<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934/1/
(AMENDMENT NO. 1)
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
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(NAME OF ISSUER)
CLASS A COMMON STOCK, $.01 par value
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(TITLE OF CLASS OF SECURITIES)
649 27A 103
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(CUSIP NUMBER)
Jay Itzkowitz
Fox Television Stations, Inc.
5746 Sunset Boulevard
Los Angeles, California 90028
(310) 369-1300
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
July 17, 1996
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(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with the statement.
[ ]
(A fee is not required only if the person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
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/1/The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
The News Corporation Limited
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[ ]
(b) X
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
South Australia, Australia
NUMBER OF 7 SOLE VOTING POWER
SHARES - 0 -
BENEFICIALLY
OWNED
BY EACH 8 SHARED VOTING POWER
REPORTING 25,224,845**
PERSON
WITH 9 SOLE DISPOSITIVE POWER
- 0 -
10 SHARED DISPOSITIVE POWER
25,224,845**
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,224,845**
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
46.69%**
14 TYPE OF REPORTING PERSON*
CO
** Consists solely of shares of Class A Common Stock (as defined) underlying
currently exercisable warrants and Series B Junior Preferred Stock
**SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
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<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
K. Rupert Murdoch
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) X
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES - 0 -
BENEFICIALLY
OWNED
BY EACH 8 SHARED VOTING POWER
REPORTING 25,224,845**
PERSON
WITH 9 SOLE DISPOSITIVE POWER
- 0 -
10 SHARED DISPOSITIVE POWER
25,224,845**
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,224,845**
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
46.69%**
14 TYPE OF REPORTING PERSON
IN
** Consists solely of shares of Class A Common Stock (as defined) underlying
currently exercisable warrants and Series B Junior Preferred Stock
**SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
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<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Twentieth Holdings Corporation
95-4066193
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) X
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware, U.S.A.
NUMBER OF 7 SOLE VOTING POWER
SHARES - 0 -
BENEFICIALLY
OWNED
BY EACH 8 SHARED VOTING POWER
REPORTING 25,224,845**
PERSON
WITH 9 SOLE DISPOSITIVE POWER
- 0 -
10 SHARED DISPOSITIVE POWER
25,224,845**
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,224,845**
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
46.69%**
14 TYPE OF REPORTING PERSON*
CO
** Consists solely of shares of Class A Common Stock (as defined) underlying
currently exercisable warrants and Series B Junior Preferred Stock
**SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
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<PAGE>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Fox Television Stations, Inc.
52-1408474
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) X
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware, U.S.A.
NUMBER OF 7 SOLE VOTING POWER
SHARES - 0 -
BENEFICIALLY
OWNED
BY EACH 8 SHARED VOTING POWER
REPORTING 25,224,845**
PERSON
WITH 9 SOLE DISPOSITIVE POWER
- 0 -
11 SHARED DISPOSITIVE POWER
25,224,845**
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,224,845**
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
46.69%**
14 TYPE OF REPORTING PERSON*
CO
** Consists solely of shares of Class A Common Stock (as defined) underlying
currently exercisable warrants and Series B Junior Preferred Stock
**SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
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<PAGE>
INTRODUCTION.
Items 3, 4, 5, 6 and 7 of the statement on Schedule 13D filed by the
Reporting Persons (as defined herein), are hereby amended ("Amendment No. 1") to
report their current beneficial ownership of Class A Common Stock (as defined
herein), of New World Communications Group Incorporated, a Delaware corporation.
ITEM 1. SECURITY AND ISSUER.
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The title of the class of equity securities to which this statement relates
is Class A Common Stock, $.01 par value per share (the "Class A Common Stock"),
of New World Communications Group Incorporated, a Delaware corporation ("New
World"). The address of the principal executive offices of New World is 3200
Windy Hill Road, Suite 1100-West, Atlanta, Georgia 30339.
ITEM 2. IDENTITY AND BACKGROUND.
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This statement is being filed by (i) The News Corporation Limited, a South
Australia, Australia corporation ("News Corporation"), with its principal
executive office located at 2 Holt Street, Sydney, New South Wales 2010,
Australia, (ii) K. Rupert Murdoch with his business address at 10201 West Pico
Boulevard, Los Angeles, California 90035, (iii) Twentieth Holdings Corporation,
a Delaware corporation ("Twentieth Holdings"), with its principal executive
office located at 10201 West Pico Boulevard, Los Angeles, California 90035, and
(iv) Fox Television Stations, Inc., a Delaware corporation ("Fox Television"),
with its principal executive office located at 5746 Sunset Boulevard, Los
Angeles, California 90028. News Corporation, K. Rupert Murdoch, Twentieth
Holdings and Fox Television are referred herein collectively as the "Reporting
Persons".
K. Rupert Murdoch holds voting preferred shares of Twentieth Holdings
representing 76% of the voting power thereof. Such preferred stock is
redeemable at the option of Fox, Inc., a wholly-owned subsidiary of News
Corporation. News Corporation through Fox, Inc. holds all of the common stock
of Twentieth Holdings (representing substantially all of the equity and 24% of
the voting securities thereof). Twentieth Holdings owns 100% of the outstanding
common stock of Fox Television.
News Corporation is a diversified media company engaged through
subsidiaries in, among other things, production and distribution of motion
pictures and television programming, television broadcasting and the publication
of newspapers, books, magazines and promotional free-standing inserts.
K. Rupert Murdoch is the Chairman and Chief Executive of News Corporation,
a director of News Limited, News Corporation's principal subsidiary in
Australia, a director of News International plc, News Corporation's principal
subsidiary in the United Kingdom, Chairman, Chief Executive Officer, President
and a director of News America Holdings Incorporated, News Corporation's
principal subsidiary in the United States, Chairman and a director of Satellite
Television Asian Region Limited, the Asia Pacific Region's largest satellite
television broadcaster and a director of British Sky Broadcasting Group plc
which operates the leading pay television broadcasting services in the United
Kingdom and the Republic of Ireland.
Twentieth Holdings is the holding company for Fox Television and Fox
Broadcasting Company.
Fox Television owns and operates 12 broadcast television stations in the
United States.
Approximately 31% of the voting stock of News Corporation is owned by
Cruden Investments Pty. Limited, a subsidiary thereof, Mr. Murdoch, members of
his immediate family and a corporation which is controlled by trustees of
settlements and trusts set up for the benefit of the Murdoch family, certain
charities and other persons.
Cruden Investments Pty. Limited is a private Australian incorporated
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 charities. By virtue of shares of News Corporation owned by
corporations which are controlled by the trustees of settlements and trusts set
up for the benefit of the Murdoch family, certain charities and other persons,
and Mr. Murdoch's positions as Chairman and Chief Executive of News Corporation,
Mr. Murdoch may be deemed to control the operations of News Corporation.
None of the Reporting Persons have, during the last five years, (i) been
convicted in a criminal proceeding (excluding minor traffic violations or
similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction a result of which it was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violations with respect to such laws.
ITEM 3. SOURCE OR AMOUNT OF FUNDS OR OTHER CONSIDERATION.
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Item 3 of the Schedule 13D is hereby amended by the Reporting Persons to
delete such Item and add in lieu thereof the following:
Pursuant to the terms of a securities purchase agreement dated May 21,
1994 (the "Purchase Agreement"), on May 27, 1994 New World sold and Fox
Television purchased 250,000 shares of Series B Junior Preferred Stock, par
value $.01 per share ("Series B Preferred Stock") for a cash consideration of
$250,000,000. The shares of Series B Preferred Stock are currently convertible
into 19,349,845 shares of Class A Common Stock (which equates to a conversion
price of $12.92 per share).
Pursuant to the terms of the Purchase Agreement and a warrant agreement
(the "Warrant Agreement"), from September 1994 through August 1995, New World
issued to Fox Television for an aggregate cash consideration of $250,000,000 an
aggregate of (i) 25,000 shares of Series C Senior Preferred Stock, par value
$.01 per share ("Series C Preferred Stock"), (ii) warrants (the "Series E
Warrants") to acquire an aggregate of 1,250,000 shares of Class A Common Stock
at an exercise price (the "Series E Exercise Price") of $15.00 per share, and
(iii) warrants (the "Series F Warrants" and, together with the Series E
Warrants, the "Warrants") to acquire an aggregate of 4,625,000 shares of Class A
Common Stock at an exercise price (the "Series F Exercise Price") of $50.00 per
share. The exercise price for the Series E Warrants and the Series F Warrants
may be paid by surrender of shares of Series C Preferred Stock.
The Purchase Agreement also grants Fox Television certain rights and
imposes certain obligations on New World, including (i) the requirement that the
affiliations of New World's television stations be switched to the Fox
Broadcasting Company network as soon as possible, (ii) the grant to Fox
Television of a right of first negotiation with respect to any television
stations New World proposes to sell, and (iii) the requirement that New World
continue to own a certain number of television stations which are Fox
Broadcasting Company affiliates.
The consideration paid for the Series B Preferred Stock, the Series C
Preferred Stock and the Warrants was provided from the working capital of Fox
Television.
It is presently anticipated that, if the Warrants are exercised, the
consideration required to pay the exercise price would be provided through the
surrender of shares of Series C Preferred Stock. No funds are required to
convert the Series B Preferred Stock. The Reporting Persons presently have no
intention of exercising the Warrants or converting the Series B Preferred Stock.
News Corporation, New World, NWCG (Parent) Holdings Corporation, a Delaware
corporation ("Parent"), and NWCG Holdings Corporation, a Delaware corporation
and a wholly-owned subsidiary of Parent ("Holdings"), entered into a Memorandum
of Understanding, dated as of July 17, 1996 (the "MOU"), with regard to the
Merger of a subsidiary of Fox Television Stations, Inc., an indirect subsidiary
of News Corporation, with and into New World.
