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
Date of Report (Date of earliest event reported): May 18, 1999
METROMEDIA INTERNATIONAL GROUP, INC.
------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-5706 58-0971455
- -------- ------ ----------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
One Meadowlands Plaza, East Rutherford, New Jersey 07073-2137
- -------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 531-8000
--------------
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2
Item 5. Other events
On May 18, 1999, Metromedia International Group, Inc. (the "Company")
entered into an agreement and plan of merger (the "Merger Agreement") with PLD
Telekom Inc. ("PLD") pursuant to which a wholly owned subsidiary of the Company
will be merged (the "Merger") with and into PLD with PLD as the surviving
corporation. Following the consummation of the Merger, PLD will become a wholly
owned subsidiary of the Company. A copy of the press release announcing the
Merger is attached hereto as Exhibit 99.1 and is incorporated herein by
reference. A copy of the Merger Agreement is attached as Exhibit 99.2 hereto and
is incorporated herein by reference.
PLD is a major provider of high quality, long distance and
international telecommunications services in the former Soviet Union. Its five
principal business units are PeterStar, which provides integrated local, long
distance and international telecommunications in St. Petersburg through a fully
digital fiber optic network; Teleport-TP, which provides international
telecommunications services from Moscow and operates a pan-Russian
satellite-based long distance network; Baltic Communications Limited, which
provides dedicated international telecommunications services in St. Petersburg;
ALTEL, which is the principal provider of cellular service in the republic of
Kazakhstan; and BELCEL, which provides the only national cellular service in
Belarus.
In the Merger, each holder of shares of common stock, par value $.01
per share, of PLD (the "PLD Common Stock") will receive for each share of PLD
Common Stock a number of shares of common stock, par value $1.00 per share, of
the Company (the "Company Common Stock") to be determined based on the following
exchange ratio:
(a) if the Average Company Stock Price (as defined below) is less than
$6.25 and equal to or greater than $5.25, the exchange ratio will
be equal to $3.50 divided by the Average Company Stock Price;
(b) if the Average Company Stock Price is equal to or greater than
$6.25 and less than or equal to $8.00, the exchange ratio will be
0.56;
(c) if the Average Company Stock Price is greater than $8.00, the
exchange ratio will be equal to $4.48 divided by the Average
Company Stock Price; and
(d) if the Average Company Stock Price is less than $5.25, then the
exchange ratio will be 0.6667.
If the Average Company Stock Price is less than $5.25, PLD will have
the right to request the Company to increase (or "top up") the exchange ratio to
equal
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3
$3.50 divided by the Average Company Stock Price. If the Company refuses to "top
up" the exchange ratio, PLD will have the right to terminate the Merger
Agreement. In addition, PLD will be entitled to terminate the Merger Agreement
if the Average Company Stock Price is less than $4.00.
The "Average Company Stock Price" will be determined by taking the
average of the daily closing prices of the Company Common Stock on the American
Stock Exchange Composite Transactions Tape for the 20 consecutive trading days
ending on the third business day immediately prior to the meeting of the
shareholders of PLD which will be called to approve the Merger.
In the Merger, each share of Series II and Series III preferred stock
of PLD (a total of 446,884 shares) will be redeemed for cash at a redemption
price of Cdn. $1.00 per share. Each outstanding option and warrant to acquire
shares of PLD Common Stock will be converted into an option or warrant of the
Company on the basis of the exchange ratio described above.
In the Merger Agreement, the Company has agreed to increase the size of
its Board of Directors in connection with the consummation of the Merger from 9
members to 11 members and to cause the designation of two persons specified by
PLD (one of which will be designated by News America Incorporated ("News")).
The consummation of the Merger is subject to a number of conditions
including the approval of the Merger by the shareholders of the Company and PLD,
the receipt of various governmental clearances and consents, the absence of any
material adverse change in the Company's or PLD's respective businesses and
operations and other customary closing conditions. In addition, the consummation
of the Merger is subject to the consummation of the transactions contemplated by
the agreement to exchange and consent entered into by certain PLD senior and
convertible noteholders, the letter agreement with Travelers (as defined below),
the letter agreement with News and the option modification agreements described
below.
The Merger Agreement may be terminated in its entirety by either the
Company or PLD in the event that the other is in material breach of the Merger
Agreement, or in the event that the stockholders of both companies do not
approve the Merger or that the Merger is not otherwise consummated by October
31, 1999. The Company also has the right to terminate the Merger Agreement in
the event that the Board of Directors of PLD withdraws or modifies its approval
of the Merger or recommends (or fails to recommend against) a different
transaction to the stockholders of PLD.
In the event that the Company terminates the Merger Agreement as a
result of PLD's Board of Directors withdrawing or modifying its approval of the
Merger or recommending (or failing to recommend against) another transaction, or
as a result of a material breach by PLD of the Merger Agreement, or as a result
of the
<PAGE>
4
stockholders of PLD not approving the Merger at a time when a different
transaction had been announced, PLD will be obligated to pay the Company a
termination fee of $6.25 million plus reimbursement of its expenses (up to a
maximum of $1 million).
In connection with the Merger Agreement, the Company entered into a
voting agreement with News and its affiliate which collectively own
approximately 38% of PLD's Common Stock. Pursuant to this voting agreement, News
has agreed to vote all of its shares of PLD Common Stock in favor of the Merger
Agreement and the consummation of the Merger and against any proposal that could
impede, interfere with, delay, postpone or materially adversely affect the
Merger. News has also agreed not to solicit, discuss or support any other
transaction involving PLD which could have the effect of interfering with,
preventing or materially delaying the Merger. The Company and its shareholder,
Metromedia Company, also granted certain tag-along rights to News upon a sale by
Metromedia Company of Company Common Stock. In connection with the voting
agreement, the Company and News America executed a registration rights agreement
granting News America certain shelf and piggy-back registration rights with
customary terms and conditions for their shares of Company Common Stock. Copies
of the voting agreement and of the registration rights agreement are attached
hereto as Exhibits 99.3 and 99.4, respectively, and are incorporated herein by
reference.
In connection with the Merger, the holders of all of PLD's 14.5% Senior
Discount Notes due 2004 and Convertible Notes (together, the "PLD Notes") have
agreed under an agreement to exchange and consent to exchange their PLD Notes
for new 10 1/2% Senior Discount Notes due 2007 of the Company with terms set
forth in a term sheet attached to the agreement. The noteholders have also
agreed to waive certain events of default under the PLD Notes that would result
from the consummation of the Merger as well as the payment of certain amounts to
become due under the PLD Notes until the earlier of the termination of the
Merger Agreement or October 31, 1999. A copy of the agreement to exchange and
consent (including the term sheet) is attached as Exhibit 99.5 hereto and is
incorporated herein by reference.
Also in connection with the Merger, the Company and PLD entered into a
note and warrant modification agreement with The Travelers Insurance Company and
The Travelers Indemnity Company (together, "Travelers") pursuant to which
Travelers agreed to waive certain events of default as well as the payment of
certain amounts due or to become due under its revolving credit and warrant
agreement dated November 26, 1997 with PLD, and agreed to a restructuring of
PLD's debt under this agreement pursuant to which Travelers will be entitled to
receive at the closing of the Merger, among other things, 100,000 shares of PLD
Common Stock (which will be converted in the Merger into shares of Company
Common Stock at the applicable exchange ratio) and 10-year warrants to purchase
700,000 shares of Company Common Stock at a price to be determined in December
2000 that will be between $10 and $15 per share. A copy of the note and warrant
<PAGE>
5
modification agreement is attached as Exhibit 99.6 hereto and is incorporated
herein by reference.
The Company also entered into a letter agreement with News America
under which News America has agreed to certain modifications to the terms of
PLD's debt under its revolving credit agreement dated as of September 30, 1998
and to the payment of such debt as modified in its entirety upon consummation of
the Merger. A copy of the letter agreement is attached as Exhibit 99.7 hereto
and is incorporated herein by reference.
The Company and PLD have also entered into option modification
agreements with two minority shareholders of Technocom Limited, a subsidiary of
PLD, pursuant to which PLD will repurchase all of such shareholders' shares of
Technocom Limited for an aggregate purchase price of $12.6 million. In addition,
PLD also agreed to pay various other amounts to one of the shareholders and to
cause the release of certain guarantees. Copies of these option modification
agreements are attached as Exhibits 99.8 and 99.9 hereto and are incorporated
herein by reference.
The Company also entered into a bridge loan agreement with PLD pursuant
to which it has agreed to extend revolving bridge loans to PLD of up to $7
million at an annual interest rate of 10% to fund PLD's ongoing operations
during the period from the execution of the Merger Agreement to the earlier of
the consummation of the Merger or the termination or expiration of the Merger
Agreement. The loans under this agreement will be secured by a pledge by PLD of
approximately 58% of the capital stock of PLD's Technocom Limited subsidiary.
Copies of the bridge loan agreement and pledge agreement are attached hereto as
exhibits 99.10 and 99.11, respectively, and are incorporated herein by
reference.
Donaldson, Lufkin & Jenrette Securities Corporation, which acted as
financial advisor to the Company, has opined to the Board of Directors of the
Company that the exchange ratio described above is fair from a financial point
of view to the Company. Salomon Smith Barney Inc., which acted as financial
advisor to PLD, has opined to the Board of Directors of PLD that the exchange
ratio described above is fair from a financial point of view to the holders of
PLD Common Stock.
The Merger Agreement and the Merger have been unanimously approved by
the Boards of Directors of both the Company and PLD, and each Board is
recommending approval by its respective stockholders.
The press release filed as an exhibit to this report includes "safe
harbor" language, pursuant to the Private Securities Litigation Reform Act of
1995, indicating that certain statements about the Company's business contained
in the press release are "forward-looking" rather than "historic." The press
release also states that a more thorough discussion of factors affecting the
Company's operating results are included in the Company's Annual Report on Form
10-K/A for the fiscal year ended
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6
December 31, 1998, its Quarterly Report on Form 10-Q for the quarter ended March
31, 1999, and other reports filed by the Company with the Securities and
Exchange Commission.
Item 7. Exhibits
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
(c) Exhibits.
Exhibit Number Description
-------------- -----------
99.1 Press Release, dated May 18, 1999.
99.2 Agreement and Plan of Merger, dated as
of May 18, 1999, among Metromedia
International Group, Inc., Moscow
Communications, Inc. and PLD
Telekom Inc.
99.3 Voting Agreement, dated as of May 18,
1999, among Metromedia International
Group, Inc., PLD Telekom Inc., News
America Incorporated and News PLD
LLC.
99.4 Registration Rights Agreement, dated as
of May 18, 1999, among Metromedia
International Group, Inc., PLD Telekom
Inc., News America Incorporated and
News PLD LLC.
99.5 Agreement to Exchange and Consent,
dated as of May 18, 1999, entered into
among Metromedia International Group,
Inc., PLD Telekom Inc. and the holders
of PLD Telekom Inc.'s outstanding
14.5% Senior Discount Notes due 2004
and 9% Convertible Subordinated Notes
due 2006.
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7
99.6 Note and Warrant Modification
Agreement, dated as of May 18, 1999,
among Metromedia International Group,
Inc., PLD Telekom Inc., The Travelers
Insurance Company and The Travelers
Indemnity Company.
99.7 Letter Agreement, dated as of May 18,
1999, between Metromedia International
Group, Inc. and News America
Incorporated.
99.8 Plicom Option Modification Agreement,
dated as of May 18, 1999, by and
among Metromedia International Group,
Inc., PLD Telekom Inc., Technocom
Limited, Plicom Limited, Elite
International Limited, Mark Klabin and
Boris Antoniuk.
99.9 Elite Option Modification Agreement,
dated as of May 18, 1999, by and
among Metromedia International Group,
Inc., PLD Telekom Inc., Technocom
Limited, Elite International Limited and
Boris Antoniuk.
99.10 Bridge Loan Agreement, dated as of
May 18, 1999, between PLD Telekom
Inc., as borrower, and Metromedia
International Group, Inc., as lender.
99.11 Pledge Agreement, dated as of May 18,
1999, entered into between PLD
Telekom Inc., as pledgor, and
Metromedia International Group, Inc.,
as pledgee.
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8
SIGNATURES
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.
METROMEDIA INTERNATIONAL GROUP, INC.
Date: May 19, 1999 By: /s/ Arnold L. Wadler
---------------------
Name: Arnold L. Wadler
Title: Executive Vice President, General
Counsel and Secretary
<PAGE>
9
EXHIBIT INDEX
Exhibit Number Description Page No.
- -------------- ----------- --------
99.1 Press Release, dated May 18, 1999.
99.2 Agreement and Plan of Merger, dated as
of May 18, 1999, among Metromedia
International Group, Inc., Moscow
Communications, Inc. and PLD
Telekom Inc.
99.3 Voting Agreement, dated as of May 18,
1999, among Metromedia International
Group, Inc., PLD Telekom Inc., News
America Incorporated and News PLD
LLC.
99.4 Registration Rights Agreement, dated as
of May 18, 1999, among Metromedia
International Group, Inc., PLD Telekom
Inc., News America Incorporated and
News PLD LLC.
99.5 Agreement to Exchange and Consent,
dated as of May 18, 1999, entered into
among Metromedia International Group,
Inc., PLD Telekom Inc. and the holders
of PLD Telekom Inc.'s outstanding
14.5% Senior Discount Notes due 2004
and 9% Convertible Subordinated Notes
due 2006.
99.6 Note and Warrant Modification
Agreement, dated as of May 18, 1999,
among Metromedia International Group,
Inc., PLD Telekom Inc., The Travelers
Insurance Company and The Travelers
Indemnity Company.
99.7 Letter Agreement, dated as of May 18,
1999, between Metromedia International
Group, Inc. and News America
Incorporated.
<PAGE>
10
99.8 Plicom Option Modification Agreement,
dated as of May 18, 1999, by and
among Metromedia International Group,
Inc., PLD Telekom Inc., Technocom
Limited, Plicom Limited, Elite
International Limited, Mark Klabin and
Boris Antoniuk.
99.9 Elite Option Modification Agreement,
dated as of May 18, 1999, by and
among Metromedia International Group,
Inc., PLD Telekom Inc., Technocom
Limited, Elite International Limited and
Boris Antoniuk.
99.10 Bridge Loan Agreement, dated as of
May 18, 1999, between PLD Telekom
Inc., as borrower, and Metromedia
International Group, Inc., as lender.
99.11 Pledge Agreement, dated as of May 18,
1999, entered into between PLD
Telekom Inc., as pledgor, and
Metromedia International Group, Inc.,
as pledgee.
Exhibit 99.1
------------
FOR IMMEDIATE RELEASE
Metromedia International Group, Inc.
To Acquire PLD Telekom Inc. in Merger
___
Upon Completion of Merger, Revenues from Communications Group Expected to
More Than Double
NEW YORK, May 18, 1999 - Metromedia International Group, Inc. (AMEX:MMG), a
global communications company, and PLD Telekom Inc. (NASDAQ: PLDI) announced
today that the two companies have entered into an agreement and plan of merger
in which MMG will acquire the stock of PLD Telekom. Pursuant to the agreement,
PLD Telekom would merge with a newly formed subsidiary of Metromedia
International Group, Inc. Both the Merger and the Merger Agreement have been
unanimously approved by the Boards of Directors of Metromedia International
Group, Inc. and PLD Telekom and each Board is recommending approval by their
respective shareholders.
In connection with the Merger Agreement, News America Incorporated, a wholly
owned subsidiary of News Corporation Limited, which owns approximately 38% of
PLD Telekom's Common Stock, has entered into an agreement with Metromedia
International Group, Inc. to vote its Common Stock in favor of the Merger
Agreement and not to support any other transaction involving PLD Telekom. Upon
completion of the merger, News America will own approximately 9% of MMG Common
Stock.
Under the terms of the transaction, when the merger is consummated, PLD Telekom
will become a wholly owned subsidiary of Metromedia International Group, Inc.
The holders of PLD Telekom stock will receive shares of MMG Common Stock on the
basis of an exchange ratio that values each share of PLD Telekom Common Stock at
$3.50 provided that the average MMG price per share is between $5.25 and $6.25
at closing. If the average price of MMG Common Stock exceeds $6.25 each PLD
Telekom share will be exchanged for .56 shares of MMG Common Stock, not to
exceed $4.48 per share of MMG Common Stock. If the average price of MMG Common
Stock is less than $5.25 per share, each share of PLD Telekom shall be
exchangeable for .6667 shares of MMG Common Stock, subject to certain
termination and "top-up" rights.
John W. Kluge, Chairman of Metromedia International Group, said, "This is an
important day for Metromedia International Group in executing our strategy of
building a global communications company. We are taking a giant step forward in
merging with PLD Telekom. The combination of their telephony assets with our
cable and telephony
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12
services will enable us to provide the communications links to deliver voice,
data and video services in these emerging markets."
Stuart Subotnick, President and Chief Executive Officer, continued, "Metromedia
International Group's vast experience operating in the former Soviet Union,
Eastern Europe and China convinces us that the demand for viable, modern
communications infrastructure and services remains strong. Even in countries
experiencing economic downturns, telecommunications services are essential and
we have seen increased subscribers despite these challenging times.
"PLD Telekom has strong operating businesses that employ state of the art
technology and they are known for providing high quality products and excellent
customer service. There are tremendous synergies between our two companies and
we look forward to joining forces and creating new opportunities to expand our
Company," Mr. Subotnick concluded.
Commenting on the announcement, Rupert Murdoch, Chairman and Chief Executive
Officer of News Corporation Limited, said, "News Corp. is pleased to be a part
of the merger between two companies poised to capitalize on the growth of
telecommunications and cable services in Eastern Europe, China and the republics
of the former Soviet Union."
James Hatt, Chairman and Chief Executive Officer of PLD Telekom, said, "This
merger is a tremendous opportunity for PLD Telekom's shareholders. The
combination of Metromedia International Group and PLD Telekom will form a
company with attractive assets, working capital and a talented management team
with the vision to create a global telecommunications company for the next
millennium."
In addition, holders of PLD Telekom Senior and Convertible Notes have agreed to
an exchange for new Metromedia Notes, which includes a reduction in interest
rate and interest payments accreting for 2 1/2 years. Further, the holders of
PLD Telekom's Revolving Credit Notes have agreed to restructure these short-term
debt obligations.
The consummation of the Merger Agreement is subject to a number of conditions,
including shareholder approval of both companies, the receipt of various U.S.,
U.K. and Canadian governmental clearances and consents, the absence of any
material adverse change in the respective businesses and operations of PLD
Telekom or Metromedia International Group, other customary closing conditions
and certain additional conditions, as defined in the Merger Agreement.
Additional details will be included in a Current Report on Form 8-K to be filed
shortly with the SEC and also will accompany shareholder proxy materials. The
Merger Agreement will be filed as an exhibit to the Form 8-K. The merger is
expected to be consummated in the third quarter of 1999.
<PAGE>
13
PLD Telekom Inc. is a major provider of high quality local, long distance and
international telecommunications services in the former Soviet Union. Its five
principal business units are PeterStar, which provides integrated local, long
distance and international telecommunications in St. Petersburg through a fully
digital fiber optic network; Teleport-TP, which provides international
telecommunications services from Moscow and operates a pan-Russian
satellite-based long distance network; Baltic Communications Limited (BCL),
which provides dedicated international telecommunications services in St.
Petersburg; ALTEL, which is the principal provider of cellular service in the
Republic of Kazakhstan; and BELCEL, which provides the only national cellular
service in Belarus.
Metromedia International Group, Inc. is a global communications and media
company. Through its wholly owned subsidiary, Metromedia International
Telecommunications, Inc., the Company owns and operates communications and media
businesses in Eastern Europe, the republics of the former Soviet Union and other
selected emerging markets. These businesses include cellular telecommunications,
fixed telephony, international and long distance telephony, cable television,
paging and radio broadcasting. Through its approximately 58% ownership of
Metromedia China Corp., MITI operates ventures supporting public switched
telephone networks and GSM systems in China.
This news release contains certain forward-looking statements that involve risks
and uncertainties. Factors that could cause or contribute to such risks and
uncertainties include, but are not limited to, general economic and business
conditions, competition, changes in technology and methods of marketing, and
various other factors beyond the control of Metromedia International Group, Inc.
and PLD Telekom Inc. This also includes such factors as are described from time
to time in the SEC reports filed by Metromedia International Group, Inc., and
PLD Telekom Inc., including their most recently filed Form 10-K and Form 10-Q.
Contact: Ellen Strahs Fader, Vice President, Investor Relations
Metromedia International Group, Inc.
(212) 606-4389
Maxwell Abbott, Vice President, Investor Relations
PLD Telekom Inc.
(212) 527-3800
Editor's note: This release was issued jointly by Metromedia International Group
and PLD Telekom Inc.
================================================================================
AGREEMENT AND PLAN OF MERGER
among
PLD TELEKOM INC.,
METROMEDIA INTERNATIONAL GROUP, INC.
and
MOSCOW COMMUNICATIONS, INC.
