Summary of NDS GROUP PLC - Yahoo! Finance

Entry into a Material Definitive Agreement, Creation of a Direct Financial Obliga

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

(a) Implementation Agreement

On August 14, 2008, NDS Group plc (the "Company"), Nuclobel Lux 1 S.à r.l., a company incorporated in Luxembourg, and Nuclobel Lux 2 S.à r.l., a company incorporated in Luxembourg (together the "Permira Newcos"), NDS Finance Limited, a private company registered in England and Wales ("NDS Finance"), News Corporation, a Delaware corporation ("News") and NDS Holdco Inc., a Delaware corporation ("NDS Holdco"), entered into an agreement providing for, subject to the satisfaction or waiver of certain conditions, transactions the result of which the Company will cease to be a publicly owned company, and the Permira Newcos and News will own approximately 51% and 49% of the Company, respectively (the "Implementation Agreement").

Generally, the Implementation Agreement provides for (i) the cancellation of 2.3 billion ordinary shares, par value $1.00 per share, in the capital of NDS Finance and the declaration and payment by NDS Finance to the Company of a dividend in the amount of up to approximately $1,347 million (the "NDS Finance Capital Reduction"), (ii) the cancellation of all 42,000,002 deferred shares, par value £1.00 per share, of the Company for no consideration and the re-registration of the Company as a private company, (iii) the cancellation of the Series A ordinary shares, par value $0.01 per share, of the Company (the "A Shares") in consideration of the payment of $63.00 per share to the holders of A Shares, (iv) the cancellation of approximately 67 per cent of the Series B ordinary shares, par value $0.01 per share, of the Company (the "B Shares") in exchange for the payment to NDS Holdco of $63.00 per share in a mix of cash of approximately $1.522 billion and a $242 million vendor loan note and (v) the issuance of new B Shares representing 51% of the Company's then outstanding B Shares to the Permira Newcos (collectively, the "Proposed Transactions"). The Proposed Transactions are to be implemented by way of a Court-approved scheme of arrangement (the "Scheme") under Part 26 of the United Kingdom Companies Act 2006 (the "Act").

The Implementation Agreement contains customary representations, warranties and covenants made by the parties. The parties have undertaken to take certain steps to implement the Scheme and implement the NDS Finance Capital Reduction. Additionally, the Proposed Transactions are subject to certain conditions, including, among others:

• the approval of the Scheme by the affirmative vote of a majority in number of the holders of A Shares voting, representing 75 per cent in value of the A Shares voted, at the meeting ("Court Meeting") convened by the High Court of Justice in England and Wales (the "Court");

• the approval of the resolutions necessary to implement the Scheme at an Extraordinary General Meeting of Shareholders of the Company (the "EGM");

• the sanction of the Scheme and the confirmation of the capital reduction involved therein by the Court;

• the issuance by the European Commission of a decision (or having been deemed to have done so) declaring the Proposed Transactions compatible with the EC Common Market;

• the unconditional approval of the Proposed Transactions, or the approval with conditions or obligations as are deemed satisfactory to the Permira Newcos and News, being given by the relevant controller pursuant to the Israeli Restrictive Business Practices Law 5748-1988;

• there having been no material adverse change or deterioration in the business, assets, financial or trading position or profits or operational performance of the Company or any of its subsidiaries (the "NDS Group") since June 30, 2008; and

• the Company having available to it sufficient distributable profits and freely available cash in excess of its working capital requirements to enable it to pay all amounts payable by it in connection with the Scheme.

The obligations of News and NDS Holdco to consummate the Scheme are further subject to the prior satisfaction, or waiver to the extent permitted by law, of the following conditions:

• the Internal Revenue Service having issued a letter ruling to News regarding certain tax consequences to News of the Scheme; and

• certain assurances regarding the status of the Company immediately following the Scheme becoming effective to avoid certain adverse tax consequences.