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<PAGE>
The merger (the "Merger") and a related stock purchase (the "Stock Purchase")
are subject to certain conditions, including obtaining all necessary regulatory
and governmental approvals and consents, including the approval of the Federal
Communications Commission to the transfer of broadcast licenses, clearance or
authorization of the Merger and the Stock Purchase under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (as amended, the "HSR Act") and certain
approvals of shareholders of New World.
Pursuant to the MOU, at the effective time of the Merger (the "Effective
Time"), News Corporation will acquire from Parent (i) all of the outstanding
shares of common stock of New World held by Parent, representing 37,192,236
shares of Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"), as of June 30, 1996; and (ii) all of the outstanding shares of capital
stock of Holdings, representing 100 shares of common stock, par value $.01 per
share, as of June 30, 1996 in exchange for that number of American Depositary
Shares (the "News Corporation Preferred ADSs"), each of which represents four
fully paid and nonassessable shares of preferred limited voting ordinary shares,
par value A$.50 per share, of News Corporation, equal to (x) the product of (A)
the number of shares of Class B Common Stock directly or indirectly owned by
Parent or Holdings at the Effective Time and (B) 1.45, less (y) the number
determined by dividing (A) the accreted value, as of the closing date of the
Merger, of the Senior Notes due 1999 of Holdings by (B) $18.625.
In addition, at the Effective Time, (i) each share of Class A Common Stock
of New World will be converted into the right to
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<PAGE>
receive 1.45 (the "Exchange Ratio") News Corporation Preferred ADSs, (ii) each
share of Class B Common Stock will be converted into the right to receive 1.45
News Corporation Preferred ADSs, (iii) subject to the approval of the holders
thereof, each share of Series A 6.375% Cumulative Redeemable Convertible
Preferred Stock, par value $.01 per share of New World (the "Series A Preferred
Stock") will be converted into the right to receive the number of News
Corporation Preferred ADSs equal to the product of (x) the Exchange Ratio and
(y) the number of shares of Class B Common Stock issuable upon conversion of the
Series A Preferred Stock immediately prior to the Effective Time and (iv)
subject to the approval of the holders thereof, each share of Series E
Cumulative Convertible Redeemable Preferred Stock, par value $.01 per share of
New World (the "Series E Preferred Stock") will be converted into the right to
receive the number of News Corporation Preferred ADSs equal to the product of
(x) the Exchange Ratio and (y) the number of shares of Class A Common Stock
issuable upon conversion of the Series E Preferred Stock immediately prior to
the Effective Time. In the event that the holders of the Series A Preferred
Stock or the holders of the Series E Preferred Stock do not approve the Merger
as described above, each share of such stock will remain outstanding and, in
accordance with the terms thereof, will thereafter be convertible into the right
to receive the number of News Corporation Preferred ADSs determined in
accordance with its terms, based upon the Exchange Ratio. The shares of capital
stock held by New World as treasury stock and the shares of capital stock and
Warrants (as previously defined)
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<PAGE>
of New World held by News Corporation or any of its subsidiaries will not be
subject to conversion and will remain outstanding.
At the Effective Time, each stock option of New World outstanding under New
World's 1994 Stock Option Plan and 1996 Stock Option Plan will immediately vest
and be exercisable, if not vested and exercisable at such time, and all such
stock options shall be assumed by the surviving corporation in the Merger,
adjusted in accordance with the terms thereof to be exercisable to purchase News
Corporation Preferred ADSs and adjusted so that the number of News Corporation
Preferred ADSs for which such stock option is exercisable and the exercise price
per share of such stock option is appropriately adjusted based upon the Exchange
Ratio.
Also at the Effective Time, each outstanding warrant to purchase Class A
Common Stock or Class B Common Stock of New World granted prior to the date of
the MOU will be assumed by the surviving corporation in the Merger, adjusted in
accordance with the terms thereof to be exercisable to purchase News Corporation
Preferred ADSs and adjusted so that the number of News Corporation Preferred
ADSs for which such warrant is exercisable and the exercise price per share of
such warrant is appropriately adjusted based upon the Exchange Ratio.
Additionally, News Corporation has agreed to purchase certain real property
used by New World in Los Angeles, California and owned by 1440 Sepulveda
Partners, a California limited partnership and an affiliate of Parent and has
agreed to assume the obligations and liabilities of Four Star Holdings Corp.
("Four Star"), an affiliate of Parent, related to $46.2 million aggregate
principal amount of Senior Notes due 1999 of Four Star outstanding.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
Item 4 of the Schedule 13D is hereby amended by the Reporting Persons to
delete such Item and add in lieu thereof the following:
The Reporting Persons acquired the Series B Preferred Stock, the Series C
Preferred Stock and the Warrants (each as previously
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<PAGE>
defined) for the purpose of investment, and to secure the performance by New
World of certain contractual covenants previously described. As set forth in
the MOU, News Corporation intends to acquire all of the capital stock of
Holdings and New World, in exchange for News Corporation Preferred ADSs as
described above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
Item 5 of the Schedule 13D is hereby amended by the Reporting Persons to
delete such Item and add in lieu thereof the following:
The number of shares of Class A Common Stock beneficially owned as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, by
the Reporting Persons as of the date hereof is 25,224,845 shares, representing
approximately 46.69% of the outstanding Class A Common Stock. Of such shares,
5,875,000 represent shares underlying currently exercisable Warrants and the
remainder, 19,349,845, represent shares issuable upon conversion of the Series B
Preferred Stock. The Reporting Persons share voting and dispositive power among
themselves with respect to all shares of Class A Common Stock which they
beneficially hold. None of the Reporting Persons has sole voting or dispositive
power with respect to any shares of Class A Common Stock. For purposes of
computing the percentage of beneficial ownership of the Reporting Persons, the
total number of shares of Class A Common Stock considered to be outstanding is
54,023,805./2/
No transactions were effected by the Reporting Persons in the Class A
Common Stock during the 60 days preceding the date hereof.
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/2/ Based solely on the number of shares outstanding on May 8, 1996 as
disclosed in the Form 10-Q for the quarter ended March 31, 1996 filed by New
World. Includes the 5,875,000 shares underlying the Warrants and 19,349,845
shares issuable upon conversion of the Series B Preferred Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
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TO SECURITIES OF THE ISSUER.
---------------------------
Item 6 of the Schedule 13D is hereby amended by the Reporting Persons to
delete such Item and add in lieu thereof the following:
On May 27, 1994, pursuant to the Purchase Agreement, Fox Television
purchased 250,000 shares of Series B Preferred Stock which are convertible into
19,349,845 shares of Class A Common Stock at $12.92 per share, subject to
adjustment for certain subdivisions and reclassifications. Also pursuant to the
Purchase Agreement, New World agreed to issue Units consisting of (i) 25,000
shares of Series C Senior Preferred Stock, (ii) the Series E Warrants to acquire
an aggregate of 1,250,000 shares of Series E Class A Common Stock at the Series
E Exercise Price and (iii) the Series F Warrants to acquire an aggregate of
4,625,000 shares of Series F Class A Common Stock at the Series F Exercise
Price. The Purchase Agreement provides for the issuance of the Series C Senior
Preferred Stock and the Warrants over time, upon the effectiveness of the
Affiliation Agreements between the New World television stations and Fox
Broadcasting Company. The purchase of the Series C Senior Preferred and the
Warrants took place from September 1994 to August 1995 in a series of
transactions. The Warrant Agreement provides that Warrants are exercisable at
any time in whole and from time to time in part, from the date of issue until
the earlier of (x) the date on which the Series C Preferred Stock is redeemed
after the occurrence of a Change of Control (as defined in the Certificate of
Designations for the Series C Preferred Stock) and (y) the seventh anniversary
of the issuance of each Warrant.
On February 8, 1996, the President signed the Telecommunications Act of
1996 (the "1996 Act"), which amends the Communications Act of 1934 (the
"Communications Act"). Regulations promulgated by the Federal Communications
Commission (the "FCC") under the Communications Act prior to the 1996 Act (a)
impose a 12-station limit on the number of television stations in the United
States in which an entity is permitted to have an interest deemed attributable
by the FCC under its rules ("attributable interest") (the "National
Restriction") and (b) prohibit an entity from having an attributable interest in
two television stations with overlapping service area contours (the "Local
Restriction"). Because (a) Fox Television has an attributable interest in 12
U.S. television stations and New World has an attributable interest in 12 U.S.
television stations, and (b) Fox Television and New World have attributable
interests in certain stations with overlapping service area contours, each of
these restrictions has heretofore prevented Fox Television from exercising its
right to convert the Series B Preferred Stock and/or exercise the Warrants,
which would cause Fox Television to have an attributable interest in the New
World television stations.
The 1996 Act directs the FCC to (a) modify the National Restriction by
eliminating the 12-station limit and permit an entity to have an attributable
interest in an unlimited number of U.S. television stations so long as such
stations do not reach, in the aggregate, more than 35 percent of the national
television audience; and (b) conduct a rulemaking proceeding to determine
whether to retain, modify or eliminate the Local Restriction. Under the 1996
Act, subject to compliance with the Local Restriction and upon the sale of one
or more existing television stations, Fox Television may exercise its right to
convert the Series B Preferred Stock into shares of Class A Common Stock and/or
exercise the Warrants for shares of Class A Common Stock without violating the
Communications Act. The Reporting Persons cannot predict when the 1996 Act's
directives with respect to the National and Local Restrictions will be
implemented or the extent to which the Local Restriction may be modified.
In addition, the Warrants contain antidilution provisions with respect to,
among other things, stock dividends, subdivisions and reclassifications, certain
other dividends and distributions, issuances of rights or warrants to subscribe
for or purchase shares of Class A Common Stock to all holders of the Class A
Common Stock at a price less than the Closing Price (as defined therein) of the
Class A Common Stock on the date fixed for determination of stockholders
entitled to receive such rights or warrants, and certain other issuances of
Class A Common Stock, at a price less than the Current Market Price (as defined
therein).