Dated as of May 18, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
RECITALS.......................................................................1
ARTICLE 1 THE MERGER...............................................2
Section 1.1 The Merger...............................................2
Section 1.2 Closing..................................................2
Section 1.3 Effective Time...........................................2
Section 1.4 The Certificate of Incorporation.........................2
Section 1.5 The By-Laws..............................................2
Section 1.6 Directors of Surviving Corporation.......................2
Section 1.7 Officers of Surviving Corporation........................3
ARTICLE 2 EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES.................................3
Section 2.1 Effect on Capital Stock..................................3
Section 2.2 Exchange of Certificates for Shares......................6
Section 2.3 No Appraisal Rights.....................................10
Section 2.4 Adjustments to Prevent Dilution.........................10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.................................................10
Section 3.1 Organization and Qualification; Subsidiaries............10
Section 3.2 Certificate of Incorporation and By-Laws................11
Section 3.3 Capitalization..........................................11
Section 3.4 Authority...............................................13
Section 3.5 No Conflict.............................................13
Section 3.6 Governmental Required Filings and Consents..............14
Section 3.7 Permits; Compliance with Law............................14
Section 3.8 Securities and Exchange Commission ("SEC") Filings;
Financial Statements....................................15
Section 3.9 Absence of Certain Changes or Events....................16
Section 3.10 Employee Benefit Plans..................................17
Section 3.11 Accounting and Tax Matters..............................17
Section 3.12 Contracts; Debt Instruments.............................18
Section 3.13 Litigation..............................................18
Section 3.14 Environmental Matters...................................18
Section 3.15 Intellectual Property...................................20
Section 3.16 Taxes...................................................23
Section 3.17 Non-Competition Agreements..............................24
Section 3.18 Certain Agreements......................................24
Section 3.19 Investment Company Act..................................24
Section 3.20 Opinion of Financial Advisor............................24
Section 3.21 Brokers.................................................24
Section 3.22 Certain Statutes........................................25
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Page
Section 3.23 Information.............................................25
Section 3.24 Vote Required...........................................25
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGER SUB............................26
Section 4.1 Organization and Qualification; Subsidiaries............26
Section 4.2 Certificate of Incorporation and By-Laws................26
Section 4.3 Capitalization..........................................27
Section 4.4 Authority...............................................28
Section 4.5 No Conflict.............................................28
Section 4.6 Governmental Required Filings and Consents..............29
Section 4.7 Permits; Compliance with Law............................29
Section 4.8 SEC Filings; Financial Statements.......................30
Section 4.9 Absence of Certain Changes or Events....................31
Section 4.10 Employee Benefit Plans..................................32
Section 4.11 Accounting and Tax Matters..............................32
Section 4.12 Contracts; Debt Instruments.............................32
Section 4.13 Litigation..............................................33
Section 4.14 Environmental Matters...................................33
Section 4.15 Intellectual Property...................................34
Section 4.16 Taxes...................................................35
Section 4.17 Non-Competition Agreements..............................36
Section 4.18 Investment Company Act..................................37
Section 4.19 Opinion of Financial Advisor............................37
Section 4.20 Brokers.................................................37
Section 4.21 Certain Statutes........................................37
Section 4.22 Information.............................................37
Section 4.23 Vote Required...........................................38
Section 4.24 Interim Operations of Merger Sub........................38
ARTICLE 5 COVENANTS...............................................38
Section 5.1 Conduct of Business of the Company......................38
Section 5.2 Conduct of Business of the Parent.......................40
Section 5.3 Other Actions...........................................42
Section 5.4 Updated Letters; Notification of Certain Matters........42
Section 5.6 Stockholders Meetings...................................45
Section 5.7 Access to Information; Confidentiality..................45
Section 5.8 No Solicitation.........................................46
Section 5.9 Affiliates..............................................48
Section 5.10 Directors' and Officers' Indemnification and Insurance..48
Section 5.11 Letters of Accountants..................................49
Section 5.12 Reasonable Best Efforts.................................49
Section 5.13 Consents; Filings; Further Action.......................50
Section 5.14 Plan of Reorganization..................................51
Section 5.15 Public Announcements....................................51
<PAGE>
Page
Section 5.16 Obligations of Merger Sub...............................51
Section 5.17 Stock Exchange Listings and De-Listings.................52
Section 5.18 Expenses................................................52
Section 5.19 Takeover Statutes.......................................52
Section 5.20 Board of Directors......................................52
ARTICLE 6 CONDITIONS..............................................52
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger..................................................52
(a) Stockholder Approval....................................52
(b) Listing.................................................53
(c) Governmental Consents...................................53
(d) Litigation..............................................53
(e) Registration Statement..................................53
(f) Accountants' Letters....................................53
Section 6.2 Conditions to Obligations of the Parent and Merger Sub..53
(a) Representations and Warranties..........................54
(b) Performance of Obligations of the Company...............54
(c) Material Adverse Effect.................................54
(d) Consents Under Agreements...............................54
(e) Affiliate Letters.......................................54
(f) The Travelers Revolving Credit Note and
Warrant Agreement.......................................54
(g) Exchange Offer..........................................54
(h) Technocom Limited Put/Call Agreements...................55
(i) News Arrangements.......................................55
(j) Certain Payments........................................55
Section 6.3 Conditions to Obligation of the Company.................55
(a) Representations and Warranties..........................55
(b) Performance of Obligations of the Parent and
Merger Sub..............................................56
(c) Tax Opinion.............................................56
(d) Material Adverse Effect.................................56
ARTICLE 7 TERMINATION.............................................56
Section 7.1 Termination.............................................56
Section 7.2 Effect of Termination...................................57
Section 7.3 Amendment...............................................58
Section 7.4 Waiver..................................................58
Section 7.5 Expenses following Termination..........................58
ARTICLE 8 MISCELLANEOUS...........................................59
Section 8.1 Certain Definitions.....................................59
Section 8.2 Non-Survival of Representations, Warranties and
Agreements..............................................60
Section 8.3 Counterparts............................................61
<PAGE>
Page
Section 8.4 GOVERNING LAW AND VENUE; WAIVER OF JURY
TRIAL...................................................61
Section 8.5 Notices.................................................62
Section 8.6 Entire Agreement........................................62
Section 8.7 No Third Party Beneficiaries............................63
Section 8.8 Obligations of the Parent and of the Company............63
Section 8.9 Severability............................................63
Section 8.10 Interpretation..........................................63
Section 8.11 Assignment..............................................63
Section 8.12 Specific Performance....................................64
EXHIBITS
Exhibit A Company Voting Agreements
Exhibit B Travelers Note and Warrant Modification Agreement
Exhibit C Agreement to Exchange and Consent
Exhibit D Technocom Put/Call Arrangement
Exhibit E News Letter Agreement
COMPANY DISCLOSURE LETTER
Section 3.1(b) Company Subsidiaries
Section 3.3(b) Other Stock Option Agreements
Section 3.3(c) Liens on Capital Stock; Material Obligations
Section 3.5(b) Conflicts
Section 3.6 Governmental Consents
Section 3.8(a) Filing Subsidiaries
Section 3.9(e) Certain Changes
Section 3.10(a) Benefit Plans
Section 3.12 Material Contracts
Section 3.14 Environmental Matters
Section 3.15(a)(i) Intellectual Property
Section 3.15(a)(ii) Licenses
Section 3.15(a)(iii) Proposed Intellectual Property Agreements
Section 3.16(a) Taxes
Section 3.16(b) Tax Extensions
Section 3.16(c) Tax Claims
Section 3.17 Non-Competition Agreements
Section 3.18 Certain Agreements
Section 5.1 Conduct of Business
Section 5.1(f) Asset Transactions
Section 6.2(j) Waivers
<PAGE>
Page
PARENT DISCLOSURE LETTER
Section 4.1(a) Organization
Section 4.1(b) Parent Subsidiaries
Section 4.3(b) Other Stock Option Agreements
Section 4.3(c) Liens on Capital Stock; Material Obligations
Section 4.5(a)(i) Violations
Section 4.5(b) Conflicts
Section 4.6 Governmental Consents
Section 4.7 Permits
Section 4.10(a) Benefit Plans
Section 4.12 Material Contracts; Changes in Indebtedness
Section 4.14 Environmental Matters
Section 4.15(a)(i) Intellectual Property
Section 4.15(a)(ii) Licenses
Section 4.15(a)(iii) Proposed Intellectual Property Agreements
Section 4.16(a) Taxes
Section 4.16(c) Tax Extensions
Section 4.16(d) Tax Claims
Section 4.17 Non-Competition Agreements
Section 5.2 Conduct of Business
Section 5.2(d) Asset Transactions
Section 5.5 Terms of New Notes; Terms of Exchange Offer
<PAGE>
INDEX OF DEFINED TERMS
Term Section
affiliate................................................... 8.1(a)
Affiliate Letters........................................... 5.9
Agreement................................................... Title
Average Parent Stock Price.................................. 2.1(a)(i)
Benefit Plans............................................... 3.10(a)
Blue Sky Laws............................................... 3.6
Bridge Loan Agreement....................................... 5.1(g)
business day................................................ 8.1(b)
Certificate................................................. 2.1(a)(i)
Certificate of Merger....................................... 1.3
Claims...................................................... 3.13
Closing..................................................... 1.2
Closing Date................................................ 1.2
Code........................................................ Recitals
Company..................................................... Title
Company Benefit Plans....................................... 3.10(a)
Company Charter Documents................................... 3.2
Company Common Stock........................................ 2.1(a)(i)
Company Disclosure Letter................................... 3.1(b)
Company Financial Advisor................................... 3.20
Company Governmental Consents............................... 3.6
Company Permits............................................. 3.7
Company Preferred Shares.................................... 2.1(a)(ii)
Company Preferred Stock..................................... 3.3(a)
Company Required Consents................................... 3.5(b)
Company SEC Reports......................................... 3.8(a)
Company Senior Notes........................................ 5.5(a)
Company Series II Preferred Stock........................... 2.1(a)(ii)
Company Series III Preferred Stock.......................... 2.1(a)(ii)
Company Share............................................... 2.1(a)
Company Shares.............................................. 2.1(a)
Company Stock Option........................................ 2.1(b)
Company Stockholders Meeting................................ 5.5(a)
Company Subsidiaries........................................ 3.1(a)
Company Voting Agreement.................................... Recitals
Company Warrant............................................. 2.1(b)
Company's Option Plan....................................... 3.3(b)
Confidentiality Agreement................................... 5.7(b)
Contracts................................................... 3.5(a)(iii)
control..................................................... 8.1(a)
controlled by............................................... 8.1(a)
controlling................................................. 8.1(a)
<PAGE>
Term Section
Convertible Notes........................................... 2.1(b)
Effective Time.............................................. 1.3
Environment................................................. 3.14
Environmental Claims........................................ 3.14
ERISA....................................................... 3.10(a)
Excess Parent Shares........................................ 2.2(d)(i)
Exchange Act................................................ 3.6
Exchange Agent.............................................. 2.2(a)(i)
Exchange Offer.............................................. 5.5(a)
Exchange Offer Registration Statement....................... 5.5(a)
Exchange Ratio ............................................. 2.1(a)(i)
Exchange Trust.............................................. 2.2(d)(i)
Excluded Company Shares..................................... 2.1(a)(i)
Expenses.................................................... 7.5(a)
FCPA........................................................ 3.7
GAAP........................................................ 3.8(b)
GCL......................................................... Recitals
Governmental Entity......................................... 3.6
group....................................................... 8.1(d)
Hazardous Substance......................................... 3.14
HSR Act..................................................... 3.6
including................................................... 8.1(c)
Indemnified Parties......................................... 5.10(a)
Intellectual Property....................................... 3.15(a)(ii)
Investment Company Act...................................... 3.19
IP Licenses................................................. 3.15(a)(ii)
Law......................................................... 3.5(a)(ii)
Liens....................................................... 3.3(c)
Material Adverse Effect on the Company...................... 3.1(a)
Material Adverse Effect on the Parent....................... 4.1(a)
Merger...................................................... Recitals
Merger Consideration........................................ 2.1(a)(i)
Merger Sub.................................................. Title
Merging Parties............................................. 3.14
MIG Form 10K................................................ 4.2
New Parent Notes............................................ 5.5(a)
News........................................................ 6.2(i)
News Notes.................................................. 3.3(b)
PLD Form 10K................................................ 3.2
Parent...................................................... Title
Parent Benefit Plans........................................ 4.10(a)
Parent Charter Documents.................................... 4.2
Parent Common Stock......................................... 2.1(a)(i)
Parent Disclosure Letter.................................... 4.1(b)
<PAGE>
Term Section
Parent Financial Advisor.................................... 4.18
Parent Governmental Consents................................ 4.6
Parent Material Contract.................................... 4.12
Parent Permits.............................................. 4.7
Parent Preferred Stock...................................... 4.3(a)
Parent SEC Reports.......................................... 4.8(a)
Parent Stock Options........................................ 4.3(b)
Parent Stockholders Meeting................................. 5.5(a)
Parent Subsidiaries......................................... 4.1(a)
Parent's Option Plan........................................ 4.3(b)
Permits..................................................... 3.14
person...................................................... 8.1(d)
Proposed Intellectual Property Agreements................... 3.15(a)(iii)
Proxy Materials............................................. 5.5(a)
Proxy Statement............................................. 5.5(a)
Qualified Transaction Proposal.............................. 5.8(a)
Redemption Payment.......................................... 2.1(a)(ii)
Registration Statement...................................... 5.5(a)
Registration Statement Effective Date....................... 5.5(a)
Release..................................................... 3.14
Representatives............................................. 5.7(a)
Requisite Company Vote...................................... 3.4(a)
Requisite Parent Vote....................................... 4.4
Safety and Environmental Laws............................... 3.14
SEC......................................................... 3.8
Securities Act.............................................. 3.6
7 1/4% Preferred Stock......................................... 4.3(a)
Shareholders................................................ Recitals
Software.................................................... 3.15(a)(ii)
Sub Common Stock............................................ 4.3(d)
subsidiary.................................................. 8.1(e)
subsidiaries................................................ 8.1(e)
Superior Acquisition Proposal............................... 5.8(b)
Surviving By-Laws........................................... 1.5
Surviving Charter........................................... 1.4
Surviving Corporation....................................... 1.1
Systems..................................................... 3.15(g)
Takeover Statute............................................ 3.22
Taxes....................................................... 3.16
Technology.................................................. 3.15(a)(ii)
Terminating Company Breach.................................. 7.1(f)
Terminating Parent Breach................................... 7.1(g)
Termination Amount.......................................... 7.5(b)
Termination Notice.......................................... 2.1(a)(i)(D)
<PAGE>
Term Section
Topped-Up Exchange Ratio.................................... 2.1(a)(i)(D)
Top-Up Request Notice....................................... 2.1(a)(i)(D)
Transaction Proposals....................................... 5.8(a)
under common control with................................... 8.1(a)
Year 2000 Compliant......................................... 3.15(g)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of May 18,
1999, among PLD Telekom Inc., a Delaware corporation (the "COMPANY"), Metromedia
International Group, Inc., a Delaware corporation (the "PARENT"), and Moscow
Communications, Inc., a Delaware corporation and a wholly owned subsidiary of
the Parent ("MERGER SUB").
RECITALS
WHEREAS, the respective boards of directors of each of the Parent,
Merger Sub and the Company have determined that it is in the best interests of
their respective stockholders to combine the respective businesses of the Parent
and the Company, and consequently have approved the merger of Merger Sub with
and into the Company (the "MERGER") and approved and adopted the Merger, in
accordance with the General Corporation Law of the State of Delaware (the "GCL")
and upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, it is intended that, for federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "CODE"), and the rules and
regulations promulgated under the Code;
WHEREAS, concurrently with the execution of this Agreement, as a
condition to the willingness of the Parent to enter into this Agreement, (i)
certain holders (the "SHAREHOLDERS") of Company Shares (as defined below) are
entering into the Voting Agreement with the Parent, a copy of which is attached
to this Agreement as Exhibit A (the "COMPANY VOTING AGREEMENT"), providing for,
among other things, the agreement of the Shareholders to vote their respective
Company Shares in favor of approval and adoption of this Agreement and the
Merger at the Company Shareholders Meeting (as defined below);
WHEREAS, certain terms used in this Agreement which are not capitalized
have the meanings specified in Section 8.1; and
WHEREAS, the Company, the Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained in this
Agreement, the parties agree as follows:
<PAGE>
2
ARTICLE 1
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time, Merger Sub shall be merged
with and into the Company and the separate corporate existence of Merger Sub
shall cease. The Company shall be the surviving corporation in the Merger
(sometimes referred to as the "SURVIVING CORPORATION") and shall continue to be
governed by the laws of the State of Delaware, and the separate corporate
existence of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger. The Merger shall have the
effects set forth in Section 259 of the GCL.
SECTION 1.2 CLOSING. The closing of the Merger (the "CLOSING") shall
take place (a) at the offices of Paul, Weiss, Rifkind, Wharton & Garrison, New
York, New York at 10:00 A.M. on the business day on which the last to be
fulfilled or waived of the conditions set forth in Article 6 (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions) shall be satisfied or waived
in accordance with this Agreement or (b) at such other place and time and/or on
such other date as the Company and the Parent may agree in writing (the "CLOSING
DATE").
SECTION 1.3 EFFECTIVE TIME. As soon as practicable following the
Closing, the Company and the Parent will cause a Certificate of Merger (the
"CERTIFICATE OF MERGER") to be signed, acknowledged and delivered for filing
with the Secretary of the State of Delaware as provided in Section 251 of the
GCL. The Merger shall become effective at the time when a Certificate of Merger
has been duly filed with the Secretary of State of the State of Delaware or such
other time as shall be agreed upon by the parties and set forth in the
Certificate of Merger and in accordance with the GCL (the "EFFECTIVE TIME").
SECTION 1.4 THE CERTIFICATE OF INCORPORATION. The certificate of
incorporation of Merger Sub in effect immediately prior to the Effective Time
shall, from and after the Effective Time, be the certificate of incorporation of
the Surviving Corporation (the "SURVIVING CHARTER"), until duly amended as
provided in the Surviving Charter or by applicable law.
SECTION 1.5 THE BY-LAWS. The by-laws of Merger Sub in effect at the
Effective Time shall, from and after the Effective time, be the by-laws of the
Surviving Corporation (the "SURVIVING BY-LAWS"), until duly amended as provided
in the Surviving By-Laws or by applicable law.
SECTION 1.6 DIRECTORS OF SURVIVING CORPORATION. The directors of Merger
Sub at the Effective Time shall, from and after the Effective Time, be the
<PAGE>
3
directors of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Charter and the Surviving By-Laws.
SECTION 1.7 OFFICERS OF SURVIVING CORPORATION. The officers of the
Company at the Effective Time shall, from and after the Effective Time, be the
officers of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Charter and the Surviving By-Laws.
ARTICLE 2
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
SECTION 2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, as a result
of the Merger and without any action on the part of the holder of any capital
stock of the Company:
(a) MERGER CONSIDERATION.
(i) Each share (each a "COMPANY SHARE" and together
the "COMPANY SHARES") of the common stock, par value $.01 per share, of the
Company (the "COMPANY COMMON STOCK") issued and outstanding immediately prior to
the Effective Time (other than Company Shares that are owned by the Parent,
Merger Sub or any other Parent Subsidiary or Company Shares that are owned by
the Company or any Company Subsidiary and in each case not held on behalf of
third parties (collectively, "EXCLUDED COMPANY SHARES")) shall be converted by
virtue of the Merger and without any action on the part of the holder thereof
into the right to receive and become exchangeable for a number of shares of
common stock, par value $1.00 per share, of the Parent ("PARENT COMMON STOCK"),
equal to the "EXCHANGE RATIO" determined in the manner set forth below:
(A) If the Average Parent Stock Price (as
defined below) is less than $6.25 and equal to or greater than $5.25,
then the "Exchange Ratio" shall be equal to the quotient (rounded to
four decimal points) obtained by dividing (I) $3.50 by (II) the Average
Parent Stock Price;
(B) If the Average Parent Stock Price is
equal to or greater than $6.25 and less than or equal to $8.00, then
the "Exchange Ratio" shall be .56;
(C) If the Average Parent Stock Price is
greater than $8.00, then the "Exchange Ratio" shall be equal to the
quotient
<PAGE>
4
(rounded to four decimal points) obtained by dividing (x) $4.48 by (y)
the Average Parent Stock Price; or
(D) If the Average Parent Stock Price is
less than $5.25, then the "Exchange Ratio" shall be .6667; provided,
that the Company shall have the right to give written notice to Parent
(the "TOP-UP REQUEST NOTICE") requesting that the Exchange Ratio be
increased to equal the quotient (rounded to four decimal points)
obtained by dividing (x) $3.50 by (y) the Average Parent Stock Price
(the "TOPPED-UP EXCHANGE RATIO"); provided further that, if the Average
Parent Stock Price is less than $4.00, then the Company also has the
right to give a Termination Notice (as defined below) to Parent in the
manner provided below that states that the Company elects to terminate
this Agreement in accordance with Section 7.1(h). The Top-Up Request
Notice shall be delivered to and received by Parent no later than 2:00
p.m. on the second Business Day prior to the Company Stockholders
Meeting. Parent, may, in its sole discretion, agree or not agree to
increase the Exchange Ratio to the Topped-Up Exchange Ratio. Within 24
hours of receiving the Top-Up Request Notice, Parent shall provide the
Company written notice of its determination with respect thereto. If
Parent agrees to increase the Exchange Ratio to the Topped-Up Exchange
Ratio, the Exchange Ratio shall be equal to the Topped-Up Exchange
Ratio for purposes of this Agreement. If Parent does not agree in its
sole discretion that the Exchange Ratio shall be increased to be the
Topped-Up Exchange Ratio (which disagreement shall be deemed to have
occurred if Parent does not respond to the Top-Up Request Notice within
the 24 hour period specified above), the Company shall either (x) agree
that the Exchange Ratio shall be .6667 or (y) give written notice (the
"TERMINATION NOTICE") to the Parent that the Company elects to
terminate this Agreement. Any Termination Notice shall be delivered to
Parent no later than 5:00 p.m. on the Business Day prior to the Company
Stockholders Meeting; provided, that if the Termination Notice has not
been received by Parent by such time, the Company shall be deemed to
have accepted .6667 as the Exchange Ratio and the Company shall have no
further right to terminate this Agreement pursuant to this Section
2.1(a)(i)(D) or Section 7.1(h).
For purposes of this Agreement, the "AVERAGE PARENT STOCK PRICE" means
the average of the daily closing prices of the Parent Common Stock as reported
on the American Stock Exchange Composite Transactions Tape (as reported by The
Wall Street Journal (national edition)) for the twenty (20) consecutive trading
days ending on the third business day (including such third business day in the
determination) immediately prior to the Company Stockholders Meeting.
The number of shares of Parent Common Stock issuable pursuant to this
Section 2.1(a)(i) shall be subject to adjustment as provided in Section 2.4 and
such shares, together with cash in lieu of fractional shares of Parent Common
Stock,
<PAGE>
5
if any, payable pursuant to Section 2.2(d) shall collectively be referred to as
the "MERGER CONSIDERATION." At the Effective Time, all Company Shares shall no
longer be outstanding, shall be canceled and retired and shall cease to exist,
and each certificate (a "CERTIFICATE") formerly representing any Company Shares
(other than Excluded Company Shares) shall thereafter represent only the right
to receive the Merger Consideration and any distribution or dividend under
Section 2.2(b).
(ii) Each share of the Series II preferred stock, par
value $.01 per share, of the Company (the "COMPANY SERIES II PREFERRED STOCK")
and each share of the Series III Preferred Stock, par value $.01 per share, of
the Company ("the COMPANY SERIES III PREFERRED STOCK" and collectively, with the
Company Series II Preferred Stock, the "COMPANY PREFERRED SHARES") issued and
outstanding immediately prior to the Effective Time shall at the Effective Time
be redeemed as provided in the Company Charter Documents (as defined below) at a
redemption price of Cdn $1.00 per share (the "REDEMPTION PAYMENT"). At the
Effective Time, all Company Preferred Shares shall no longer be outstanding,
shall be canceled and retired and shall cease to exist, and each certificate
formerly representing any Company Preferred Shares shall thereafter represent
only the right to receive the Redemption Payment.
