Voting Agreement or the matters
contemplated hereby or thereby without Buyer's consent (other than those
related to Tax matters, which shall be governed exclusively by the provisions
of Section 5.3 hereof);
(j) settle or discharge any material liability of a type not covered in
subsection (i) above, other than in accordance with its terms or on terms no
less favorable to the Company and its subsidiaries;
(k) amend or waive any right under or enter into any agreement with any
affiliate of the Company (other than its wholly owned subsidiaries in the
ordinary course of business consistent with past practice) or with any
stockholder of the Company or any of its subsidiaries or any affiliate of any
such stockholder;
(l) enter into, amend in any material respect or terminate any network
affiliation agreement, retransmission consent agreement or, except in the case
of agreements terminable without cost or penalty by the Company prior to the
Closing or by Buyer within 30 days thereafter, any agreement licensing or
creating any obligations with respect to the use of the digital data stream of
any DTV Station;
(m) enter into, amend or terminate any film or program license or
syndication agreement (each a "Program Agreement") involving aggregate payments
of more than (i) $2,500,000 in the aggregate on a per Program Agreement, per
station basis (including, for purposes of calculating such $2,500,000 aggregate
limitation, any action taken by or on behalf of Chris-Craft, BHC or the Company
pursuant to Section 5.1(m) of the Chris-Craft Merger Agreement or by or on
behalf of BHC pursuant to Section 5.1(m) of the BHC Merger Agreement), (ii)
$5,000,000 in the aggregate (including, for purposes of calculating such
$5,000,000 aggregate limitation, any action taken by or on behalf of Chris-
Craft, BHC or the Company pursuant to Section 5.1(m) of the Chris-Craft Merger
Agreement or by or on behalf of BHC pursuant to Section 5.1(m) of the BHC
Merger Agreement) on a per station basis, (iii) $500,000 per annum on a per
Program Agreement, per station basis and (iv) barter agreements that expire
after December 31, 2001; or
(n) enter into or publicly announce an intention to enter into any contract,
agreement, commitment or arrangement to do any of the foregoing actions set
forth in this Section 5.1.
Section 5.2 FCC Matters. During the period from the date of this Agreement
to the Effective Time, the Company shall, and shall cause each of its
subsidiaries: (i) to use its reasonable best efforts to comply with all
material requirements of the FCC applicable to the operation of the Company
Stations; (ii) promptly to deliver to Buyer copies of any material reports,
applications or responses filed with the FCC; (iii) promptly to notify Buyer of
any inquiry, investigation or proceeding initiated by the FCC; (iv) not to make
or revoke any material election with the FCC; and (v) use its reasonable best
efforts to take all actions necessary to complete construction and initiate
operation of the DTV Stations by the relevant deadline established by the FCC,
as it may be extended, and to consult with Buyer about, and keep Buyer
reasonably informed of, the progress of construction of the DTV Stations.
Section 5.3 Certain Tax Matters. During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of its
subsidiaries to: (i) timely file all Tax Returns ("Post-Signing Returns")
required to be filed by it and such Post-Signing Returns shall be prepared in a
manner consistent with past practice; (ii) timely pay all Taxes due and payable
in respect of such Post-Signing Returns that are so filed; (iii) accrue a
reserve in its books and records and financial statements in accordance with
past practice for all Taxes payable by it for which no Post-Signing Return is
due prior to the Effective Time; (iv) promptly notify Buyer of any Federal or
New Jersey income or franchise tax and any other material suit, claim, action,
investigation, proceeding or audit (collectively, "Actions") pending against or
with respect to the
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Company or any of its subsidiaries in respect of any Tax matter, including
(without limitation) Tax liabilities and refund claims, and not settle or
compromise any such Tax matter or Action without Buyer's consent, which consent
shall not be unreasonably withheld, and (v) not make or revoke any material Tax
election or adopt or change a material tax accounting method without Buyer's
consent.
ARTICLE VI
Additional Agreements
Section 6.1 Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement, (i)
the Company shall prepare and shall cause to be filed with the SEC a proxy
statement (together with any amendments thereof or supplements thereto, the
"Proxy Statement") relating to the meeting of the Company's stockholders to be
held to consider the adoption of this Agreement and the approval of the Merger,
(ii) Buyer shall prepare and file with the SEC a registration statement on the
appropriate form (together with all amendments thereto, the "Share Registration
Statement") in which the Proxy Statement shall be included as a prospectus, in
connection with the registration under the Securities Act of the Buyer Shares
to be issued to the stockholders of the Company pursuant to the Merger and
(iii) Buyer shall prepare and file with the SEC a registration statement on the
appropriate form (together with all amendments thereto, the "Option
Registration Statement," and together with the Share Registration Statement,
the "Registration Statement") in which the Proxy Statement will be included as
a prospectus, in connection with the registration under the Securities Act of
the Buyer Shares to the issued upon exercise of the Substituted Options, it
being understood that the Option Registration Statement shall be considered
filed as promptly as practicable if it is filed by Buyer within at least two
(2) business days following the Effective Time. In addition to the foregoing,
Buyer shall make such other appropriate filings and deliveries as may be
required by applicable law (including any applicable prospectus delivery
requirements thereof). Each of Buyer and the Company shall use its reasonable
best efforts to cause the Registration Statement to become effective at such
time as they shall agree, and, prior to the effective date of the Registration
Statement, Buyer shall use reasonable best efforts to take all or any action
required under any applicable Federal or state securities Laws in connection
with the issuance of Buyer Shares pursuant to the Merger. If requested by the
SEC, each of the Forward Merger and the Reverse Merger shall be submitted to
the Company's stockholders at the Stockholders' Meeting (as defined in Section
6.2) as separate proposals. Each of Buyer and the Company shall furnish all
information concerning it as may reasonably be requested by the other party in
connection with such actions and the preparation of the Proxy Statement and
Registration Statement. As promptly as practicable after the Registration
Statement shall have become effective, the Company shall mail the Proxy
Statement to its stockholders. Each of Buyer and the Company shall also
promptly file, use reasonable best efforts to cause to become effective as
promptly as practicable and, if required, mail to the Company's stockholders,
any amendment to the Registration Statement or Proxy Statement which may become
necessary after the date the Registration Statement is declared effective.
(b) The Proxy Statement shall include the recommendations of the Special
Committee and the Board of Directors of the Company to the stockholders of the
Company in favor of the adoption of this Agreement and the approval of the
Merger; provided, however, that the Special Committee and the Board of
Directors of the Company may take or disclose to the stockholders of the
Company a position contemplated by Rule 14e-2(a) promulgated under the Exchange
Act or make any disclosure required under applicable Law and may, prior to the
date of its Stockholders' Meeting (as defined in Section 6.2 hereof), withdraw,
modify, or change any such recommendation to the extent that the Special
Committee or the Board of Directors of the Company determines in good faith
that such withdrawal, modification or change is required in order to comply
with its fiduciary duties under applicable Law after receiving advice to such
effect from independent legal counsel (who may be the Company's regularly
engaged outside legal counsel). Unless this Agreement is previously terminated
in accordance with Article VIII, the Company shall submit this Agreement to its
stockholders at its Stockholders' Meeting even if the Special Committee or the
Board of Directors of the Company determines at any time after the date hereof
that is no longer advisable or recommends that the Company's stockholders
reject it.
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(c) No amendment or supplement to the Proxy Statement or the Registration
Statement will be made by Buyer or the Company without the approval of the
other party, which shall not be unreasonably withheld or delayed. Each of Buyer
and the Company will advise the other, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Buyer Shares issuable in connection with
the Merger for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional
information.
(d) The information supplied by the Company for inclusion in the
Registration Statement and the Proxy Statement (including by incorporation by
reference) shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of the Company, (iii)
the time of the Stockholders' Meeting, and (iv) the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to the Company or any of its subsidiaries, or their
respective officers or directors, should be discovered by the Company which,
pursuant to the Securities Act or Exchange Act, should be set forth in an
amendment or a supplement to the Registration Statement or Proxy Statement, the
Company shall promptly inform Buyer. All documents that the Company is
responsible for filing with the SEC in connection with the Merger will comply
as to form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act.
(e) The information supplied by Buyer for inclusion in the Registration
Statement and the Proxy Statement (including by incorporation by reference)
shall not, at (i) the time the Registration Statement is declared effective,
(ii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the stockholders of the Company, (iii) the time of
the Stockholders' Meeting, and (iv) the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to Buyer or any of its subsidiaries, or their respective
officers or directors, should be discovered by Buyer which, pursuant to the
Securities Act or Exchange Act, should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, Buyer shall
promptly inform the Company. All documents that Buyer is responsible for filing
with the SEC in connection with the Merger will comply as to form in all
material respects with the applicable requirements of the Securities Act and
the Exchange Act.
Section 6.2 Stockholders' Meetings.
(a) The Company shall, as promptly as practicable following the date of this
Agreement establish a record date (which will be as promptly as reasonably
practicable following the date of this Agreement) for, duly call, give notice
of, convene and hold a meeting of its stockholders (the "Stockholders'
Meeting"), for the purpose of voting upon the adoption of this Agreement and
approval of the Merger, and the Company shall hold the Stockholders' Meeting as
soon as practicable after the date on which the Registration Statement becomes
effective. The Company shall use its reasonable best efforts to cause the
Stockholders' Meeting to occur on the same day as the meetings of stockholders
are held to consider the Chris-Craft Merger and the BHC Merger. The Company
shall use its reasonable best efforts to solicit from its stockholders proxies
in favor of the adoption of this Agreement and approval of the Merger, and
shall take all other action necessary or advisable to secure the vote of its
stockholders, required by the NYSE or Delaware Law, as applicable, to obtain
such approvals; provided, however, that the Company shall not be obligated to
solicit proxies in favor of the adoption of this Agreement at its Stockholders'
Meeting (but shall nonetheless remain obligated to submit this Agreement to a
vote of its stockholders) to the extent that the Board of Directors of the
Company determines in good faith that such failure to solicit proxies is
required in order to comply with its fiduciary duties under applicable Law
after receiving advice to such effect from independent legal counsel (who may
be such party's regularly engaged outside legal counsel).
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(b) Without limiting the provisions of Section 4.4 hereof, Buyer shall, as
promptly as practicable following the date of this Agreement, obtain, and cause
its subsidiaries to obtain, all stockholder and other approvals, including the
Buyer Shareholder Approval if required, necessary to consummate the Merger and
the other transactions contemplated hereby, including, without limitation,
entering into and performing the agreements and transactions contemplated by
Section 6.18 hereof.
Section 6.3 Appropriate Action; Consents; Filings.
(a) Each of the parties hereto shall (i) make promptly its respective
filings, and thereafter make any other required submissions under the HSR Act
with respect to the transactions contemplated herein and (ii) make promptly
filings with or applications to the FCC with respect to the transactions
contemplated herein (the "FCC Application"). The parties hereto will use their
respective reasonable best efforts to consummate and make effective the
transactions contemplated herein and to cause the conditions to the Forward
Merger and, if a Restructuring Trigger has occurred, the Reverse Merger, in
each case as set forth in Article VII to be satisfied (including using
reasonable best efforts to obtain all licenses, permits, consents, approvals,
authorizations, waivers, qualifications and orders of Governmental Authorities
as are necessary for the consummation of the transactions contemplated herein),
and will do so in a manner designed to obtain such regulatory clearance and the
satisfaction of such conditions as expeditiously as reasonably possible;
provided, however, that Buyer and FTH shall have the right to make all
decisions concerning any divestiture commitments necessary to comply with the
FCC's multiple ownership rules set forth at 47 C.F.R. Section 73.3555 as in
effect on the date of this Agreement (the "FCC Multiple Ownership Rules");
provided that Buyer and FTH shall regularly consult with the Company during the
processes referred to in this Section 6.3 and consider in good faith the views
of the Company with respect thereto; and provided, further, that, in connection
with the Merger, Buyer and FTH shall not seek a waiver of Section 73.3555 of
the FCC's rules except for a temporary waiver of subsections (b) and (e)
thereof for a period not to exceed twelve months from the Closing Date for
television divestitures required in order to obtain the FCC Consent (as defined
in Section 7.1(e) hereof) and, with respect to subsection (d) thereof, in the
FCC Application when it is filed, Buyer will (1) maintain that no waiver is
required to permit it to own a newspaper and two television stations in the New
York market, and (2) request in the alternative, if that position is rejected
or a permanent waiver is not issued by the FCC, a temporary waiver to hold two
television stations and a newspaper for a period not to extend beyond the date
which is the later of (A) twelve months from the Closing Date and (B) the
conclusion of any then pending FCC rule making proceeding regarding 47 C.F.R.