A copy of the Warrant Agreement representing the Warrants is attached
hereto as Exhibit 1. A copy of the Purchase Agreement is attached hereto as
Exhibit 2.
On May 27, 1994, New World and Fox Television entered into a registration
rights agreement (the "Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement and subject to certain restrictions, the holder of
the Series B Preferred Stock and the Warrants is entitled to request that New
World use its best efforts to effect the registration under the Securities Act
of 1933 of the Class A Common Stock underlying the Series B Preferred Stock and
the Warrants and the Series B Preferred Stock. In addition, subject to certain
restrictions, if New World proposes to register any of its equity securities
under the Securities Act of 1933, the holder of the Series B Preferred Stock and
the Warrants may request that the Class A Common Stock underlying the Series B
Preferred Stock and the Warrants be included in such registration.
A copy of the Registration Rights Agreement is attached hereto as Exhibit
3.
As more fully described in Item 3 above, News Corporation, New World,
Parent and Holdings entered into the MOU, with regard to the merger of a
subsidiary of Fox Television Stations, Inc., an indirect subsidiary of News
Corporation, with and into New World. The Merger and related Stock Purchase are
subject to certain conditions, including obtaining all necessary regulatory and
governmental approvals and consents, including the approval of the FCC to the
transfer of broadcast licenses, clearance or authorization of the Merger and the
Stock Purchase under the HSR Act and certain approvals of shareholders of New
World.
Pursuant to the MOU, Parent has agreed that, during the term of the MOU,
Parent will vote, or cause to be voted, the shares of capital stock of New World
beneficially owned by it and its subsidiaries in favor of the Merger, the Stock
Purchase and any other transaction which is the subject of the MOU, including
the approval of any agreements, including the MOU, relating thereto.
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A copy of the MOU is attached hereto as Exhibit 4.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
---------------------------------
Document Exhibit No.
-------- -----------
Warrant Agreement, dated May 27, 1994,
by and between New World Communications
Group Incorporated and Fox Television
Stations, Inc. relating to 5,875,000
shares of Class A Common Stock of
varying series 1*
Securities Purchase Agreement, dated
May 21, 1994 by and between New World
Communications Group Incorporated and
Fox Television Stations, Inc. 2*
Registration Rights Agreement, dated
May 27, 1994 by and between New World
Communications Group Incorporated and
Fox Television Stations, Inc. 3*
Memorandum of Understanding, dated as of
July 17, 1996 by and between New World
Communications Group Incorporated, NWCG
(Parent) Holdings Corporation, NWCG Holdings
Corporation and The News Corporation Limited 4
* Previously filed
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: July 24, 1996
THE NEWS CORPORATION LIMITED
BY: /S/ ARTHUR M. SISKIND
-----------------------
NAME: ARTHUR M. SISKIND
TITLE: DIRECTOR
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: July 24, 1996
/S/ K. RUPERT MURDOCH
------------------------
K. RUPERT MURDOCH
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: July 24, 1996
FOX TELEVISION STATIONS, INC.
BY: /S/ JAY ITZKOWITZ
-------------------------
NAME: JAY ITZKOWITZ
TITLE: SENIOR VICE
PRESIDENT & SECRETARY
-14-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Date: July 24, 1996
TWENTIETH HOLDINGS CORPORATION
BY: /S/ JAY ITZKOWITZ
--------------------------
NAME: JAY ITZKOWITZ
TITLE: SENIOR VICE
PRESIDENT AND
SECRETARY
-15-
<PAGE>
EXHIBIT 4
As of July 17, 1996
The News Corporation Limited
1211 Avenue of the Americas
New York, New York 10036
Gentlemen:
This Memorandum of Understanding (this "Memorandum") confirms our
mutual agreements regarding the direct and indirect acquisition by The News
Corporation Limited, a South Australia corporation ("News Corp."), of all of the
outstanding shares of common stock of New World Communications Group
Incorporated, a Delaware corporation (the "Company"), and all of the outstanding
shares of capital stock of NWCG Holdings Corporation ("Holdings"), a Delaware
corporation and a wholly owned subsidiary of NWCG (Parent) Holdings Corporation,
a Delaware corporation (the "Parent"), and sets forth our agreements with
respect to certain matters related thereto.
The parties hereto hereby agree as follows:
1. The Stock Purchase and the Merger. Subject to the terms and
---------------------------------
conditions hereof, as such terms may be incorporated into (i) a definitive
Merger Agreement (the "Merger Agreement") among News Corp., Acquiror Sub (a
wholly owned subsidiary of News Corp. to be established by News Corp. for the
purpose of facilitating the transactions contemplated thereby), and the Company,
(ii) a Stock Purchase Agreement (the "Stock Purchase Agreement"), between News
Corp. and Parent, and (iii) a Purchase Agreement (the "Real Estate Purchase
Agreement") between News Corp. and 1440 Sepulveda Partners, a California limited
partnership and an affiliate of Parent (the "Partnership") (the Merger
Agreement, the Stock Purchase Agreement, the Real Estate Purchase Agreement and
all other agreements and instruments necessary to
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 2
consummate the transactions contemplated hereby and thereby, the "Definitive
Agreements"), (i) News Corp. shall acquire from Parent (x) all of the
outstanding shares of capital stock of the Company held by Parent, free and
clear of any liens, charges or encumbrances and (y) all of the outstanding
shares of capital stock of Holdings, free and clear of any liens, charges or
encumbrances (collectively, the "Stock Purchase"), (ii) Acquiror Sub shall merge
with and into Company (the "Merger") and (iii) Parent and News Corp. shall
consummate certain other transactions as set forth below.
The Stock Purchase. Pursuant to the Stock Purchase Agreement, on the
Closing Date (as defined below), simultaneously with and conditioned upon the
Merger, News Corp. shall purchase from Parent, and Parent will sell to News
Corp., (i) all of the outstanding shares of capital stock of the Company held by
Parent and (ii) all of the outstanding shares of capital stock of Holdings, in
consideration of the issuance to Parent of that number of American Depositary
Shares (the "News Corp. Preferred ADRs"), each of which represents four fully
paid and nonassessable shares of Preferred Limited Voting Ordinary Shares, par
value A$.50 per share, of News Corp. (the "News Corp. Preferred Stock"), equal
to (x) the product of (A) the number of shares of Class B Common Stock, par
value $.01 per share (the "Class B Common Stock"), of the Company directly or
indirectly owned by Parent or Holdings as of the effective time of the Merger
(the "Effective Time") and (B) 1.45 (the "Exchange Ratio"), less (y) the number
----
determined by dividing (A) the accreted value as of the Closing Date of the
Senior Notes due 1999 (the "Holdings Notes") of Holdings by (B) $18.625.
The Real Estate Purchase. On the Closing Date, News Corp. shall
purchase from the Partnership, and the Partnership shall sell to News Corp., in
accordance with Section 4(g), that certain real property located at 1440 South
Sepulveda Boulevard, in the City and County of Los Angeles, State of California,
the legal description of which is set forth in Exhibit A hereto, including the
---------
building and all related improvements and facilities, together with all rights,
privileges, easements, hereditaments and appurtenances thereunto (the "Real
Property")
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 3
for a purchase price, payable in cash, equal to $50 million (the "Real Property
Purchase Price"); provided, however, in the event that the principal amount
-------- -------
outstanding pursuant to the Loan Agreement, dated as of April 14, 1995 (the
"Real Property Loan Agreement"), by and between the Partnership and Credit
Lyonnais Cayman Island Branch shall not have been repaid on or prior to the
Closing Date and all liens and encumbrances relating thereto shall not have been
released, the Real Property Purchase Price shall be reduced by the principal
amount outstanding under the Real Property Loan Agreement at the Closing Date
and the amount required to release all such liens and encumbrances. The
purchase price for the Real Property shall be paid by wire transfer of
immediately available funds to a bank account designated by the Partnership not
later than two business days prior to the Closing Date. In connection with such
purchase, the sublease, dated April 14, 1995, between New World Entertainment,
Ltd., as sublessor, and Andrews Group Incorporated ("AGI"), as sublessee, shall
be terminated without any continuing liability of AGI.
The Four Star Notes. As of the date hereof, there is $46.2 million
aggregate principal amount of Senior Notes due 1999 (the "Four Star Notes") of
Four Star Holdings Corp. ("Four Star") outstanding. Four Star is the account
party with respect to an aggregate of $49.15 million of letters of credit
related to the Four Star Notes (the "Letters of Credit"). At the Effective
Time, News Corp. shall assume all of the obligations under, and shall hold Four
Star and its affiliates harmless against all obligations and liabilities under,
the Four Star Notes and shall permit itself or one or more of its affiliates to
be substituted in all respects for Four Star, as of the Effective Time, in
respect of all obligations and liabilities under the Letters of Credit and shall
permit all of the collateral related to the Letters of Credit to be released and
returned to the pledgor thereof as of the Effective Time.
The Merger. Upon the terms and subject to the conditions set forth
herein, Acquiror Sub will merge with and into the Company with the Company as
the surviving corporation in the Merger, and the separate existence of
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 4
the Acquiror Sub shall cease. As a result of the Merger and without any action
on the part of any holder of outstanding shares of capital stock of the Company,
at the Effective Time:
(a) Each share of Class A Common Stock, par value $.01 per share (the
"Class A Common Stock"), of the Company (other than shares owned by the Company
as treasury stock and shares owned by News Corp., Acquiror Sub or any other
subsidiary of News Corp., which shall be treated as described below) shall be
converted into the right to receive 1.45 (the "Exchange Ratio") News Corp.
Preferred ADRs.
(b) Each share of Class B Common Stock (other than shares owned by
the Company as treasury stock and shares owned by News Corp., Acquiror Sub or
any other subsidiary of News Corp., which shall be treated as described below)
shall be converted into the right to receive the Exchange Ratio of News Corp.