(b) STOCK OPTIONS, WARRANTS, CONVERTIBLE NOTES, ETC. At the
Effective Time, each outstanding option to purchase shares of Company Common
Stock (a "COMPANY STOCK OPTION") issued pursuant to the Company's Option Plan
(as defined below) and each outstanding warrant to acquire shares of Company
Common Stock (a "COMPANY WARRANT") issued pursuant to a warrant agreement or
otherwise appearing on the Company's Schedule of Warrants, Options and
Conversions dated as of April 30, 1999, whether vested or unvested, shall be
assumed by Parent and any remaining outstanding 9% Convertible Subordinated
Notes due 2006 (the "CONVERTIBLE NOTES") that have not been tendered in the
Exchange Offer (as defined below) shall be assumed by the Parent. Each Company
Stock Option and Company Warrant shall be deemed, without further action on the
part of Parent or the holders of such Company Stock Options and Company
Warrants, to constitute an option or a warrant, as the case may be, to acquire,
on the same terms and conditions as were applicable under such Company Stock
Option or Company Warrant (except to the extent that such terms and conditions
may be altered in accordance with their terms as a result of the transactions
contemplated hereby), and the Convertible Notes after the Effective Time shall
be convertible for, shares of Parent Common Stock in such amount and at the
exercise price provided below:
(i) the number of shares of Parent Common Stock to be
subject to the option, warrant or Convertible Note (as adjusted) shall be equal
to the product of (x) the number of shares of Company Common Stock subject to
the original option, warrant or Convertible Note and (y) the Exchange Ratio
(rounded to four decimal points);
<PAGE>
6
(ii) the exercise price per share of Parent Common
Stock under the option, warrant or Convertible Note (as adjusted) shall be equal
to (x) the exercise price per share of Company Common Stock under the original
option, warrant or Convertible Note divided by (y) the Exchange Ratio (rounded
to the nearest $0.01); and
(iii) fractional shares of any assumed Company Stock
Options or Company Warrants resulting from the adjustments set forth in this
Section 2.1(b) shall be eliminated.
In the case of any option to which section 421 of the Code
applies by reason of its qualification under any of sections 422-424 of the
Code, the exercise price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such option shall be effected
in a manner consistent with the requirements of section 424(a) of the Code.
(c) CANCELLATION OF SHARES. Each Excluded Company Share issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder of such Excluded Company
Share, no longer be outstanding, shall be canceled and retired without payment
of any consideration therefor and shall cease to exist.
(d) MERGER SUB. At the Effective Time, each share of common
stock, par value $.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one validly
issued, fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation, and the Surviving Corporation shall be a
wholly owned subsidiary of the Parent.
SECTION 2.2 EXCHANGE OF CERTIFICATES FOR SHARES.
(a) EXCHANGE PROCEDURES.
(i) LETTER OF TRANSMITTAL. Promptly after the
Effective Time, the Surviving Corporation shall cause an exchange agent selected
by the Parent and reasonably acceptable to the Company (the "EXCHANGE AGENT") to
mail to each holder of record of a Certificate (other than Certificates in
respect of Excluded Company Shares) (A) a letter of transmittal specifying that
delivery shall be effected, and that risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates (or affidavits of loss in
lieu of Certificates) to the Exchange Agent, in a form and with other provisions
reasonably acceptable to both the Parent and the Company, and (B) instructions
for exchanging the Certificates for (1) certificates representing shares of
Parent Common Stock, and (2) cash in lieu of fractional shares.
<PAGE>
7
(ii) SURRENDER OF CERTIFICATES. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, the holder of that Certificate shall be entitled to
receive in exchange (A) a certificate representing that number of whole shares
of Parent Common Stock that the holder is entitled to receive under this Article
2, (B) a check in the amount (after giving effect to any required tax
withholding) of any cash in lieu of fractional shares that such holder has the
right to receive under the provisions of this Article 2, and the Certificate so
surrendered shall immediately be canceled. No interest will be paid or accrued
on any amount payable upon due surrender of the Certificates.
(iii) UNREGISTERED TRANSFEREES. In the event of a
transfer of ownership of Company Shares that is not registered in the transfer
records of the Company, a certificate representing the proper number of shares
of Parent Common Stock, together with a check for any cash to be paid upon the
surrender of the Certificate and any other dividends or distributions in respect
of those shares, may be issued or paid to such a transferee if the Certificate
formerly representing such Company Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect the transfer and to
evidence that any applicable stock transfer taxes have been paid. If any
certificate for shares of Parent Common Stock is to be issued in a name other
than that in which the surrendered Certificate is registered, it shall be a
condition of such exchange that the person requesting such exchange shall pay
any transfer or other taxes required by reason of the issuance of certificates
for shares of Parent Common Stock in a name other than that of the registered
holder of the surrendered Certificate, or shall establish to the satisfaction of
the Parent or the Exchange Agent that such tax has been paid or is not
applicable.
(iv) NO OTHER RIGHTS. Until surrendered as
contemplated by this Section 2.2(a), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive the
certificate representing shares of Parent Common Stock and cash in lieu of any
fractional shares of Parent Common Stock, as contemplated by this Section
2.2(a). All shares of Parent Common Stock, together with any cash paid under
Section 2.2(b) or Section 2.2(d) issued upon the surrender for or exchange of
Certificates in accordance with the terms of this Agreement, shall be deemed to
have been issued in full satisfaction of all rights pertaining to the Company
Shares formerly represented by such Certificates.
(b) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. Whenever
a dividend or other distribution is declared by the Parent in respect of Parent
Common Stock and the record date for that dividend or other distribution is at
or after the Effective Time, that declaration shall include dividends or other
distributions in respect of all shares issuable under this Agreement. No
dividends or other distributions in respect of the Parent Common Stock shall be
paid to any holder of any unsurrendered Certificate until that Certificate is
surrendered for exchange in accordance with this Article 2. Subject to the
effect of applicable laws, following
<PAGE>
8
surrender of any such Certificate, there shall be issued or paid to the holder
of the certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
dividends or other distributions with a record date after the Effective Time and
a payment date on or prior to the date of issuance of such whole shares of
Parent Common Stock and not previously paid, and (ii) at the appropriate payment
date, the dividends or other distributions payable with respect to such whole
shares of Parent Common Stock with a record date after the Effective Time but
with a payment date subsequent to surrender. For purposes of dividends or other
distributions in respect of shares of Parent Common Stock, all shares of Parent
Common Stock to be issued pursuant to the Merger shall be deemed issued and
outstanding as of the Effective Time.
(c) NO FURTHER TRANSFERS. After the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers on the records of the Company of the Company Shares or
Company Preferred Shares that were outstanding immediately prior to the
Effective Time.
(d) FRACTIONAL SHARES.
(i) No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle its owner to
vote, to receive dividends or to any other rights of a stockholder of the
Parent. Notwithstanding any other provision of this Agreement, each holder of
Company Shares exchanged pursuant to the Merger who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock (after taking
into account all Certificates delivered by such holder) shall receive from the
Exchange Agent, in accordance with the provisions of this Article 2, a cash
payment in lieu of such fractional shares of Parent Common Stock, as applicable,
representing such holder's proportionate interest, if any, in the net proceeds
from the sale by the Exchange Agent in one or more transactions (which sale
transactions shall be made at such times, in such manner and on such terms as
the Exchange Agent shall determine in its reasonable discretion) on behalf of
all such holders of the aggregate of the fractional shares of Parent Common
Stock, as applicable, which would otherwise have been issued (the "EXCESS PARENT
SHARES"). The sale of the Excess Parent Shares by the Exchange Agent shall be
executed on the American Stock Exchange and shall be executed in round lots to
the extent practicable. Until the net proceeds of such sale or sales have been
distributed to the holders of Certificates, the Exchange Agent will hold such
proceeds in trust (the "EXCHANGE TRUST") for the holders of Certificates. All
commissions, transfer taxes and other out-of-pocket transaction costs, including
the expenses and compensation of the Exchange Agent, incurred in connection with
this sale of the Excess Parent Shares shall be paid out of the Exchange Trust
prior to the distribution of proceeds therefrom to holders of Certificates. As
soon as practicable after the determination of the amount of cash, if any, to be
paid to holders
<PAGE>
9
of Certificates in lieu of any fractional shares of Parent Common Stock, the
Exchange Agent shall make available such amounts to such holders of Certificates
without interest. The Exchange Agent shall determine the portion of such net
proceeds to which each holder of Company Shares shall be entitled, if any, by
multiplying the amount of the aggregate net proceeds by a fraction the numerator
of which is the amount of the fractional share interest to which such holder of
Company Shares is entitled (after taking into account all Company Shares then
held by such holder) and the denominator of which is the aggregate amount of
fractional share interests to which all holders of Certificates representing
Company Shares are entitled.
(ii) Notwithstanding the provisions of subsection (i)
of this Section 2.2(d), the Parent may elect, at its option exercised prior to
the Effective Time and in lieu of the issuance and sale of Excess Shares and the
making of the payments contemplated in such subsection, to pay to the Exchange
Agent an amount in cash sufficient for the Exchange Agent to pay each holder of
Company Shares an amount in cash equal to the product obtained by multiplying
(A) the fractional share interest to which such holder would otherwise be
entitled (after taking into account all Company Shares held at the Effective
Time by such holder) by (B) the closing price for a share of Parent Common Stock
on the American Stock Exchange on the first business day immediately following
the Effective Time and, in such case, the Exchange Fund, all references in this
Agreement to the cash proceeds of the sale of the Excess Shares and similar
references shall be deemed to mean and refer to the payments calculated as set
forth in this Section 2.2(d)(ii).
(e) TERMINATION OF EXCHANGE PERIOD; UNCLAIMED STOCK. Any
shares of Parent Common Stock and any portion of the Exchange Fund or of
dividends or other distributions with respect to the Parent Common Stock
deposited by the Parent with the Exchange Agent (including the proceeds of any
investments of those funds) that remains unclaimed by the stockholders of the
Company 180 days after the Effective Time shall be paid to the Parent. Any
former stockholders of the Company who have not theretofore complied with this
Article 2 shall thereafter look only to the Parent for payment of their Merger
Consideration and any dividends and other distributions issuable or payable
pursuant to Section 2.1 and Section 2.2(b) upon due surrender of their
Certificates (or affidavits of loss in lieu of Certificates), in each case,
without any interest. Notwithstanding the foregoing, none of the Parent, the
Surviving Corporation, the Exchange Agent or any other person shall be liable to
any former holder of Company Shares for any amount properly delivered to a
public official under applicable abandoned property, escheat or similar laws. If
any Certificates shall not have been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity), any amounts payable in respect
of such Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interests
of any person previously entitled to those amounts.
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10
(f) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and the posting by such person of a bond in the form
customarily required by the Parent as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the shares of Parent
Common Stock, any unpaid dividends or other distributions and any cash payment
in lieu of a fractional share in respect of that Certificate issuable or payable
under this Article 2 upon due surrender of and deliverable in respect of the
Company Shares represented by such Certificate under this Agreement, in each
case, without interest.
SECTION 2.3 NO APPRAISAL RIGHTS. In accordance with Section 262(b)(1)
of the GCL, no appraisal rights shall be available to holders of Company Shares
in connection with the Merger.
SECTION 2.4 ADJUSTMENTS TO PREVENT DILUTION. In the event that prior to
the Effective Time there is a change in the number of Company Shares or shares
of Parent Common Stock or securities convertible or exchangeable into or
exercisable for Company Shares or shares of Parent Common Stock issued and
outstanding as a result of a distribution, reclassification, stock split
(including a reverse stock split), stock dividend or distribution or other
similar transaction, the Exchange Ratio shall be equitably adjusted to eliminate
the effects of that event.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent and Merger Sub that:
SECTION 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of the Company and each subsidiary of the Company
other than dormant subsidiaries that are immaterial to the business and
operations of the Company (collectively, the "COMPANY SUBSIDIARIES") has been
duly organized and is validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization, as the case may be, 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. Each of the Company and each Company Subsidiary is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or
<PAGE>
11
licensed and in good standing that, individually or in the aggregate, have not
resulted and could not reasonably be expected to result in a Material Adverse
Effect on the Company. For purposes of this Agreement, "MATERIAL ADVERSE EFFECT
ON THE COMPANY" means any change in or effect on the business, assets,
properties, results of operations or financial condition of the Company or any
Company Subsidiaries that is or could reasonably be expected to be materially
adverse to the Company and the Company Subsidiaries, taken as a whole, or that
could reasonably be expected to materially impair the ability of the Company to
perform its obligations under this Agreement or consummate the Merger and the
other transactions contemplated hereby.
(b) Section 3.1(b) of the Disclosure Letter delivered to the
Parent and Merger Sub by the Company prior to the execution of this Agreement
(the "COMPANY DISCLOSURE LETTER") sets forth a complete and correct list of all
of the Company Subsidiaries. Except as set forth in Section 3.1(b) of the
Company Disclosure Letter, neither the Company nor any Company Subsidiary holds
any interest in any person other than the Company Subsidiaries so listed.
SECTION 3.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. The copies of the
Company's certificate of incorporation and by-laws, each as amended through the
date of this Agreement (collectively, the "COMPANY CHARTER DOCUMENTS") that are
incorporated by reference in, as exhibits to, the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, as amended by its filing on Form
10K/A (the "PLD FORM 10K"), and all comparable corporate organizational
documents of the Company Subsidiaries made available to the Parent by the
Company are complete and correct copies of those documents. Except as set forth
in Section 3.2 of the Company Disclosure Letter, the Company Charter Documents
and all comparable corporate organizational documents of the Company
Subsidiaries are in full force and effect. The Company is not in violation of
any of the provisions of the Company Charter Documents.
SECTION 3.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
(i) 100,000,000 shares of Company Common Stock and (ii) 100,000,000 shares of
Preferred Stock, par value $.01 per share (the "COMPANY PREFERRED STOCK"). As of
April 30, 1999, (i) 37,846,789 shares of Company Common Stock were issued and
outstanding, all of which were validly issued and are fully paid, nonassessable
and not subject to preemptive rights, (ii) 405,217 shares of Series II Preferred
Stock and 41,667 shares of Series III Preferred Stock were issued and
outstanding, all of which were validly issued and are fully paid, nonassessable
and not subject to preemptive rights, (iii) 4,550,333, 5,453,800 and 9,910,462
shares of Company Common Stock were reserved for issuance upon exercise of
outstanding Company Stock Options, Company Warrants or convertible debentures or
notes, respectively.
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12
(b) Between April 30, 1999 and the date of this Agreement, no
Company Stock Options have been granted by the Company under the PLD Equity
Compensation Plan (the "COMPANY'S OPTION PLAN"). Except for (i) Company Stock
Options to purchase an aggregate of 4,550,333 shares of Company Common Stock
outstanding or available for grant under the Company's Option Plan, or under
agreements or arrangements set forth in Section 3.3(b) of the Company Disclosure
Letter, (ii) Company Warrants to purchase an aggregate of 5,453,800 shares of
Company Common Stock and (iii) $26,500,000 principal amount of the Convertible
Notes and $9,550,000 principal amount of outstanding obligations in respect of
guarantees or loans advanced by News America Incorporated ("NEWS NOTES")
convertible for 3,840,580 and 6,069,882 shares of Company Common Stock,
respectively, there are no options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights or other rights,
agreements, arrangements or commitments of any character to which the Company is
a party or by which the Company is bound relating to the issued or unissued
capital stock of the Company or any Company Subsidiary or obligating the Company
or any Company Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Company Subsidiary. Section 3.3(b)
of the Company Disclosure Letter sets forth, as of the date of this Agreement,
(w) the persons to whom Company Stock Options have been granted or Company
Warrants, Convertible Notes or News Notes have been issued, (x) the aggregate
principal amount of Convertible Notes and News Notes outstanding and the
applicable conversion prices thereof, (y) the exercise prices for the Company
Stock Options and Company Warrants held by each such person and (z) whether such
Company Stock Options are subject to vesting and, if subject to vesting, the
dates on which each of those Company Stock Options vest.
(c) All shares of Company Common Stock subject to issuance,
upon issuance prior to the Effective Time on the terms and conditions specified
in the instruments under which they are issuable, will be duly authorized,
validly issued, fully paid, nonassessable and will not be subject to preemptive
rights. Except as set forth in Section 3.3(c) of the Company Disclosure Letter,
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 any capital stock of any Company Subsidiary. Except as set forth
in Section 3.3(c) of the Company Disclosure Letter, each outstanding share of
capital stock of each Company Subsidiary is duly authorized, validly issued,
fully paid, nonassessable and not subject to preemptive rights and each such
share owned by the Company or a Company Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever
(collectively, "LIENS"). Except as set forth in Section 3.3 of the Company
Disclosure Letter there are no outstanding material contractual obligations of
the Company or any Company Subsidiary to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
Company Subsidiary that is not wholly owned by the Company or in any other
person.
<PAGE>
13
SECTION 3.4 AUTHORITY.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the Merger and the other transactions
contemplated by this Agreement to be consummated by the Company. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of such transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate such
transactions, other than, with respect to the Merger, the adoption of this
Agreement by stockholders of the Company representing a majority of the Company
Common Stock entitled to vote hereon (the "REQUISITE COMPANY VOTE"). This
Agreement has been duly authorized and validly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(b) The Board of Directors of the Company (i) has unanimously
adopted the plan of merger set forth in this Agreement and approved this
Agreement and the other transactions contemplated by this Agreement and (ii) has
declared that the Merger and this Agreement and the other transactions
contemplated by this Agreement are advisable.
SECTION 3.5 NO CONFLICT.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not:
(i) conflict with or violate any provision of any
Company Charter Document or any equivalent organizational documents of
any Company Subsidiary;
(ii) assuming that all consents, approvals,
authorizations and other actions described in Section 3.5(b) of the
Company Disclosure Letter have been obtained and all filings and
obligations described in Section 3.5(b) of the Company Disclosure
Letter have been made, conflict with or violate any foreign or domestic
law, statute, ordinance, rule, regulation, order, judgment or decree
("LAW") applicable to the Company or any Company Subsidiary or by which
any property or asset of the Company or any Company Subsidiary is or
may be bound or affected; or
(iii) except as set forth in Section 3.5(b) of the
Company Disclosure Letter, result in any breach of or constitute a
default (or an event which with or without notice or lapse of time or
both would become a default) under, or give to others any right of
termination, amendment,
<PAGE>
14
acceleration or cancellation of, or result in the creation of a Lien on
any property or asset of the Company or any Company Subsidiary under
any note, bond, mortgage, indenture, contract, agreement, commitment,
lease, license, permit, franchise or other instrument or obligation
(collectively, "CONTRACTS") to which the Company or any Company
Subsidiary is a party or by which any of them or their assets or
properties is or may be bound or affected, except for such breaches,
defaults or other occurrences which, individually or in the aggregate,
have not resulted and could not reasonably be expected to result in a
Material Adverse Effect on the Company.
(b) Section 3.5(b) of the Company Disclosure Letter sets forth
a correct and complete list of all Contracts to which the Company or any Company
Subsidiaries are a party or by which they or their assets or properties is or
may be bound or affected under which consents or waivers are or may be required
prior to consummation of the transactions contemplated by this Agreement
(collectively, the "COMPANY REQUIRED CONSENTS").
SECTION 3.6 GOVERNMENTAL REQUIRED FILINGS AND CONSENTS. The execution
and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any domestic or
foreign national, federal, state, provincial or local governmental, regulatory
or administrative authority, agency, commission, court, tribunal or arbitral
body or self- regulated entity (each, a "GOVERNMENTAL ENTITY"), except (i) for
those consents or approvals set forth in Section 3.6 of the Company Disclosure
Letter (the "COMPANY GOVERNMENTAL CONSENTS"), (ii) for applicable requirements
of the Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "EXCHANGE ACT"), and the Securities Act
of 1933, as amended (together with the rules and regulations promulgated
thereunder, the "SECURITIES ACT"), (iii) applicable requirements of state
securities or "blue sky" laws ("BLUE SKY LAWS"), (iv) the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
ACT"), and (v) for the filing of the Certificate of Merger as required by the
GCL.
SECTION 3.7 PERMITS; COMPLIANCE WITH LAW. Each of the Company and the
Company Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
Company Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted (collectively, the "COMPANY PERMITS"),
except where the failure to have, or the suspension or cancellation of, any of
the Company Permits, individually or in the aggregate, has not resulted and
could not reasonably be expected to result in a Material Adverse Effect on the
Company, and, as of the date of this Agreement, no suspension or cancellation of
any of the Company Permits is pending or, to the knowledge of the Company,
threatened,
<PAGE>
15
except where the failure to have, or the suspension or cancellation of, any of
the Company Permits, individually or in the aggregate, has not resulted and
could not reasonably be expected to result in a Material Adverse Effect on the
Company or except as otherwise set forth in Section 3.7 of the Company
Disclosure Letter. Neither the Company nor any Company Subsidiary is in conflict
with, or in default or violation of, (i) any Law applicable to the Company or
any Company Subsidiary or by which any property or asset of the Company or any
Company Subsidiary is or may be bound or affected or (ii) any Company Permits,
in either case, except where such conflict, default or violation could not
reasonably be expected to result in a Material Adverse Effect on the Company. To
the Company's knowledge, the business of the Company is not being conducted in
violation of any portion of the Foreign Corrupt Practices Act, Pub. L. No.
95-213, 91 Stat.1494 (December 19, 1977), as amended (the "FCPA"), or any
regulation promulgated thereunder, and there are not pending any investigations,
reviews or inquiries made by any Governmental Entity of the Company, any Company
Subsidiaries or any of their respective affiliates with respect to the FCPA, nor
to the knowledge of the Company has any Governmental Entity threatened to
conduct the same.
SECTION 3.8 SECURITIES AND EXCHANGE COMMISSION ("SEC") FILINGS;
FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports, statements and
other documents (including all exhibits, annexes, supplements and amendments to
such documents) required to be filed by it under the Exchange Act and the
Securities Act since January 1, 1996 (collectively, including any such documents
filed subsequent to the date of this Agreement, the "COMPANY SEC REPORTS") and
the Company has made available to the Parent each Company SEC Report filed with
the SEC. The Company SEC Reports, including any financial statements or
schedules included or incorporated by reference, (i) comply and will comply with
the requirements of the Exchange Act or the Securities Act or both, as the case
may be, applicable to those Company SEC Reports and (ii) did not and will not at
the time filed contain any untrue statement of a material fact or omit to state
a material fact required to be stated or necessary in order to make the
statements made in those Company SEC Reports, in the light of the circumstances
under which they were made, not misleading. Except as set forth in Section
3.8(a) of the Company Disclosure Letter, no Company Subsidiary is subject to the
periodic reporting requirements of the Exchange Act or is otherwise required to
file any documents with the SEC or any national securities exchange or quotation
service or comparable Governmental Entity.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Company SEC Reports (including the related
notes and schedules) fairly presented or will fairly present, in all material
respects, the consolidated financial position of the Company as of the dates set
forth in those consolidated balance sheets. Each of the consolidated statements
of income and of cash flows included in or incorporated by reference into the
Company SEC Reports
<PAGE>
16
(including any related notes and schedules), fairly presented or will fairly
present, in all material respects, the consolidated results of operations and
cash flows, as the case may be, of the Company and the consolidated Company
Subsidiaries for the periods set forth in those consolidated statements of
income and of cash flows (subject, in the case of unaudited quarterly
statements, to notes and normal year-end audit adjustments that will not be
material in amount or effect), in each case in conformity with United States
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited quarterly statements, as permitted by Form 10-Q of the SEC)
consistently applied throughout the periods indicated.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Company Subsidiaries as of
December 31, 1998 including the related notes, neither the Company nor any
Company Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in the related notes prepared in accordance with
GAAP, except for liabilities or obligations incurred in the ordinary course of
business since December 31, 1998 that, individually or in the aggregate, have
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Company.