Section 73.3555(d); provided, that the foregoing sentence shall be subject to
the provisions of subsection (b) below. Failure to obtain any of the waivers
set forth above shall not limit Buyer's obligations pursuant to subsection (b)
below.
(b) Notwithstanding anything to the contrary in this Agreement other than
the following sentence, the Company, Buyer and FTH each agree to take promptly
any and all steps necessary to avoid or eliminate each and every impediment and
obtain all consents or waivers under any antitrust, competition or
communications or broadcast Law that may be validly required by any U.S.
federal, state or local antitrust or competition Governmental Authority, or by
the FCC or similar Governmental Authority, or by any Australian Law, in each
case with competent jurisdiction, so as to enable the parties to close the
transactions contemplated by this Agreement as expeditiously as reasonably
possible, including committing to or effecting, by consent decree, hold
separate orders, trust, or otherwise, the sale or disposition of such of its
assets or businesses as are required to be divested in order to obtain the FCC
Consent (as defined below), or to avoid the entry of, or to effect the
dissolution of or vacate or lift, any decree, order, judgment, injunction,
temporary restraining order or other order in any suit or proceeding by or with
any Governmental Authority (each, an "Order"), that would otherwise have the
effect of preventing or materially delaying the consummation of the Merger and
the other transactions contemplated by this Agreement. Notwithstanding the
foregoing, (i) neither Buyer nor FTH shall not be required to divest any of its
material assets or accept any material limitation on any of its material
businesses other than (x) the divestiture of such broadcast assets (i.e.,
newspaper and television stations) as it is required to divest or (y) the
material limitation on such broadcast assets or Buyer's and FTH's operation
thereof as it is required to be subject to, in the case of each of clauses (x)
and (y) in order to comply with the
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FCC Multiple Ownership Rules or a final Order in an action brought by an
antitrust or competition or FCC or similar Governmental Authority, (ii)
notwithstanding clause (i), neither the Company, Buyer nor FTH shall be
required to divest or to hold separate, or to accept any substantial limitation
on the operation of, or to waive any rights material to, the San Francisco
television station of Buyer or the Company (each of the actions described in
clause (i) and (ii) above being an "Adverse Condition"), (iii) neither party
shall be required to take any of the foregoing actions if such action is not
conditioned on the consummation of the Merger and (iv) without limiting Buyer's
obligations set forth herein, the Company shall not agree to any of the
foregoing without Buyer's consent and, at Buyer's request, the Company shall
agree to any of the foregoing so long as such agreement is conditioned upon
consummation of the Merger.
(c) Each of Buyer, FTH and the Company shall give (or shall cause its
respective subsidiaries to give) any notices to third parties, and Buyer, FTH
and the Company shall use, and cause each of its subsidiaries to use, its
reasonable best efforts to obtain any third party consents not covered by
paragraphs (a) and (b) above, necessary, proper or advisable to consummate the
Forward Merger or, if a Restructuring Trigger has occurred, the Reverse Merger;
provided that neither Buyer nor FTH shall be required to pay, and the Company
shall not pay, without Buyer's prior written consent, any material
consideration to obtain any such third party consent. Each of the parties
hereto will furnish to the other such necessary information and reasonable
assistance as the other may request in connection with the preparation of any
required governmental filings or submissions and will cooperate in responding
to any inquiry from a Governmental Authority, including immediately informing
the other party of such inquiry, consulting in advance before making any
presentations or submissions to a Governmental Authority, and supplying each
other with copies of all material correspondence, filings or communications
between either party and any Governmental Authority with respect to this
Agreement.
Section 6.4 Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, Buyer will comply with the
reasonable requests of the Company to make officers available to respond to the
reasonable inquiries of the Company in connection with the transactions
contemplated by this Agreement and to make available information regarding
Buyer and its subsidiaries as the Company may reasonably request.
(b) From the date hereof to the Effective Time, to the extent permitted by
applicable Law and contracts, the Company will provide to Buyer (and its
officers, directors, employees, accountants, consultants, legal counsel, agents
and other representatives, collectively, "Representatives") access to all
employees, sites, properties, information and documents which Buyer may
reasonably request regarding the business, assets, liabilities, employees and
other aspects of the Company; provided, however, that the Company shall not be
required to provide access to any employees, sites, properties, information or
documents which would breach any agreement with any third-party or which would
constitute a waiver of the attorney-client or other privilege by the Company.
(c) Except with respect to matters relating to the hiring of employees and
the solicitation for hiring of employees, which matters shall be governed by
the provisions of Section 6.17 hereof, the parties hereto shall comply with,
and shall cause their respective Representatives to comply with all of their
respective obligations under the Confidentiality Agreement dated September 16,
1999 between Buyer and Chris-Craft, as supplemented by the Addendum to the
Confidentiality Agreement, dated August 7, 2000 (as so supplemented, the
"Confidentiality Agreement") provided that, following any termination of this
Agreement, Section 6.17 hereof shall be of no further force or effect.
(d) No investigation pursuant to this Section 6.4 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
Section 6.5 No Solicitation of Competing Transactions.
(a) The Company shall not, directly or indirectly, through any officer,
director, agent or otherwise, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information), or take any other
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action knowingly to facilitate, any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Competing
Transaction (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize any of the officers, directors or employees
of the Company or any investment banker, financial advisor, attorney,
accountant or other agent or representative of the Company to take any such
action, and the Company shall notify Buyer as promptly as practicable of all of
the relevant material details relating to all inquiries and proposals which the
Company or any such officer, director, employee, investment banker, financial
advisor, attorney, accountant or other agent or representative may receive
relating to any of such matters, provided, however, that prior to the adoption
of this Agreement and the approval of the Merger by the stockholders of the
Company, nothing contained in this Section 6.5 shall prohibit the Board of
Directors of the Company from (i) furnishing information to, or entering into
and engaging in discussions or negotiations with, any person that makes an
unsolicited proposal that the Board of Directors of the Company determines in
good faith, after consultation with the Company's financial advisors and
independent legal counsel, can be reasonably expected to result in a Superior
Proposal; provided that prior to furnishing such information to, or entering
into discussions or negotiations with, such person, the Company (1) provides
notice to Buyer to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such Person and provides, in any such
notice to Buyer in reasonable detail the identity of the Person making such
proposal and the material terms and conditions of such proposal, and (2) has
received from such person or entity an executed confidentiality agreement or
(ii) complying with Rule 14e-2 promulgated under the Exchange Act with regard
to a tender or exchange offer or making any disclosure required under
applicable Law.
(b) For purposes of this Agreement, "Competing Transaction" shall mean any
of the following involving the Company: (i) any merger, consolidation, share
exchange, business combination, issuance or purchase of securities or other
similar transaction other than transactions specifically permitted pursuant to
Section 5.1 of this Agreement; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of the assets of the Company in a single
transaction or series of related transactions; (iii) any tender offer or
exchange offer for the Company's securities or the filing of a registration
statement under the Securities Act in connection with any such exchange offer;
in the case of clauses (i), (ii) or (iii) above, which transaction would result
in a third party (or its stockholders) acquiring more than 25% of the voting
power of the capital stock then outstanding or more than 25% of the assets of
the Company and its subsidiaries, taken as a whole; or (iv) any public
announcement of an agreement, proposal, plan or intention to do any of the
foregoing, either during the effectiveness of this Agreement or at any time
thereafter.
For purposes of this Agreement, a "Superior Proposal" means any proposal
made by a third party which would result in such party (or in the case of a
parent-to-parent merger, its stockholders) acquiring, directly or indirectly,
including pursuant to a tender offer, exchange offer, merger, consolidation,
share exchange, business combination, share purchase, asset purchase,
recapitalization, liquidation, dissolution, joint venture or similar
transaction, more than 50% of the voting power of the capital stock then
outstanding or all or substantially all of the assets of the Company and its
subsidiaries, taken as a whole, for consideration which the Board of Directors
of the Company determines in its good faith judgment, after consultation with
independent legal counsel and its financial advisors, to be more favorable to
the Company's stockholders than the Merger.
Section 6.6 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the Restated Certificate of Incorporation and By-laws of the Company
on the date of this Agreement, which provisions shall not be amended, repealed
or otherwise modified after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were officers, directors or employees of the Company in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by law.
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(b) The Surviving Corporation shall maintain (or cause to be maintained) in
effect for six years from the Effective Time directors' and officers' liability
insurance covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy on terms comparable to such
existing insurance coverage; provided, however, that in no event shall the
Surviving Corporation be required to expend pursuant to this Section 6.6 more
than an amount per year equal to 300% of current annual premiums paid by the
Company for such insurance; and provided further that if the annual premiums
exceed such amount, Buyer shall be obligated to obtain a policy with the
greatest coverage available for an annual cost not exceeding such amount.
(c) In addition to the other rights provided for in this Section 6.6 and not
in limitation thereof (but without in any way limiting or modifying the
obligations of any insurance carrier contemplated by Section 6.6(b)), from and
after the Effective Time, Buyer shall, and shall cause the Surviving
Corporation to, to the fullest extent permitted by applicable Law (the
"Indemnifying Party"), (i) indemnify and hold harmless (and release from any
liability to Buyer or the Surviving Corporation or any of their respective
subsidiaries), the individuals who, on or prior to the Effective Time, were
officers, directors or employees of the Company or served on behalf of the
Company as an officer, director or employee of any of the Company's current or
former subsidiaries or affiliates (including, without limitation, those
affiliates listed in Section 6.6(c) of the Company Disclosure Schedule
(collectively, "Covered Affiliates") or any of their predecessors in all of
their capacities (including as stockholder, controlling or otherwise) and the
heirs, executors, trustees, fiduciaries and administrators of such officers,
directors or employees (the "Indemnitees") against all Expenses (as defined
hereinafter), losses, claims, damages, judgments or amounts paid in settlement
("Costs") in respect of any threatened, pending or completed claim, action,
suit or proceeding, whether criminal, civil, administrative or investigative,
based on, or arising out of or relating to the fact that such person is or was
a director, officer, employee or stockholder (controlling or otherwise) of the
Company or any of its current or former subsidiaries or Covered Affiliates or
any of their predecessors arising out of acts or omissions occurring on or
prior to the Effective Time (including, without limitation, in respect of acts
or omissions in connection with this Agreement and the transactions
contemplated hereby (an "Indemnifiable Claim"; except for acts or omissions
which involve conduct known to such Person at the time to constitute a material
violation of Law); provided that the Surviving Corporation and Buyer shall not
be responsible for any amounts paid in settlement of any Indemnifiable Claim
without the consent of Buyer and the Surviving Corporation; and (ii) advance to
such Indemnitees all Expenses incurred in connection with any Indemnifiable
Claim (including in circumstances where the Indemnifying Party has assumed the
defense of such claim) promptly after receipt of reasonably detailed statements
therefor; provided that the person to whom Expenses are to be advanced provides
an undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification from Buyer or the Surviving
Corporation. Any Indemnifiable Claim shall continue until such Indemnifiable
Claim is disposed of or all judgments, orders, decrees or other rulings in
connection with such Indemnifiable Claim are fully satisfied. Except as
otherwise may be provided pursuant to any Indemnity Agreement, the Indemnitees
as a group may retain only one law firm with respect to each related matter
except to the extent there is, in the opinion of counsel to an Indemnitee,
under applicable standards of professional conduct, a conflict on any
significant issue between positions of any two or more Indemnitees; provided
that any law firm or firms so retained shall be reasonably acceptable to Buyer.