Preferred ADRs.
(c) If the Company Series A Preferred Stock Approval (as defined
below) is obtained, each share of 6.375% Cumulative Redeemable Convertible
Preferred Stock, Series A, par value $.01 per share (the "Series A Preferred
Stock"), of the Company (other than shares owned by the Company as treasury
stock and shares owned by News Corp., Acquiror Sub or any other subsidiary of
News Corp., which shall be treated as described below) shall be converted into
the right to receive the number of News Corp. Preferred ADRs equal to the
product of (x) the Exchange Ratio and (y) the number of shares of Class B Common
Stock issuable upon conversion of the Series A Preferred Stock immediately prior
to the Effective Time. In the event that the Company Series A Preferred Stock
Approval is not obtained, in accordance with the terms of the Series A Preferred
Stock, each share of Series A Preferred Stock outstanding at the Effective Time
shall remain outstanding and, in accordance with the terms thereof, shall
thereafter be convertible into the right to receive the number of News Corp.
Preferred ADRs determined in accordance with its terms, based upon the Exchange
Ratio.
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 5
(d) If the Company Series E Preferred Stock Approval (as defined
below) is obtained, each share of Series E Cumulative Convertible Redeemable
Preferred Stock, par value $.01 per share (the "Series E Preferred Stock"), of
the Company (other than shares owned by the Company as treasury stock and shares
owned by News Corp., Acquiror Sub or any other subsidiary of News Corp., which
shall be treated as described below) shall be converted into the right to
receive the number of News Corp. Preferred ADRs equal to the product of (x) the
Exchange Ratio and (y) the number of shares of Class A Common Stock issuable
upon conversion of the Series E Preferred Stock immediately prior to the
Effective Time. In the event that the Company Series E Preferred Stock Approval
is not obtained, in accordance with the terms of the Series E Preferred Stock,
each share of Series E Preferred Stock outstanding at the Effective Time shall
remain outstanding and, in accordance with the terms thereof, shall thereafter
be convertible into the right to receive the number of News Corp. Preferred ADRs
determined in accordance with its terms, based upon the Exchange Ratio.
All shares of capital stock of the Company that are owned by the
Company as treasury stock and any shares of capital stock of the Company owned
by News Corp., Acquiror Sub or any other subsidiary of News Corp., including the
shares of Series B Junior Convertible Preferred Stock, par value $.01 per share,
of the Company, the shares of Series C Senior Preferred Stock, par value $.01
per share, of the Company held by a subsidiary of News Corp. and the shares of
Class B Common Stock indirectly acquired by News Corp. as a result of the Stock
Purchase, shall remain outstanding and unchanged as a result of the Merger.
No certificate or scrip representing fractional News Corp. Preferred
ADRs shall be issued upon the surrender for exchange of capital stock of the
Company in the Stock Purchase or the Merger. In lieu of any fractional News
Corp. Preferred ADR, each holder of capital stock of the Company who would
otherwise have been entitled to a fraction of an News Corp. Preferred ADR will
be entitled to receive a cash payment in lieu of such frac-
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 6
tional News Corp. Preferred ADR in an amount equal to such fraction multiplied
by $18.625.
At the Effective Time, each outstanding Company Stock Option (as
defined in Section 4(b)) shall immediately vest and be exercisable, if not
vested and exercisable at such time, and all Company Stock Options shall be
assumed by the surviving corporation in the Merger and adjusted in accordance
with the terms thereof and this Memorandum to be exercisable to purchase News
Corp. Preferred ADRs, as provided below. Following the Effective Time, each
Company Stock Option shall continue to have, and shall be subject to, the same
terms and conditions set forth in the Company Option Plan (as defined in Section
4(b)) or any other agreement pursuant to which such Company Stock Option was
subject immediately prior to the Effective Time, except as set forth in this
Section 1 and except that the number of News Corp. Preferred ADRs for which each
such Company Stock Option shall be exercisable and the exercise price per share
of such Company Stock Option shall be appropriately adjusted based upon the
Exchange Ratio.
At the Effective Time, each outstanding Company Warrant (as defined in
Section 4(b)) granted prior to the date of this Memorandum shall be assumed by
the surviving corporation in the Merger and adjusted in accordance with the
terms thereof and this Memorandum to be exercisable to purchase News Corp.
Preferred ADRs, as provided below. Following the Effective Time, each Company
Warrant shall continue to have, and shall be subject to, the same terms and
conditions set forth in the agreement pursuant to which such Company Warrant was
subject immediately prior to the Effective Time, except as set forth in this
Section 1 and except that the number of News Corp. Preferred ADRs for which each
such Company Warrant shall be exercisable and the exercise price per share of
such Company Warrant shall be appropriately adjusted based upon the Exchange
Ratio.
The Certificate of Incorporation of the Company immediately prior to
the Effective Time shall be the Certificate of Incorporation of the surviving
corporation
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 7
in the Merger, until amended in accordance with the Delaware General Corporation
Law (the "DGCL").
2. Definitive Agreements. News Corp., the Company and the Parent
---------------------
shall promptly and diligently negotiate in good faith and use their respective
best efforts to reach agreement on the Stock Purchase Agreement, the Merger
Agreement, the Real Estate Purchase Agreement and the other Definitive
Agreements, each of which shall be consistent with the terms hereof and shall
contain such representations, warranties, covenants, conditions and
indemnification as are set forth below as well as those customary for
transactions similar to those provided herein and therein, including, without
limitation, customary representations, warranties, covenants and indemnification
relating to income taxes of Holdings and the consolidated group in which it was
included prior to the Closing Date. Although the parties intend to diligently
negotiate and promptly enter into the Definitive Agreements, the parties
acknowledge and agree that this Memorandum contains all of the essential terms
of the Transactions (as defined below) and, in the event that the parties do not
enter into Definitive Agreements, that this Memorandum is a binding agreement
and shall form the basis for consummation of the Transactions contemplated
hereby.
3. Conditions; Closing.
-------------------
(a) The parties' respective obligations to consummate the Stock
Purchase, the Merger and the other transactions contemplated hereby
(collectively, the "Transactions") shall be subject to the following conditions:
(i) the stockholders of the Company shall have approved this Memorandum or the
Merger Agreement, as the case may be, the Merger, the Stock Purchase and the
other Transactions; (ii) the closing of the Transactions shall have occurred on
or before June 30, 1997 (the "Outside Date"); (iii) all necessary regulatory and
governmental approvals and consents, including the approval of the Federal
Communications Commission (the "FCC"), shall have been obtained; (iv) the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), shall have expired or been
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 8
terminated; and (v) no action shall have been taken, and no statute, rule,
regulation, executive order, judgment, decree, or injunction (other than a
temporary restraining order) shall have been enacted, entered, promulgated or
enforced (and not repealed, superseded, lifted or otherwise made inapplicable),
by any court of competent jurisdiction or governmental entity which restrains,
enjoins or otherwise prohibits the consummation of the Transactions (each party
agreeing to use its best efforts to avoid the effect of any such statute, rule,
regulation or order or to have any such order, judgment, decree or injunction
lifted).
(b) Subject to the satisfaction or waiver of all of the conditions to
closing contained in Section 3(a), the closing of the Transactions (the
"Closing") will take place at 10:00 a.m., New York City time, on a date to be
specified by the parties, which shall be no later than the fifth business day
after the satisfaction or waiver of the conditions to Closing contained in
Section 3(a), at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, New York, New York 10022, unless another date or place is agreed to in
writing by the parties hereto. The date and time at which the Closing occurs is
referred to herein as the "Closing Date."
4. Representations and Warranties of the Company and Parent. The
--------------------------------------------------------
Company, Holdings and Parent hereby represent and warrant to News Corp. that:
(a) Organization and Qualifications. Each of the Company, Parent,
Holdings and each Company subsidiary is a corporation, partnership or other
legal entity duly incorporated or organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has the requisite power and authority and all governmental permits,
approvals and other authorizations necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental permits, approvals and other
authorizations would not, individually or in the
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 9
aggregate, have a material adverse effect on the business, assets, financial or
other condition, or results of operations of the Company and its subsidiaries,
taken as a whole (a "Company Material Adverse Effect").