SECTION 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1998, and except as otherwise disclosed in the PLD Form 10-K, the Company and
the Company Subsidiaries have conducted their businesses only in the ordinary
course and in a manner consistent with past practice and, since such date, there
has not been:
(a) any Material Adverse Effect on the Company;
(b) any damage, destruction or other casualty loss with
respect to any asset or property owned, leased or otherwise used by it or any
Company Subsidiaries, whether or not covered by insurance, which damage,
destruction or loss, individually or in the aggregate, has resulted or could
reasonably be expected to result in a Material Adverse Effect on the Company;
(c) any material change by the Company in its or any Company
Subsidiary's accounting methods, principles or practices;
(d) any declaration, setting aside or payment of any dividend
or distribution in respect of Company Shares or any redemption, purchase or
other acquisition of any of the Company's securities;
(e) Except as described in Section 3.9(e) of the Company
Disclosure Letter any increase in the compensation or benefits or establishment
of any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other
<PAGE>
17
employee benefit plan, or any other increase in the compensation payable or to
become payable to any executive officers of the Company or any Company
Subsidiary except in the ordinary course of business consistent with past
practice or except as required by applicable Law.
SECTION 3.10 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in Section 3.10 of the Company
Disclosure Letter and except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company: (A)
each pension, retirement, savings, disability, medical, dental, health, life,
death benefit, group insurance, profit sharing, deferred compensation, stock
option, bonus, incentive, severance pay, or other employee benefit plan, trust,
arrangement, contract, commitment, agreement or policy (each a "BENEFIT PLAN")
of the Company or any Company Subsidiary (the "COMPANY BENEFIT PLANS") has been
administered and is in compliance with the terms of such plan and all applicable
laws, rules and regulations, (B) no "reportable event" (as such term is used in
section 4043 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (other than those events for which the 30 day notice has been waived
pursuant to the regulations), "prohibited transaction" (as such term is used in
section 406 of ERISA or sec tion 4975 of the Code) or "accumulated funding
deficiency" (as such term is used in section 412 or 4971 of the Code) has
heretofore occurred with respect to any Company Benefit Plan and (C) each
Company Benefit Plan intended to qualify under Section 401(a) of the Code has
received a favorable determination from the IRS regarding its qualified status
and no notice has been received from the IRS with respect to the revocation of
such qualification.
(b) There is no litigation or administrative or other
proceeding involving any Company Benefit Plan nor has the Company or any Company
Subsidiary received notice that any such proceeding is threatened, in each case
where an adverse determination could reasonably be expected to have a Material
Adverse Effect on the Company. Neither the Company nor any Company Subsidiary
has incurred, nor, to the Company's knowledge, is reasonably likely to incur any
withdrawal liability with respect to any "multiemployer plan" (within the
meaning of section 3(37) of ERISA) which remains unsatisfied in an amount which
could reasonably be expected to have a Material Adverse Effect on the Company.
The termination of, or withdrawal from, any Company Benefit Plan or
multiemployer plan to which the Company or any Company Subsidiaries contributes,
on or prior to the Closing Date, will not subject the Company or any Company
Subsidiary to any liability under Title IV of ERISA that could reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 3.11 ACCOUNTING AND TAX MATTERS. Neither the Company nor, to
the knowledge of the Company, any of its affiliates has taken or agreed to take
any action, nor is the Company aware of any agreement, plan or other
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18
circumstance that would prevent the Merger from constituting a transaction
qualifying as a reorganization under Section 368(a) of the Code.
SECTION 3.12 CONTRACTS; DEBT INSTRUMENTS. Except as set forth in
Section 3.12 of the Company Disclosure Letter there is no Contract that is
material to the business, financial condition or results of operations of the
Company and the Company Subsidiaries taken as a whole. Neither the Company nor
any Company Subsidiary is in violation of or in default under (nor does there
exist any condition which with the passage of time or the giving of notice would
cause such a violation of or default under) any Contract to which it is a party
or by which it or any of its properties or assets is or may be bound or
affected, except for violations or defaults that, individually or in the
aggregate, have not resulted and could not reasonably be expected to result in a
Material Adverse Effect on the Company. Set forth in Section 3.12 of the Company
Disclosure Letter is a description of any material changes to the amount and
terms of the indebtedness of the Company and the consolidated Company
Subsidiaries as described in the notes to the financial statements set forth as
incorporated by reference in the PLD Form 10K.
SECTION 3.13 LITIGATION. There is no suit, claim, action, proceeding or
investigation (collectively, "CLAIMS") pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary before any
Governmental Entity that, if adversely determined, individually or in the
aggregate, has resulted or could reasonably be expected to result in a Material
Adverse Effect on the Company. Neither the Company nor any Company Subsidiary is
subject to any outstanding order, writ, injunction or decree which, individually
or in the aggregate, has resulted or could reasonably be expected to result in a
Material Adverse Effect on the Company.
SECTION 3.14 ENVIRONMENTAL MATTERS. Except as disclosed on Section 3.14
of the Company Disclosure Letter and except as could not reasonably be expected
to have a Material Adverse Effect on the Company:
(a) Neither the Company nor any Company Subsidiary is or has
been in violation in any material respect of any applicable Safety and
Environmental Law (as hereafter defined).
(b) The Company and each Company Subsidiary have all Permits
(as hereafter defined) required pursuant to Safety and Environmental Laws that
are material to the conduct of the business of the Company or any Company
Subsidiary, all such Permits are in full force and effect, no action or
proceeding to revoke, limit or modify any of such Permits is pending, and the
Company and each Company Subsidiary is in compliance in all material respects
with all terms and conditions thereof.
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19
(c) Neither the Company nor any Company Subsidiary has
received, or expects to receive due to the consummation of the Agreement, any
material Environmental Claim (as hereafter defined).
(d) To the Company's knowledge, there is not now and has not
been at any time in the past a Release or threatened Release (as hereafter
defined) of Hazardous Substances into the Environment for which the Company or
any Company Subsidiary may be directly or indirectly responsible.
(e) To the Company's knowledge, there is not now and has not
been at any time in the past at, on or in any of the real properties owned,
leased or operated by the Company or any Company Subsidiary, and, to the
Company's knowledge, was not at, on or in any real property previously owned,
leased or operated by the Company or any Company Subsidiary or any predecessor:
(i) any generation, use, handling, Release, treatment, recycling, storage or
disposal of any Hazardous Substances, (ii) any underground storage tank, surface
impoundment, lagoon or other containment facility (past or present) for the
temporary or permanent storage, treatment or disposal of Hazardous Substances,
(iii) any asbestos-containing material in a condition requiring abatement, (iv)
any Release or threatened Release, or any visible signs of Releases or
threatened Releases, of a Hazardous Substance to the Environment in form or
quantity requiring remedial action under Safety and Environmental Laws, or (v)
any Hazardous Substances present at such property, excepting such quantities as
are handled in accordance with all applicable manufacturer's instructions and
Safety and Environmental Laws and in proper storage containers, and as are
necessary for the operations of the Company and the Company Subsidiaries.
For purposes of this Agreement, the following terms have the following
meanings:
(a) "ENVIRONMENT" means navigable waters, waters of the
contiguous zone, ocean waters, natural resources, surface waters, ground water,
drinking water supply, land surface, subsurface strata, ambient air, both inside
and outside of buildings and structures, man-made buildings and structures, and
plant and animal life on earth.
(b) "ENVIRONMENTAL CLAIMS" means any notification, whether
direct or indirect, formal or informal, written or oral, pursuant to Safety and
Environmental Laws or principles of common law relating to pollution, protection
of the Environment or health and safety, that any of the current or past
operations of any of the Parent, any Parent Subsidiary, or the Company, or any
Company Subsidiary (collectively, the "MERGING PARTIES"), as the case may be, or
any by-product thereof, or any of the property currently or formerly owned,
leased or operated by any of the Merging Parties, or the operations or property
of any predecessor of any of the Merging Parties is or may be implicated in or
subject to any proceeding, action,
<PAGE>
20
investigation, claim, lawsuit, order, agreement or evaluation by any
Governmental Entity or any other person.
(c) "HAZARDOUS SUBSTANCE" means any toxic waste, pollutant,
hazardous substance, toxic substance, hazardous waste, special waste, industrial
substance or waste, petroleum or petroleum-derived substance or waste,
radioactive substance or waste, or any constituent of any such substance or
waste, or any other substance regulated under or defined by any Safety and
Environmental Law.
(d) "PERMITS" means all licenses, permits, orders or approvals
of, and all required registrations with, any Governmental Entity.
(e) "RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into or through the indoor or outdoor Environment or into, through or
out of any property, including the movement of Hazardous Substances through or
in the air, soil, surface water, ground water or property.
(f) "SAFETY AND ENVIRONMENTAL LAWS" means all federal, state
and local laws and orders relating to pollution, protection of the Environment,
public or worker health and safety, or the emission, discharge, release or
threatened release of pollutants, contaminants or industrial, toxic or hazardous
substances or wastes into the Environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or industrial, toxic or
hazardous substances or wastes, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq.,
the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 42 U.S.C.
ss. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. ss. 121 et seq., the Occupational Safety and Health Act, 29 U.S.C. ss.
651 et seq., the Asbestos Hazard Emergency Response Act, 15 U.S.C. ss. 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C. ss. 300f et seq., the Oil Pollution
Act of 1990 and analogous state acts.
SECTION 3.15 INTELLECTUAL PROPERTY.
(a) DISCLOSURE.
(i) Section 3.15(a)(i) of the Company Disclosure
Letter sets forth all material United States and foreign patents and patent
applications, trademark and service mark registrations and applications,
Internet domain name registrations and applications, and copyright registrations
and applications owned or licensed by the Company, specifying as to each item,
as applicable: (A) the nature of the item, including the title; (B) the owner of
the item; (C) the jurisdictions in which
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21
the item is issued or registered or in which an application for issuance or
registration has been filed; and (D) the issuance, registration or application
numbers and dates.
(ii) Section 3.15(a)(ii) of the Company Disclosure
Letter sets forth all material licenses, sublicenses, and other agreements or
permissions ("IP LICENSES") under which the Company is a licensor or licensee or
otherwise is authorized to use or practice any Intellectual Property. For
purposes of this Agreement, "INTELLECTUAL PROPERTY" means all of the following
as they exist in all jurisdictions throughout the world, in each case, to the
extent owned by, licensed to, or otherwise used by the Company or the Parent:
(A) patents, patent applications, and other patent rights (including any
divisions, continuations, continuations-in-part, substitutions, or reissues
thereof, whether or not patents are issued on any such applications and whether
or not any such applications are modified, withdrawn, or resubmitted); (B)
trademarks, service marks, trade dress, trade names, brand names, Internet
domain names, designs, logos, or corporate names, whether registered or
unregistered, and all registrations and applications for registration thereof;
(C) copyrights, including all renewals and extensions, copyright registrations
and applications for registration, and non-registered copyrights; (D) trade
secrets, concepts, ideas, designs, research, processes, procedures, techniques,
methods, know-how, data, mask works, discoveries, inventions, modifications,
extensions, improvements, and other proprietary rights (whether or not
patentable or subject to copyright, mask work, or trade secret protection)
(collectively, "TECHNOLOGY"); and (E) computer software programs, including all
source code, object code, and documentation related thereto (the "SOFTWARE").
(iii) Section 3.15(a)(iii) of the Company Disclosure
Letter sets forth and describes the status of any material agreements involving
Intellectual Property currently in negotiation or proposed by the Company
("PROPOSED INTELLECTUAL PROPERTY AGREEMENTS").
(b) OWNERSHIP. The Company owns, free and clear of all Liens,
and has the unrestricted right to use, sell, or license, all Intellectual
Property set forth in Section 3.15(a)(i) and, as applicable, Section 3.15(a)(ii)
of the Company Disclosure Letter, except for failures that, individually or in
the aggregate, have not resulted and could not reasonably be expected to result
in a Material Adverse Effect on the Company.
(c) CLAIMS. The Company has not been, during the three years
preceding the date of this Agreement, a party to any Claim, nor, to the
knowledge of the Company, is any Claim threatened, that challenges the validity,
enforceability, ownership, or right to use, sell, or license any Intellectual
Property owned or licensed by the Company, except for Claims that, individually
or in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Company. To the knowledge of the
Company, no third party is infringing upon any Intellectual Property, except for
infringements that,
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22
individually or in the aggregate, have not resulted and could not reasonably be
expected to result in a Material Adverse Effect on the Company.
(d) ADMINISTRATION AND ENFORCEMENT. The Company has taken all
necessary and desirable actions to maintain and protect each item of Intellec
tual Property owned by the Company, except for failures to take such actions
that, individually or in the aggregate, have not resulted and could not
reasonably be expected to result in a Material Adverse Effect on the Company.
(e) PROTECTION OF TRADE SECRETS AND TECHNOLOGY. The Company
has taken all reasonable precautions to protect the secrecy, confidentiality,
and value of its trade secrets and the proprietary nature and value of the
Technology, except for failures to take such precautions that, individually or
in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Company.
(f) SOFTWARE. All material Software is described in Section
3.15(a)(ii) of the Company Disclosure Letter. The Software performs in
conformance with its documentation and is fully and freely transferable to the
Parent without any third party consents, except for failures to perform or to be
fully and freely transferable that, individually or in the aggregate, have not
resulted and could not reasonably be expected to result in a Material Adverse
Effect on the Company.
(g) YEAR 2000 COMPLIANCE. All Software, hardware, databases,
and embedded control systems (collectively, the "SYSTEMS") used by the Company
are Year 2000 Compliant and to the Company's knowledge the Systems used by the
Company's material suppliers are Year 2000 Compliant, except in each case for
failures to be Year 2000 Compliant that, individually or in the aggregate, have
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Company and except as set forth in Section 3.15(g) of the
Company Disclosure Letter. For purposes of this Agreement, "YEAR 2000 COMPLIANT"
means that the Systems (i) accurately process date and time data (including
calculating, comparing, and sequencing) from, into, and between the twentieth
and twenty-first centuries, the years 1999 and 2000, and leap year calculations
and (ii) operate accurately with other software and hardware that use standard
date format (4 digits) for representation of the year.
(h) EFFECT OF TRANSACTION. The Company is not, nor, as a
result of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, will be, in violation of any agreement
relating to any Intellectual Property, except for violations that, individually
or in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Company. After the completion of the
transactions contemplated by this Agreement, the Parent will own directly or
indirectly all right, title, and interest in and to or have a license to use all
Intellectual Property on identical terms and conditions as the Company or a
Company Subsidiary enjoyed immediately prior to
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23
such transactions, except for failures to own or have available for use that,
individually or in the aggregate, have not resulted and could not reasonably be
expected to result in a Material Adverse Effect on the Company.
SECTION 3.16 TAXES. (a) Except as set forth on Section 3.16(a) of the
Company Disclosure Letter, (i) the Company and each Company Subsidiary has
timely filed (after giving effect to any extensions of the time to file which
were obtained) prior to the date of this Agreement, and will file prior to the
Effective Time, all returns required to be filed prior to the date of this
Agreement and/or required to be filed prior to the Effective Time by any of them
with respect to, and has paid (or the Company has paid on its behalf), or has or
will set up an adequate reserve for the payment of, all federal, state, local,
foreign and other taxes, together with interest and penalties thereon ("TAXES"),
required to be paid prior to the date of the Agreement or the Effective Time, as
the case may be, and the most recent financial statements contained in the
Company SEC Reports reflect an adequate reserve for all Taxes payable by the
Company and the Company Subsidiaries accrued through the date of such financial
statements and (ii) no deficiencies for any Taxes have been proposed, asserted
or assessed against the Company or any Company Subsidiary other than those which
are being contested in good faith and by proper proceedings by the Company,
except in the case of clauses (i) and (ii) above, any of the foregoing which do
not and will not have a Material Adverse Effect on the Company.
(b) Except as set forth on Section 3.16(b) of the Company
Disclosure Letter, none of the Company, any Company Subsidiary, or to the
Company's knowledge, any group of which the Company or any Company Subsidiary is
now or ever was a member, has filed or entered into any election, consent or
extension agreement that extends any applicable statute of limitations or the
time within which a return must be filed which statute of limitations has not
expired or return has not been timely filed, except, in the case of Company
Subsidiaries organized under the laws of jurisdictions outside the United States
and Canada, as has not and could not reasonably be expected to have a Material
Adverse Effect on the Company.
(c) Except as set forth on Section 3.16(c) of the Company
Disclosure Letter, (i) none of the Company, any Company Subsidiary or, to the
Company's knowledge, any group of which the Company or any Company Subsidiary is
now or ever was a member, is a party to any action or proceeding pending or, to
the Company's knowledge, threatened by any governmental authority for assessment
or collection of Taxes, (ii) no unresolved claim for assessment or collection of
Taxes has, to the Company's knowledge, been asserted, (iii) no audit or
investigation of the Company or any Company Subsidiary by any governmental
authority is pending or, to the Company's knowledge, threatened and (iv) no such
matters are under discussion with any governmental authority which, in the case
of clauses (i-iv), could have a Material Adverse Effect on the Company.
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24
SECTION 3.17 NON-COMPETITION AGREEMENTS. Except as set forth in Section
3.17 of the Company Disclosure Letter, neither the Company nor any Company
Subsidiary is a party to any agreement which purports to restrict or prohibit in
any material respect the Company and the Company Subsidiaries collectively from,
directly or indirectly, engaging in any business involving telecommunications
currently engaged in by the Company, any Company Subsidiary or any other persons
affiliated with the Company. None of the Company's officers, directors or key
employees is a party to any agreement which, by virtue of such person's
relationship with the Company, restricts in any material respect the Company or
any Company Subsidiary or affiliate of either of them from, directly or
indirectly, engaging in any of the businesses described above.
SECTION 3.18 CERTAIN AGREEMENTS. Except as set forth in Section 3.18 of
the Company Disclosure Letter, and except for this Agreement, as of the date of
this Agreement, neither the Company nor any of the Company Subsidiaries is a
party to any oral or written (i) agreement with any executive officer or other
key employee of the Company or Company Subsidiary the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving the Company of the nature contemplated by this
Agreement, or agreement with respect to any executive officer of the Company
providing any term of employment or compensation guarantee (x) extending for a
period longer than one year after the Effective Time or (y) for the payment of
in excess of $100,000 per annum or (ii) plan, including any stock option plan,
stock appreciation right plan, restricted stock plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
SECTION 3.19 INVESTMENT COMPANY ACT. Each of the Company and the
Company Subsidiaries either (i) is not an "investment company," or a company
"controlled" by, or an "affiliated company" with respect to, an "investment
company," within the meaning of the Investment Company Act of 1940, as amended
(the "INVESTMENT COMPANY ACT") or (ii) satisfies all conditions for an exemption
from the Investment Company Act, and, accordingly, neither the Company nor any
of the Company is required to be registered under the Investment Company Act.
SECTION 3.20 OPINION OF FINANCIAL ADVISOR. Salomon Smith Barney Inc.
(the "COMPANY FINANCIAL ADVISOR") has delivered to the Board of Directors of the
Company its oral opinion to the effect that, as of the date of this Agreement,
the Exchange Ratio is fair to holders of Company Common Stock from a financial
point of view, a copy of the written opinion of which will be delivered to the
Parent after receipt thereof by the Company.
SECTION 3.21 BROKERS. No broker, finder or investment banker other than
the Company Financial Advisor is entitled to any brokerage, finder's or other
fee
<PAGE>
25
or commission in connection with the Merger or the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. Prior to the date of this Agreement, the Company has made available
to the Parent a complete and correct copy of all agreements between the Company
and the Company Financial Advisor under which the Company Financial Advisor
would be entitled to any payment relating to the Merger or any other
transactions.
SECTION 3.22 CERTAIN STATUTES. The Board of Directors of the Company
has taken or will take all appropriate and necessary actions to ensure that the
restrictions on business combinations in Section 203 of the GCL will not have
any effect on the Merger or the other transactions contemplated by this
Agreement. No "fair price," "moratorium," "control share acquisition" or other
similar state or federal anti-takeover statute or regulation (each a "TAKEOVER
STATUTE") is, as of the date of this Agreement, applicable to the Merger or any
other transactions contemplated by this Agreement.
SECTION 3.23 INFORMATION. None of the information to be supplied by the
Company for inclusion or incorporation by reference in the Proxy Statement, the
Registration Statement or the Exchange Offer Registration Statement will, in the
case of the Registration Statement and the Exchange Offer Registration
Statement, at the time it becomes effective and at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated in the Registration Statement or necessary to make the
statements in that Registration Statement or the Exchange Offer Registration
Statement, as the case may be, not misleading, or, in the case of the Proxy
Statement or any amendments or supplements of the Proxy Statement, at the time
of the mailing of the Proxy Statement and any amendments or supplements of the
Proxy Statement and at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the Proxy Statement or necessary in order to make the statements
in the Proxy Statement, in light of the circumstances under which they are made,
not misleading. The Proxy Statement (except for those portions of the Proxy
Statement that relate only to Parent or subsidiaries or affiliates of the
Parent) will comply as to form in all material respects with the provisions of
the Exchange Act.
SECTION 3.24 VOTE REQUIRED. The Requisite Company Vote is the only vote
of the holders of any class or series of the Company's capital stock necessary
(under the Company Charter Documents, the GCL, other applicable Law or
otherwise) to approve this Agreement, the Merger or the other transactions
contemplated by this Agreement.
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26
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGER SUB
Each of the Parent and Merger Sub represents and warrants to the
Company that:
SECTION 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Except as set forth in Section 4.1(a) of the Parent
Disclosure Letter, each of the Parent, Merger Sub, and each other subsidiary of
the Parent other than dormant subsidiaries that are immaterial to the business
and operations of the Parent (collectively, the "PARENT SUBSIDIARIES") has been
duly organized and is validly existing and in good standing under the laws of
its jurisdiction of its incorporation or organization, as the case may be, 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. Each of the Parent, Merger Sub and each other Parent
Subsidiary is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that, individually or in the aggregate, have not resulted
and could not reasonably be expected to result in a Material Adverse Effect on
the Parent. For purposes of this Agreement, "MATERIAL ADVERSE EFFECT ON THE
PARENT" means any change in or effect on the business, assets, properties,
results of operations or financial condition of the Parent or any Parent
Subsidiaries that is or could reasonably be expected to be materially adverse to
the Parent and the Parent Subsidiaries, taken as a whole, or that could
reasonably be expected to materially impair the ability of the Parent or Merger
Sub to perform its obligations under this Agreement or to consummate
transactions contemplated hereby.
(b) Section 4.1(b) of the Disclosure Letter delivered to the
Company by the Parent and Merger Sub prior to the execution of this agreement
(the "PARENT DISCLOSURE LETTER") sets forth a complete and correct list of all
of the Parent Subsidiaries. Except as set forth in Section 4.1(b) of the Parent
Disclosure Letter, neither the Parent nor any Parent Subsidiary holds any
interest in any other person other than the Parent Subsidiaries so listed.