The Indemnifying Party shall be entitled to assume and control the defense of
any potential Indemnifiable Claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to the Indemnified Party
within 30 days of its receipt of notice from the Indemnified Party that a
potential Indemnifiable Claim has been made and so long as it unconditionally
agrees in writing (x) to indemnify fully and indefinitely, subject only to
limitations required by applicable Law, and (y) not to seek repayment of any
Expenses advanced (unless such repayment would otherwise be available pursuant
to clause (ii) of the first sentence of this Section 6.6(c) solely because such
matter was excluded from the definition of Indemnifiable Claim pursuant to the
exception contained in the definition thereof appearing immediately prior to
the initial proviso in this subsection) from, the Indemnitees in respect of
such potential Indemnifiable Claim, and acknowledges in writing its obligation
to do so under this Section; provided, however, that, if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Indemnified Party, in its reasonable
discretion, for the same counsel to represent both the Indemnified Party and
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the Indemnifying Party, then the Indemnified Party shall be entitled to retain
its own counsel at the expense of the Indemnifying Party. In the event that the
Indemnifying Party exercises the right to undertake any such defense against
any such Indemnifiable Claim as provided above, the Indemnified Party shall
cooperate with the Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against
any such Indemnifiable Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party. No such Indemnifiable Claim may be settled by any Indemnified Party
without the prior written consent of the Indemnifying Party, which consent will
not be unreasonably withheld or delayed. For the purposes of this Section 6.6,
"Expenses" shall include reasonable attorneys' fees and all other reasonable
costs, charges and expenses paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in any Indemnifiable Claim,
but shall exclude damages, losses, claims, judgments and amounts paid in
settlement. The term "Indemnitees" shall exclude persons who both (x) were
serving as officers or directors or employees of the Covered Affiliates listed
on Section 6.6(c) of the Company Disclosure Schedule at the request of an
entity other than the Company or one of its current or former subsidiaries, or
any predecessor thereto, and (y) are not otherwise an Indemnitee.
(d) Notwithstanding anything contained in Section 9.1 hereof to the
contrary, this Section 6.6 shall survive the consummation of the Merger
indefinitely, is intended to benefit each Indemnitee, shall be binding, jointly
and severally, on all successors and assigns of Buyer, the Surviving
Corporation and its subsidiaries, and shall be enforceable by the Indemnitees
and their successors. In the event that Buyer or the Surviving Corporation or
any of its subsidiaries or any of their respective successors or assigns (i)
consolidates with or merges into any other Person or (ii) transfers all or
substantially all of its properties or assets to any Person, then, and in each
case, the successors and assigns of Buyer or the Surviving Corporation or its
subsidiary, as the case may be, shall expressly assume and be bound by the
indemnification obligations set forth in this Section 6.6.
(e) The obligations of the Surviving Corporation, its subsidiaries and Buyer
under this Section 6.6 shall not be terminated or modified in such a manner as
to adversely affect any Indemnitee to whom this Section 6.6 applies without the
consent of such affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 6.6 applies shall be third party beneficiaries
of this Section 6.6).
Section 6.7 Notification of Certain Matters. The Company shall give prompt
notice to Buyer, and Buyer shall give prompt notice to the Company, of (i) the
occurrence, or nonoccurrence, of any event the occurrence, or nonoccurrence, of
which would be likely to cause (x) any representation or warranty contained in
this Agreement to be untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied or
(z) the Forward Merger not to be consummated and (ii) any failure of the
Company or Buyer, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.7
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 6.8 Tax Matters. Buyer and Chris-Craft shall submit any filings or
documents necessary to obtain the IRS Ruling and shall engage, through their
representatives, in any communications with the IRS and Buyer and, on behalf of
the Company, Chris-Craft shall control the process of obtaining the IRS Ruling.
Buyer and the Company shall make reasonable best efforts to obtain the IRS
Ruling, the tax opinions set forth in Sections 7.2(f) and 7.3(c) hereof, and
the FCC Consent, including taking any reasonable actions requested by the IRS
or the FCC in connection with obtaining the IRS Ruling and the FCC Consent and
cooperating in
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preparing and submitting any filings and documents to the IRS and the FCC in a
prompt manner. In the case of the Forward Merger (a) the Agreement is intended
to constitute a "plan of reorganization" within the meaning of Section 1.368-
2(g) of the income tax regulations promulgated under the Code; (b) neither the
Company nor Buyer nor their affiliates shall directly or indirectly (without
the consent of the other) take any action, that would reasonably be expected to
adversely affect the intended tax treatment of the transactions contemplated by
this Agreement; (c) officers of Buyer, Acquisition Sub and the Company shall
execute and deliver to (i) Squadron, Ellenoff, Plesent & Sheinfeld LLP, tax
counsel to Buyer, and Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel to
the Company, certificates substantially in the form agreed to by the parties as
of the date hereof and other appropriate representations at such time or times
as may be reasonably requested by such law firms, including contemporaneously
with the execution of this Agreement and at the Effective Time, in connection
with their respective deliveries of opinions, pursuant to Sections 7.2(f) and
7.3(c) hereof, with respect to the tax treatment of the Merger and (ii)
Squadron, Ellenoff, Plesent & Sheinfeld LLP, counsel to Buyer and Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to Chris-Craft, such representations
as are required by the IRS in order to issue the IRS Ruling; and (d) none of
the Buyer, Acquisition Sub or the Company shall take or cause to be taken any
action which would cause to be untrue (or fail to take or cause not to be taken
any action which would cause to be untrue) any of such certificates and
representations.
Section 6.9 Stock Exchange Listing. Buyer and the Company shall (a) as
promptly as reasonably practicable prepare and submit to the NYSE applications
covering the Buyer Shares to be issued in the Merger and the Buyer Shares
underlying the Company Options outstanding immediately prior to the Effective
Time and shall use their reasonable best efforts to cause such securities to be
approved for listing on the NYSE prior to the Effective Time, (b) within two
business days after the Effective Time, prepare and submit to the ASX, pursuant
to the applicable listing rules of the ASX, applications covering the Buyer
Preferred Stock underlying the Buyer Shares issued pursuant to the Merger and
cause such securities to be approved for quotation by the ASX, and (c) promptly
seek the ASX Waiver or, if the ASX Waiver is not granted, as soon as possible
thereafter call a special meeting of shareholders to obtain the Buyer
Shareholder Approval and take all actions and prepare all documents and
shareholder materials required in connection therewith.
Section 6.10 Public Announcements. Buyer and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the
other (which consent shall not be unreasonably withheld or delayed), except as
may be required by Law or any listing rules of, or listing agreement or
arrangement with, a national securities exchange or the ASX to which Buyer or
the Company is a party. The parties have agreed on the text of a joint press
release by which Buyer and the Company will announce the execution of this
Agreement.
Section 6.11 Affiliates of the Company. The Company represents and warrants
to Buyer that prior to the date of the Stockholders' Meeting the Company will
deliver to Buyer a letter identifying all persons who may be deemed affiliates
of the Company under Rule 145 of the Securities Act, including, without
limitation, all directors and executive officers of the Company, and the
Company represents and warrants to Buyer that the Company has advised the
persons identified in such letter of the resale restrictions imposed by
applicable securities laws. The Company shall use its reasonable best efforts
to obtain from each person identified in such letter a written agreement,
substantially in the form of Exhibit B. The Company shall use its reasonable
best efforts to obtain as soon as practicable from any person who may be deemed
to have become an affiliate of the Company after the Company's delivery of the
letter referred to above and prior to the Effective Time, a written agreement
substantially in the form of Exhibit A.
Section 6.12 Employee Matters.
(a) During the one-year period commencing on the Effective Date, Buyer shall
provide or shall cause the Surviving Corporation to provide to each Company
Employee employee benefits (including incentive opportunities but excluding
benefits under equity-based plans) that are either (i) in the aggregate,
substantially comparable to the benefits being provided to Company Employees as
of the date of this Agreement under the
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Company Benefit Plans or (ii) substantially similar to those being provided to
similarly situated employees of the Buyer (other than for former employees of
the Company).
(b) Without limiting the generality of paragraph (a) of this Section 6.12,
if the Effective Time occurs prior to December 31, 2000, (1) each Company
Employee who received an annual bonus in respect of 1999 and is eligible to
receive an annual bonus for the year 2000 and who is employed by the Company
immediately prior to the Effective Time, shall be entitled to receive, in lieu
of any other bonus to which the participant may otherwise be entitled under
such plan, or for the period from January 1, 2000 through the Effective Time,
as the case may be, a prorated bonus (the "Pro-Rata Bonus"), determined by
multiplying (i) the participant's annual bonus in respect of 1999 by (ii) a
fraction, the numerator of which is equal to the number of days in calendar
year 2000 through and including the Effective Time and the denominator of which
is 366 and (2) each such Company Employee who remains employed with the Company
(or its successor) or any affiliate thereof through December 31, 2000, shall be
entitled to receive an additional bonus such that, when added to such
employee's Pro-Rata Bonus, such employee's aggregate annual bonus in respect of
2000 is not less than such employee's annual bonus in respect of 1999. Such
annual bonus with respect of 2000 shall be payable at such time that annual
bonuses are normally paid to similarly situated employees of the Company. If
the Effective Time occurs during the calendar year 2001, then the process
described in (i) of the preceding sentence shall apply in an analogous manner
to the Company's 2001 Bonus Plan and to other employees who receive an annual
bonus in respect of the year 2000, with the references to the year 2000 therein
being deemed to be references to the year 2001 and with references to the year
1999 therein being deemed to be references to the year 2000 and subject to
Section 6.12(a), the process for determining the bonus for those who remain
employed on and after the Effective Time through December 31, 2001 shall be
determined in the discretion of the Buyer.
(c) Without limiting the generality of paragraph (a) of this Section 6.12,
with respect to each Buyer Plan, each Surviving Corporation plan and such other
employee benefit plans as may be maintained for Company Employees from time to
time following the Effective Time by Buyer, the Surviving Corporation or any
subsidiary of the Surviving Corporation (including, without limitation, plans
or policies providing severance benefits and vacation entitlement), and service
with the Company and any of its subsidiaries (or a predecessor to the Company's
or any of its subsidiaries' business or assets) shall be treated as service
with the Buyer, the Surviving Corporation or any of its subsidiaries, as the
case may be, to the extent recognized in the comparable plans of the Company
for purposes of determining eligibility to participate and vesting but not for
purposes of benefit accrual. Such service also shall apply for purposes of
satisfying any waiting periods, evidence of insurability requirements, or the
application of any preexisting condition limitations. In the event Company
Employees are transferred to a new health plan maintained by the Surviving
Corporation effective as of a date within the annual plan year for purposes of
accumulating annual deductibles, copayments and out-of-pocket maximums, Company
Employees shall be given credit for amounts they have paid under a
corresponding benefit plan during the new health plan's year in which the
Company Employees are transferred for purposes of applying deductibles,
copayments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms and conditions of the benefit plan maintained by
Surviving Corporation or any of its subsidiaries. Buyer shall also honor, or
cause the Surviving Corporation to honor, all vacation, personal and sick days
accrued by the Company Employees under the plans, policies, programs and
arrangements of the Company or any of its subsidiaries immediately prior to the
Effective Time to the extent reserved against the Company's financial
statements.
(d) Without limiting the generality of paragraph (a) of this Section 6.12,
the Surviving Corporation shall, or shall cause its subsidiaries to, honor, in
accordance with their terms, and shall, or shall cause its subsidiaries to,
make required payments when due under, all Company Benefit Plans maintained or
contributed to by the Company or any of its subsidiaries or to which the
Company or any of its subsidiaries is a party (including, but not limited to,
employment, incentive and severance agreements and arrangements), that are
applicable with respect to any Company Employee or any director of the Company
or any of its subsidiaries (whether current, former or retired) or their
beneficiaries; provided, however, that, subject to the provisions of Section
6.12(e) of the Chris-Craft Disclosure Schedule Merger Agreement, the foregoing
shall not preclude the Surviving
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Corporation or any of its subsidiaries from amending or terminating any Company
Benefit Plan in accordance with its terms.