The Implementation Agreement prohibits the Company and News from soliciting or encouraging competing proposals. The Company may, subject to the terms and conditions set forth in the Implementation Agreement, provide information to and negotiate with, a third party that makes an unsolicited acquisition proposal provided the independent committee formed by the Company's board of directors concludes that the failure to take such action would be in breach of their fiduciary duties or would violate their obligations under the Implementation Agreement, the Act or the United Kingdom Companies Act 1985, as amended. The Implementation Agreement also contains certain restrictions on the conduct of business by the Company prior to the earlier of the implementation of the Scheme or the termination of the Implementation Agreement.

The Implementation Agreement contains certain termination rights for the parties, including, among other things, the right of the Permira Newcos or News, acting in their absolute discretion, to terminate the Implementation Agreement if there is a failure of certain conditions. Furthermore, the parties may terminate the Implementation Agreement if the Scheme has not become effective by February 25, 2009.

If the Scheme becomes effective, the Company will bear all costs on the basis agreed between the parties to the Implementation Agreement. If the Scheme fails to become effective, each party will bear its own legal, financial advisory, accountancy and other costs and expenses incurred in connection with the implementation of the Proposed Transactions, subject to certain exceptions.

The foregoing description of the Implementation Agreement does not purport to be complete, and is qualified in its entirety by reference to such agreement. A copy of the Implementation Agreement is filed as Exhibit 2.1 and is incorporated by reference in this Item 1.01.

(b) Facilities Agreements

On August 14, 2008, NDS Finance, a wholly owned subsidiary of the Company, entered into (a) a senior credit agreement (the "Senior Facilities Agreement") and (b) a mezzanine credit agreement (the "Mezzanine Facility Agreement" and together with the Senior Facilities Agreement, the "Facilities Agreements"), in each case among NDS Finance, J.P. Morgan plc and Morgan Stanley Bank International Limited as mandated lead arrangers (the "Mandated Lead Arrangers"), JPMorgan Chase Bank, N.A., London Branch and Morgan Stanley Bank (and, in the case of the Senior Facilities Agreement only, Morgan Stanley Bank International Limited) as original lenders and J.P. Morgan Europe Limited as facility agent and security agent (and, in the case of the Senior Facilities Agreement only, JPMorgan Chase Bank, N.A., London Branch as issuing bank).

The Senior Facilities Agreement provides for senior secured credit facilities (the "Senior Facilities") of up to $1.04 billion comprising $890 million term loan facilities (consisting of three tranches in the amount of $300 million ("Facility A"), $295 million ("Facility B") and $295 million ("Facility C")) and a $150 million revolving facility (the "Revolving Facility"). The Mezzanine Facility Agreement provides for a mezzanine secured credit facility (the "Mezzanine Facility" and together with the Senior Facilities, the "Debt Facilities") of up to $385 million.

Each of the term loan facilities drawn under the Facilities Agreements bears an interest rate in the aggregate of (a) the applicable margin, (b) LIBOR or EURIBOR, as applicable, and (c) applicable mandatory regulatory costs (if any), in each case (other than in respect of the capitalizing portion of the interest rate attributable to loans under the Mezzanine Facility Agreement (see below)) payable at the end of each interest period during the term of the applicable loan. The capitalizing portion of the interest rate payable under the Mezzanine Facility Agreement is added to the principal amount of the Mezzanine Facility at the end of each interest period during the term of the applicable loan. Unless an alternative interest period has been selected in accordance with the terms of the Facilities Agreements, the interest period for each term loan facility under the Facilities Agreements is one month. In respect of the Senior Facilities Agreement, for loans made under Facility A and the Revolving Facility the margin is 3.0 per cent per annum, for loans made under Facility B the margin is 3.5 per cent per annum and for loans made under Facility C the margin is 4.0 per cent per annum. In respect of Facility A, Facility B and the Revolving Facility, step-downs in the interest rate are applied depending on the debt coverage . . .