(b) Capitalization. Subject to Section 4(b)(i) of the disclosure
schedule of the Company attached as Exhibit B hereto (the "Company Disclosure
---------
Schedule"): (i) The authorized capital stock of the Company consists of
400,000,000 shares of Class A Common Stock, 400,000,000 shares of Class B Common
Stock (together with the Class A Common Stock, the "Company Common Stock"), and
100,000,000 shares of preferred stock, par value $.01 per share, of which
1,200,000 shares were designated as Series A Preferred Stock, 250,000 shares
were designated as Series B Preferred Stock, 25,000 shares were designated as
Series C Senior Preferred Stock, and 300,000 shares were designated as Series E
Preferred Stock (together with the Series A Preferred Stock, the Series B
Preferred Stock, and the Series C Senior Preferred Stock, the "Company Preferred
Stock"). As of June 30, 1996, (i)(A) 28,986,326 shares of Class A Common Stock
were issued and outstanding, all of which were validly issued, fully paid and
nonassessable, (B) 38,277,908 shares of Class B Common Stock were issued and
outstanding, all of which were fully paid and nonassessable and 37,192,236 of
which in the aggregate were held by Parent and Holdings (and, except for
1,500,000 Class B Warrants (as defined below), no other shares of capital stock
of the Company are owned by any affiliate of Parent or Holdings), (C) 1,200,000
shares of Series A Preferred Stock were issued and outstanding, all of which
were fully paid and nonassessable, (D) 250,000 shares of Series B Preferred
Stock were issued and outstanding, all of which were fully paid and
nonassessable, (E) 25,000 shares of Series C Senior Preferred Stock were issued
and outstanding, all of which were fully paid and nonassessable, and (F) 300,000
shares of Series E Preferred Stock were issued and outstanding, all of which
were fully paid and nonassessable; (ii) 13,375,000 warrants to purchase shares
of Class A Common Stock (the "Class A Warrants") were issued and outstanding;
(iii) 3,476,955 warrants to purchase shares of Class B Common Stock (the "Class
B Warrants" and, together with the Class A Warrants, the
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 10
"Company Warrants") were issued and outstanding; and (iv)(A) 20,853,604 shares
of Class A Common Stock were reserved for issuance upon conversion of the Series
B Preferred Stock and the Series E Preferred Stock, (B) 5,903,188 shares of the
Class B Common Stock were reserved for issuance upon conversion of the Series A
Preferred Stock, (C) 15,203,340 shares of Class A Common Stock were reserved for
issuance upon exercise of the Class A Warrants, (D) 3,476,955 shares of Class B
Common Stock were reserved for issuance upon exercise of the Class B Warrants,
(E) 5,732,660 shares of Class A Common Stock were reserved for issuance upon
exercise of outstanding stock options (the "Company Stock Options") granted
pursuant to the Company's 1994 Stock Option Plan and the Company's 1996 Stock
Option Plan (collectively, the "Company Stock Option Plans") and (F) 1,467,340
shares of Class A Common Stock were reserved for issuance upon exercise of
options available for grant under the Company Stock Option Plans. Except as set
forth above, as of June 30, 1996, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding and,
since such date, no shares of capital stock or other voting securities or
options in respect thereof have been issued except (i) upon the exercise of the
Company Stock Options outstanding on June 30, 1996 or (ii) upon the conversion
of convertible securities or upon the exercise of Company Warrants, in each case
outstanding on June 30, 1996. Except as set forth above and except as
contemplated herein, there are no options or agreements relating to the issued
or unissued capital stock of the Company or any Company subsidiary, or
obligating the Parent, Holdings, any Company subsidiary or AGI to issue,
transfer, grant or sell any shares of capital stock of, or other equity
interests in, or securities convertible into or exchangeable for any capital
stock or other equity interests in, the Company or any Company subsidiary.
Except for required repurchases of options or stock upon termination of
employment to the extent required by agreements in effect on the date hereof,
there are no outstanding contractual obligations of the Company or any Company
subsidiary to repurchase, redeem or otherwise acquire any shares of Company
Common Stock or Company Preferred Stock
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 11
or any other shares of capital stock of the Company or any Company subsidiary.
(ii) The authorized capital stock of Holdings consists of 1,000 shares
of common stock, par value $.01 per share (the "Holdings Common Stock"), and
1,000 shares of preferred stock, par value $.01 per share, of which 100 shares
of Holdings Common Stock are issued and outstanding. All of the issued and
outstanding shares of Holdings Common Stock are owned by Parent. Subject to
Section 4(b)(ii) of the Company Disclosure Schedule, as of the date hereof,
there are no options or agreements relating to the issued or unissued capital
stock of Holdings or obligating Holdings, any Holdings subsidiary or Parent to
issue, transfer, grant or sell any shares of capital stock of, or other equity
interests in, or securities convertible into or exchangeable for any capital
stock or other equity interests in, Holdings.
(c) Authority Relative to This Memorandum. Each of the Company,
Holdings, and Parent has all necessary corporate power and authority to execute
and deliver this Memorandum, to perform its obligations hereunder and, subject
to adoption of this Memorandum by the stockholders of the Company as
contemplated hereby (the "Company Stockholder Approval"), to consummate the
Transactions. The execution and delivery of this Memorandum by each of the
Company, Holdings and Parent and the consummation by each of them of the
Transactions have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of the Company, Holdings
or Parent is necessary to authorize this Memorandum or to consummate the
Transactions (other than (i) the Company Stockholder Approval and (a) if the
shares of Series A Preferred Stock are to be converted pursuant to Section 1(c),
the approval of the Merger Agreement by the affirmative vote of holders of a
majority of the shares of Series A Preferred Stock (the "Company Series A
Preferred Stock Approval"), and (b) if the shares of Series E Preferred Stock
are to be converted pursuant to Section 1(c), the approval of the Merger
Agreement by the affirmative vote of holders of a majority of the shares of
Series E Preferred Stock (the "Company Series E Preferred Stock Approval"), and
(ii) the fil-
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 12
ing of a certificate of merger with the Delaware Secretary of State pursuant to
the DGCL and any other documents necessary to effect the Merger in accordance
with the DGCL (the "Merger Filing")). This Memorandum has been duly and validly
executed and delivered by each of the Company, Holdings and Parent and, assuming
the due authorization, execution and delivery thereof by News Corp. and Acquiror
Sub, constitutes the legal, valid and binding obligation of each of the Company,
Holdings and Parent, enforceable against them 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.
(d) No Conflict; Required Filings and Consents. (i) The execution
and delivery of this Memorandum by the Company, Holdings and the Parent do not,
and the performance of their respective obligations under this Memorandum and
the consummation of the Transactions by them will not, (i) conflict with or
violate the certificate of incorporation or bylaws or equivalent organizational
documents of the Company, Holdings or the Parent or any of their respective
material subsidiaries, (ii) subject to the making of the filings and obtaining
the approvals identified in Section 4(d)(ii), conflict with or violate any law,
rule, regulation, order, judgment or decree (collectively, "Laws") applicable to
the Company, Holdings, the Parent or any of their respective subsidiaries or by
which any property or asset of the Company, Holdings, the Parent or any of their
respective subsidiaries is bound or affected, or (iii) except as provided in
Section 4(d) of the Company Disclosure Schedule, conflict with or 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, result in the loss (by the Company,
any Company subsidiary or the surviving corporation in the Merger) or
modification in a manner materially adverse to the Company and the Company's
subsidiaries of any material right or benefit under, or give to others any right
of termination, amendment, acceleration, repurchase or repayment, increased
payments or cancellation of, or result in the creation of a lien
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 13
or other encumbrance on any property or asset of the Company or any Company
subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise, or other instrument or obligation,
whether written or oral (collectively, "Contracts"), to which the Company or any
Company subsidiary is a party or by which the Company or any Company subsidiary
or any property or asset of the Company or any Company subsidiary is bound or
affected, except, in the case of clauses (ii) and (iii) for any such conflicts
or violations which would not prevent or delay in any material respect
consummation of the Transactions, or otherwise, individually or in the
aggregate, prevent the Company, Holdings or the Parent from performing its
obligations under this Memorandum in any material respect, and would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(ii) The execution and delivery of this Memorandum by the Company,
Holdings and the Parent do not, and the performance of their obligations under
this Memorandum and the consummation of the Transactions by them will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any federal, state or local governmental or regulatory agency,
authority, commission or instrumentality, whether domestic or foreign (each a
"Governmental Entity"), except (i) for (A) applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Securities
Act of 1933, as amended (the "Securities Act"), and state securities or "blue
sky" laws ("Blue Sky Laws"), (B) the pre-merger notification requirements of the
HSR Act, (C) approval of the Transactions by the FCC under the Federal
Communications Act of 1934, as amended (the "Communications Act"), and the rules
and regulations of the FCC thereunder, and (D) the Merger Filing, and (ii) where
the failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not, individually or in the aggregate,
prevent or delay in any material respect consummation of the Transactions, or
otherwise prevent the Company, Holdings or the Parent from performing their
respective obligations under this Memorandum in any mate-
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 14
rial respect, and would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(e) SEC Reports and Financial Statements. Each form, report,
schedule, registration statement and definitive proxy statement filed by the
Company and Holdings with the Securities and Exchange Commission (the "SEC")
since December 31, 1994 and prior to the date hereof (as such documents have
been amended prior to the date hereof, collectively, the "Company SEC Reports"),
as of their respective dates, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and the rules
and regulations thereunder. None of the Company SEC Reports, as of their
respective dates, contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except for such statements, if any, as have been modified
or superseded by subsequent filings prior to the date hereof. The respective
consolidated financial statements of the Company and its subsidiaries and of
Holdings and its subsidiaries included in such reports comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited interim financial statements, as
permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of
the unaudited interim financial statements, to normal, year-end audit
adjustments) the respective consolidated financial position of the Company and
its subsidiaries and Holdings and its subsidiaries as at the dates thereof and
the consolidated results of their operations and cash flows for the periods then
ended. Since March 31, 1996, neither the Company nor any of its subsidiaries
nor Holdings nor any of its subsidiaries has incurred any liabilities or
obligations (whether absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise and whether due or to become due) of any nature,
except liabilities, obliga-
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 15
tions or contingencies (a) which are reflected on the unaudited balance sheet of
the Company and its subsidiaries or Holdings and its subsidiaries, as the case
may be, as at March 31, 1996 (including the notes thereto), or (b) which (i)
were incurred in the ordinary course of business after March 31, 1996 and
consistent with past practices, (ii) are disclosed in the Company SEC Reports
filed after March 31, 1996 or (iii) would not, individually or in the aggregate,
have a Company Material Adverse Effect. Since March 31, 1996, there has been no
change in any of the significant accounting (including tax accounting) policies,
practices or procedures of the Company or any Company material subsidiary.
(f) Absence of Certain Changes or Events; Obligations. Subject to
Section 4(f) of the Company Disclosure Schedule: (i) except as contemplated by
this Memorandum or as disclosed in any Company SEC Report, since March 31, 1996,
(x) the Company and the Company subsidiaries have conducted their respective
businesses only in the ordinary course, consistent with past practice, and have
not taken any of the actions set forth in Section 6(a) and (y) there has not
occurred or arisen any event that, individually or in the aggregate, has had or,
insofar as reasonably can be foreseen, is likely in the future to have, a
Company Material Adverse Effect other than any developments that generally
affect the industry in which the Company operates.