Section 6.13 Letters of the Company's Accountants. The Company shall use
reasonable best efforts to cause to be delivered to Buyer two "comfort" letters
in customary form from PricewaterhouseCoopers LLP, the Company's independent
public accountants, one dated a date within five business days before the date
on which the Registration Statement shall become effective and one dated a date
within five business days before the Closing Date, each addressed to Buyer.
Section 6.14 Letters of Buyer's Accountants. Buyer shall use reasonable best
efforts to cause to be delivered to the Company two "comfort" letters in
customary form from Arthur Andersen LLP, Buyer's independent public
accountants, one dated a date within five business days before the date on
which the Registration Statement shall become effective and one dated a date
within five business days before the Closing Date, each addressed to the
Company.
Section 6.15 [INTENTIONALLY OMITTED].
Section 6.16 Other Merger Agreements. Buyer shall comply with its
obligations under the Chris-Craft Merger Agreement and the BHC Merger
Agreement.
Section 6.17 Employee Solicitation. In addition to, and not in limitation of
any restrictions on the parties hereto contained in other documents, the
parties hereto agree that during the period from the date hereof to the earlier
of the termination of this Agreement or the consummation of the Merger, neither
they nor any of their controlled affiliates shall solicit for employment any
current senior management level employees or any of the three (3) highest
compensated on air talent employees at each station of the other party hereto.
This Section 6.17 shall govern in the event of any inconsistency between this
Section 6.17 and Section 6.4 hereof.
Section 6.18 Post-Closing Covenant of Buyer. As of or promptly following the
Effective Time, in the event of the Forward Merger (as defined in the Chris-
Craft Merger Agreement) under the Chris-Craft Merger Agreement Buyer shall
cause such assets as Buyer shall determine, but at a minimum shall include the
broadcast assets and related liabilities held or previously held by the Company
and its subsidiaries, to be transferred to and assumed by one or more direct or
indirect subsidiaries of Buyer, and shall cause such assets and liabilities to
be ultimately held by a newly formed subsidiary which is controlled by Buyer
within the meaning of Section 368(c) of the Code ("Newco") of Fox Entertainment
Group, Inc. ("FEG"). As of or promptly following the Effective Time, Newco and
either FTH or a wholly owned subsidiary thereof will enter into the Newco-FTH
Agreement (as hereinafter defined). The Newco-FTH Agreement shall be an
agreement prepared by Buyer and FTH as soon as practicable after the date
hereof and in any event no later than August 31, 2000 which (i) reflects and is
consistent with the terms set forth on Exhibit C hereto and (ii) otherwise is
as Buyer and FTH shall determine, but which is consistent with the objective of
obtaining the FCC Consent (without an Adverse Condition) with respect to the
Forward Merger and, if the Chris-Craft Merger is to be effected as a Forward
Merger (as defined in the Chris-Craft Merger Agreement), with respect to the
Chris-Craft Merger, and the IRS Ruling; provided that it shall not contain any
provisions as to which Chris-Craft or, if the Merger is a Forward Merger, the
Company reasonably objects by reason of concerns as to the Federal income tax
treatment of the Chris-Craft Merger or, if the Merger is a Forward Merger, the
Forward Merger, or the ability to obtain the FCC Consent (without any Adverse
Condition) or the IRS Ruling for the Forward Merger or, if the Chris-Craft
Merger is a Forward Merger (as defined in the Chris-Craft Merger Agreement),
for the Chris-Craft Merger. Buyer shall comply with this Section 6.18 in a
manner deemed appropriate by Buyer and FTH; provided, that Buyer and FTH shall
act in a manner that preserves (i) the qualification of the Merger or the
Chris-Craft Merger, as the case may be, as a reorganization under Section
368(a) of the Code and (ii) the effectiveness and validity of the FCC Consent
(as defined below). In the event (and only in the event) that the Merger is a
Reverse Merger and the Chris-Craft Merger is a Reverse Merger (as defined in
the Chris-Craft Merger Agreement), as of or promptly following the Effective
Time, the broadcast assets and related liabilities held by the Company and its
subsidiaries (or the Company and its subsidiaries themselves by way of merger)
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will be transferred to and assumed by FTH or one or more direct or indirect
subsidiaries thereof. The foregoing processes contained in this Section 6.18
and the actions contemplated hereby shall be deemed to constitute "transactions
contemplated by this Agreement" for purposes of Buyer's representations and
warranties herein.
Section 6.19 Form of Merger. In the event that there is a Ruling Failure or
an FCC Failure (each, a "Restructuring Trigger"), then the Merger shall be
effected as the Reverse Merger and not as the Forward Merger and, in lieu of
News Publishing Australia Limited, a newly formed indirect subsidiary of Buyer
(which could, at the election of Buyer, be a subsidiary of BHC unless the BHC
Merger has not occurred prior to the Effective Time) shall be Acquisition Sub
and Buyer shall cause such Acquisition Sub to execute a counterpart signature
page to this Agreement and become a party hereto; provided, that,
notwithstanding the foregoing, if the Chris-Craft Merger is to be effected as a
Forward Merger (as defined in the Chris-Craft Merger Agreement), then such
Acquisition Sub shall be a first-tier subsidiary of Buyer that is controlled by
Buyer within the meaning of Section 368(c) of the Code. In the event that,
following the occurrence of a Restructuring Trigger, and prior to the Effective
Time, subsequent events occur such that the conditions to effecting the Forward
Merger are all satisfied, then the Merger shall occur as if such Triggering
Event had never occurred. For purposes of this Agreement, a "Ruling Failure"
shall be deemed to have occurred (i) if the IRS Ruling (as defined herein) is
not obtained on or prior to the seven-month anniversary of the submission of
the ruling request to the IRS (unless a responsible officer of the IRS has
indicated to representatives of both the Company and Buyer that the IRS Ruling
is likely to be issued within the next succeeding three months and such IRS
Ruling is so issued within such three-month period) in form and substance
reasonably satisfactory to each of the parties hereto or (ii) a responsible
officer of the IRS has indicated to representatives of both Chris-Craft and
Buyer prior to the three-month anniversary of this Agreement that the IRS
Ruling, in form and substance reasonably satisfactory to each of the parties
hereto, is not likely to be issued, and such indication shall not have been
reversed or withdrawn prior to the five-month anniversary of the date of this
Agreement or (iii) either Kaye, Scholer, Fierman, Hays & Handler, LLP or
Squadron, Ellenoff, Plesent & Sheinfeld LLP indicates in writing to Chris-Craft
and Buyer that it will not be able to deliver its respective opinion pursuant
to Section 7.3 or Section 7.2, as the case may be. For purposes of this
Agreement, an "FCC Failure" shall be deemed to have occurred (i) if the FCC
Consent (without an Adverse Condition) is not obtained on or prior to the ten-
month anniversary of this Agreement (unless a responsible officer of the FCC
has indicated to representatives of both the Company and Buyer that the FCC
Consent (without an Adverse Condition) will be issued within the next
succeeding two months and such FCC Consent is so issued within such two-month
period) in form and substance reasonably satisfactory to each of the parties
hereto or (ii) a responsible officer of the FCC has indicated to
representatives of both the Company and Buyer that the FCC Consent, in form and
substance reasonably satisfactory to each of the parties hereto, will not be
issued and, prior to the three-month anniversary of this Agreement, such
indication shall not have been reversed or withdrawn; provided that no FCC
Failure shall have occurred if a responsible officer of the FCC has indicated
(and subsequently not withdrawn or changed such indication) to representatives
of both the Company and Buyer that the sole reason or reasons for the FCC
Consent (without an Adverse Condition) not having been obtained does not relate
in any manner to whether the Merger is the Forward Merger or the Reverse Merger
and that there is no material greater likelihood of obtaining the FCC Consent
(without an Adverse Condition) with respect to the Reverse Merger than the
Forward Merger.
Section 6.20 Advance of Funds. Notwithstanding anything to the contrary
contained in this Agreement, the Company shall (and shall be permitted to)
advance funds to Chris-Craft on an as needed basis, including, without
limitation, to pay any and all fees and expenses payable by Chris-Craft in
connection with the Chris-Craft Merger; provided, however, that any such
advances shall be made pursuant to short term loans on arms-length terms and
must be repaid no later than 30 days after consummation of the Merger, unless
the Chris-Craft Merger has also been consummated.
Section 6.21 Obligations of FTH. In view of the fact that one or more
subsidiaries of FTH would become the licensees of the Company Stations under
either the Forward Merger or the Reverse Merger and would otherwise benefit
from either merger, FTH agrees that it shall take such actions, and shall cause
its
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subsidiaries to take such actions, as may be necessary to accomplish the
requirements of FTH under Sections 6.3, 6.18 and 6.19 hereof and any other
requirements of this Agreement relating to the effectuation of, or transactions
to be accomplished immediately following, the Forward Merger and the Reverse
Merger.
ARTICLE VII
Conditions to the Merger
Section 7.1 Conditions to the Obligations of Each Party. The obligations of
the Company and Buyer to consummate the Merger are subject to the satisfaction
or waiver by the Company and Buyer of the following conditions:
(a) this Agreement shall have been adopted by the affirmative vote of a
majority of the votes cast by all stockholders entitled to vote at the
Stockholders' Meeting voting together as a single class;
(b) any applicable waiting period under the HSR Act relating to the Merger
shall have expired or been terminated;
(c) no Governmental Authority or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Law, rule, regulation,
executive order or Order which is then in effect and has the effect of making
the Merger illegal or otherwise prohibiting the consummation of the Merger;
(d) the Registration Statement shall have been declared effective, and no
stop order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the SEC;
(e) the FCC Consent (as defined below) shall have been obtained. "FCC
Consent," as used herein, means action by the FCC granting its consent to the
transfer of control of the FCC licenses of the Company and its subsidiaries to
FTH (or a wholly owned subsidiary of FTH), including transfer of those
authorizations, licenses, permits, and other approvals, issued by the FCC, and
used in the operation of the Company Stations, pursuant to appropriate
applications filed by the parties with the FCC, as contemplated by this
Agreement;
(f) all other authorizations, consents, waivers, orders or approvals for the
Merger required to be obtained, and all other filings, notices or declarations
required to be made, by Buyer and the Company prior to the consummation of the
Merger and the transactions contemplated hereunder, shall have been obtained
from, and made with, all required Governmental Authorities including the ASX
Waiver or, if the ASX Waiver is not granted, the Buyer Shareholder Approval,
and except for such authorizations, consents, waivers, orders, approvals,
filings, notices or declarations the failure to obtain or make which would not,
individually or in the aggregate, have a Company Material Adverse Effect or
Buyer Material Adverse Effect; provided, however, that a party who has failed
to fulfill its obligations under Section 6.3 hereof shall not be entitled to
deem this Section 7.1(e) unsatisfied by reason of such non-fulfillment;
(g) the Buyer Shares issuable to the Company's stockholders in the Merger
shall have been authorized for listing on the NYSE, subject to official notice
of issuance;
(h) the Chris-Craft Merger shall have occurred or the stockholders of Chris-
Craft shall have failed to approve the Chris-Craft Merger at a duly held
stockholders' meeting called for such purpose or at any adjournment or
postponement thereof; and
(i) all conditions to all parties' obligations to consummate the BHC Merger,
except completion of the BHC Merger, shall have been satisfied or waived;
provided, however, that this condition may not be enforced by a party if such
party's actions or failure to act has prevented the conditions to the
consummation of the BHC Merger from being satisfied.