SECTION 4.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. The copies of the
Parent's certificate of incorporation and by-laws, each as amended through the
date of this Agreement (collectively, the "PARENT CHARTER DOCUMENTS") that are
incorporated by reference in, as exhibits to, the Parent's Annual Report on Form
10-K for the year ended December 31, 1998, as amended by its filing on Form
10K/A (the "MIG FORM 10K"), and all comparable corporate organizational
documents of the Parent Subsidiaries made available to the Company by the Parent
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27
are complete and correct copies of those documents. Except as set forth in
Section 4.2 of the Parent Disclosure Letter, the Parent Charter Documents and
all comparable corporate organizational documents of the Parent Subsidiaries are
in full force and effect. The Parent is not in violation of any of the
provisions of the Parent Charter Documents.
SECTION 4.3 CAPITALIZATION.
(a) The authorized capital stock of the Parent consists of (i)
400,000,000 shares of Parent Common Stock and (ii) 70,000,000 shares of
Preferred Stock, par value $1.00 per share ("PARENT PREFERRED STOCK"). As of
April 30, 1999, (A) 69,161,937 shares of Parent Common Stock were issued and
outstanding, all of which were validly issued and are fully paid, nonassessable
and not subject to preemptive rights, (B) 4,140,000 shares of 7 1/4% Cumulative
Convertible Preferred Stock (the "7 1/4% PREFERRED STOCK") were issued and
outstanding, all of which were validly issued and are fully paid, nonassessable
and not subject to preemptive rights, (C) no shares of Parent Common Stock were
held in the treasury of the Parent or by the Parent Subsidiaries, and (D)
22,785,658 shares of Parent Common Stock were reserved for issuance upon
exercise of outstanding Parent Stock Options or conversion of shares of 7 1/4%
Preferred Stock. The shares of Parent Common Stock included in the Merger
Consideration, when issued in accordance with this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable.
(b) Between April 30, 1999 and the date of this Agreement, no
options to purchase shares of Parent Common Stock ("PARENT STOCK OPTIONS") have
been granted by the Parent under the Metromedia International Group, Inc. 1996
Incentive Stock Option Plan (the "PARENT'S OPTION PLAN"). Except for (i) Parent
Stock Options to purchase an aggregate of 2,442,188 shares of Parent Common
Stock outstanding or available for grant under the Parent's Option Plan, (ii)
under agreements or arrangements set forth in Section 4.3(b) of the Parent
Disclosure Letter or (iii) 13,800,000 shares of Parent Common Stock issuable
upon conversion of shares of 7 1/4% Preferred Stock, there are no options,
warrants, conversion rights, stock appreciation rights, redemption rights,
repurchase rights or other rights, agreements, arrangements or commitments of
any character to which the Parent is a party or by which the Parent is bound
relating to the issued or unissued capital stock of the Parent or any Parent
Subsidiary or obligating the Parent or any Parent Subsidiary to issue or sell
any shares of capital stock of, or other equity interests in, the Parent or any
Parent Subsidiary.
(c) Except as set forth in Section 4.3(c) of the Parent
Disclosure Letter, there are no outstanding contractual obligations of the
Parent or any Parent Subsidiary to repurchase, redeem or otherwise acquire any
shares of Parent Common Stock or any capital stock of any Parent Subsidiary.
Except as set forth in Section 4.3(c) of the Parent Disclosure Letter, each
outstanding share of capital stock of each Parent Subsidiary is duly authorized,
validly issued, fully paid, nonassessable and not subject to preemptive rights
and each such share owned by the
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28
Parent or a Parent Subsidiary is free and clear of all Liens. Except as set
forth in Section 4.3(c) of the Parent Disclosure Letter, there are no material
outstanding contractual obligations of the Parent or any Parent Subsidiary to
provide funds in excess of $1 million to, or make any investment in excess of $1
million (in the form of a loan, capital contribution or otherwise) in, any
Parent Subsidiary that is not wholly owned by the Parent or in any other person.
(d) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $.01 per share ("SUB COMMON STOCK"). All
of the issued and outstanding shares of Sub Common Stock are (A) owned by the
Parent or another Parent Subsidiary wholly owned by the Parent and (B) duly
authorized, validly issued, fully paid and nonassessable.
SECTION 4.4 AUTHORITY.
(a) Each of the Parent and Merger Sub has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated hereby
to be consummated by it. The execution and delivery of this Agreement by each of
the Parent and Merger Sub and the consummation by each of the Parent and Merger
Sub of such transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Parent or
Merger Sub are necessary to authorize this Agreement or to consummate such
transactions, other than, with respect to the approval of the issuance by the
Parent of the Parent Common Stock to be issued in the Merger, by a majority of
the outstanding shares of Parent Common Stock (the "REQUISITE PARENT VOTE").
This Agreement has been duly authorized and validly executed and delivered by
each of the Parent and Merger Sub and constitutes a legal, valid and binding
obligation of each of the Parent and Merger Sub, enforceable against each of the
Parent and Merger Sub in accordance with its terms.
(b) The Board of Directors of each of the Parent and Merger
Sub (i) has unanimously adopted the plan of merger set forth in this Agreement
and approved this Agreement and the other transactions contemplated by this
Agreement and (ii) has declared that the Merger and this Agreement and the other
transactions contemplated by this Agreement are advisable.
SECTION 4.5 NO CONFLICT. (a) The execution and delivery of this
Agreement by the Parent and Merger Sub do not, and the performance of this
Agreement by each of the Parent and Merger Sub will not:
(i) conflict with or violate any provision of any
Parent Charter Document or any equivalent organizational documents of any Parent
Subsidiary except as set forth in Section 4.5(a) of the Parent Disclosure
Letter;
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29
(ii) assuming that all consents, approvals,
authorizations and other actions described in Section 4.5(b) of the Parent
Disclosure Letter have been obtained and all filings and obligations described
in Section 4.5(b) of the Parent Disclosure Letter have been made, conflict with
or violate any foreign or domestic Law applicable to the Parent, Merger Sub or
any other Parent Subsidiary or by which any property or asset of the Parent or
any Parent Subsidiary is or may be bound or affected; or
(iii) except as set forth in Section 4.5(b) of the
Parent Disclosure Letter, result in any breach of or constitute a default (or an
event which with or without notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Parent, Merger Sub, or any other
Parent Subsidiary under, any Contract to which the Parent, Merger Sub or any
other Parent Subsidiary is a party or by which any of them or their assets or
Properties is or may be bound or affected, except for any such breaches,
defaults or other occurrences which, individually or in the aggregate, have not
resulted and could not reasonably be expected to result in a Material Adverse
Effect on the Parent;
(b) Section 4.5(b) of the Parent Disclosure Letter sets forth
a correct and complete list of all Contracts to which Parent or any Parent
Subsidiaries are a party or by which they or their assets or properties is or
may be bound or affected under which consents or waivers are or may be required
prior to consummation of the transactions contemplated by this Agreement.
SECTION 4.6 GOVERNMENTAL REQUIRED FILINGS AND CONSENTS. The execution
and delivery of this Agreement by the Parent and Merger Sub do not, and the
performance of this Agreement by the Parent and Merger Sub will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Government Entity except for (i) those consents or approvals set forth
in Section 4.6 of the Parent Disclosure Letter (the "PARENT GOVERNMENTAL
CONSENTS"), (ii) applicable requirements of the Exchange Act and the Securities
Act, (iii) applicable requirements of Blue Sky Laws, (iv) the rules and
regulations of the American Stock Exchange, Inc., (v) the pre-merger
notification requirements of the HSR Act, and (vi) the filing of the Certificate
of Merger as required by the GCL.
SECTION 4.7 PERMITS; COMPLIANCE WITH LAW. Except as set forth in
Section 4.7 of the Parent Disclosure Letter, each of the Parent and the Parent
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Parent or any
Parent Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted (collectively, the "PARENT PERMITS"),
except where the failure to have, or the suspension or cancellation of, any of
the Parent Permits, individually or in the aggregate, has not resulted and could
not reasonably be expected to result in a
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30
Material Adverse Effect on the Parent, and, as of the date of this Agreement, no
suspension or cancellation of any of the Parent Permits is pending or, to the
knowledge of the Parent, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Parent Permits, individually or in the
aggregate, has not resulted and could not reasonably be expected to result in a
Material Adverse Effect on the Parent. Neither the Parent nor any Parent
Subsidiary is in conflict with, or in default or violation of, (i) any Law
applicable to the Parent or any Parent Subsidiary or by which any property or
asset of the Parent or any Parent Subsidiary is or may be bound or affected or
(ii) any Parent Permits, in either case, except where such conflict, default or
violation could not reasonably be expected to result in a Material Adverse
Effect on the Parent. To the Parent's knowledge, the business of the Parent is
not being conducted in violation of any portion of the FCPA, or any regulation
promulgated thereunder, and there are not pending any investigations, reviews or
inquiries made by any Governmental Entity of the Parent, any Parent Subsidiaries
or any of their respective affiliates with respect to the FCPA, nor to the
knowledge of the Parent has any Governmental Entity threatened to conduct the
same.
SECTION 4.8 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Parent has filed all forms, reports, statements and
other documents (including all exhibits, annexes, supplements and amendments to
such documents) required to be filed by it under the Exchange Act and the
Securities Act since January 1, 1996 through the date of this Agreement
(collectively, including any such documents filed subsequent to the date of this
Agreement, the "PARENT SEC REPORTS") and the Parent has made available to the
Company each Parent SEC Report. The Parent SEC Reports, including any financial
statements or schedules included or incorporated by reference, (i) comply and
will comply with the requirements of the Exchange Act or the Securities Act or
both, as the case may be, applicable to those Parent SEC Reports and (ii) did
not and will not at the time filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated or necessary in
order to make the statements made in those Parent SEC reports, in the light of
the circumstances under which they were made, not misleading. No Parent
Subsidiary is subject to the periodic reporting requirements of the Exchange Act
or is otherwise required to file any documents with the SEC or any national
securities exchange or quotation service or comparable Governmental Entity.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Parent SEC Reports (including the related
notes and schedules) fairly presented or will fairly present, in all material
respects, the consolidated financial position of the Parent as of the dates set
forth in those consolidated balance sheets. Each of the consolidated statements
of income and of cash flows included in or incorporated by reference into the
Parent SEC Reports (including any related notes and schedules) fairly presented
or will fairly present, in all material respects, the consolidated results of
operations and cash flows, as the case may be, of the Parent and the
consolidated Parent Subsidiaries for the periods set
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forth in those consolidated statements of income and of cash flows (subject, in
the case of unaudited quarterly statements, to notes and normal year-end audit
adjustments that will not be material in amount or effect), in each case in
conformity with GAAP (except, in the case of unaudited quarterly statements, as
permitted by Form 10-Q of the SEC) consistently applied throughout the periods
indicated.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Parent and the consolidated Parent Subsidiaries as of
December 31, 1998, including the related notes, neither the Parent nor any
Parent Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in the related notes prepared in accordance with
GAAP, except for liabilities or obligations incurred in the ordinary course of
business since December 31, 1998, that, individually or in the aggregate, have
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Parent.
SECTION 4.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1998 (or, with respect to Snapper, Inc., December 31, 1998), and except as
otherwise disclosed in the MIG Form 10K, the Parent and the Parent Subsidiaries
have conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been:
(a) any Material Adverse Effect on the Parent;
(b) any damage, destruction or other casualty loss with
respect to any asset or property owned, leased or otherwise used by it or any
Parent Subsidiaries, whether or not covered by insurance, which damage,
destruction or loss, individually or in the aggregate, has resulted or could
reasonably be expected to result in a Material Adverse Effect on the Parent;
(c) any material change by the Parent in its or any Parent
Subsidiary's accounting methods, principles or practices;
(d) any declaration, setting aside or payment of any dividend
or distribution in respect of Parent Shares or any redemption, purchase or other
acquisition of any of the Parent's securities; or
(e) any increase in the compensation or benefits or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, the granting of
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any executive officers of the
Parent or any Parent Subsidiary except in the ordinary course of business
consistent with past practice or except as required by applicable Law.
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SECTION 4.10 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in Section 4.10 of the Parent
Disclosure Letter and except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Parent: (A) each
Benefit Plan of the Parent or any Parent Subsidiary (the "PARENT BENEFIT PLANS")
has been administered and is in compliance with the terms of such plan and all
applicable laws, rules and regulations, (B) no "reportable event" (as such term
is used in section 4043 of ERISA) (other than those events for which the 30 day
notice has been waived pursuant to the regulations), "prohibited transaction"
(as such term is used in sec tion 406 of ERISA or section 4975 of the Code) or
"accumulated funding deficiency" (as such term is used in section 412 or 4971 of
the Code) has heretofore occurred with respect to any Parent Benefit Plan and
(C) each Parent Benefit Plan intended to qualify under Section 401(a) of the
Code has received a favorable determination from the IRS regarding its qualified
status and no notice has been received from the IRS with respect to the
revocation of such qualification.
(b) There is no litigation or administrative or other
proceeding involving any Parent Benefit Plan nor has the Parent or any Parent
Subsidiary received notice that any such proceeding is threatened, in each case
where an adverse determination could reasonably be expected to have a Material
Adverse Effect on the Parent. Neither the Parent nor any Parent Subsidiary has
incurred, nor, to the Parent's knowledge, is reasonably likely to incur any
withdrawal liability with respect to any "multiemployer plan" (within the
meaning of section 3(37) of ERISA) which remains unsatisfied in an amount which
could reasonably be expected to have a Material Adverse Effect on the Parent.
The termination of, or withdrawal from, any Parent Benefit Plan or multiemployer
plan to which the Parent or any Parent Subsidiaries contributes, on or prior to
the Closing Date, will not subject the Parent or any Parent Subsidiary to any
liability under Title IV of ERISA that could reasonably be expected to have a
Material Adverse Effect on the Parent.
SECTION 4.11 ACCOUNTING AND TAX MATTERS. Neither the Parent nor Merger
Sub, nor to the knowledge of the Parent, any of Parent's affiliates has taken or
agreed to take any action, nor is the Parent aware of any agreement, plan or
other circumstance, that would prevent the Merger from constituting a
transaction qualifying as a reorganization under Section 368(a) of the Code.
SECTION 4.12 CONTRACTS; DEBT INSTRUMENTS. Except as set forth in
Section 4.12 of the Parent Disclosure Letter, there is no Contract that is
material to the business, financial condition or results of operations of the
Parent and the Parent Subsidiaries taken as a whole (each, a "PARENT MATERIAL
CONTRACT"). Neither the Parent nor any Parent Subsidiary is in violation of or
in default under (nor does there exist any condition which with the passage of
time or the giving of notice would cause such a violation of or default under)
any Contract to which it is a party or by which it or any of its properties or
assets is or may be bound or affected, except for violations or defaults that,
individually or in the aggregate, have not resulted and could not
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33
reasonably be expected to result in a Material Adverse Effect on the Parent. Set
forth in Section 4.12 of the Parent Disclosure Letter is a description of any
material changes to the amount and terms of the indebtedness of the Parent and
the consolidated Parent Subsidiaries as described in the notes to the financial
statements set forth as incorporated by reference in the MIG Form 10K.
SECTION 4.13 LITIGATION. There is no Claim pending or, to the knowledge
of the Parent, threatened against the Parent or any Parent Subsidiary before any
Governmental Entity that, individually or in the aggregate, has resulted or
could reasonably be expected to result in a Material Adverse Effect on the
Parent. Neither the Parent nor any Parent Subsidiary is subject to any
outstanding order, writ, injunction or decree which, individually or in the
aggregate, has resulted or could reasonably be expected to result in a Material
Adverse Effect on the Parent.
SECTION 4.14 ENVIRONMENTAL MATTERS. Except as disclosed on Section 4.14
of the Parent Disclosure Letter or in the Parent SEC Reports and except as could
not reasonably be expected to have a Material Adverse Effect on the Parent:
(a) Neither the Parent nor any Parent Subsidiary is or has
been in violation in any material respect of any applicable Safety and
Environmental Law.
(b) The Parent and each Parent Subsidiary have all Permits
required pursuant to Safety and Environmental Laws that are material to the
conduct of the business of the Parent or any Parent Subsidiary, all such Permits
are in full force and effect, no action or proceeding to revoke, limit or modify
any of such Permits is pending, and the Parent and each Parent Subsidiary is in
compliance in all material respects with all terms and conditions thereof.
(c) Neither the Parent nor any Parent Subsidiary has received,
or expects to receive due to the consummation of the Agreement, any material
Environmental Claim.
(d) To the Parent's knowledge, there is not now and has not
been at any time in the past a Release or threatened Release of Hazardous
Substances into the Environment for which the Parent or any Parent Subsidiary
may be directly or indirectly responsible.
(e) To the Parent's knowledge, there is not now and has not
been at any time in the past at, on or in any of the real properties owned,
leased or operated by the Parent or any Parent Subsidiary, and, to the Parent's
knowledge, was not at, on or in any real property previously owned, leased or
operated by the Parent or any Parent Subsidiary or any predecessor: (i) any
generation, use, handling, Release, treatment, recycling, storage or disposal of
any Hazardous Substances, (ii) any underground storage tank, surface
impoundment, lagoon or other containment facility (past or present) for the
temporary or permanent storage, treatment or disposal
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of Hazardous Substances, (iii) any asbestos-containing material in a condition
requiring abatement, (iv) any Release or threatened Release, or any visible
signs of Releases or threatened Releases, of a Hazardous Substance to the
Environment in form or quantity requiring remedial action under Safety and
Environmental Laws, or (v) any Hazardous Substances present at such property,
excepting such quantities as are handled in accordance with all applicable
manufacturer's instructions and Safety and Environmental Laws and in proper
storage containers, and as are necessary for the operations of the Parent and
the Parent Subsidiaries.
SECTION 4.15 INTELLECTUAL PROPERTY.
(a) DISCLOSURE.
(i) Section 4.15(a)(i) of the Parent Disclosure
Letter sets forth all material United States and foreign patents and patent
applications, trademark and service mark registrations and applications,
Internet domain name registrations and applications, and copyright registrations
and applications owned or licensed by the Parent, specifying as to each item, as
applicable: (A) the nature of the item, including the title; (B) the owner of
the item; (C) the jurisdictions in which the item is issued or registered or in
which an application for issuance or registration has been filed; and (D) the
issuance, registration, or application numbers and dates.
(ii) Section 4.15(a)(ii) of the Parent Disclosure
Letter sets forth all material IP Licenses under which the Parent is a licensor
or licensee or otherwise is authorized to use or practice any Intellectual
Property.
(iii) Section 4.15(a)(iii) of the Parent Disclosure
Letter sets forth and describes the status of any material Proposed Intellectual
Property Agreements.
(b) OWNERSHIP. The Parent owns, free and clear of all Liens,
and has the unrestricted right to use, sell, or license, all Intellectual
Property set forth in Section 4.15(a)(i) and, as applicable, Section 4.15(a)(ii)
of the Parent Disclosure Letter, except for failures that, individually or in
the aggregate, have not resulted and could not reasonably be expected to result
in a Material Adverse Effect on the Parent.
(c) CLAIMS. The Parent has not been, during the three years
preceding the date of this Agreement, a party to any Claim, nor, to the
knowledge of the Company, is any Claim threatened, that challenges the validity,
enforceability, ownership, or right to use, sell, or license any Intellectual
Property owned or licensed by the Parent, except for Claims that, individually
or in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Parent. To the knowledge of the
Parent, no third party is infringing upon any Intellectual Property, except for
infringements that, individually or in the aggregate,
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35
have not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Parent.
(d) ADMINISTRATION AND ENFORCEMENT. The Parent has taken all
necessary and desirable actions to maintain and protect each item of Intellec
tual Property owned by the Parent, except for failures to take such actions
that, individually or in the aggregate, have not resulted and could not
reasonably be expected to result in a Material Adverse Effect on the Parent.
(e) PROTECTION OF TRADE SECRETS AND TECHNOLOGY. The Parent has
taken all reasonable precautions to protect the secrecy, confidentiality, and
value of its trade secrets and the proprietary nature and value of the
Technology, except for failures to take such precautions that, individually or
in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Parent.
(f) SOFTWARE. All material Software is described in Section
4.15(a)(ii) of the Parent Disclosure Letter. The Software performs in
conformance with its documentation, except for failures to perform that,
individually or in the aggregate, have not resulted and could not reasonably be
expected to result in a Material Adverse Effect on the Parent.
(g) YEAR 2000 COMPLIANCE. All Systems used by the Parent are
Year 2000 Compliant and to the Parent's knowledge the systems used by the
Parent's material suppliers are Year 2000 Compliant, except in each case for
failures to be Year 2000 Compliant that, individually or in the aggregate, have
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Parent and except as set forth in Section 4.15(g) of the
Parent Disclosure Letter.
(h) EFFECT OF TRANSACTION. The Parent is not, nor, as a result
of the execution and delivery of this Agreement or the performance of its
obligations under this agreement, will be, in violation of any agreement
relating to any Intellectual Property, except for violations that, individually
or in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Parent.
SECTION 4.16 TAXES. (a) Except as set forth on Section 4.16(a) of the
Parent Disclosure Letter, (i) the Parent and each Parent Subsidiary has timely
filed (after giving effect to any extensions of the time to file which were
obtained) prior to the date of this Agreement, and will file prior to the
Effective Time, all returns required to be filed prior to the date of this
Agreement and/or required to be filed prior to the Effective Time by any of them
with respect to, and has paid (or the Parent has paid on its behalf), or has or
will set up an adequate reserve for the payment of, all Taxes required to be
paid prior to the date of the Agreement or the Effective Time, as the case may
be, and the most recent financial statements contained in the Parent SEC Reports
reflect an adequate reserve for all Taxes payable
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36
by the Parent and the Parent Subsidiaries accrued through the date of such
financial statements and (ii) no deficiencies for any Taxes have been proposed,
asserted or assessed against the Parent or any Parent Subsidiary other than
those which are being contested in good faith and by proper proceedings by the
Parent, except in the case of clauses (i) and (ii) above, any of the foregoing
which do not and will not have a Material Adverse Effect on the Parent.
(b) The Federal income tax returns of the Parent and each
Parent Subsidiary consolidated in such returns have been examined by and settled
with the IRS, or the statute of limitations with respect to such years has
expired, for all years through 1994.
(c) Except as set forth on Section 4.16(c) of the Parent
Disclosure Letter, none of the Parent, any Parent Subsidiary, or to the Parent's
knowledge, any group of which the Parent or any Parent Subsidiary is now or ever
was a member, has filed or entered into any election, consent or extension
agreement that extends any applicable statute of limitations or the time within
which a return must be filed which statute of limitations has not expired or
return has not been timely filed except, in the case of Parent Subsidiaries
organized under the laws of jurisdictions outside the United States, as has not
and could not reasonably be expected to result in a Material Adverse Effect on
the Parent.