(ii) Except for the Holdings Notes, Holdings does not have any
material liabilities or obligations. None of the Company, the Parent nor
Holdings is obligated to make any payment to King World Productions, Inc. as a
result of the recent discussions regarding a possible transaction between the
Company and King World Productions, Inc.
(g) The Partnership has, and at the Closing the Partnership will
convey to News Corp., good and marketable title to, the Real Property, subject
only to Permitted Exceptions (as defined below). The improvements on the Real
Property (the "Improvements") do not encroach onto land adjoining the Real
Property or onto any easements to such an extent as would materially
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 16
impair the value of the Real Property and the Improvements, the continued use
and operation of the Real Property and the Improvements for the same uses and
operations as those conducted at the present time, and the improvements from
land adjoining the Real Property do not encroach onto any part of the Real
Property to such an extent as would materially impair the continued use and
operation of the Real Property and the Improvements for the same uses and
operations as those conducted at the present time. For the purposes of this
Agreement, "Permitted Exceptions" means security interests, liens and other
encumbrances for (i) property taxes not yet due and payable, (ii) workmen's,
repairmen's or other similar liens imposed by law but not yet asserted arising
or incurred in the ordinary course of business in respect of obligations which
are not overdue, (iii) easements, covenants, rights-of-way, claims and other
encumbrances of record specifically disclosed on the Title Policy (No. CL-1530-
279593) issued by Stewart Title Guaranty Company dated April 14, 1995, (iv)
zoning, building and other similar governmental restrictions applicable to the
Real Property, and (v) security interests, liens, charges and other encumbrances
related to the Real Property Loan Agreement.
(h) Certain of the Company's subsidiaries have entered into (i) an
Asset Purchase Agreement, dated as of May 22, 1996, with National Broadcasting
Company, Inc. ("NBC") with respect to the sale to NBC of all of the assets
related to WVTM-TV, Channel 13, Birmingham, Alabama, and (ii) an Asset Purchase
Agreement, dated as of May 22, 1996, with NBC with respect to the sale to NBC of
all of the assets related to KNSD-TV, Channel 39, San Diego, California
(collectively, the "NBC Agreements"). Under the terms of the NBC Agreements,
the Company expects to receive aggregate gross proceeds of $440 million,
including a working capital adjustment. Based on such proceeds, the Company
intends to file a Federal income tax return for the year ending December 31,
1996 which reflects a Federal tax from the closings of the transactions pursuant
to the NBC Agreements (assuming such closings occur during such period), after
giving effect to the application of operating loss carry forwards, not in excess
of $30 million. To the extent per-
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 17
mitted by existing Company Contracts, the Company intends to use the net
proceeds received under the NBC Agreements to repay outstanding indebtedness and
any balance will remain within the Company and its subsidiaries.
5. Representations and Warranties of News Corp. News Corp. hereby
--------------------------------------------
represents and warrants to the Company, Holdings and Parent that:
(a) Organization and Qualifications. Each of News Corp. and each
material News Corp. subsidiary is a corporation, partnership or other legal
entity duly incorporated or organized, validly existing and, if applicable, in
good standing under the laws of the jurisdiction of its incorporation or
organization and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing or, if applicable, in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a material adverse effect on the business, assets, financial or
other condition, or results of operations of News Corp. and its subsidiaries,
taken as a whole (a "News Corp. Material Adverse Effect").
(b) Capitalization. The authorized capital stock of News Corp.
consists of 5,000,000,000 shares of A$.50 each, of which, as of June 30, 1996,
1,940,029,769 were designated as Ordinary Shares, par value A$.50 each (the
"News Corp. Ordinary Shares"), and were issued and outstanding, 977,363,617 were
designated as shares of News Corp. Preferred Stock and were issued and
outstanding, and 25,000,000 were designated as shares of 6.25% Convertible
Preference Shares, par value A$.50 each (the "News Corp. Convertible Stock"),
and were issued and outstanding. All of such shares were validly issued, fully
paid and nonassessable. As of June 30, 1996, (i) (A) an aggregate of 2,598,530
options ("News Corp. Options") over Ordinary Shares were outstanding under the
News Corp. Executives' Share Option Scheme (the "Executive Scheme"), (B) an
aggregate of 1,299,265 News Corp. Options over News Corp. Preferred Stock were
outstanding
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 18
under the Executive Scheme, (C) an aggregate of 5,335,319 News Corp. Options
over News Corp. Ordinary Shares were outstanding under the News Corp. Share
Option Plan (the "Plan"), (D) an aggregate of 4,892,659 News Corp. Options over
News Corp. Preferred Stock were outstanding under the Plan and (E) warrants to
purchase an aggregate of $155,339,806 News Corp. Ordinary Shares (the "News
Corp. Warrants") were outstanding, and (ii)(A) 155,339,806 News Corp. Ordinary
Shares were reserved for exercise upon exercise of the News Corp. Warrants and
(B) 25,000,000 News Corp. Ordinary Shares and 12,500,000 shares of News Corp.
Preferred Stock were reserved for issuance upon conversion of the News Corp.
Convertible Stock on September 13, 1998 (the "Conversion Date"), provided the
News Corp. Ordinary Share price is $21.62 per share or greater on the Conversion
Date. (If the News Corp. Ordinary Share price is below $21.62 per share on the
Conversion Date, the number of shares to be issued on conversion will be
determined by dividing the adjusted share price into $500 million. The adjusted
share price will be calculated as 92.5% of the weighted average sale price
during the 10 trading days prior to the Conversion Date.) Except as set forth
above, as of June 30, 1996, no shares of capital stock or other voting
securities of News Corp. were issued, reserved for issuance or outstanding and,
since such date, no shares of capital stock or other voting securities or
options in respect thereof have been issued except (i) upon the exercise of News
Corp. Stock Options outstanding on June 30, 1996 or (ii) upon the conversion of
convertible securities or upon the exercise of the News Corp. Warrants. Except
as set forth above, except with respect to agreements between News Corp. and MCI
Communications Corporation, and the Scheme of Arrangement involving News Corp.
and News International plc, the terms of each of which were previously disclosed
to the Company, and except as contemplated herein, (i) there are no options or
agreements relating to the issued or unissued capital stock of News Corp. or any
News Corp. subsidiary, or obligating News Corp. or any News Corp. subsidiary to
issue, transfer, grant or sell any shares of capital stock of, or other equity
interests in, or securities convertible into or exchangeable for any capital
stock or other equity interests in, News Corp. or any News Corp. subsidiary and
(ii) there are no outstand-
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 19
ing contractual obligations of News Corp. or any News Corp. subsidiary to
repurchase, redeem or otherwise acquire any shares of News Corp. capital stock
or any shares of capital stock of any News Corp. subsidiary. All of the shares
of News Corp. Preferred Stock underlying the News Corp. Preferred ADRs to be
issued in the Stock Purchase and the Merger, when issued upon the terms and
conditions set forth herein or, if applicable, in the Merger Agreement and the
Stock Purchase Agreement, will be duly authorized, validly issued, fully paid
and nonassessable.
(c) Authority Relative to This Memorandum. (i) News Corp. has all
necessary corporate power and authority to execute and deliver this Memorandum,
to perform its obligations hereunder and to consummate the Transactions.
(ii) The execution and delivery of this Memorandum by News Corp. and
the consummation by News Corp. of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of News Corp. are necessary to authorize this Memorandum or to
consummate the Transactions (other than the Merger Filing). This Memorandum has
been duly and validly executed and delivered by News Corp. and, assuming the due
authorization, execution and delivery thereof by the Company, Holdings and the
Parent, constitutes the legal, valid and binding obligation of News Corp.,
enforceable against News Corp. 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.
(d) No Conflict; Required Filings and Consents. (i) The execution
and delivery of this Memorandum by News Corp. do not, and the performance of its
obligations under this Memorandum and the consummation of the Transactions by
News Corp. will not, (i) conflict with or violate the articles of incorporation
or bylaws or equivalent organizational documents of News Corp. or any material
News Corp. subsidiary, (ii) subject to
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 20
making the filings and obtaining the approvals identified in Section 5(d)(ii),
conflict with or violate any Law applicable to News Corp. or any News Corp.
subsidiary or by which any property or asset of News Corp. or any News Corp.
subsidiary is bound or affected, or (iii) subject to making the filings and
obtaining the approvals identified in Section 5(d)(ii), conflict with or 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, result in the loss or
modification in a manner adverse to News Corp. and the News Corp. subsidiaries
of a material right or benefit under, or give to others any right of
termination, amendment, acceleration, repurchase or repayment, increased
payments or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of News Corp. or any News Corp. subsidiary
pursuant to, any Contract to which News Corp. or any News Corp. subsidiary is a
party or by which News Corp. or any News Corp. subsidiary or any property or
asset of News Corp. or any News Corp. subsidiary is bound, except, in the case
of clauses (ii) and (iii), for any such conflicts and violations which would not
prevent or delay in any material respect consummation of the Transactions, or
otherwise, individually or in the aggregate, prevent News Corp. from performing
its obligations under this Memorandum in any material respect, and would not,
individually or in the aggregate, have a News Corp. Material Adverse Effect.
(ii) The execution and delivery of this Memorandum by News Corp. do
not, and the performance of its obligations under this Memorandum and the
consummation of the Transactions by News Corp. will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) for (A) applicable requirements, if any, of the
Exchange Act, the Securities Act or the Blue Sky Laws, (B) the pre-merger
notification requirements of the HSR Act, (C) approval of the FCC under the
Communications Act, (D) the Merger Filing, and (E) the filing of listing
applications with the stock exchanges on which the News Corp. Preferred Stock or
News Corp. Preferred ADRs are listed and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 21
such filings or notifications, would not, individually or in the aggregate,
prevent or delay in any material respect consummation of the Transactions, or
otherwise prevent News Corp. from performing its obligations under this
Memorandum in any material respect, and would not, individually or in the
aggregate, have a News Corp. Material Adverse Effect.