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Section 7.2 Conditions to the Obligations of Buyer. The obligations of Buyer
to consummate the Merger are subject to the satisfaction or waiver by Buyer of
the following further conditions:
(a) each of the representations and warranties of the Company contained in
this Agreement that is qualified as to materiality shall be true and correct,
and each of the representations and warranties of the Company contained in this
Agreement that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Effective
Time with the same effect as though made as of the Effective Time (except to
the extent expressly made as of an earlier date, in which case as of such
date), and the Buyer shall have received a certificate signed on behalf of the
Company by the chief executive officer or chief financial officer of the
Company to such effect;
(b) the Company shall have performed or complied in all material respects
with all material agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and Buyer
shall have received a certificate signed on behalf of the Company by the chief
executive officer or chief financial officer of the Company to such effect;
(c) Buyer shall have received from each person named in the letter referred
to in Section 6.11 an executed copy of an agreement substantially in the form
of Exhibit B hereto;
(d) Buyer shall have received evidence, in form and substance reasonably
satisfactory to it, that Buyer or the Company shall have obtained (i) all
material consents, approvals, authorizations, qualifications and orders of all
Governmental Authorities legally required for the consummation of the Merger
and (ii) all other consents, approvals, authorizations, qualifications and
orders of Governmental Authorities or third parties required (other than those
set forth in Section 7.2(d) of the Company Disclosure Schedule) for the
consummation of the Merger, except, in the case of this clause (ii), for those
the failure of which to be obtained individually or in the aggregate could not
reasonably be expected to have a Company Material Adverse Effect or a Buyer
Material Adverse Effect; provided, however, that if Buyer has failed to fulfill
its obligations under Section 6.3 hereof it shall not be entitled to deem this
Section 7.2(d) unsatisfied by reason of such non-fulfillment;
(e) [INTENTIONALLY OMITTED]
(f) In the case of the Forward Merger, Buyer shall have received (i) the
opinion of Squadron, Ellenoff, Plesent & Sheinfeld LLP, in form and substance
reasonably satisfactory to Buyer, dated as of the Closing Date, on the basis of
facts, representations and assumptions set forth in such opinion, the IRS
Ruling, and certificates obtained from officers of Buyer, Acquisition Sub and
the Company, all of which are consistent with the state of facts existing as of
the Effective Time, to the effect that (A) the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code, (B) for U.S.
federal income tax purposes, no income, gain or loss will be recognized by
Buyer, Acquisition Sub and the Company as a result of the Merger, and (C) for
U.S. federal income tax purposes, no income, gain or loss will be recognized by
the holders of Company Common Stock as a result of the Merger except to the
extent such holders receive cash as Merger Consideration and (ii) a private
letter ruling (the "IRS Ruling") from the IRS, to the effect that the Merger
will satisfy the continuity of business enterprise requirement described in
Treasury Regulations Section 1.368-1(d). In rendering the opinion described in
clause (i) hereof, Squadron, Ellenoff, Plesent & Sheinfeld LLP shall have
received and may rely upon the certificates and representations referred to in
Section 6.8 hereof; and
(g) the FCC Consent shall not contain any Adverse Condition.
Section 7.3 Conditions to the Obligations of the Company. The obligations of
the Company to consummate the Merger are subject to the satisfaction or waiver
by the Company of the following further conditions:
(a) each of the representations and warranties of Buyer contained in this
Agreement that is qualified as to materiality shall be true and correct, and
each of the representations and warranties of Buyer contained in this
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Agreement that are not qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Effective
Time with the same effect as though made on and as of the Effective Time
(except to the extent expressly made as of an earlier date, in which case as of
such date), and the Company shall have received a certificate signed on behalf
of Buyer by the chief executive officer or chief financial officer of Buyer to
such effect;
(b) Buyer and FTH shall have performed or complied in all material respects
with all material agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and the
Company shall have received a certificate signed on behalf of Buyer by the
chief executive officer or chief financial officer of Buyer to such effect; and
(c) in the case of the Forward Merger, the Company shall have received (i)
the opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP, in form and
substance reasonably satisfactory to the Company, dated as of the Closing Date,
on the basis of facts, representations and assumptions set forth in such
opinion, the IRS Ruling, and certificates obtained from officers of Buyer,
Acquisition Sub and the Company, all of which are consistent with the state of
facts existing as of the Effective Time, to the effect that (A) the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the Code,
(B) for U.S. federal income tax purposes, no income, gain or loss will be
recognized by Buyer, Acquisition Sub and the Company as a result of the Merger,
and (C) for U.S. federal income tax purposes, no income, gain or loss will be
recognized by the holders of Company Common Stock as a result of the Merger
except to the extent such holders receive cash as Merger Consideration and (ii)
the IRS Ruling. In rendering the opinion described in clause (i) hereof, Kaye,
Scholer, Fierman, Hays & Handler, LLP shall have received and may rely upon the
certificates and representations referred to in Section 6.8 hereof.
ARTICLE VIII
Termination, Amendment and Waiver
Section 8.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, notwithstanding any
requisite adoption of this Agreement and approval of the Merger, as follows:
(a) by mutual written consent duly authorized by the Boards of Directors of
each of Buyer and the Company;
(b) by either Buyer or the Company, if the Effective Time shall not have
occurred on or before 15 months from the execution of this Agreement (the
"Termination Date");
(c) by the Company, upon a breach of any representation, warranty, covenant
or agreement on the part of Buyer or FTH set forth in this Agreement, or if any
representation or warranty of Buyer shall have become untrue, in either case
such that the conditions set forth in Section 7.3(a) or (b) cannot be satisfied
on or before the Termination Date (a "Terminating Buyer Breach");
(d) by Buyer, upon breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Sections 7.2(a) or (b) cannot be
satisfied on or before the Termination Date ("Terminating Company Breach");
(e) by either Buyer or the Company, if any Governmental Authority of
competent jurisdiction shall have issued an Order or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such Order or other action shall have
become final and nonappealable;
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(f) by Buyer or the Company if the approval of the Merger by the
stockholders of the Company required for the consummation of the Merger as set
forth in Section 7.1(a) shall not have been obtained by reason of the failure
to obtain such required vote at a duly held Stockholders' Meeting or at any
adjournment or postponement thereof; provided, however, the Company shall not
have the right to terminate this Agreement pursuant to this Section 8.1(f) if
the breach by BHC of the Voting Agreement is the reason for such failure;
(g) by Buyer or the Company if the Chris-Craft Merger Agreement shall have
been terminated; provided, however, that a party shall not have the right to
terminate the Agreement pursuant to this Section 8.1(g) if its actions or
failure to act shall have prevented the consummation of the Chris-Craft Merger;
provided, further, that the Company shall not have the right to terminate the
Agreement pursuant to this Section 8.1(g) if the Chris-Craft Merger shall have
been terminated as a result of the failure of the Chris-Craft stockholders to
approve the Chris-Craft Merger at a duly held stockholders meeting called for
such purpose or at any adjournment or postponement thereof; or
(h) by Buyer or the Company if the BHC Merger Agreement shall have been
terminated; provided, however, that a party shall not have the right to
terminate this Agreement pursuant to this Section 8.1(h) if its actions or
failure to act shall have prevented the consummation of the BHC Merger.
Section 8.2 Effect of Termination. Subject to Sections 8.5 and 9.1 hereof,
in the event of termination of this Agreement pursuant to Section 8.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of Buyer, FTH or the Company or any of their respective
officers or directors and all rights and obligations of each party hereto shall
cease; provided, however, that nothing herein shall relieve any party from
liability for the willful breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
Section 8.3 Amendment. This Agreement may be amended by mutual agreement of
the parties hereto by action taken by or on behalf of their respective Boards
of Directors at any time prior to the Effective Time; provided, however, that,
after the adoption of this Agreement and the approval of the Merger by
stockholders of the Company, there shall not be any amendment that by Law
requires further approval by the stockholders of the Company without the
further approval of such stockholders and provided further that any such
amendment must also be approved by the Special Committee. This Agreement may
not be amended except by an instrument in writing signed by the parties hereto.
Section 8.4 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto
and (c) subject to the proviso of Section 8.3, waive compliance with any
agreement or condition contained herein. Any such extension or waiver shall
only be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
Section 8.5 Expenses. Except as set forth in this Section 8.5, all Expenses
(as defined below) incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses, whether or not the Merger or any other transaction is
consummated, except that the Company and Buyer each shall pay one-half of all
Expenses relating to (i) printing, filing and mailing the Registration
Statement and the Proxy Statement and all SEC and other regulatory filing fees
incurred in connection with the Registration Statement and the Proxy Statement,
(ii) any filing with the FCC or similar authority and (iii) any filing with
antitrust authorities; provided, however, that Buyer shall pay all Expenses
relating to the Exchange Agent and, provided further, that the Company, Chris-
Craft and BHC shall not, in the aggregate, pay more than one-half of the
Expenses. "Expenses" as used in this Agreement (other than Section 6.6 hereof)
shall include all reasonable out-of-pocket expenses (including all fees and
expenses of counsel, accountants, investment bankers, experts and consultants
to a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing of the Registration Statement and
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the Proxy Statement, the solicitation of stockholder and stockholder approvals,
the filing of any required notices under the HSR Act or other similar
regulations, any filings with the SEC or the FCC and all other matters related
to the closing of the Merger and the other transactions contemplated by this
Agreement.
ARTICLE IX
General Provisions
Section 9.1 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement and any
certificate delivered pursuant hereto by any person shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
8.1, as the case may be, except that this Section 9.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time or after termination of this Agreement,
including, without limitation, those contained in Sections 6.4, 6.6, 6.8, 6.10,
6.11, 6.12, 6.18 and 6.21.
Section 9.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by facsimile, by courier service or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.2):
if to Buyer:
The News Corporation Limited
1211 Avenue of the Americas
New York, New York 10036
Telecopier No.: (212) 768-2029
Attention: Arthur M. Siskind, Esq.
Senior Executive Vice President and Group General Counsel
with copies to:
Squadron, Ellenoff, Plesent & Sheinfeld LLP
551 Fifth Avenue
New York, New York 10176
Telecopier No.: (212) 697-6686
Attention: Jeffrey W. Rubin, Esq.
if to the Company:
United Television, Inc.
132 South Rodeo Drive
4th Floor
Beverly Hills, California 90212
Telecopier No.: (310) 281-5870
Attention: Garth S. Lindsey
with copies to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 718-8000
Attention: Thomas D. Balliett, Esq.
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with copies to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Telecopier No.: (212) 836-8689
Attention: Lynn Toby Fisher, Esq.
Section 9.3 Interpretation, Certain Definitions. When a reference is made in
this Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement, unless otherwise
indicated. The table of contents and headings for this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
statute defined or referred to herein or in any agreement or instrument that is
referred to herein means such statute as from time to time amended, modified or
supplemented, including (in the case of statutes) by succession of comparable
successor statutes. References to a person are also references to its permitted
successors and assigns. References of "$" or "dollars" herein shall be deemed
to be references to US $.
For purposes of this Agreement, the term:
(a) "affiliate," of a specified Person, means a Person who, directly or
indirectly, through one or more intermediaries controls, is controlled by, or
is under common control with, such specified Person;
(b) "business day" means any day on which the principal offices of the SEC
in Washington, D.C. are open to accept filings, or, in the case of determining
a date when any payment is due, any day on which banks are not required or
authorized to close in the City of New York;
(c) "control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly, or as trustee or executor,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "Governmental Authority" means any United States (Federal, state or
local) or foreign government, or governmental, regulatory, judicial or
administrative authority, agency or commission;
(e) "knowledge" means the actual knowledge of the following officers and
employees of the Company (or Chris-Craft) and Buyer, without benefit of an
independent investigation of any matter, as to (i) the Company: Herbert J.
Siegel, John C. Siegel, William D. Siegel, Brian C. Kelly, Evan C. Thompson,
Joelen K. Merkel and Garth Lindsey and (ii) Buyer: K.R. Murdoch, D.F. DeVoe, A.
Siskind, Peter Chernin and Chase Carey; and
(f) "subsidiary" or "subsidiaries," of any Person, means any corporation,
partnership, joint venture or other legal entity of which such Person (either
above or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests, the holders
of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
For purposes of this Agreement, FTH and its subsidiaries shall each be deemed
to be a subsidiary of Buyer, of FEG and of all of the entities of which FEG is
itself a subsidiary.
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Section 9.4 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the Merger be consummated as originally contemplated to the fullest extent
possible.