(d) Except as set forth on Section 4.16(d) of the Parent
Disclosure Letter, (i) none of the Parent, any Parent Subsidiary or, to the
Parent's knowledge, any group of which the Parent or any Parent Subsidiary is
now or ever was a member, is a party to any action or proceeding pending or, to
the Parent's knowledge, threatened by any governmental authority for assessment
or collection of Taxes, (ii) no unresolved claim for assessment or collection of
Taxes has, to the Parent's knowledge, been asserted, (iii) no audit or
investigation of the Parent or any Parent Subsidiary by any governmental
authority is pending or, to the Parent's knowledge, threatened and (iv) no such
matters are under discussion with any governmental authority which, in the case
of clauses (i-iv), could have a Material Adverse Effect on the Parent.
SECTION 4.17 NON-COMPETITION AGREEMENTS. Except as set forth in Section
4.17 of the Parent Disclosure Letter, neither the Parent nor any Parent
Subsidiary is a party to any agreement which purports to restrict or prohibit in
any material respect the Parent and the Parent Subsidiaries collectively from,
directly or indirectly, engaging in any business involving telecommunications
currently engaged in by the Parent, any Parent Subsidiary, any other persons
affiliated with the Parent, or the Company or any Company Subsidiaries. None of
the Parent's officers, directors or key employees is a party to any agreement
which, by virtue of such person's relationship with the Parent, restricts in any
material respect the Parent or any Parent Subsidiary or affiliate of either of
them from, directly or indirectly, engaging in any of the businesses described
above.
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SECTION 4.18 INVESTMENT COMPANY ACT. Each of Parent and each Parent
Subsidiary either (i) is not an "investment company," or a company "controlled"
by, or an "affiliated company" with respect to, an "investment company," within
the meaning of the Investment Company Act or (ii) satisfies all conditions for
an exemption from the Investment Company Act, and, accordingly, neither the
Parent nor any Parent Subsidiary is required to be registered under the
Investment Company Act.
SECTION 4.19 OPINION OF FINANCIAL ADVISOR. Donaldson, Lufkin & Jenrette
Securities Corporation (the "PARENT FINANCIAL ADVISOR") has delivered to the
Board of Directors of the Parent its oral opinion to the effect that, as of the
date of this Agreement, the Exchange Ratio is fair to the Parent from a
financial point of view, a copy of the written opinion of which will be
delivered to the Company after receipt thereof by the Parent.
SECTION 4.20 BROKERS. No broker, finder or investment banker other than
the Parent Financial Advisor is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or the other transactions
contemplated hereby based upon arrangements made by or on behalf of the Parent
or Merger Sub. The Parent has heretofore made available to the Company a
complete and correct copy of all agreements between the Parent and the Parent
Financial Advisor pursuant to which the Parent Financial Advisor would be
entitled to any payment relating to the Merger or such other transactions.
SECTION 4.21 CERTAIN STATUTES. The Board of Directors of the Parent has
taken or will take all appropriate and necessary actions such that the
restrictions on business combinations in Section 203 of the GCL will not have
any effect on the Merger or the other transactions contemplated hereby. No
Takeover Statute is, as of the date hereof, applicable to the Merger or such
other transactions.
SECTION 4.22 INFORMATION. None of the information to be supplied by the
Parent or Merger Sub for inclusion or incorporation by reference in the
Registration Statement, the Exchange Offer Registration Statement or the Proxy
Statement will, in the case of the Registration Statement and the Exchange Offer
Registration Statement, at the time it becomes effective and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated in that Registration Statement or the
Exchange Offer Registration Statement, as the case may be, or necessary to make
the statements in the Registration Statement or the Exchange Offer Registration
Statement, as the case may be, not misleading, or, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
mailing of the Proxy Statement and any amendments or supplements thereto and at
the time of the Parent Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated in that
Proxy Statement or necessary in order to make the statements in that Proxy
Statement, in light of the circumstances under which they are made, not
misleading. The Proxy Statement (except for such portions thereof that
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38
relate only to the Company or the Company Subsidiaries or affiliates of the
Company) and the Registration Statement and the Exchange Offer Registration
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the Securities Act, respectively.
SECTION 4.23 VOTE REQUIRED. The Requisite Parent Vote is the only vote
of the holders of any class or series of the Parent's capital stock necessary
(under the rules and regulations of the American Stock Exchange, Inc., the
Parent Charter Documents, the GCL, other applicable Law or otherwise to approve
this Agreement, the issuance of Parent Common Stock in the Merger and the other
transactions contemplated by this Agreement.
SECTION 4.24 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated by this
Agreement.
ARTICLE 5
COVENANTS
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated
by this Agreement or with the prior written consent of the Parent, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will use its best efforts to cause each of the Company Subsidiaries to,
conduct its operations only in the ordinary course of business consistent with
past practice and will use its reasonable best efforts to, and to use its best
efforts to cause each Company Subsidiary to, preserve intact the business
organization of the Company and each of the Company Subsidiaries, to keep
available the services of the present officers and key employees of the Company
and the Company Subsidiaries, and to preserve the good will of customers,
suppliers and all other persons having business relationships with the Company
and the Company Subsidiaries. Without limiting the generality of the foregoing,
and except as otherwise contemplated by this Agreement or disclosed in Section
5.1 of the Company Disclosure Letter, prior to the Effective Time, the Company
will not, and will not permit any Company Subsidiary (or with respect to clauses
(e) and (h) below, use its best efforts not to permit any Company Subsidiary
that is not a wholly-owned Company Subsidiary) to, without the prior written
consent of the Parent:
(a) adopt any amendment to the Company Charter Documents or
the comparable organizational documents of any Company Subsidiary;
(b) except for issuances of capital stock of Company
Subsidiaries to the Company or a wholly owned Company Subsidiary, issue, reissue
or sell, or authorize the issuance, reissuance or sale of (i) additional shares
of capital
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39
stock of any class, or securities convertible into capital stock of any class,
or any rights, warrants or options to acquire any convertible securities or
capital stock, other than the issue of Company Shares, in accordance with the
terms of the instruments governing such issuance on the date hereof, pursuant to
the exercise of Company Stock Options or Company Warrants or the conversion of
Convertible Notes outstanding on the date hereof, or (ii) any other securities
in respect of, in lieu of, or in substitution for, Company Shares outstanding on
the date hereof;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock other than
between the Company and any Company Subsidiary;
(d) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities, except for a
redemption of the Company Preferred Shares in accordance with the terms of this
Agreement;
(e) except for (i) increases in salary, wages and benefits of
officers or employees of the Company or the Company Subsidiaries in the ordinary
course of business and in accordance with past practice, (ii) increases in
salary, wages and benefits granted to officers and employees of the Company or
the Company Subsidiaries in conjunction with new hires, promotions or other
changes in job status in the ordinary course of business and consistent with
past practices, increase the compensation or fringe benefits payable or to
become payable to its directors, officers or employees (whether from the Company
or any Company Subsidiaries), or pay any benefit not required by any existing
plan or arrangement (including the granting of stock options, stock appreciation
rights, shares of restricted stock or performance units) or grant any severance
or termination pay to (except pursuant to existing agreements, plans or
policies), or enter into any employment or severance agreement with, any
director, officer or other employee of the Company or any Company Subsidiaries
or establish, adopt, enter into, or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, savings, welfare, deferred compensation, employment, termination,
severance or other employee benefit plan, agreement, trust, fund, policy or
arrangement for the benefit or welfare of any directors, officers or current or
former employees, except in each case to the extent required by applicable Law;
PROVIDED, HOWEVER, that nothing in this Agreement will be deemed to prohibit the
payment of benefits existing on the date hereof as they become payable;
(f) except as set forth in Section 5.1(f) of the Company
Disclosure Letter, acquire, sell, lease, license, transfer, pledge, encumber,
grant or dispose of (whether by merger, consolidation, purchase, sale or
otherwise) any assets, including capital stock of Company Subsidiaries (other
than the acquisition and sale of inventory or the disposition of used or excess
equipment and the purchase of raw materials, supplies and equipment, in either
case in the ordinary course of business
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40
consistent with past practice), with a value in excess of $100,000 or enter into
any material commitment or transaction outside the ordinary course of business,
other than transactions between a wholly owned Company Subsidiary and the
Company or another wholly owned Company Subsidiary;
(g) (i) incur, assume or prepay any long-term indebtedness or
incur or assume any short-term indebtedness (including, in either case, by
issuance of debt securities), except that the Company and the Company
Subsidiaries may incur, assume or prepay indebtedness in the ordinary course of
business consistent with past practice and except for loans made by the Parent
to the Company pursuant to the Bridge Loan Agreement dated as of the date hereof
between the Company and the Parent (the "Bridge Loan Agreement"), (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except in the
ordinary course of business, or (iii) make any loans, advances or capital
contributions to, or investments in, any other person except in the ordinary
course of business and except for loans, advances, capital contributions or
investments between any wholly owned Company Subsidiary and the Company or
another wholly owned Company Subsidiary;
(h) terminate, cancel or request any material change in, or
agree to any material change in any Contract which is material to the Company
and the Company Subsidiaries taken as a whole, or enter into any Contract which
would be material to the Company and the Company Subsidiaries taken as a whole,
in either case other than in the ordinary course of business consistent with
past practice; or make or authorize any capital expenditure, other than capital
expenditures that are not, in the aggregate, for any fiscal year, in excess of
the capital expenditures provided for in the Company's budget for the Company
and the Company Subsidiaries taken as a whole for such fiscal year (a copy of
which budget has been provided to the Parent);
(i) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and consistent
with past practice or as required pursuant to applicable Law or GAAP;
(j) make any Tax election or settle or compromise any
material federal, state, local or foreign income Tax liability; or
(k) authorize or enter into any formal or informal written or
other agreement or otherwise make any commitment to do any of the foregoing.
SECTION 5.2 CONDUCT OF BUSINESS OF THE PARENT. Except as contemplated
by this Agreement or with the prior written consent of the Company, during the
period from the date of this Agreement to the Effective Time, the Parent will,
and will use its best efforts to cause each of the Parent Subsidiaries to,
conduct its operations only in the ordinary course of business consistent with
past practice and will use its reasonable best efforts to, and to use its best
efforts to cause each Parent
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Subsidiary to, preserve intact the business organization of the Parent and each
of the Parent Subsidiaries, to keep available the services of the present
officers and key employees of the Parent and the Parent Subsidiaries, and to
preserve the good will of customers, suppliers and all other persons having
business relationships with the Parent and the Parent Subsidiaries. Without
limiting the generality of the foregoing, and except as otherwise contemplated
by this Agreement or disclosed in Section 5.2 of the Parent Disclosure Letter,
prior to the Effective Time, the Parent will not, and will not permit any Parent
Subsidiary to, without the prior written consent of the Company:
(a) adopt any amendment to the Parent Charter Documents;
(b) except for dividends on the 7 1/4% Preferred Stock and pro
rata dividends set aside or paid by any Parent Subsidiary to the holders of its
equity interests, declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock other than between the Parent and
any Parent Subsidiary;
(c) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities, except for a
redemption of shares of Parent Preferred Stock;
(d) except as set forth in Section 5.2 (d) of the Parent
Disclosure Letter, sell, lease, transfer or dispose of (whether by merger,
consolidation, purchase, sale or otherwise) all or substantially all the
Parent's and the Parent Subsidiaries' assets and properties;
(e) (i) incur, assume or prepay any long-term indebtedness or
incur or assume any short-term indebtedness (including, in either case, by
issuance of debt securities), except that the Parent and the Parent Subsidiaries
may incur, assume or prepay indebtedness in the ordinary course of business
consistent with past practice, (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person except in the ordinary course of business,
or (iii) make any loans, advances or capital contributions to, or investments
in, any other person except in the ordinary course of business and except for
loans, advances, capital contributions or investments between any Parent
Subsidiary and the Parent or another Parent Subsidiary; provided, however, that
this subsection shall not prohibit the Parent from providing interim financing
to the Company or any Company Subsidiary from the date hereof until the closing
date;
(f) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and consistent
with past practice or as required pursuant to applicable Law or GAAP; or
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(g) authorize or enter into any formal or informal written or
other agreement or otherwise make any commitment to do any of the foregoing.
SECTION 5.3 OTHER ACTIONS. During the period from the date hereof to
the Effective Time, the Company and the Parent shall not, and shall not permit
any of their respective subsidiaries to, take any action that would, or that
could reasonably be expected to, result in any of the conditions to the Merger
set forth in Article 6 hereof not being satisfied.
SECTION 5.4 UPDATED LETTERS; NOTIFICATION OF CERTAIN MATTERS. The
Parent and the Company shall each deliver, on the Closing Date, updated copies
of the Parent Disclosure Letter and Company Disclosure Letter, respectively,
setting forth any changes to such letters from the date hereof through the
Business Day prior to the Closing Date (it being understood and agreed that such
updated letters are being provided for information purposes only and any matters
discussed on such updated letters shall not cure any breach or default of any
representation, warranty, covenant or condition in this Agreement). The Parent
and the Company shall promptly notify each other of (a) the occurrence or
non-occurrence of any fact or event which could reasonably be expected (i) to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time, (ii) to cause any material covenant, condition or agreement
hereunder not to be complied with or satisfied in all material respects or (iii)
to result in, in the case of Parent, a Material Adverse Effect on the Parent;
and, in the case of the Company, a Material Adverse Effect on the Company, (b)
any failure of the Company or the Parent, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder in any material respect; PROVIDED, HOWEVER, that no such
notification shall affect the representations or warranties of any party or the
conditions to the obligations of any party hereunder, (c) any notice or other
material communications from any Governmental Entity in connection with the
transactions contemplated by this Agreement and (d) the commencement of any
suit, action or proceeding that seeks to prevent or seek damages in respect of,
or otherwise relates to, the consummation of the transactions contemplated by
this Agreement.
SECTION 5.5 PROXY STATEMENT, REGISTRATION STATEMENTS.
(a) As promptly as practicable after the execution of this
Agreement, (i) the Parent and the Company shall jointly prepare and file with
the SEC a single document that will constitute (A) the proxy statement of the
Company relating to the special meeting of the Company's stockholders (the
"COMPANY STOCKHOLDERS MEETING") to be held to consider approval and adoption of
this Agreement and the Merger, (B) the proxy statement of the Parent relating to
the special meeting of the Parent's stockholders (the "PARENT STOCKHOLDERS
MEETING") to be held to consider approval of the issuance of the Parent Common
Stock to be issued in the Merger, (C) the registration statement on Form S-4 of
the Parent (together with all amendments thereto, the "REGISTRATION STATEMENT"),
in connection with the
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43
registration under the Securities Act of the Parent Common Stock to be issued to
the stockholders of the Company in connection with the Merger and the prospectus
included in the Registration Statement (such single document, together with any
amendments thereof or supplements thereto, the "PROXY STATEMENT") and (ii) the
Parent shall prepare and file with the SEC the registration statement on Form
S-4 of the Parent or a shelf registration statement on Form S-3, as the case may
be (together with all amendments thereto, the "EXCHANGE OFFER REGISTRATION
STATEMENT"), providing for the offer to exchange and consent solicitation by
Parent and registration under the Securities Act of certain of its new 10 1/2%
Senior Notes due 2007 (the "NEW PARENT NOTES") to holders of each of the
Company's 14 1/2% Senior Discount Notes due 2004 (the "COMPANY SENIOR NOTES")
and Convertible Notes, which New Parent Notes will have the terms substantially
as specified in Section 5.5 of the Parent Disclosure Letter and which exchange
offer and consent solicitation will be commenced on the basis and with the terms
substantially as specified in Section 5.5 of the Parent Disclosure Letter (the
"EXCHANGE OFFER"). Substantially contemporaneously with the filing of the Proxy
Statement with the SEC, copies of the Proxy Statement shall be provided to
NASDAQ and the American Stock Exchange. The Parent and the Company each shall
use its reasonable best efforts to cause the Registration Statement and the
Exchange Offer Registration Statement to become effective as promptly as
practicable, and, prior to the effective date of the Registration Statement (the
"REGISTRATION STATEMENT EFFECTIVE DATE"), the Parent shall take all or any
action required under any applicable Law in connection with the issuance of
Parent Common Stock pursuant to the Merger. The Parent or the Company, as the
case may be, shall furnish all information concerning the Parent or the Company
as the other party may reasonably request in connection with such actions and
the preparation of the Proxy Statement, the Registration Statement and the
Exchange Offer Registration Statement. As promptly as practicable after the
Registration Statement Effective Date, the proxy statements and prospectus
included in the Proxy Statement (collectively, the "PROXY MATERIALS") will be
mailed to the stockholders of the Parent and the Company and the Exchange Offer
will be commenced. The Parent and the Company shall cause the Proxy Statement to
comply as to form and substance in all material respects with the applicable
requirements of (i) the Exchange Act, including Sections 14(a) and 14(d) thereof
and the respective regulations promulgated thereunder, (ii) the Securities Act,
(iii) the rules and regulations of the American Stock Exchange and NASDAQ and
(iv) the GCL.
(b) The Proxy Statement shall include the unanimous and
unconditional recommendation of the Board of Directors of the Company to the
stockholders of the Company that they vote in favor of the adoption of this
Agreement and the Merger; PROVIDED, HOWEVER, that the Board of Directors of the
Company may, at any time prior to the Effective Time, withdraw, modify or change
any such recommendation solely in accordance with the provisions of Section
5.8(b) hereof. In addition, the Proxy Statement and the Proxy Materials will
include a copy of the written opinions of the Company Financial Advisor and the
Parent Financial Adviser referred to in Sections 3.20 and 4.19 respectively.
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44
(c) No amendment or supplement to the Proxy Statement will be
made without the approval of each of the Parent and the Company, which approval
shall not be unreasonably withheld or delayed.
(d) The information supplied by the Company for inclusion in
the Proxy Statement, the Registration Statement or the Exchange Offer
Registration Statement, as the case may be, shall not, at (i) the time the
Registration Statement or Exchange Offer Registration Statement is declared
effective, (ii) the time the Proxy Materials (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of each of the Parent
and the Company, (iii) the time of the Company Stockholders Meeting, (iv) the
time of the Parent Stockholders Meeting and (v) the Effective Time, contain any
untrue statement of a material fact or fail to state any material fact required
to be stated in the Proxy Statement, the Registration Statement or the Exchange
Offer Registration Statement, as the case may be, or necessary in order to make
the statements in the Proxy Statement, the Registration Statement or the
Exchange Offer Registration Statement, as the case may be, not misleading. If at
any time prior to the Effective Time any event or circumstance relating to the
Company or any Company Subsidiary, or their respective officers or directors,
should be discovered by the Company that should be set forth in an amendment or
a supplement to the Proxy Statement, the Registration Statement or the Exchange
Offer Registration Statement, the Company shall promptly inform the Parent. All
documents that the Company is responsible for filing with the SEC in connection
with the transactions contemplated hereby will comply as to form and substance
in all material respects with the applicable requirements of the GCL, the
Securities Act and the Exchange Act.
(e) The information supplied by the Parent for inclusion in
the Proxy Statement, the Registration Statement or the Exchange Offer
Registration Statement, as the case may be, shall not, at (i) the time the
Registration Statement or the Exchange Offer Registration Statement is declared
effective, (ii) the time the Proxy Materials (or any amendment of or supplement
to the Proxy Materials) are first mailed to the stockholders of each of the
Parent and the Company, (iii) the time of the Company Stockholders Meeting, (iv)
the time of the Parent Stockholders Meeting and (v) the Effective Time, contain
any untrue statement of a material fact or fail to state any material fact
required to be stated in the Proxy Statement, the Registration Statement or the
Exchange Offer Registration Statement, as the case may be, or necessary in order
to make the statements in the Proxy Statement, the Registration Statement or the
Exchange Offer Registration Statement, as the case may be, not misleading. If,
at any time prior to the Effective Time, any event or circumstance relating to
the Parent or any Parent Subsidiary, or their respective officers or directors,
should be discovered by the Parent that should be set forth in an amendment or a
supplement to the Proxy Statement, the Registration Statement or the Exchange
Offer Registration Statement, the Parent shall promptly inform the Company. All
documents that the Parent is responsible for filing in connection with the
transactions contemplated by this Agreement will comply as to form and substance
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45
in all material aspects with the applicable requirements of the GCL, the
Securities Act and the Exchange Act.
SECTION 5.6 STOCKHOLDERS MEETINGS.
(a) The Company shall call and hold the Company Stockholders
Meeting as promptly as practicable after the Registration Statement Effective
Date for the purpose of voting upon the adoption of this Agreement and the
Parent and the Company will cooperate with each other to cause the Company
Stockholders Meeting to be held as soon as practicable following the mailing of
the Proxy Materials to the stockholders of the Company. The Company shall use
its reasonable best efforts (through its agents or otherwise) to solicit from
its stockholders proxies in favor of the adoption of this Agreement, and shall
take all other action necessary or advisable to secure Requisite Company Vote,
except to the extent that the Board of Directors of the Company determines in
good faith that doing so would cause the Board of Directors of the Company to
breach its fiduciary duties to the Company's stockholders under applicable Law
after receipt of advice to such effect from independent legal counsel (who may
be the Company's regularly engaged independent legal counsel). In addition, the
Company shall use its reasonable best efforts to solicit, as directed by the
Parent and at the Parent's expense, acceptance of the Exchange Offer by holders
of Company Senior Notes and Convertible Notes.
(b) The Parent shall call and hold the Parent Stockholders
Meeting as promptly as practicable after the Registration Statement Effective
Date for the purpose of voting upon the approval of the issuance of the Parent
Common Stock to be issued in the Merger and the Parent and the Company will
cooperate with each other to cause the Parent Stockholders Meeting to be held as
soon as practicable following the mailing of the Proxy Materials to the
stockholders of the Parent. The Parent shall use its reasonable best efforts
(through its agents or otherwise) to solicit from its stockholders proxies in
favor of the adoption of such issuance, and shall take all other action
necessary or advisable to secure the Requisite Parent Vote. In addition, the
Parent shall use its reasonable best efforts to solicit acceptance of the
Exchange Offer by holders of Company Senior Notes and Convertible Notes.
SECTION 5.7 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Except as required under any confidentiality agreement or
similar agreement or arrangement to which the Parent or the Company or any of
their respective subsidiaries is a party or under applicable Law or the
regulations or requirements of any securities exchange or quotation service or
other self regulatory organization with whose rules the parties are required to
comply, from the date of this Agreement to the Effective Time, the Parent and
the Company shall (and shall cause their respective subsidiaries to): (i)
provide to the other (and its officers, directors, employees, accountants,
consultants, legal counsel, financial advisors, investment bankers, agents and
other representatives (collectively, "REPRESENTATIVES")) access at reasonable
times upon prior notice to the officers, employees, agents, properties,
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46
offices and other facilities of the other and its subsidiaries and to the books
and records thereof; and (ii) furnish promptly such information concerning the
business, properties, Contracts, assets, liabilities, personnel and other
aspects of the other party and its subsidiaries as the other party or its
Representatives may reasonably request. No investigation conducted under this
Section 5.7 shall affect or be deemed to modify any representation or warranty
made in this Agreement.