(e) SEC Reports and Financial Statements. Each form, report,
schedule and registration statement filed by News Corp. with the SEC since
December 31, 1994 and prior to the date hereof (as such documents have been
amended prior to the date hereof, the "News Corp. SEC Reports"), as of their
respective dates, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the rules and
regulations thereunder. None of the News Corp. SEC Reports, as of their
respective dates, contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except for such statements, if any, as have been modified
or superseded by subsequent filings prior to the date hereof. The consolidated
financial statements of News Corp. and its subsidiaries included in such reports
have been prepared in accordance with Australian generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto) and fairly present (subject, in the
case of the unaudited interim financial statements, to normal, year-end audit
adjustments) the consolidated financial position of News Corp. and its
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended, and such financial
statements and the reconciliations to United States generally accepted
accounting principles comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. Since March 31, 1996, neither News Corp. nor any of its
subsidiaries has incurred any liabilities or obligations (whether absolute,
accrued, fixed, contingent, liquidated, unliquidated or otherwise
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 22
and whether due or to become due) of any nature, except liabilities, obligations
or contingencies (a) which are reflected on the audited balance sheet of News
Corp. and its subsidiaries as at March 31, 1996 (including the notes thereto),
or (b) which (i) were incurred in the ordinary course of business after March
31, 1996 and consistent with past practices, (ii) are disclosed in News Corp.
SEC Reports filed after March 31, 1996 or (iii) would not, individually or in
the aggregate, have a News Corp. Material Adverse Effect. Since March 31, 1996,
there has been no change in any of the significant accounting (including tax
accounting) policies, practices or procedures of News Corp. or any News Corp.
material subsidiary.
(f) Absence of Certain Changes or Events. Except as contemplated by
this Memorandum or as disclosed in any News Corp. SEC Report, since March 31,
1996, (i) News Corp. and News Corp. subsidiaries have conducted their respective
businesses only in the ordinary course, consistent with past practice, and have
not taken any of the actions set forth in Section 6(b), and (ii) there has not
occurred or arisen any event that, individually or in the aggregate, has had or,
insofar as reasonably can be foreseen, is likely in the future to have, a News
Corp. Material Adverse Effect, other than events or developments generally
affecting the industry in which News Corp. operates.
6. Covenants.
---------
(a) Conduct of Business of the Company, Holdings and Parent Pending
the Merger. Holdings and Parent covenant and agree that (i) until the Effective
Time, (A) Holdings will not issue or authorize the issuance of, grant or
otherwise create any additional shares of or any options to acquire any shares
of, its capital stock or any debt or equity securities convertible into or
exchangeable for such capital stock and (B) except as contemplated herein,
Parent and Holdings will not sell, pledge or otherwise dispose of any capital
stock of Holdings or the Company and (ii) as of the Effective Time, Holdings
will have no liabilities or obligations
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 23
other than the Holdings Notes and liabilities and obligations under the
Indenture relating to the Holdings Notes. The Company covenants and agrees
that, except as expressly permitted or contemplated by this Memorandum, until
the Effective Time, the Company shall, and shall cause each of its subsidiaries
to, conduct its operations and business in the ordinary and usual course of
business and consistent with past practice and use reasonable efforts to
preserve intact its business organizations' goodwill, keep available the
services of its present officers and key employees, and preserve the goodwill
and business relationships with suppliers, distributors, customers and others
having business relationships with it. Without limiting the generality of the
foregoing, and except as otherwise expressly permitted by this Memorandum or as
set forth in Section 6(a) of the Company Disclosure Schedule, prior to the
Effective Time, without the prior written consent of News Corp., the Company
will not, and will cause each of its subsidiaries not to:
(i) amend or otherwise change its certificate of incorporation or
bylaws (other than immaterial bylaw amendments which will not interfere with or
delay consummation of the Transactions);
(ii) issue or authorize the issuance of, sell, pledge or otherwise
dispose of, grant or otherwise create any additional shares of, or any options
to acquire any shares of, its capital stock or any debt or equity securities
convertible into or exchangeable for such capital stock, other than (a) any such
issuance pursuant to the exercise of outstanding Company Stock Options, or upon
the conversion of outstanding convertible securities or Company Warrants, in
each case in accordance with their respective terms as in effect on the date
hereof or (b) the issuance of shares of capital stock of a Company subsidiary to
the Company or any wholly owned Company subsidiary;
(iii) purchase, redeem or otherwise acquire or retire, or offer to
purchase, redeem or otherwise acquire or retire, any shares of its capital
stock, other than transactions between the Company and its wholly owned
subsidiaries and required repurchases of options or stock
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 24
upon termination of employment to the extent required by agreements in effect on
the date hereof;
(iv) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, except dividends declared and paid by a Company subsidiary
only to the Company or a wholly owned Company subsidiary; provided, however,
that the Company may declare and pay cash dividends on shares of Company
Preferred Stock in accordance with their respective terms;
(v) incur or become contingently liable with respect to any
indebtedness or guarantee any such indebtedness or issue any debt securities if
the aggregate amount of indebtedness so incurred, guaranteed or issued exceeds
the sum of (i) the amount of indebtedness of the Company and its subsidiaries at
June 30, 1996 plus (ii) the amount of the Company's unused commitments under its
----
credit facilities at June 30, 1996;
(vi) merge, consolidate with or consummate any other business
combination with any person;
(vii) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business entity.
(viii) dispose of a substantial portion of the Company's assets in a
transaction outside the ordinary course of business;
(ix) take, or permit any affiliate to take, any other action that is
reasonably likely to delay, or adversely impact, the approval of the
Transactions contemplated hereby; or
(x) authorize any of, or commit or agree to take any of, the foregoing
actions.
(b) Conduct of Business of News Corp. Pending the Merger. News Corp.
covenants and agrees that, except
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 25
as expressly permitted or contemplated by this Memorandum, News Corp. shall, and
shall cause each of its subsidiaries to, conduct its operations and business in
the ordinary and usual course of business. Without limiting the generality of
the foregoing, and except as otherwise expressly permitted by this Memorandum,
prior to the Effective Time, without the prior written consent of the Company,
News Corp. will not, and will cause each of its subsidiaries not to:
(i) amend its articles of association or by-laws in any manner that
would be adverse to the holders of News Corp. capital stock, or, unless
appropriate adjustment is made in the Exchange Ratio, subdivide, reclassify,
recapitalize, split, combine or exchange any of its shares of capital stock; or
(ii) take, or permit any affiliate to take, any action that is
reasonably likely to delay, or adversely impact, the approval of the
Transactions contemplated hereby.
(c) Governmental Approvals. As promptly as practicable after the
execution of this Memorandum, News Corp. and the Company shall file notification
reports under the HSR Act and shall request early termination of the waiting
period under the HSR Act. News Corp. and the Company shall (i) use their best
efforts to obtain clearance or authorization of the Stock Purchase and the
Merger under the HSR Act at the earliest practicable time and (ii) initiate
steps to obtain all required approvals (including approvals of the FCC to the
transfer of broadcast licenses) and consents from governmental agencies and
third parties and shall use their reasonable efforts to obtain such consents and
approvals, including, without limitation, taking all action necessary, including
commitments to divest the Milwaukee station to eliminate any Grade B contour
overlap between the Milwaukee and Chicago markets. Notwithstanding the
foregoing, News Corp. will not be required to take any action to reduce its
coverage below 35% to the extent that such excess is due to (i) the Company's
failure to divest the Birmingham and San Diego stations pursuant to the NBC
Agreements, or (ii) changes in the current FCC attribution rules.
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 26
(d) Access to Information. From the date hereof to the Effective
Time, each of the Company, Holdings, the Parent and News Corp. shall (and shall
cause their respective Subsidiaries and officers, directors, employees, auditors
and agents to) afford the officers, employees, auditors and agents (the
"Representatives") of the other parties reasonable access at all reasonable
times to its officers, employees, agents, properties, offices, plants and other
facilities, books, records and tax returns, and shall furnish such
Representatives with all financial, operating and other data and information as
may be reasonably requested. To the extent permitted by law, all information
obtained will be treated confidentially by the party receiving such information.
(e) Further Action, Reasonable Efforts. (i) Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the Transactions, including, without limitation, using commercially reasonable
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities, make all filings and
required submissions with Governmental Entities, including foreign filings and
submissions, and obtain all consents and approvals from parties to Contracts
with the Company, Holdings or the Parent or their respective subsidiaries as are
necessary for the consummation of the Transactions. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Memorandum, the proper officers and directors of each party to
this Memorandum shall use their reasonable efforts to take all such action.
(ii) Each party shall use its best efforts not to take any action, or
enter into any transaction, which would result in a breach of any covenant made
by it in this Memorandum.
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 27
(f) Public Announcements. The Company, Holdings and the Parent, on
the one hand, and News Corp., on the other hand, shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Memorandum or any of the Transactions and shall not issue any
such press release or make any such public statement without the prior consent
of the other party, which consent shall not be unreasonably withheld; provided,
however, that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may be required by law or
any listing agreement or arrangement to which it is a party with a national
securities exchange if it has used all reasonable efforts to consult with the
other party and to obtain such party's consent but has been unable to do so in a
timely manner.
(g) Registration Rights. News Corp. agrees to enter into an
agreement to provide Parent and other persons who are "affiliates" of the
Company immediately prior to the Effective Time with customary demand (including
the right to a shelf registration for a period of two years following the
Effective Time) registration rights for News Corp. Preferred ADRs issued in the
Stock Purchase, the Merger and upon exercise of the Company Warrants.
(h) Voting Agreement. Parent agrees that, during the term of this
Memorandum, at any meeting of the stockholders of the Company called for such
purpose, Parent shall vote, or cause to be voted, the shares of capital stock of
the Company beneficially owned by it and its subsidiaries in favor of the
Transactions, this Memorandum and, if applicable, the Merger Agreement, the
Stock Purchase Agreement and the Real Estate Purchase Agreement.