Section 9.5 Entire Agreement; Assignment. This Agreement (including the
Exhibits, the Company Disclosure Schedule and the Buyer Disclosure Schedule
which are hereby incorporated herein and made a part hereof for all purposes as
if fully set forth herein), the Voting Agreement, and the Confidentiality
Agreement constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof. The parties agree to comply with all covenants and
agreements set forth on the Company Disclosure Schedule and the Buyer
Disclosure Schedule as if such covenants and agreements were fully set forth in
this Agreement. This Agreement shall not be assigned by the Company. Buyer
shall not assign this Agreement, other than to an affiliate of Buyer; provided
that no such assignment shall relieve Buyer of any of its obligations
hereunder.
Section 9.6 Parties in Interest. Except as otherwise provided in this
Section 9.6, this Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement
other than Sections 6.6, 6.8, 6.12, 6.18 and 6.21 (which are intended to be for
the benefit of the Persons covered thereby and may be enforced by such Persons
(including Chris-Craft in respect of Sections 6.8, 6.9, 6.18 and 6.21)). In the
event that the Forward Merger is consummated, Sections 6.8, 6.18 and 6.21 are
intended for the benefit of the persons who were the stockholders of the
Company immediately preceding the Effective Time.
Section 9.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware.
Section 9.8 Consent to Jurisdiction.
(a) Each of Buyer and the Company hereby irrevocably submits to the
exclusive jurisdiction of the courts of the State of Delaware and to the
jurisdiction of the United States District Court for the State of Delaware, for
the purpose of any action or proceeding arising out of or relating to this
Agreement and each of Buyer and the Company hereby irrevocably agrees that all
claims in respect to such action or proceeding may be heard and determined
exclusively in any Delaware state or federal court. Each of Buyer and the
Company agrees that a final judgment in any action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
(b) Each of Buyer and the Company irrevocably consents to the service of the
summons and complaint and any other process in any other action or proceeding
relating to the transactions contemplated by this Agreement, on behalf of
itself or its property, by personal delivery of copies of such process to such
party in accordance with Section 9.2 hereof. Nothing in this Section 9.8 shall
affect the right of any party to serve legal process in any other manner
permitted by law.
Section 9.9 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
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Section 9.10 WAIVER OF JURY TRIAL. EACH OF BUYER AND THE COMPANY HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF BUYER OR THE COMPANY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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In Witness Whereof, Buyer, Acquisition Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
The News Corporation Limited
/s/ Arthur M. Siskind
By: _________________________________
Name: Arthur M. Siskind
Title: Director
News Publishing Australia Limited
/s/ Paula Wardynski
By: _________________________________
Name: Paula Wardynski
Title:Vice President
Fox Television Holdings, Inc.
(solely as to Section 6.3 and
Section 6.21 of this Agreement)
/s/ Paula Wardynski
By: _________________________________
Name: Paula Wardynski
Title:Vice President
United Television, Inc.
/s/ John C. Siegel
By: _________________________________
Name: John C. Siegel
Title:Chairman of the Board
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ANNEX D
[ALLEN & COMPANY LOGO]
August 13, 2000
Board of Directors
Chris-Craft Industries, Inc.
767 Fifth Avenue
New York, NY 10153
Members of the Board of Directors:
We understand that Chris-Craft Industries, Inc. ("Chris-Craft") and The News
Corporation Limited ("News Corporation"), through its wholly owned subsidiary
News Publishers Australia Limited, are considering entering into an Agreement
and Plan of Merger with terms substantially as set forth in the draft dated
August 12, 2000 (the "Merger Agreement") proposing to effect a transaction as
described in the Merger Agreement and related documentation (the
"Transaction").
Pursuant to an engagement letter dated September 13, 1999, as amended from
time to time and most recently on July 31, 2000, you have asked us to render
our opinion as of the date hereof as to the fairness of the consideration to be
received by the stockholders of Chris-Craft (collectively, "Securityholders")
in connection with the Transaction, from a financial point of view.
Allen & Company Incorporated ("Allen"), as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, private placements and
related financings, bankruptcy reorganizations and similar recapitalizations,
negotiated underwritings, secondary distributions of listed and unlisted
securities, and valuations for corporate and other purposes.
As you know, Allen has been engaged by Chris-Craft since September 13, 1999,
to render certain financial advisory services in connection with a potential
sale of Chris-Craft. In connection with such engagement, Allen will receive a
fee upon consummation of the Transaction. In the past, Allen has provided
financial advisory services to each of Chris-Craft and News Corporation and has
received fees for the rendering of such services.
Stanley S. Shuman, who is a Managing Director of Allen and has participated
in this engagement, also serves as a Director and is a shareholder of News
Corporation. News Corporation has acknowledged that while Mr. Shuman is a
member of News Corporation's Board of Directors, he has acted solely on behalf
of Chris-Craft with respect to the Transaction and has recused himself from
News Corporation's deliberations with respect to the Transaction.
In the course of its business as a broker-dealer, Allen may from time to
time trade in the securities of Chris-Craft and News Corporation for its own
account, the accounts of investment funds under management of Allen and for the
accounts of its customers and, accordingly, may at any time hold a long or
short position in such securities.
Our opinion as expressed herein reflects and gives effect to information
concerning each of Chris-Craft and News Corporation which we acquired during
the course of this assignment, including information provided by senior
management in the course of a number of discussions. We have not, however,
conducted an independent appraisal of either Chris-Craft's or News
Corporation's assets, or independently verified the information concerning
either Chris-Craft's or News Corporation's operations or other data which we
have considered in our review, and for the purpose of expressing our opinion
set forth herein, we have assumed that all such information is accurate,
complete and current.
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In arriving at our conclusion, we have considered, among other factors we
deemed relevant, (i) the terms of the draft Merger Agreement and related
documentation (which prior to the delivery of this opinion has not been
executed by the parties); (ii) the nature of the operations, assets and
financial history of each of Chris-Craft and News Corporation, including
discussions with senior management of each regarding their respective
businesses and prospects relating to, among other things, their respective
operating budgets and financial outlooks; (iii) filings with the Securities and
Exchange Commission, including audited and unaudited financial statements, for
each of Chris-Craft and News Corporation; (iv) the historical trading
information for the equity securities of each of Chris-Craft and News
Corporation; (v) certain publicly available equity research reports, published
by nationally recognized brokerage houses, covering News Corporation and
certain other companies in businesses related to those of News Corporation;
(vi) certain financial and stock market information for certain other companies
in businesses related to those of each of Chris-Craft and News Corporation;
(vii) certain financial information relating to certain merger and acquisition
transactions involving companies in businesses related to those of Chris-Craft;
and (viii) certain publicly available information relating to premiums paid in
certain selected merger and acquisition transactions. In addition to our review
and analyses of the specific information set forth above, our opinion herein
reflects and gives effect to our assessment of general economic, monetary,
market and industry conditions existing as of the date hereof as they may
affect the business and prospects of Chris-Craft.
It is understood that this letter is for the information of the Board of
Directors of Chris-Craft and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any filing made by Chris-Craft or News Corporation with the Securities and
Exchange Commission with respect to the Transaction.
The opinion rendered herein does not constitute a recommendation to
Securityholders of Chris-Craft as to how they should vote or what action they
should take in connection with the Transaction.
Based upon and subject to the foregoing, it is our opinion as of the date
hereof that the consideration to be received by the Securityholders of Chris-
Craft in connection with the Transaction is fair from a financial point of
view.
Very truly yours,
ALLEN & COMPANY INCORPORATED
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ANNEX E
[WASSERSTEIN PERELLA & CO. LOGO]
August 13, 2000
Special Committee of the Board of Directors
BHC Communications, Inc.
767 Fifth Avenue
New York, NY 10153
Members of the Special Committee of the Board:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the stockholders of BHC Communications, Inc.
("BHC"), other than Chris-Craft Industries, Inc. ("Chris-Craft"), of the Merger
Consideration (as defined below) provided for pursuant to the terms of the
Agreement and Plan of Merger, dated as of August 13, 2000 (the "Merger
Agreement"), among BHC, The News Corporation Limited ("News Corp"), News
Publishing Australia Limited, a wholly owned subsidiary of News Corp
("Acquisition Sub") and Fox Television Holdings Inc., an indirect subsidiary of
News Corp. The Merger Agreement provides for, among other things, a merger of
BHC with and into Acquisition Sub (the "Merger") pursuant to which the holder
of each outstanding share of Class A common stock, par value $.01 per share, of
BHC (other than any such shares held in the treasury of BHC, owned by Chris-
Craft or owned by News Corp, Acquisition Sub or their respective affiliates )
will have the option to elect to convert each share into (a) $165.00 of cash
(the "All Cash Amount"), (b) 3.7131 American Depositary Shares of News Corp
(the "News Corp ADSs"), each of which represents four fully paid and
nonassessable Preferred Limited Voting Ordinary Shares of News Corp (the "All
Stock Exchange Ratio"), or (c) a combination of $66.00 (the "Partial Cash
Amount") and 2.2278 American Depositary Shares of News Corp (the "Partial
Exchange Ratio"). The All Cash Amount, the All Stock Exchange Ratio and the
Partial Cash Amount and Partial Exchange Ratio are referred to collectively
herein as the "Merger Consideration." The terms and conditions of the Merger
are set forth in more detail in the Merger Agreement. The Merger Agreement
contains adjustments to the amounts of cash and stock to be received by BHC
stockholders who elect to receive the All Cash Amount or the All Stock Amount,
the effect of which is intended to equalize the value of the consideration
received by the BHC stockholders regardless of their election by giving effect
to the market value of the News Corp ADSs during a period prior to the closing
(the "Rebalancing Mechanism").
In connection with rendering our opinion, we have reviewed a draft of the
Merger Agreement, and for purposes hereof, we have assumed that the final form
of this document will not differ in any material respect from the draft
provided to us. We have also reviewed and analyzed certain publicly available
business and financial information relating to BHC, Chris-Craft, United
Television ("UTV"), Inc., a 57.9% owned subsidiary of BHC, and News Corp for
recent years and interim periods to date, as well as certain internal financial
and operating information, including certain prospective financial information
for the calendar year 2000 prepared by or on behalf of BHC, Chris-Craft and UTV
and provided to us for purposes of our analysis, (collectively, the
"Prospective Financial Information"). We have also reviewed the estimates of
third party research analysts of the earnings of News Corp for 2000 and 2001
(the "Analysts' Estimates"). We have met with the managements, of BHC, Chris-
Craft, UTV and News Corp to review and discuss such information and, among
other matters, each of BHC's, Chris-Craft's, UTV's and News Corp's businesses,
results of operations, assets, financial conditions and future prospects.
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We have reviewed and considered certain financial and stock market data
relating to BHC, Chris-Craft, UTV and News Corp and we have compared that data
with similar data for certain other companies, the securities of which are
publicly traded, that we believe may be relevant or comparable in certain
respects to BHC, or one or more of its businesses or assets, and we have
reviewed and considered the financial terms of certain recent acquisitions and
other business combination transactions in the television broadcasting industry
specifically, and in other industries generally, that we believe to be
reasonably comparable to the Merger or otherwise relevant to our inquiry. We
have also performed such other financial studies, analyses, and investigations
and reviewed such other information as we considered appropriate for purposes
of this opinion. Management informed us that BHC does not prepare prospective
financial information for periods extending beyond fiscal year 2000; therefore,
we did not perform a discounted cash flow analysis in connection with rendering
this opinion.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all of the historical
financial and other information provided to or discussed with us or publicly
available, and we have not assumed any responsibility for independent
verification of any of such information. We have also assumed and relied upon
the reasonableness and accuracy of the Prospective Financial Information
provided to us, and we have assumed that such Prospective Financial Information
was reasonably prepared in good faith and on bases reflecting the best
currently available judgments and estimates of BHC's, Chris-Craft's and UTV's
respective managements. We express no opinion with respect to such Prospective
Financial Information or the respective assumptions upon which it is based. We
have also assumed and relied on the reasonableness and accuracy of the
Analysts' Estimates. In addition, we have not reviewed any of the books and
records of BHC, Chris-Craft, UTV or News Corp, or assumed any responsibility
for conducting a physical inspection of the properties or facilities of BHC,
Chris-Craft, UTV or News Corp, or for making or obtaining an independent
valuation or appraisal of the assets or liabilities of BHC, Chris-Craft, UTV or
News Corp, and no such independent valuation or appraisal was provided to us.