(b) The parties shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreement, dated October, 1998 (the "CONFIDENTIALITY
AGREEMENT"), between the Parent and the Company with respect to the information
disclosed under this Section 5.7.
SECTION 5.8 NO SOLICITATION.
(a) Neither the Company nor any of the Company Subsidiar ies
shall, nor shall it or any of Company Subsidiaries authorize or permit any of
their respective directors, officers, employees, investment bankers, attorneys
or other agents or representatives, directly or indirectly to, (i) solicit,
initiate, encourage (including by way of furnishing information or assistance)
or take any other action to facilitate, any inquiry or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
acquisition or purchase of a substantial amount of assets of, or any equity
interest in, the Company or any of its Subsidiaries or any tender offer
(including a self tender offer) or exchange offer, merger, consolidation,
business combination, sale of substantially all assets, sale of securities,
recap italization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries (other than the transactions contemplated by
this Agreement) or any other material corporate transaction the consummation of
which would or could reasonably be expected to impede, interfere with, prevent
or materially delay the Merger (collectively, "TRANSACTION PROPOSALS") or agree
to or endorse any Transac tion Proposal or (ii) propose, enter into or
participate in any discussions or negotiations regarding any of the foregoing,
or furnish to any other Person any information with respect to its business,
properties or assets or any of the foregoing, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek any of the forego ing; provided,
however, that the foregoing clauses (i) and (ii) shall not prohibit the Company
from, prior to the Company Stockholders Meeting (A) furnishing information
pursuant to an appropriate confidentiality letter concerning the Company and its
businesses, properties or assets to a third party which has made an unsolicited
Qualified Transaction Proposal (as defined below), (B) engaging in discussions
or negotiations with such a third party which has made an unsolicited Qualified
Transac tion Proposal or (C) following receipt of an unsolicited Qualified
Transaction Proposal, taking and disclosing to its shareholders a position with
respect to such Qualified Transaction Proposal, but in each case referred to in
the foregoing clauses (A) through (C) only after the Board of Directors of the
Company concludes in good faith, following receipt of a written opinion
addressed to the Company from outside
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47
counsel, that such action is necessary for the Board of Directors of the Company
to comply with its fiduciary obligations to stockholders under applicable law.
If the Board of Directors of the Company receives a Transaction Proposal, then
the Company shall immediately (and in any event within 24 hours) inform Parent
of the material terms and conditions of such proposal and the identity of the
person making it and shall keep the Parent fully informed regarding any
significant details or developments with respect to any such Transaction
Proposal and of all significant steps it is taking in response to such
Transaction Proposal. For purposes of this Agreement, the term "QUALIFIED
TRANSACTION PROPOSAL" shall mean a Transaction Proposal for which financing is
then fully committed or which the Board of Directors of the Company determines
in good faith after consultation with its outside financial advisors, is
reasonably capable of being financed and is not subject to any material
contingencies relating to financing. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in this Section
5.8(a) by (or at the direction of) an officer, director of or any investment
banker, attorney, accountant, agent or other advisor or representative of the
Company or any Company Subsidiary, whether or not such person is purporting to
act on behalf of the Company, and the Company Subsidiary or otherwise, shall be
deemed to be a breach of this section by the Company. The Company immediately
shall cease and cause to be terminated all existing discussions or negotiations
with any persons conducted heretofore with respect to, or that could reasonably
be expected to lead to, any Qualified Transaction Proposal.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose publicly to withdraw
or modify, in a manner adverse to Parent, the recommendation or any approval or
recommendation by the Board of Directors of the Company or any committee thereof
of this Agreement or the Merger or (ii) approve or recommend, or propose to
approve or recommend, any Qualified Transaction Proposal. Notwithstanding the
foregoing, the Board of Directors of the Company, to the extent it concludes in
good faith, following receipt of a written opinion addressed to the Company from
outside counsel, that such action is necessary for the Board of Directors of the
Company to comply with its fiduciary obligations to stockholders under
applicable law, may recommend (and, in connection therewith, withdraw or modify
its recommendation or its approval of this Agreement or the Merger) a Superior
Acquisition Proposal (as defined below); provided, that, neither the Company nor
the Board of Directors of the Company may in such instance terminate this
Agreement but instead the Company, at the option of the Parent, shall,
notwithstanding such withdrawal or modification of the recommendation or
approval of this Agreement or the Merger by the Company's Board of Directors
and/or the recommendation by the Company's Board of Directors that the Company's
stockholders reject this Agreement or the Merger, submit approval of this
Agreement and the Merger to a vote of the holders of Company Common Stock at the
Company Stockholders Meeting, as contemplated by this Agreement, it being
understood and agreed that, Parent, Company and Merger Sub elect this Agreement
to be governed by the provisions of Section 251(c) of the GCL. For purposes of
this Agreement, "SUPERIOR ACQUISITION PROPOSAL" means a bona fide
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48
written proposal made by a third party to acquire the Company pursuant to a
tender or exchange offer, a merger, a share exchange, a sale of all or
substantially all of its assets or otherwise, in any such case, on terms which a
majority of the members of the Board of Directors of the Company determines in
their good faith judgment (after consultation with independent financial
advisors) to be more favorable to the Company and its stockholders than the
Merger and for which financing, to the extent required, is then fully committed
or which, in the good faith judgment of a majority of such members (after
consultation with independent financial advisors), is reasonably capable of
being financed by such third party.
SECTION 5.9 AFFILIATES. Concurrently with the execution of this
Agreement, the Company is delivering to Parent (i) a letter identifying all
persons who, to the knowledge of the Company, may be deemed to be "affiliates"
of the Company under Rule 145 under the Securities Act, including, without
limitation, all directors and executive officers of the Company, and (ii) not
later than 30 days prior to the Company Stockholders Meeting copies of letter
agreements, each in the form prepared by Parent and reasonably acceptable to the
Company, executed by each such Person so identified as an "affiliate" of the
Company (the letters described in clauses (i) and (ii) being collectively
referred to as "AFFILIATE LETTERS").
SECTION 5.10 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) The Parent agrees that all rights to indemnification now
existing in favor of any employee, agent, director or officer of the Company and
the Company Subsidiaries (the "INDEMNIFIED PARTIES") as provided in their
respective charters or by-laws, in an agreement between an Indemnified Party and
the Company or one of the Company Subsidiaries, or otherwise in effect on the
date hereof shall survive the Merger and shall continue in full force and effect
for a period of not less than six years from the Effective Time; PROVIDED that
in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or claims
shall continue until final disposition of any and all such claims. The Parent
also agrees to indemnify all Indemnified Parties to the fullest extent permitted
by applicable law with respect to all acts and omissions arising out of such
individuals' services as officers, directors, employees or agents of the Company
or any of the Company Subsidiaries or as trustees or fiduciaries of any plan for
the benefit of employees, or otherwise on behalf of, the Company or any of the
Company Subsidiaries, occurring prior to the Effective Time including the
transactions contemplated by this Agreement. Without limiting of the foregoing,
in the event any such Indemnified Party is or becomes involved in any capacity
in any action, proceeding or investigation in connection with any matter,
including the transactions contemplated by this Agreement, occurring prior to,
and including, the Effective Time, the Parent will pay as incurred such
Indemnified Party's legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith.
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(b) The Parent agrees that the Company and, from and after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
for not less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company; PROVIDED
that the Surviving Corporation may substitute therefor policies of at least the
same coverage containing terms and conditions which are no less advantageous and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time; and
PROVIDED, FURTHER, that the Surviving Corporation shall not be required to pay
an annual premium in excess of 100% of the last annual premium paid by the
Company prior to the date hereof and if the Surviving Corporation is unable to
obtain the insurance required by this Section 5.10(b) it shall obtain as much
comparable insurance as possible for an annual premium equal to such maximum
amount.
SECTION 5.11 LETTERS OF ACCOUNTANTS.
(a) The Company shall use its reasonable best efforts to cause
to be delivered to the Parent "comfort" letters of KPMG LLP ("KPMG"), the
Company's independent public accountants, dated and delivered on each applicable
Registration Statement Effective Date and as of the Effective Time, and
addressed to the Parent in form and substance reasonably satisfactory to the
Parent and reasonably customary in scope and substance for letters delivered by
independent public accountants in connection with transactions contemplated
hereby.
(b) The Parent shall use its reasonable best efforts to cause
to be delivered to the Company "comfort" letters of KPMG, the Parent's
independent public accountants, dated and delivered on each applicable
Registration Statement Effective Date and as of the Effective Time, and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and reasonably customary in scope and substance for letters delivered by
independent public accountants in connection with transactions contemplated
hereby.
SECTION 5.12 REASONABLE BEST EFFORTS. Subject to the terms and
conditions provided in this Agreement and to applicable legal requirements, each
of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, in the case of
the Company, consistent with the fiduciary duties of the Company's Board of
Directors, and to assist and cooperate with the other parties hereto in doing,
as promptly as practicable, all things necessary, proper or advisable under
applicable laws and regulations to ensure that the conditions set forth in
Article 6 are satisfied and to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
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SECTION 5.13 CONSENTS; FILINGS; FURTHER ACTION.
(a) Upon the terms and subject to the conditions hereof, each
of the parties hereto shall use its reasonable best efforts to (i) take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger and the other transactions contemplated
hereby, (ii) obtain from Governmental Entities any Company Governmental Consents
and Parent Governmental Consents and any other consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or made by
the Parent or the Company or any of their subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the Merger and the other transactions contemplated hereby, and (iii) make all
necessary filings, and thereafter make any other submissions either required or
deemed appropriate by each of the parties, with respect to this Agreement and
the Merger and the other transactions contemplated hereby required under (A) the
Securities Act, the Exchange Act and any other applicable federal or Blue Sky
Laws, (B) the HSR Act and any applicable other foreign antitrust, anti-monopoly
or similar Laws, (C) the GCL, (D) any other applicable Law and (E) the rules and
regulations of NASDAQ, the American Stock Exchange and the Toronto Stock
Exchange. The parties hereto shall cooperate and consult with each other in
connection with the making of all such filings, including by providing copies of
all such documents to the nonfiling party and its advisors prior to filing, and
none of the parties will file any such document if any of the other parties
shall have reasonably objected to the filing of such document. No party to this
Agreement shall consent to any voluntary extension of any statutory deadline or
waiting period or to any voluntary delay of the consummation of the Merger and
the other transactions contemplated hereby at the behest of any Governmental
Entity without the consent and agreement of the other parties to this Agreement,
which consent shall not be unreasonably withheld or delayed.
(b) Without limiting the generality of Section 5.13(a), each
party hereto shall promptly inform the others of any material communication from
the Federal Trade Commission, the Department of Justice or any other domestic or
foreign government or governmental or multinational authority regarding any of
the transactions contemplated by this Agreement. If any party or any affiliate
thereof receives a request for additional information or documentary material
from any such government or authority with respect to the transactions
contemplated by this Agreement, then such party will endeavor in good faith to
make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request. The Parent will advise the Company promptly in respect of any
understandings, undertakings or agreements (oral or written) which the Parent
proposes to make or enter into with the Federal Trade Commission, the Department
of Justice or any other domestic or foreign government or governmental or
multinational authority in connection with the transactions contemplated by this
Agreement. In furtherance and not in limitation of the foregoing, the Parent
shall use its reasonable best efforts to resolve such objections, if
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51
any, as may be asserted with respect to the transactions contemplated by this
Agreement under any antitrust, competition or trade regulatory laws, rules or
regulations of any domestic or foreign government or governmental authority or
any multinational authority. Notwithstanding the foregoing, nothing in this
Section 5.13 shall require, or be construed to require, the Parent or the
Company, in connection with the receipt of any regulatory approval, to proffer
to, or agree to (A) sell or hold separate and agree to sell, divest or to
discontinue to or limit, before or after the Effective Time, any assets,
businesses, or interest in any assets or businesses of the Parent, the Company
or any of their respective affiliates (or to the consent to any sale, or
agreement to sell, or discontinuance or limitation by the Parent or the Company,
as the case may be, of any of its assets or businesses) or (B) agree to any
conditions relating to, or changes or restriction in, the operations of any such
asset or businesses which, in either case, could reasonably be expected to
result in a Material Adverse Effect on the Parent or a Material Adverse Effect
on the Company or to materially and adversely impact the economic or business
benefits to such party of the transactions contemplated by this Agreement.
SECTION 5.14 PLAN OF REORGANIZATION. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code. From and after the
date of this Agreement and until the Effective Time, each party hereto shall use
its reasonable best efforts to cause the Merger to qualify, and will not,
without the prior written consent of the parties hereto, knowingly take any
actions or cause any actions to be taken which could prevent the Merger from
qualifying, as a reorganization under the provisions of Section 368(a) of the
Code. Following the Effective Time, and consistent with any such consent, none
of the Surviving Corporation, the Parent or any of their affiliates shall
knowingly take any action or knowingly cause any action to be taken which would
cause the Merger to fail to so qualify as a reorganization under Section 368(a)
of the Code.
SECTION 5.15 PUBLIC ANNOUNCEMENTS. The initial press release concerning
the Merger shall be a joint press release and, thereafter, the Parent and Merger
Sub and the Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
or any of the transactions contemplated hereby and shall not issue any such
press release or make any such public statement prior to such consultation,
except to the extent required by applicable Law or the requirements of NASDAQ,
the American, Toronto, Berlin or Frankfurt Stock Exchanges, in which case the
issuing party shall use its reasonable best efforts to consult with the other
parties before issuing any such release or making any such public statement.
SECTION 5.16 OBLIGATIONS OF MERGER SUB. The Parent shall take all
actions necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement.
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SECTION 5.17 STOCK EXCHANGE LISTINGS AND DE-LISTINGS. The Parent shall
use its reasonable best efforts to cause the shares of Parent Common Stock to be
issued in the Merger to be approved for listing on the American Stock Exchange,
subject to official notice of issuance, prior to the Effective Time. The parties
shall use their reasonable best efforts to cause the Surviving Corporation to
cause the Company Common Stock to be de-listed from NASDAQ and the Toronto,
Berlin and Frankfurt Stock Exchanges and de-registered under the Exchange Act as
soon as practicable following the Effective Time.
SECTION 5.18 EXPENSES. Except as otherwise provided in Section 7.5(b),
whether or not the Merger is consummated, all Expenses incurred in connection
with this Agreement and the Merger and the other transactions contemplated
hereby shall be paid by the party incurring such Expense, except that Expenses
incurred in connection with the filing fee for the Proxy Statement and printing
and mailing the Proxy Materials and the filing fee under the HSR Act shall be
shared equally by the Parent and the Company.
SECTION 5.19 TAKEOVER STATUTES. If any Takeover Statute is or may
become applicable to the Merger or the other transactions contemplated hereby,
each of the Parent and the Company and its board of directors shall grant such
approvals and take such actions as are necessary so that such transactions may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise act to eliminate or minimize the effects of such statute
or regulation on such transactions.
SECTION 5.20 BOARD OF DIRECTORS. Parent shall take such action as is
required to expand the size of its Board of Directors to eleven (11) members and
to cause the designation of two persons specified by the Company (one of which
shall be designated by News America Incorporated) in writing prior to the
Effective Time to fill such vacancies.
ARTICLE 6
CONDITIONS
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger and consummate the
other transactions contemplated hereby to be consummated on the Closing Date is
subject to the satisfaction or waiver at or prior to the Effective Time of each
of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and consummation of
the Merger shall have been duly approved by holders of outstanding Company
Shares by the Requisite Company Vote and shall have been duly approved by the
Parent as sole stockholder of Merger Sub, and the issuance of Parent Common
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53
Stock in the Merger shall have been duly approved by the holders of outstanding
shares of Parent Common Stock by the Requisite Parent Vote.
(b) LISTING. The shares of Parent Common Stock issuable to the
Company's stockholders pursuant to this Agreement shall have been authorized for
listing on the American Stock Exchange upon official notice of issuance.
(c) GOVERNMENTAL CONSENTS. The waiting period applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated and other than the filing provided for in Section 1.3, all notices,
reports and other filings required to be made prior to the Effective Time by the
Company or the Parent or any of their respective subsidiaries with, and all
consents, registrations, approvals, permits and authorizations required to be
obtained prior to the Effective Time by, the Company or the Parent or any of
their respective subsidiaries from, any Governmental Entity in connection with
the execution and delivery of this Agreement and the consummation of the Merger
and the other transactions contemplated hereby (including, without limitation,
all Company Governmental Consents and Parent Governmental Consents) shall have
been made or obtained (as the case may be) upon terms and conditions that could
not reasonably be expected to result in Material Adverse Effect on the Parent or
a Material Adverse Effect on the Company.
(d) LITIGATION. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law, order injunction or decree (whether temporary, preliminary or permanent)
that is in effect and restrains, enjoins or otherwise prohibits consummation of
the Merger or the other transactions contemplated hereby or that, individually
or in the aggregate with all other such Laws, orders injunctions or decrees,
could reasonably be expected to result in a Material Adverse Effect on the
Parent or a Material Adverse Effect on the Company, and no Governmental Entity
shall have instituted any proceeding or threatened to institute any proceeding
seeking any such Law, order injunction or decree.
(e) REGISTRATION STATEMENTS. The Registration Statement and
the Exchange Offer Registration Statement shall have become effective under the
Securities Act. No stop order suspending the effectiveness of such registration
statements shall have been issued, and no proceedings for that purpose shall
have been initiated or be threatened by the SEC.
(f) ACCOUNTANTS' LETTERS. The Parent and the Company shall
have received the "comfort" letters described in Section 5.11.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF THE PARENT AND MERGER SUB. The
obligations of each of the Parent and Merger Sub to effect the Merger and
consummate the other transactions contemplated hereby to be consummated on the
Closing Date are also subject to the satisfaction or waiver by the Parent at or
prior to the Effective Time of the following conditions:
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54
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
the Company set forth in this Agreement that are not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date, as though made on and as of the Closing
Date, except to the extent the representation or warranty is expressly limited
by its terms to another date, and the Parent shall have received a certificate
(which certificate may be qualified by knowledge to the same extent as the
representations and warranties of the Company contained in this Agreement are so
qualified) signed on behalf of the Company by an executive officer of the
Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and the
Parent shall have received a certificate signed on behalf of the Company by an
executive officer of the Company to such effect.
(c) MATERIAL ADVERSE EFFECT. Since the date of this Agreement,
there shall have been no Material Adverse Effect on the Company, and the Parent
shall have received a certificate of an executive officer of the Company to such
effect.
(d) CONSENTS UNDER AGREEMENTS. The Company shall have obtained
the Company Required Consents and the consent, approval or waiver of each person
whose consent, approval or waiver shall be required in order to consummate the
transactions contemplated by this Agreement, except those for which the failure
to obtain such consent, approval or waiver, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect on the
Company.
(e) AFFILIATE LETTERS. The Parent shall have received the
Affiliate Letters referred to in Section 5.9 hereof.
(f) THE TRAVELERS REVOLVING CREDIT NOTE AND WARRANT AGREEMENT.
The Parent and the Company shall have consummated the transactions contemplated
by the Note and Warrant Modification Agreement dated as of the date hereof, with
each of The Travelers Insurance Company and The Travelers Indemnity Company, a
copy of which is attached as Exhibit B hereto, in accordance with the terms of
such Agreement.
(g) EXCHANGE OFFER. At least 95% in aggregate principal amount
of each of the Senior Company Notes and the Convertible Notes shall have
properly and validly tendered and not withdrawn their Company Senior Notes and
Convertible Notes, respectively, and consented to the consent solicitation, in
each case in accordance with the terms of the Agreement to Exchange and Consent,
a copy of which is attached as Exhibit C hereto.
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55
(h) TECHNOCOM LIMITED PUT/CALL AGREEMENTS. The Parent and the
Company shall have consummated the purchase of the shares of Technocom Limited
in accordance with each of the Elite Option Modification Agreement and the
Plicom Option Modification Agreement, each dated the date hereof, with each of
Elite International Limited and Plicom Limited, copies of which are attached
hereto as Exhibits D-1 and D-2.
(i) NEWS ARRANGEMENTS. The Parent and News America
Incorporated ("News") shall have consummated the transactions contemplated by
the News Letter Agreement dated as of the date hereof with News, a copy of which
is attached as Exhibit E hereto, in accordance with the terms of such Letter
Agreement, and News shall have received (i) the full proceeds of the repayment
of the Loans (as defined in the News Letter Agreement) and interest thereon to
and including the date of repayment, as specified in the News Letter Agreement,
and (ii) written releases in form and substance satisfactory to News in respect
of the Guarantees (as defined in the News Letter Agreement) and all obligations
thereunder.
(j) CERTAIN PAYMENTS. Each of the officers and other employees
listed in Section 6.2 of the Company Disclosure Letter shall have agreed to (i)
waive the acceleration of any amounts due as a result of the Merger under the
relevant employment or other compensation agreement that such person is a party
to with the Company or a Company Subsidiary as specified in Section 6.2 of the
Company Disclosure Letter and (ii) waive the acceleration of any unvested
Company Stock Options at the Effective Time which would otherwise accelerate as
a result of the consummation of the Merger, in each case in a manner reasonably
satisfactory to the Parent.
SECTION 6.3 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of
the Company to effect the Merger and consummate the other transactions
contemplated hereby to be consummated on the Closing Date is also subject to the
satisfaction or waiver by the Company at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each of the Parent and Merger Sub set forth in this Agreement that
are qualified as to materiality shall be true and correct, and the
representations and warranties of the Parent and Merger Sub set forth in this
Agreement that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Closing
Date, as though made on and as of the Closing Date, except to the extent the
representation or warranty is expressly limited by its terms to another date,
and the Company shall have received a certificate (which certificate may be
qualified by knowledge to the same extent as the representations and warranties
of each of the Parent and Merger Sub contained in this Agreement are so
qualified) signed on behalf of each of the Parent and Merger Sub by an executive
officer of the Parent to such effect.
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56
(b) PERFORMANCE OF OBLIGATIONS OF THE PARENT AND MERGER SUB.
Each of the Parent and Merger Sub shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate signed on
behalf of the Parent and Merger Sub by an executive officer of the Parent to
such effect.
(c) TAX OPINION. The Company shall have received the opinion
of Morgan, Lewis & Bockius, LLP, counsel to the Company, dated the Closing Date,
to the effect that the Merger will be treated for federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code.
(d) MATERIAL ADVERSE EFFECT. Since the date of this Agreement,
there shall have been no Material Adverse Effect on the Parent, and the Company
shall have received a certificate of an executive officer of the Parent to such
effect.
