SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 17, 1996
(Date of earliest event reported)
NWCG HOLDINGS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 33-82274 13-3771996
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
3200 Windy Hill Road, Suite 1100-West, Atlanta, Georgia 30339
(Address of principal executive offices, including zip code)
(770) 955-0045
(Registrant's telephone number, including area code)
_____________________________________________________________
(Former name or former address, if changed since last report)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
NWCG Holdings Corporation, a Delaware corpora-
tion ("Holdings"), New World Communications Group Incor-
porated ("New World"), NWCG (Parent) Holdings Corpora-
tion, a Delaware corporation and the sole stockholder of
Holdings ("NWCGP"), and The News Corporation Limited, a
South Australia corporation ("News Corp."), have entered
into a binding Memorandum of Understanding, dated as of
July 17, 1996 (the "Agreement"), pursuant to which (a) a
subsidiary of News Corp. will merge with and into New
World and New World will become a subsidiary of News
Corp. (the "Merger"), and each outstanding share of
common stock of New World (other than shares held by News
Corp.) will be converted into the right to receive 1.45
American Depositary Receipts ("ADRs") of News Corp., each
representing four Preferred Limited Voting Ordinary
Shares of News Corp., (b) News Corp. will purchase from
NWCGP (i) all of the shares of capital stock of New World
owned by NWCGP and (ii) all of the outstanding capital
stock of Holdings for 1.45 ADRs per share of common stock
of New World owned in the aggregate by NWCGP and Hold-
ings, reduced by the amount of certain indebtedness of
Holdings, (c) News Corp. will purchase from an affiliate
of NWCGP certain real estate consisting of an office
building that serves as New World's headquarters in Los
Angeles, California, and (d) News Corp. will assume all
of the obligations of an affiliate of NWCGP under certain
promissory notes issued in connection with the acquisi-
tion of New World Entertainment Ltd. In addition, NWCGP
has agreed to vote, or cause to be voted, all of the
shares of capital stock of New World beneficially owned
by it or its subsidiaries in favor of the Merger and, if
applicable, the other transactions contemplated by the
Agreement.
The Merger and the other transactions are
conditioned on one another and the Merger is subject to
certain other conditions, including approval by the
Federal Communications Commission and other customary
conditions.
The description of the Agreement included in
this Report is a summary and is qualified in its entirety
by the terms of the Agreement, which is filed as Exhibit
2.1 to this Report and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(c) Exhibits
2.1 Memorandum of Understanding among Hold-
ings, New World, NWCGP and News Corp.,
dated as of July 17, 1996
99.1 Press Release issued by New World, dat-
ed July 17, 1996
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
NWCG HOLDINGS CORPORATION
By: /s/ Joseph P. Page
___________________________
Joseph P. Page
Vice President and
Chief Financial Officer
Date: July 30, 1996
EXHIBIT INDEX
Exhibit
Number Exhibit Page
2.1 Memorandum of Understanding among Hold-
ings, New World, NWCGP and News Corp.,
dated as of July 17, 1996
99.1 Press Release issued by New World,
dated July 17, 1996
EXHIBIT 2.1
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 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") 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
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.
(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 fractional 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
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 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
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
"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 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 filing 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 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
material 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, obligations 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
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 $30 million. To the extent
permitted by existing Company Contracts, the Company
intends to use the net proceeds received under the NBC
Agreements to repay outstanding indebtedness and any
balance will remain within the Company and its
subsidiaries.
5. Representations and Warranties of News
Corp. News Corp. hereby represents and warrants to the
Company, Holdings and Parent that:
(a) Organization and Qualifications. Each of
News Corp. and each material News Corp. subsidiary is a
corporation, partnership or other legal entity duly
incorporated or organized, validly existing and, if
applicable, in good standing under the laws of the
jurisdiction of its incorporation or organization and has
the requisite power and authority and all necessary
governmental approvals to own, lease and operate its
properties and to carry on its business as it is now
being conducted, except where the failure to be so
organized, existing or, if applicable, in good standing
or to have such power, authority and governmental
approvals would not, individually or in the aggregate,
have a material adverse effect on the business, assets,
financial or other condition, or results of operations of
News Corp. and its subsidiaries, taken as a whole (a
"News Corp. Material Adverse Effect").
(b) Capitalization. The authorized capital
stock of News Corp. consists of 5,000,000,000 shares of
A$.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 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 outstanding 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 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 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
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 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
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
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.
(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.
(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;
(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 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
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.
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
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.
Exhibit 99.1
News Corporation to Acquire Remaining Stake in
New World Communications in $2.48 Billion Stock Deal
New York, NY, Wednesday, July 17, 1996 -- New World
Communications Group Incorporated (NASDAQ: NWCG)
announced today that it had entered into an agreement
providing for a simultaneous merger and stock purchase
pursuant to which New World will be acquired by News
Corporation (NYSE: NWS). In the transaction, each share
of New World will be exchanged for 1.45 preferred limited
voting News Corporation ADRs, which trade under the
symbol NWSpr on the New York Stock Exchange, valued at
approximately $27 per share based on the closing price on
Tuesday, July 16. New World Communications Group shares
closed at $15 3/16 on Tuesday.
New World Chief Executive Officer William C. Bevins
said, "The offer by News Corporation represents an
extremely attractive opportunity for our shareholders to
realize the value which has been steadily accruing in
New World. Since our landmark affiliation with Fox in
1994, which accelerated the trend toward vertical
integration in the television industry, New World has
been a force for reordering the landscape of
broadcasting. With this transaction, New World caps a
brief but remarkable history by permanently joining our
economic interests with the world's most innovative
entertainment company under the visionary leadership of
Rupert Murdoch." News Corporation presently owns 20
million of New World's approximately 112 million fully
diluted shares outstanding.
The transaction, which must be approved by
stockholders of New World and by the Federal
Communications Commission, is expected to close early in
1997. It is anticipated that the receipt of News
Corporation preferred limited voting ADRs will be taxable
to New World stockholders.
New World Communications Group Incorporated is a
vertically integrated entertainment company that operates
twelve television stations in major U.S. markets --
Atlanta, Austin, Birmingham, Cleveland, Dallas, Detroit,
Kansas City, Milwaukee, Phoenix, San Diego, St. Louis,
and Tampa; produces television programming for first-run,
network and cable television; distributes programming
domestically and internationally; and sells advertising
time on its stations and programs. New World stations in
Birmingham and San Diego are under contract of sale to
NBC for $425 million.
Contacts: Media Relations: Michael Diamond of New World
Communications Group at 212-685-6893. Investor
Relations: Gary Fishman at 212-685-6890.