We also have assumed that obtaining all regulatory and other approvals and
third party consents required for consummation of the Merger will not have a
material effect on BHC or News Corp or on the anticipated benefits of the
Merger, and we have assumed that the transactions described in the Merger
Agreement will be consummated without waiver or modification of any of the
material terms or conditions contained therein by any party thereto. Our
opinion is necessarily based on economic and market conditions and other
circumstances as they exist and can be evaluated by us as of the date hereof.
We are not expressing any opinion herein as to the prices at which any
securities of News Corp, Chris-Craft, BHC or UTV will actually trade at any
time.
In the ordinary course of our business, we may actively trade the debt and
equity securities of BHC, Chris-Craft, UTV or News Corp for our own account and
for the accounts of customers and, accordingly, may at any time hold a long or
short position in such securities. We are acting as exclusive financial advisor
to the Special Committee of the Board of Directors of BHC in connection with
the proposed Merger and will receive a fee for our services, a significant
portion of which is contingent upon the consummation of the Merger, as well as
a fee for rendering this opinion. BHC has also agreed to indemnify us for
certain liabilities arising out of our engagement and the rendering of this
opinion.
It should be noted that in the context of our engagement, we were not
authorized to and did not solicit third party indications of interest in
acquiring all or any part of BHC, or investigate any alternative transactions
that may be available to BHC.
Our opinion addresses only the fairness from a financial point of view to
the stockholders of BHC (other than Chris-Craft) of the Merger Consideration
provided for pursuant to the Merger Agreement, and we do not express any views
on any other term of the Merger Agreement or the Merger (including the
Rebalancing Mechanism and the consideration to be paid to Chris-Craft pursuant
to the Merger or any transaction related thereto). Specifically, our opinion
does not address BHC's underlying business decision to effect the transactions
contemplated by the Merger Agreement or the merits of the Merger relative to
any alternative transaction or business strategy that may be available to BHC.
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It is understood that this letter is for the benefit and use of the Special
Committee of the Board of Directors of BHC in its consideration of the Merger
and, except for inclusion in its entirety in any registration statement or
proxy statement required to be circulated to stockholders of BHC relating to
the Merger, may not be quoted, referred to or reproduced at any time or in any
manner without our prior written consent. This opinion does not constitute a
recommendation to any stockholder as to how such holder should vote with
respect to the Merger or whether such holder should elect to receive the All
Cash Amount, the All Stock Exchange Ratio, or the Partial Cash Amount and
Partial Exchange Ratio, and should not be relied upon by any stockholder as
such.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, it is our opinion that as of the date hereof
the Merger Consideration provided for pursuant to the Merger Agreement is fair
to the stockholders of BHC (other than Chris-Craft) from a financial point of
view.
Very truly yours,
WASSERSTEIN PERELLA & CO., INC.
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ANNEX F
Bear Stearns
BEAR, STEARNS & CO. INC.
245 PARK AVENUE
NEW YORK, NEW YORK 10167
(212) 272-2000
FAX: (212) 272-3092
ATLANTA * BOSTON
CHICAGO * DALLAS * LOS ANGELES
NEW YORK * SAN FRANCISCO
SAO PAULO * LONDON * PARIS * GENEVA
BEIJING * HONG KONG * SHANGHAI * TOKYO
August 13, 2000
The Special Committee of the Board of Directors
United Television, Inc.
132 South Rodeo Drive, Fourth Floor
Beverly Hills, CA 30212
Attention: James D. Hodgson
Director
Howard F. Roycroft
Director
Gentlemen:
We understand that United Television, Inc. ("UTVI") proposes to enter into an
Agreement and Plan of Merger dated August 13, 2000 (the "Agreement"), pursuant
to which UTVI will be acquired by The News Corporation Limited ("News Corp.")
(the "Transaction"). Upon consummation of the Transaction contemplated by the
Agreement, each share of UTVI Common Stock, other than certain shares,
including for example those held in treasury or as to which dissenter's rights
have been perfected, will be converted into the right to receive a combination
of $60 in cash (the "Partial Cash") and 2.0253 American Depositary Shares of
News Corp. (NYSE ticker symbol: NWS.A), each of which represents four (4)
fully paid and nonassessable Preferred Limited Voting Ordinary Shares of News
Corp. (the "ADRs") (the "Partial Exchange Ratio"); provided, that each
stockholder will be entitled to elect to receive instead, subject to pro-
ration, equivalent value of the sum of the Partial Cash and the Partial
Exchange Ratio either in (i) cash (the "Cash") or (ii) ADRs (the "ADR Value")
(such consideration being referred to collectively as the "Base
Consideration").
If the value of the ADRs declines such that the aggregate value of the ADRs at
closing does not equal at least 45% of the aggregate value of the total
consideration paid for the UTVI Common Stock, the components of the Base
Consideration will be modified, in accordance with and as more fully described
in the Agreement, by reducing the cash portion of the Base Consideration to
the minimum extent necessary, and issuing in lieu thereof ADRs, such that the
total cash paid for shares of UTVI Common Stock in the Transaction does not
exceed 55% of the aggregate value of the total consideration paid (the
modified Base Consideration is referred to as the "Tax-Adjusted
Consideration"), as provided for in Section 1.4(f) of the Agreement.
Pursuant to the Agreement, if News Corp. does not receive the necessary
Federal Communications Commission approval for the Transaction to be
accomplished in a manner that will qualify as a tax-free reorganization within
the meaning of Section 368(a) of the Internal Revenue Code, or if a ruling
from the Internal Revenue Service and certain tax opinions are not obtained
and the Transaction will not be effected as a tax-free reorganization, the ADR
Value, the Partial Exchange Ratio, the Cash and the Partial Cash each will be
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increased by 5% (the increased ADR Value, Partial Exchange Ratio, Cash and
Partial Cash are referred collectively as the "Enhanced Consideration"). The
value delivered as a result of the Base Consideration, the Tax-Adjusted
Consideration or the Enhanced Consideration are referred collectively to as the
"Consideration". You have provided us with a copy of the Agreement.
We also understand that, simultaneously with the Transaction, News Corp. will
enter into agreements to acquire both BHC Communications, Inc. ("BHC") and
Chris-Craft Industries, Inc. ("Chris-Craft"), which owns 80.0% of the shares
and controls 95.0% of the vote of BHC, and that BHC, which owns 57.9% of the
voting shares of UTVI, will agree to vote its shares in favor of the
Transaction.
You have asked us to render our opinion as to whether the Consideration to be
received is fair, from a financial point of view, to the public shareholders of
UTVI.
In the course of performing our review and analyses for rendering this opinion,
we have:
. reviewed the Agreement;
. reviewed UTVI's Annual Reports to Shareholders and Annual Reports on Form
10-K for the years ended December 31, 1997 through 1999, its Quarterly
Reports on Form 10-Q for the periods ended March 31 and June 30, 2000 and
its Report on Form 8-K dated July 7, 1999;
. reviewed BHC's Annual Reports to Shareholders and Annual Reports on Form 10-
K for the years ended December 31, 1997 through 1999, its Quarterly Reports
on Form 10-Q for the periods ended March 31 and June 30, 2000 and its Report
on Form 8-K dated February 8, 2000;
. reviewed Chris-Craft's Annual Reports to Shareholders and Annual Reports on
Form 10-K for the years ended December 31, 1997 through 1999 and its
Quarterly Reports on Form 10-Q for the periods ended March 31 and June 30,
2000;
. reviewed News Corp.'s Annual Reports to Shareholders and Annual Reports on
Form 20-F for the fiscal years ended June 30, 1997 through 1999 and its
Interim Report on Form 6-K for the period ended March 31, 2000;
. reviewed certain operating and financial information, including a budget for
the year ended December 31, 2000, provided to us by UTVI's management
relating to UTVI's business and prospects;
. reviewed certain operating and financial information, including a budget for
the year ended December 31, 2000, provided to us by Chris-Craft's management
relating to Chris-Craft's business and prospects;
. met with certain members of UTVI's senior management to discuss UTVI's
business, operations, historical and budgeted financial results and future
prospects;
. spoke with certain members of News Corp.'s senior management to discuss News
Corp.'s business, operations, historical and projected financial results and
future prospects and noted that News Corp.'s management expressed confidence
that it would meet analyst expectations for 2000 and 2001;
. reviewed the historical prices, trading multiples and trading volumes of the
common shares of UTVI, BHC and Chris-Craft and Ordinary Shares and Preferred
Limited Voting Ordinary Shares (and respective American Depositary Shares)
of News Corp. (collectively, the "News Corp. Ordinary Share Classes");
. reviewed publicly available financial data, stock market performance data
and trading multiples of companies which we deemed generally comparable to
UTVI and News Corp.;
. reviewed the terms of recent mergers and acquisitions of companies which we
deemed generally comparable to the Transaction involving companies which we
deemed generally comparable to UTVI;
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. reviewed the pro forma results, financial condition and capitalization of
News Corp. giving effect to the Transaction; and
. conducted such other studies, analyses, inquiries and investigations as we
deemed appropriate.
We have relied upon, without independent verification, the accuracy and
completeness of the financial and other information, including without
limitation the budget, provided to us by UTVI and Chris-Craft. With respect to
such budgeted financial results, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the senior management of each such company as to the expected
future performance of such companies. We have not independently verified any
such information or the budget provided to us, and we have further relied upon
the assurances of the senior management of each such company that they are
unaware of any facts that would make the information and budget provided to us
incomplete or misleading.
In arriving at our opinion, we have not performed or obtained any independent
appraisal of the assets or liabilities (contingent or otherwise) of UTVI, nor
have we been furnished with any such appraisals. Except in the case of the
Enhanced Consideration, we have assumed that the stock portion of the
consideration to be received will qualify as a tax-free "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code. We have assumed
that the Transaction will be consummated in a timely manner and in accordance
with the terms of the Agreement without any regulatory limitations,
restrictions, conditions, amendments or modifications that collectively would
have a material effect on UTVI, News Corp., BHC or Chris-Craft.
We do not express any opinion as to the price or range of prices at which the
shares of common stock of UTVI and the News Corp. Ordinary Share Classes may
trade subsequent to the announcement of the Transaction or as to the price or
range of prices at which the News Corp. Ordinary Share Classes may trade
subsequent to the consummation of the Transaction.
We have acted as a financial advisor to the Special Committee of UTVI in
connection with the Transaction and will receive a customary fee for such
services, a substantial portion of which is contingent on successful
consummation of the Transaction. In the ordinary course of business, Bear
Stearns may actively trade the equity and debt securities of UTVI, BHC, Chris-
Craft, and/or News Corp. for our own account and for the account of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
This letter was provided to the Special Committee of the Board of Directors of
UTVI for their use in considering the Transaction and does not constitute a
recommendation to the Special Committee of the Board of Directors of UTVI or
any holders of UTVI common stock as to how to vote in connection with the
Transaction. This opinion does not address UTVI's underlying business decision
to pursue the Transaction, the relative merits of the Transaction as compared
to any alternative business strategies that might exist for UTVI or the effects
of any other transaction in which UTVI might engage. This letter is not to be
used for any other purpose, or be reproduced, disseminated, quoted from or
referred to at any time, in whole or in part, without our prior written
consent; provided, however, that this letter may be included in its entirety in
any joint proxy statement/prospectus to be distributed to the holders of UTVI
common stock in connection with the Transaction. Our opinion is subject to the
assumptions and conditions contained herein and is necessarily based on
economic, market and other conditions, and the information made available to
us, as of the date hereof. We assume no responsibility for updating or revising
our opinion based on circumstances or events occurring after the date hereof.