7. Termination. The parties' obligations under this Memorandum may
-----------
be terminated and the proposed Transactions abandoned as follows:
(a) by mutual agreement of the parties;
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 28
(b) by either party if the Closing Date shall not have occurred on or
before the Outside Date or a court of competent jurisdiction in the United
States or any other jurisdiction shall have issued an order, judgment or decree
(other than a temporary restraining order) restraining, enjoining or otherwise
prohibiting the Stock Purchase, the Merger or any of the other material
Transactions contemplated hereby and such order, judgment or decree has become
final and non-appealable;
(c) by the Company, Holdings and Parent if News Corp. has committed a
material breach of this Memorandum;
(d) by News Corp. if any of the Company, Holdings or the Parent has
committed a material breach of this Memorandum;
(e) by News Corp. if:
(i) the Parent, Holdings or the Company or any of their
affiliates enters into any agreement to consummate a Qualifying Proposal (as
defined below); or
(ii) the Company's board of directors approves or
recommends any Qualifying Proposal.
(f) by the Parent, Holdings or the Company if the Company's board of
directors approves, and the Company enters into, an agreement providing for a
Qualifying Proposal. For purposes of this Memorandum, a "Qualifying Proposal"
shall mean a written, bona fide Acquisition Proposal (as defined below) that the
Company's board of directors (i) determines is reasonably capable of being
financed and (ii) determines, after consultation with its financial advisors,
provides consideration to the holders of the Company's capital stock that is
more favorable than that provided by the Transactions. For purposes of this
Memorandum, an "Acquisition Proposal" shall mean a merger or other business
combination involving the Company or any subsidiary of the Company, or an offer
to acquire in any manner, directly or indirectly, an equity interest in,
substantially all
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 29
of the equity securities of, or a substantial portion of the assets of the
Company or any subsidiary of the Company.
8. Effect of Memorandum of Understanding. It is understood that
-------------------------------------
this Memorandum constitutes a binding agreement as to the terms of and our
respective obligations with respect to the Transactions. It also specifies our
agreement as to the basis on which we will proceed from this point forward as we
negotiate the definitive Stock Purchase and Merger Agreements and the other
Definitive Agreements. News Corp. may assign its rights under this Memorandum
to any subsidiary of News Corp. (for these purposes Twentieth Holdings
Corporation and its subsidiaries are deemed to be subsidiaries of News Corp.);
provided, that News Corp. shall remain responsible for all obligations
- --------
hereunder.
9. Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally, telecopied
(receipt of which is confirmed by the person to whom sent) or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to the Company, the Parent or Holdings, to:
c/o Andrews Group Incorporated
3200 Windy Hill Road
Suite 1100-West
Atlanta, Georgia 30339
Telecopy No.: (770) 563-9610
Attention: Terry C. Bridges
and
c/o Andrews Group Incorporated
35 East 62nd Street
New York, New York 10021
Telecopy No.: (212) 752-5056
Attention: Barry F. Schwartz
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 30
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
Telecopy No.: (213) 687-5600
Attention: Thomas C. Janson, Jr.
(b) If to News Corp., to:
The News Corporation Limited
1211 Avenue of the Americas
New York, New York 10036
Attention: Arthur M. Siskind
10. Governing Law. This Memorandum, the Merger Agreement and the
-------------
Stock Purchase Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts to be performed in
such state.
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 31
If you agree to the foregoing, please return a signed copy of this
Memorandum to the undersigned.
Very truly yours,
NEW WORLD COMMUNICATIONS GROUP
INCORPORATED
By:/s/ William C. Bevins
-------------------------------
Name: William C. Bevins
Title: Chief Executive
Officer
NWCG (PARENT) HOLDINGS CORPORATION
By:/s/ William C. Bevins
-------------------------------
Name: William C. Bevins
Title: Chief Executive
Officer
NWCG HOLDINGS CORPORATION
By: /s/ William C. Bevins
-------------------------------
Name: William C. Bevins
Title: Chief Executive
Officer
Accepted and agreed to:
THE NEWS CORPORATION LIMITED
By: /s/ Arthur M. Siskind
------------------------
Name: Arthur M. Siskind
Title: Director
<PAGE>
The News Corporation Limited
As of July 17, 1996
Page 32
EXHIBIT A
---------
Description of the Land
-----------------------
Lots 1 through 9, inclusive, of Block 7, Tract 7514, in the City of Los Angeles,
County of Los Angeles, State of California, as per map recorded in Book 80,
Pages 81 and 82 of maps, in the Office of the County Recorder of said County.
<PAGE>
EXHIBIT B
---------
The Company Disclosure Schedule
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SECTION 4 (b)(i)
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1. The Company has entered into a Settlement Agreement, dated September 1,
1995, in connection with the settlement of an action entitled Steven
Cooperman, et al. v. Ronald O. Perelman, et al., pursuant to which the
Company has agreed to issue warrants to purchase 2,000,000 shares of
Class A Common Stock at an exercise price equal to the market price on
the date of issuance. The settlement agreement is subject to court
approval.
2. New World Television Incorporated ("NWT") makes annual investments in
New World Entertainment, Ltd. ("NWE"), as a "Program Co. Investment"
pursuant to the Credit Agreement, dated as of May 25, 1993, among SCI
Television, Inc., the lenders named therein, and Canadian Imperial Bank
of Commerce, New York Agency, as Agent thereunder.
3. Pending option grants for 103,000 options.
4. Certain ongoing employment agreements entered into by the Company
predecessors permit, under certain circumstances involving the
termination of the employment of the employees party thereto, such
terminated employee to require the Company to repurchase for cash
Company Stock Options held by such terminated employee. Such options
total 515,000 in the aggregate, of which all but 66,666 are vested. It
has been the practice of the Company to encourage such terminated
employees who wish to require the Company to repurchase Company Stock
Options to exercise and sell such options by offering to pay the
employee's commissions and expenses in connection with such sales.
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SECTION 4(b)(ii)
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1. Consent to the Transactions is required under an agreement between
Parent and a third party, which consent will be obtained on or prior to
the Closing Date.
SECTION 4 (d)
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1. The provisions of the following agreements will be violated as result of
the Transactions: (i) the Credit Agreement, dated as of September 29,
1994, among NWC Acquisition Corporation, the financial institutions
party thereto, and The Chase Manhattan Bank, N.A. and Chemical Bank, as
Agents thereunder, (ii) the Credit Agreement, dated as of May 25, 1993,
among SCI Television, Inc., the lenders named therein, and Canadian
Imperial Bank of Commerce, New York Agency, as Agent thereunder, (iii)
the Credit Agreement, dated as of July 25, 1995, among New World
Entertainment, Ltd., the financial institutions party thereto, and
Chemical Bank, as Agent, (iv) the Indenture, dated as of May 25, 1993,
between SCI and NationsBank of Georgia, as Trustee, relating to the
Senior Secured Notes due June 30, 1998, and (v) the Indenture, dated as
of May 25, 1993, between SCI and Continental Bank, National Association,
as Trustee, relating to the 11% Senior Secured Notes due June 30, 2005.
2. Arthur H. Bilger's employment agreement contains change of control
provisions.
3. The terms of the Series A Preferred Stock and the Series E Preferred
Stock contain change of control provisions.
4. Consent to the Transaction is required under an agreement between
Parent and a third party, which consent will be obtained on or prior to
the Closing Date.
SECTION 4 (f)
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1. Certain Company subsidiaries have entered into the NBC Agreements (as
defined in Section 5 of the Memorandum).
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2. The Company has assigned to New Dallas Media, Inc. its option to
purchase from Dallas Media Investors, Inc. all of the assets related to KDFI-TV,
Dallas-Fort Worth, Texas ("KDFI"), and has entered into an Option Agreement
(together with the agreements contemplated thereby, the "KDFI Option Agreement")
with New Dallas Media Inc. to purchase from New Dallas Media, Inc. all of the
assets of KDFI.
3. The Company has an option to purchase such number of additional shares
of capital stock of Guthy-Renker as would result in the Company owning 50% of
the outstanding shares of capital stock of Guthy-Renker. If such option is
exercised, the stockholders of Guthy-Render have the right to put to the
Company all shares of capital stock of Guthy-Renker owned by them. Such option
expires in November 1996 and the Company may exercise such option prior to such
expiration. The Company will not exercise such option without News Corp.'s
consent.
SECTION 6 (a)
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The transactions and the effects of the transactions set forth below:
1. The Company has entered into the NBC Agreements.
2. The Company has assigned to New Dallas Media, Inc its option to purchase
from Dallas Media Investors, Inc. all of the assets related to KDFI and
has entered into the KDFI Option Agreement.
3. The Company has an option to purchase such number of additional shares
of capital stock of Guthy-Renker as would result in Company owning 50%
of the outstanding shares of capital stock of Guthy-Renker. If such
option is exercised, the stockholders of Guthy-Renker have the right to
put to the Company all shares of capital stock of Guthy-Renker owned by
them. Such option expires in November 1996 and the Company may exercise
such option prior to such expiration. The Company will not exercise
such option without News Corp.'s consent.
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4. In connection with the sale of WTVM and KNSD, the Company intends to
accelerate the vesting of 64,169 stock options held by employees of such
stations and to extend the post-termination exercise period of such
options.
5. Certain ongoing employment agreements entered into by the Company
predecessors permit, under certain circumstances involving the
termination of the employment of the employees party thereto, such
terminated employee to require to Company to repurchase for cash Company
Stock Options held by such terminated employee. Such options total
515,000 in the aggregate, of which all but 66,666 are vested. It has
been the practice of the Company to encourage such terminated employees
who wish to require the Company to repurchase Company Stock Options to
exercise and sell such options by offering to pay the employee's
commissions and expenses in connection with such sales.
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