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Based on and subject to the foregoing, it is our opinion that, as of the date
hereof, the Consideration to be received is fair, from a financial point of
view, to the public shareholders of UTVI.
Very truly yours,
BEAR, STEARNS & CO. INC.
F-4
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ANNEX G
THE GENERAL CORPORATION LAW
OF
THE STATE OF DELAWARE
SECTION 262 APPRAISAL RIGHTS.--(a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to (S) 228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of the stockholder's shares of stock
under the circumstances described in subsections (b) and (c) of this section.
As used in this section, the word "stockholder" means a holder of record of
stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is ordinarily
meant by those words and also membership or membership interest of a member of
a nonstock corporation; and the words "depository receipt" mean a receipt or
other instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series
of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to (S) 251 (other than a merger effected pursuant to
(S) 251(g) of this title), (S) 252, (S) 254, (S) 257, (S) 258, (S) 263 or
(S) 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of (S) 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
(S)(S) 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective
date of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S) 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
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(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to (S) 228 or
(S) 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
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(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise entitled
to appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after the effective
date of the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is received
by the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound,
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as the Court may direct. Payment shall be so made to each such stockholder, in
the case of holders of uncertified stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20 Indemnification of Directors and Officers.
With respect to News Corporation, Section 199A of the Corporations Law of
South Australia provides:
"(1) A company or a related body corporate must not exempt a person
(whether directly or through an interposed entity) from a liability to the
company incurred as an officer or auditor of the company.
(2) A company or a related body corporate must not indemnify a person
(whether by agreement or by making a payment and whether directly or
through an interposed entity) against any of the following liabilities
incurred as an officer or auditor of the company:
(a) a liability owed to the company or a related body corporate
(b) a liability for a pecuniary penalty order under section 1317G or
a compensation order under section 1317H
(c) a liability that is owed to someone other than the company or a
related body corporate and did not arise out of conduct in good faith.
This subsection does not apply to a liability for legal costs.
(3) A company or related body corporate must not indemnify a person
(whether by agreement or by making a payment and whether directly or
through an interposed entity) against legal costs incurred in defending an
action for a liability incurred as an officer or auditor of the company if
the costs are incurred:
(a) in defending or resisting proceedings in which the person is
found to have a liability for which they could not be indemnified under
subsection (2); or
(b) in defending or resisting criminal proceedings in which the
person is found guilty; or
(c) in defending or resisting proceedings brought by ASIC or a
liquidator for a court order if the grounds for making the order are
found by the court to have been established; or
(d) in connection with proceedings for relief to the person under
this Law in which the Court denies the relief.
Paragraph (c) does not apply to costs incurred in responding to actions
taken by ASIC or a liquidator as part of an investigation before commencing
proceedings for the court order.
(4) For the purpose of subsection (3), the outcome of proceedings is the
outcome of the proceedings and any appeal in relation to the proceedings."
Section 116 of the Articles of Association of News Corporation provides as
follows:
"(1) To the extent permitted by law and without limiting the powers of
the Company, the Company must indemnify each person who is, or has been, a
director, principal executive officer or secretary of the Company against
any liability which results directly or indirectly from facts or
circumstances relating to the person serving or having served in that
capacity: (a) incurred on or after 15 April 1994 to any person (other than
the Company or a related body corporate), whether or not arising from a
prior contingent liability, and which does not arise out of conduct
involving a lack of good faith or conduct known to the person to be
wrongful; or (b) for costs and expenses incurred by the person in defending
proceedings, whether civil or criminal, in which judgment is given in favor
of the person or in which the person is acquitted, or in connection with
any application in relation to such proceedings in which the court grants
relief to the person under the Law.
II-1
<PAGE>
(2) The Company need not indemnify a person as provided for in paragraph
(1) in respect of a liability to the extent that the person is entitled to
an indemnity in respect of that liability under a contract of insurance.
(3) To the extent permitted by law and without limiting the powers of
the Company, the Board of Directors may authorize the Company to, and the
Company may, enter into any: (a) documentary indemnity in favor of; or (b)
insurance policy for the benefit of, a person who is, or has been, a
director, principal executive officer, secretary, auditor, employee or
other officer of the Company, or of a subsidiary of the Company.
(4) The benefit of any indemnity previously given to any person in
respect of liabilities incurred prior to 15 April 1994 is not affected by
this Article.
(5) The benefit of each indemnity given in paragraph (1) continues, even
after its terms are modified or deleted, in respect of a liability arising
out of acts or omissions occurring prior to the modification or deletion."
Item 21 Exhibits and Financial Statement Schedules.
See the Exhibit Index of this Registration Statement.
Item 22 Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment will be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) To file a post-effective amendment to the Registration Statement to
include any financial statements required by Item 8 of Form 20-F at the
start of any delayed offering or throughout a continuous offering.
II-2
<PAGE>
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in the Registration Statement will be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to be
the initial bona fide offering thereof.
(c) (1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of
a prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The undersigned registrant hereby undertakes that every prospectus (i)
that is filed pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
will be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time will be
deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(e) The undersigned registrant hereby undertakes: (1) to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means; and (2) to arrange or provide for a facility in the
U.S. for the purpose of responding to such requests. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on December 7, 2000.
The News Corporation Limited
(Registrant)
/s/ K. Rupert Murdoch
By: _________________________________
K. Rupert Murdoch
Chairman and Chief Executive
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints K. Rupert Murdoch, David F. DeVoe and Arthur M.
Siskind or any one of them, his attorneys-in-fact, each with the power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to sign any registration
statement for the same offering covered by this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) promulgated under the
Securities Act of 1933, as amended, and all post-effective amendments thereto,
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that such attorneys-in-
fact and agents or any of them, or his or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ K. Rupert Murdoch Executive Director, December 7, 2000
______________________________________ Chairman and Chief
K. Rupert Murdoch Executive (Principal
Executive Officer)
/s/ David F. DeVoe Executive Director, Chief December 7, 2000
______________________________________ Financial Officer and
David F. DeVoe Finance Director
(Principal Financial and
Accounting Officer)
/s/ Geoffrey C. Bible Non-Executive Director December 7, 2000
______________________________________
Geoffrey C. Bible
/s/ Chase Carey Executive Director December 7, 2000
______________________________________
Chase Carey
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Peter Chernin Executive Director December 7, 2000
______________________________________
Peter Chernin
/s/ Kenneth E. Cowley Non-Executive Director December 7, 2000
______________________________________
Kenneth E. Cowley
/s/ Roderich I. Eddington Non-Executive Director December 7, 2000
______________________________________
Roderich I. Eddington
/s/ Aatos Erkko Non-Executive Director December 7, 2000
______________________________________
Aatos Erkko
/s/ Andrew S. B. Knight Non-Executive Director December 7, 2000
______________________________________
Andrew S. B. Knight
/s/ Lachlan L. Murdoch Executive Director December 7, 2000
______________________________________
Lachlan L. Murdoch
/s/ Thomas J. Perkins Non-Executive Director December 7, 2000
______________________________________
Thomas J. Perkins
/s/ Bert C. Roberts, Jr. Non-Executive Director December 7, 2000
______________________________________
Bert C. Roberts, Jr.
/s/ Stanley S. Shuman Non-Executive Director December 7, 2000
______________________________________
Stanley S. Shuman
/s/ Arthur M. Siskind Executive Director December 7, 2000
______________________________________
Arthur M. Siskind
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Item
--- ----
<C> <S>
2.1 Agreement and Plan of Merger, dated as of August 13, 2000, among
Chris-Craft Industries, Inc., The News Corporation Limited, News
Publishing Australia Limited and Fox Television Holdings, Inc. (3)
2.2 Agreement and Plan of Merger, dated as of August 13, 2000, among BHC
Communications, Inc., The News Corporation Limited, News Publishing
Australia Limited and Fox Television Holdings, Inc. (4)
2.3 Agreement and Plan of Merger, dated as of August 13, 2000, among
United Television, Inc., The News Corporation Limited, News Publishing
Australia Limited and Fox Television Holdings, Inc. (5)
2.4 Amendment No. 1 to Agreement and Plan of Merger, dated as of August
13, 2000, among Chris-Craft Industries, Inc., The News Corporation
Limited, News Publishing Australia Limited and Fox Television
Holdings, Inc. (1)
2.5 Amendment No. 1 to Agreement and Plan of Merger, dated as of August
13, 2000, among BHC Communications, Inc., The News Corporation
Limited, News Publishing Australia Limited and Fox Television
Holdings, Inc. (1)
2.6 Amendment No. 1 to Agreement and Plan of Merger, dated as of August
13, 2000, among United Television, Inc., The News Corporation Limited,
News Publishing Australia Limited and Fox Television Holdings, Inc.
(1)
5.1 Opinion of Allen Allen & Hemsley as to the validity of the Preferred
Limited Voting Ordinary Shares of News Corporation offered hereby and
certain other matters. (1)
8.1 Opinion of Squadron, Ellenoff, Plesent & Sheinfeld, LLP as to certain
U.S. federal income tax matters. (2)
8.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to certain U.S.
federal income tax matters. (2)
8.3 Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP as to certain
U.S. federal income tax matters. (2)
10.1 Voting Agreement, dated as of August 13, 2000, among The News
Corporation Limited, News Publishing Australia Limited and Chris-Craft
Industries, Inc. (6)
10.2 Voting Agreement, dated as of August 13, 2000, among The News
Corporation Limited, News Publishing Australia Limited and BHC
Communications, Inc. (7)
23.1 Consent of Arthur Andersen LLP regarding The News Corporation Limited.
(1)
23.2 Consent of Arthur Andersen LLP regarding Fox Entertainment Group, Inc.
(1)
23.3 Consent of Arthur Andersen LLP regarding British Sky Broadcasting
Group plc. (1)
23.4 Consent of Arthur Andersen LLP regarding Stream S.p.A. (1)
23.5 Consent of PricewaterhouseCoopers LLP regarding Chris-Craft
Industries, Inc. (1)
23.6 Consent of PricewaterhouseCoopers LLP regarding BHC Communications,
Inc. (1)
23.7 Consent of PricewaterhouseCoopers LLP regarding United Television,
Inc. (1)
23.8 Consent of Allen Allen & Hemsley (included in the opinion filed as
Exhibit 5 to this Registration Statement and incorporated herein by
reference). (1)
23.9 Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP (included in
the opinion filed as Exhibit 8.1 to this Registration Statement and
incorporated herein by reference). (2)
23.10 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in the
opinion filed as Exhibit 8.2 to this Registration Statement and
incorporated herein by reference). (2)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
No. Item
--- ----
<C> <S>
23.11 Consent of Kaye, Scholer, Fierman, Hays & Handler, LLP (included in
the opinion filed as Exhibit 8.3 to this Registration Statement and
incorporated herein by reference). (2)
24.1 Powers of Attorney (included at page II-4). (1)
99.1 Consent of Allen & Company, Incorporated. (1)
99.2 Consent of Bear, Stearns & Co. (1)
99.3 Consent of Wasserstein Perella & Co. (1)
99.4 Form of proxy card of Chris-Craft Industries, Inc. (2)
99.5 Form of proxy card of BHC Communications, Inc. (2)
99.6 Form of proxy card of United Television, Inc. (2)
</TABLE>
--------
(1) Filed herewith.
(2) To be filed by amendment.
(3) Incorporated herein by reference to exhibit number 2.1 to Chris-Craft's
Current Report on Form 8-K filed on August 23, 2000 (File No. 001-02999).
(4) Incorporated herein by reference to exhibit number 2.1 to BHC's Current
Report on Form 8-K filed on August 23, 2000 (File No. 001-10342).
(5) Incorporated herein by reference to exhibit number 2.1 to United
Television's Current Report on Form 8-K filed on August 23, 2000 (File No.
001-08411).
(6) Incorporated herein by reference to exhibit number 10.1 to Chris-Craft's
Current Report on Form 8-K filed on August 23, 2000 (File No. 001-02999).
(7) Incorporated herein by reference to exhibit number 10.3 to BHC's Current
Report on Form 8-K filed on August 23, 2000 (File No. 001-10342).