ARTICLE 7
TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite approval and adoption of this Agreement, as follows:
(a) by mutual written consent of the Parent and the Company
duly authorized by their respective boards of directors;
(b) by either the Parent or the Company, if the Effective Time
shall not have occurred on or before October 31, 1999; PROVIDED, HOWEVER, that
(i) the right to terminate this Agreement under this Section 7.1(b) shall not be
available to the party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date; and (ii) if the applicable
federal or foreign antitrust authority shall seek an order, injunction or decree
with respect to the legality of the Merger under applicable antitrust Laws, this
Agreement may be extended prior to the termination hereof by written notice of
either the Parent or the Company to the other to the date that is 30 days
following the date on which a ruling with respect to such an order injunction or
decree is entered by a trial court or administrative body;
(c) by either the Parent or the Company, if any order
injunction or decree preventing the consummation of the Merger shall have been
entered by any court of competent jurisdiction or Governmental Entity and shall
have become final and nonappealable;
<PAGE>
57
(d) by the Parent, if (i) the Board of Directors of the
Company withdraws, modifies or changes its approval or recommendation of this
Agreement in a manner adverse to the Parent or shall have resolved to do so,
(ii) the Board of Directors of the Company shall have recommended to the
stockholders of the Company a Transaction Proposal or shall have resolved to do
so or the Company shall have entered into an agreement with respect to a
Qualified Transaction Proposal, or (iii) a tender offer or exchange offer for
any outstanding shares of capital stock of the Company is commenced and the
Board of Directors of the Company fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders (including by taking no
position with respect to the acceptance of such tender offer or exchange offer
by its stockholders);
(e) by the Parent or the Company, if this Agreement shall fail
to receive the requisite vote for adoption at either the Company Stockholders
Meeting or the Parent Stockholders Meeting or any adjournment or postponement
thereof;
(f) by the Parent, upon a breach of any material
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement, or if any representation or warranty of the Company
shall have become untrue, in either case such that the conditions set forth in
either of Section 6.2(a) or 6.2(b) would not be satisfied (a "TERMINATING
COMPANY BREACH"); PROVIDED, HOWEVER, that, if such Terminating Company Breach is
curable by the Company through the exercise of its reasonable best efforts and
for so long as the Company continues to exercise such reasonable best efforts,
the Parent may not terminate this Agreement under this Section 7.1(f);
(g) by the Company, upon breach of any material
representation, warranty, covenant or agreement on the part of the Parent set
forth in this Agreement, or if any representation or warranty of the Parent
shall have become untrue, in either case such that the conditions set forth in
either of Section 6.3(a) or 6.3(b) would not be satisfied (a "TERMINATING PARENT
BREACH"); PROVIDED, HOWEVER, that, if such Terminating Parent Breach is curable
by the Parent through its reasonable best efforts and for so long as the Parent
continues to exercise such reasonable best efforts, the Company may not
terminate this Agreement under this Section 7.1(g); or
(h) by the Company in the manner specified in Section
2.1(a)(i)(D).
SECTION 7.2 EFFECT OF TERMINATION. Except as provided in Section 8.2,
in the event of termination of this Agreement pursuant to Section 7.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of the Parent, Merger Sub or the Company or any of their
respective Representatives, and all rights and obligations of each party hereto
shall cease, subject to the remedies of the parties set forth in Sections 7.5(b)
and (c);
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58
PROVIDED, HOWEVER, that nothing in this Agreement shall relieve any party from
liability for the wilful breach of any of its representations and warranties or
the breach of any of its covenants or agreements set forth in this Agreement
which shall survive any such termination.
SECTION 7.3 AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; PROVIDED that, after the approval of
this Agreement by the stockholders of the Company, no amendment may be made that
would reduce the amount or change the type of consideration into which each
Company Share shall be converted upon consummation of the Merger. This Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.
SECTION 7.4 WAIVER. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained in this Agreement or in any document delivered pursuant
hereto, and (c) waive compliance with any agreement or condition contained in
this Agreement. Any waiver of a condition set forth in Section 6.1, or any
determination that such a condition has been satisfied, will be effective only
if made in writing by each of the Company and the Parent and, unless otherwise
specified in such writing, shall thereafter operate as a waiver (or
satisfaction) of such conditions for any and all purposes of this Agreement. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 7.5 EXPENSES FOLLOWING TERMINATION.
(a) Except as set forth in this Section 7.5, all Expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid in accordance with the provisions of Section 5.18. For
purposes of this Agreement, "EXPENSES" consist of all out-of-pocket expenses
(including, all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Proxy Statement and/or the
Proxy Materials (as the case may be), the solicitation of stockholder approvals
and all other matters related to the closing of the transactions contemplated
hereby.
(b) The Company agrees that, if (i) the Parent shall terminate
this Agreement pursuant to Section 7.1(d), (ii) (A) Parent shall terminate this
Agreement pursuant to Section 7.1(e) due to the failure to obtain the approval
of the Company's stockholders at the Company Stockholders Meeting and (B) at the
time of such failure, any person shall have made a public announcement or
otherwise communicated to the Company and its stockholders with respect to a
Transaction
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59
Proposal with respect to the Company, or (iii) the Parent shall terminate this
Agreement pursuant to Section 7.1(f) and such termination is the result of a
material breach of any representation, warranty, covenant or agreement contained
herein and if at such time the agreement is solely terminable for any or all
such reasons, then in accordance with Section 7.5(c), after such termination, or
in the case of clause (ii) after the consummation of such Transaction Proposal,
the Company shall pay to Parent an amount equal to Parent's documented Expenses
in connection with this Agreement and the transactions contemplated hereby (not
to exceed $1 million) and a termination fee in the amount of $6,250,000
(collectively, such Expenses and such fee, the "TERMINATION AMOUNT"), which
Termination Amount shall be exclusive of any Expenses paid pursuant to Section
5.18. The Parent agrees that if the Company shall terminate this Agreement (i)
pursuant to Section 7.1(e) due to the failure to obtain the approval of the
Parent's Stockholders at the Parent Stockholders Meeting or (ii) pursuant to
Section 7.1(g) and such termination is the result of a material breach of any
representation, warranty, covenant or agreement contained herein, and if at such
time the Agreement is terminable solely for either or both such reasons, then
the Parent shall pay to the Company an amount equal to the Company's documented,
out-of-pocket expenses (not to exceed $500,000) incurred in connection with this
Agreement and the transactions contemplated hereby.
(c) Any payment required to be made pursuant to Section 7.5(b)
shall be made to the Parent by the Company, or by the Company to the Parent, as
applicable, not later than two Business Days after delivery to the Company by
the Parent of notice of demand for payment and shall be made by wire transfer of
immediately available funds to an account designated by the Parent.
(d) The Company acknowledges that the agreements contained in
this Section 7.5 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Parent would not enter into
this Agreement; accordingly, if the Company fails to pay promptly the
Termination Amount, and, in order to obtain such payment, the Parent commences a
suit which results in a judgment against the Company for the Termination Amount,
the Company shall pay the Parent's Expenses in connection with such suit,
together with interest on the amount of the Termination Amount at the prime rate
of The Chase Manhattan Bank in effect on the date such payment was required to
be made.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) The term "AFFILIATE," as applied to any person, means any
other person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "CONTROL"
(including,
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60
with correlative meanings, the terms "CONTROLLING," "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH"), as applied to any person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that person, whether through the ownership of voting securities,
by contract or otherwise.
(b) The term "BUSINESS DAY" means any day, other than
Saturday, Sunday or a federal holiday, and shall consist of the time period from
12:01 a.m. through 12:00 midnight Eastern time. In computing any time period
under this Agreement, the date of the event which begins the running of such
time period shall be included EXCEPT that if such event occurs on other than a
business day such period shall begin to run on and shall include the first
business day thereafter.
(c) The term "INCLUDING" means, unless the context clearly
requires otherwise, including but not limited to the things or matters named or
listed after that term.
(d) The term "PERSON" shall include individuals, corporations,
limited and general partnerships, trusts, limited liability companies,
associations, joint ventures, Governmental Entities and other entities and
groups (which term shall include a "GROUP" as such term is defined in Section
13(d)(3) of the Exchange Act).
(e) The term "SUBSIDIARY" or "SUBSIDIARIES" means, with
respect to the Parent, the Company or any other person, any entity of which the
Parent, the Company or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or indirectly,
stock or other equity interests the holders of which are generally entitled to
more than 50% of the vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
SECTION 8.2 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations, warranties and agreements in this Agreement and in any
certificate delivered under this Agreement shall terminate at the Effective Time
or upon the termination of this Agreement under Section 7.1, as the case may be,
except that the agreements set forth in Articles 1 and 2 and Sections 5.10, 5.18
and 5.20 and this Article 8 shall survive the Effective Time, those set forth in
Sec tions 5.7(b), 5.18, 7.2 and 7.5 and this Article 8 shall survive termination
of this Agreement. Each party agrees that, except for the representations and
warranties contained in this Agreement, the Company Disclosure Letter and the
Parent Disclosure Letter, no party to this Agreement has made any other
representations and warranties, and each party disclaims any other
representations and warranties, made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
Representatives with respect to the execution and delivery of this Agreement or
the transactions contemplated by this Agreement, notwithstanding the
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61
delivery of disclosure to any other party or any party's representatives of any
documentation or other information with respect to any one or more of the
foregoing.
SECTION 8.3 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
SECTION 8.4 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES, EXCEPT THAT DELAWARE LAW SHALL APPLY TO THE EXTENT REQUIRED IN
CONNECTION WITH THE EFFECTUATION OF THE MERGER. The parties irrevocably submit
to the jurisdiction of the federal courts of the United States of America
located in the State of New York solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred to
in this Agreement, and in respect of the transactions contemplated by this
Agreement and by those documents, and hereby waive, and agree not to assert, as
a defense in any action, suit or proceeding for the interpretation or
enforcement of this Agreement or of any such document, that it is not subject to
this Agreement or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a federal court.
The parties hereby consent to and grant any such court jurisdiction over the
person of such parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 8.5 or in such other manner as may
be permitted by law, shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDI
TIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARIS ING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE TRANSAC TIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
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62
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 8.4.
SECTION 8.5 NOTICES. Any notice, request, instruction or other document
to be given hereunder by any party to the others shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile:
IF TO THE PARENT OR MERGER SUB:
Metromedia International Group, Inc.
One Meadowlands Plaza
East Rutherford, NJ 07073-2137
Attention: Arnold L. Wadler, Esq.
Fax: (201) 531-2803
WITH COPIES TO:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Douglas A. Cifu, Esq.
Fax: (212) 757-3990
IF TO THE COMPANY:
PLD Telekom, Inc.
505 Park Avenue, 21st Floor
New York, NY 10022
Attention: General Counsel
Fax: (212) 527-3995
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
SECTION 8.6 ENTIRE AGREEMENT. This Agreement (including any exhibits
and annexes to this Agreement), the Company Disclosure Letter and the Parent
Disclosure Letter constitute the entire agreement and supersede all other prior
agreements, understandings, representations and warranties, both written and
oral, among the parties, with respect to the subject matter of this Agreement.
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63
SECTION 8.7 NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended to confer upon any person other than the parties to this Agreement any
rights or remedies under this Agreement.
SECTION 8.8 OBLIGATIONS OF THE PARENT AND OF THE COMPANY. Whenever this
Agreement requires a Parent Subsidiary to take any action, that requirement
shall be deemed to include an undertaking on the part of the Parent to cause
that Parent Subsidiary to take that action if it is a wholly-owned Subsidiary or
use its best efforts to cause the Subsidiary to take that action if it is not a
wholly-owned Subsidiary. Whenever this Agreement requires a Company Subsidiary
to take any action, that requirement shall be deemed to include an undertaking
on the part of the Company to cause that Company Subsidiary to take that action
and, after the Effective Time, on the part of the Surviving Corporation to cause
that Company Subsidiary to take that action if it is a wholly-owned Subsidiary
or use its best efforts to cause the Subsidiary to take that action if it is not
a wholly-owned Subsidiary.
SECTION 8.9 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions of this
Agreement. If any provision of this Agreement, or the application of that
provision to any person or any circumstance, is invalid or unenforceable, (a) a
suitable and equitable provision shall be substituted for that provision in
order to carry out, so far as may be valid and enforceable, the intent and
purpose of the invalid or unenforceable provision and (b) the remainder of this
Agreement and the application of the provision to other persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of the
provision, or the application of that provision, in any other jurisdiction.
SECTION 8.10 INTERPRETATION. The table of contents and headings in this
Agreement are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions of this Agreement. Where a reference in this Agreement is made to a
section, exhibit or annex, that reference shall be to a section of or exhibit or
annex to this Agreement unless otherwise indicated. Wherever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
SECTION 8.11 ASSIGNMENT. This Agreement shall not be assignable by
operation of law or otherwise, except that the Parent may designate, by written
notice to the Company, another Parent Subsidiary that is wholly owned directly
or indirectly by the Parent to be merged with and into the Company in lieu of
Merger Sub, in which event all references in this Agreement to Merger Sub shall
be deemed references to such other Parent Subsidiary, and in that case, all
representations and warranties made in this Agreement with respect to Merger Sub
as of the date of this Agreement shall be deemed representations and warranties
made with respect to such other Parent Subsidiary as of the date of such
designation.
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64
SECTION 8.12 SPECIFIC PERFORMANCE. The parties to this Agreement agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise reached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
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65
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties to this Agreement as of the date
first written above.
PLD TELEKOM, INC.
By: /s/ James R.S. Hatt
-------------------
Name: James R.S. Hatt
Title: Chairman, President and Chief
Executive Officer
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
MOSCOW COMMUNICATIONS, INC.
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Vice President, Treasurer
VOTING AGREEMENT
VOTING AGREEMENT, dated as of May 18, 1999 (this "Agreement"), by and
among Metromedia International Group, Inc., a Delaware corporation ("Buyer"),
News America Incorporated, a Delaware corporation, News PLD LLC, a Delaware
limited liability company (each, a "Shareholder" and, collectively, the
"Shareholders"), and for purposes of Section 5.5 only, Metromedia Company, a
Delaware general partnership ("Metromedia").
WHEREAS, PLD Telekom, Inc., a Delaware corporation (the "Company"), and
Buyer propose to enter into an Agreement and Plan of Merger, dated as of the
date hereof (the "Merger Agreement"), which provides for, among other things,
the merger of a wholly-owned subsidiary of Buyer with and into the Company (the
"Merger");
WHEREAS, as of the date hereof, the Shareholders are holders of record
or Beneficially Own (as defined herein) shares of common stock, par value $.01
per share ("Company Common Stock"), of the Company; and
WHEREAS, as a condition to the willingness of Buyer to enter into the
Merger Agreement, Buyer has required that each Shareholder agrees, and in order
to induce Buyer to enter into the Merger Agreement, each Shareholder has agreed,
to enter into this Agreement with respect to all of the shares of Company Common
Stock now held of record or Beneficially Owned and which may hereafter be
acquired by such Shareholder (collectively, the "Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 General. Capitalized terms used and not defined herein have
the respective meanings ascribed to them in the Merger Agreement.
Section 1.2 Beneficial Ownership. For purposes of this Agreement,
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean "beneficial ownership" of such securities (as determined pursuant to
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), including pursuant to any agreement, arrangement or understanding,
whether or not in writing. Without duplicative counting of the same securities
by the same holder,
<PAGE>
2
securities Beneficially Owned by a Person shall include securities Beneficially
Owned by all other Persons with whom such Person would constitute a "group"
within the meaning of Section 13(d) of the Exchange Act.
ARTICLE II
Section 2.1 Voting Agreement. Each of the Shareholders hereby agrees as
follows:
(a) to appear, or cause the holder of record on any applicable
record date with respect to any Shares Beneficially Owned by such
Shareholder (the "Record Holder") to appear, for the purpose of
obtaining a quorum at any annual or special meeting of stockholders of
the Company and at any adjournment thereof at which matters relating to
the Merger, Merger Agreement or any transaction contemplated thereby
are considered; and
(b) at any meeting of the stockholders of the Company, however
called, and in any action by consent of the stockholders of the
Company, to vote, or cause to be voted by the Record Holder, the Shares
held of record or Beneficially Owned by such Shareholder: (i) in favor
of the Merger, the Merger Agreement (as amended from time to time) and
the transactions contemplated by the Merger Agreement and (ii) against
any proposal for any extraordinary corporate transaction, such as a
recapitalization, dissolution, liquidation, or sale of assets of the
Company or any merger, consolidation or other business combination
(other than the Merger) between the Company and any Person (other than
Buyer or a subsidiary of Buyer) or any other action or agreement that
is intended or which reasonably could be expected to (x) result in a
breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement, (y)
result in any of the conditions to the Company's obligations under the
Merger Agreement not being fulfilled or (z) impede, interfere with,
delay, postpone or materially adversely affect the Merger and the
transactions contemplated by the Merger Agreement.
Section 2.2 No Ownership Interest. Except as set forth in Section 2.1,
nothing contained in this Voting Agreement shall be deemed to vest in Buyer any
direct or indirect ownership or incidence of ownership of or with respect to any
Shares. All rights, ownership and economic benefits of and relating to the
Shares shall remain and belong to the Shareholders, and Buyer shall have no
authority to manage, direct, restrict, regulate, govern, or administer any of
the policies or operations of the Company or exercise any power or authority to
direct the Shareholders in the voting of any of the Shares except as otherwise
provided herein, or the performance of the Shareholders' duties or
responsibilities as stockholders of the Company.
<PAGE>
3
Section 2.3 Evaluation of Investment. Each Shareholder, by reason of
its knowledge and experience in financial and business matters, believes itself
capable of evaluating the merits and risks of the investment in shares of common
stock, par value $.01 per share, of Buyer, contemplated by the Merger Agreement.
Each of the Shareholders acknowledges receipt and review of a copy of the Merger
Agreement and all reports, registration statements, proxy statements and other
filings made by Buyer with the Securities Exchange Commission since January 1,
1996.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
Each of the Shareholders hereby represents and warrants, severally and
not jointly, to Buyer as follows:
Section 3.1 Authority Relative to This Agreement. Such Shareholder has
all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Where such Shareholder is a corporation, partnership or
other entity, the execution and delivery of this Agreement by such Shareholder
and the consummation by such Shareholder of the transactions contemplated hereby
have been duly and validly authorized by the board of directors or other
governing body of such Shareholder, and no other proceedings on the part of such
Shareholder are necessary to authorize this Agreement or to consummate such
transactions and where such Shareholder is an individual, such individual has
the capacity to enter into this Agreement. This Agreement has been duly and
validly executed and delivered by such Shareholder and, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes a
legal, valid and binding obligation of such Shareholder, enforceable against
such Shareholder in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights generally or by general principles
governing the availability of equitable remedies.
Section 3.2 No Conflict. (a) The execution and delivery of this
Agreement by such Shareholder does not, and the performance of this Agreement by
such Shareholder shall not, (i) where such Shareholder is a corporation,
partnership or other entity, conflict with or violate the organizational
documents of such Shareholder, (ii) conflict with or violate any agreement,
arrangement, law, rule, regulation, order, judgment or decree to which such
Shareholder is a party or by which such Shareholder (or the Shares held of
record or Beneficially Owned by such Shareholder) is bound or affected or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse or time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the Shares held of
<PAGE>
4
record or Beneficially Owned by such Shareholder pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which such Shareholder is a party or by which
such Shareholder (or the Shares held of record or Beneficially Owned by such
Shareholder) is bound or affected, except, in the case of clauses (ii) and (iii)
of this Section 3.2, for any such conflicts, violations, breaches, defaults or
other occurrences which would not prevent or delay the performance by such
Shareholder of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by such
Shareholder does not, and the performance of this Agreement by such Shareholder
shall not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental entity except for applicable
requirements, if any, of the Exchange Act and except where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by such Shareholder of
its obligations under this Agreement.
Section 3.3 Title to the Shares. As of the date hereof, such
Shareholder is the record or Beneficial Owner of the Shares listed opposite the
name of such Shareholder on Schedule 1 hereto. The Shares listed opposite the
name of such Shareholder on Schedule 1 hereto are all the securities of the
Company either held of record or Beneficially Owned by such Shareholder. Such
Shareholder has not appointed or granted any proxy, which appointment or grant
is still effective, with respect to the Shares held of record or Beneficially
Owned by such Shareholder. The Shares listed opposite the name of such
Shareholder on Schedule 1 hereto are owned free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreement,
limitations on such Shareholder's voting rights, charges and other encumbrances
of any nature whatsoever.
ARTICLE IV
COVENANTS OF THE SHAREHOLDER
Section 4.1 No Inconsistent Agreements. Each Shareholder hereby
represents, warrants, covenants and agrees that, except as contemplated by this
Agreement and the Merger Agreement, such Shareholder has not and shall not, and
shall not permit any Person under such Shareholder's control (including any
Record Holder) to, enter into any voting agreement or grant a proxy or power of
attorney with respect to the Shares held of record or Beneficially Owned by such
Shareholder which, in either case, is inconsistent with this Agreement.
Section 4.2 Transfer of Title. Each Shareholder hereby covenants and
agrees that such Shareholder will not, prior to the termination of this Voting
Agreement, either directly or indirectly, offer or otherwise agree to sell,
assign,
<PAGE>
5
pledge, hypothecate, transfer, exchange, or dispose of any Shares or options,
warrants or other convertible securities to acquire or purchase Company Common
Stock (collectively "Derivative Securities") or any other securities or rights
convertible into or exchangeable for shares of Company Common Stock, owned
either directly or indirectly by such Stockholder or with respect to which such
Stockholder has the power of disposition, whether now or hereafter acquired,
without the prior written consent of Buyer (provided nothing contained herein
will be deemed to restrict the exercise or conversion of Derivative Securities
outstanding on the date hereof), unless the Person to whom Shares or Derivative
Securities have been sold, assigned, pledged, hypothecated, transferred,
exchanged or disposed agrees to be bound by this Voting Agreement as if a party
hereto. Each Shareholder hereby agrees and consents to the entry of stop
transfer instructions by the Company against the transfer of any Shares
consistent with the terms of this Section 4.2.
ARTICLE V
MISCELLANEOUS
Section 5.1 No Solicitation. From the date hereof until the Effective
Time or, if earlier, the termination of the Merger Agreement in accordance with
its terms, the Shareholders (a) shall not have, or shall immediately terminate
any discussions with, any third party concerning a Transaction Proposal and (b)
shall not, and shall not permit any officer, director, employee, controlled
Affiliate, investment banker or other agent (in such agency capacity) of the
Shareholder to, directly or indirectly, (i) solicit, engage in discussions or
negotiate with any Person (whether such discussions or negotiations are
initiated by the Shareholder or otherwise) or take any other action intended or
designed to facilitate the efforts of any Person, other than Buyer, relating to
a Transaction Proposal, (ii) provide information with respect to the Company or
any of its subsidiaries to any Person, other than Buyer, relating to a possible
Transaction Proposal by any person other than Buyer, (iii) enter into an
agreement with any person, other than Buyer, providing for a possible
Transaction Proposal, or (iv) make or authorize any statement, recommendation or
solicitation in support of any possible Transaction Proposal by any Person,
other than by Buyer. Notwithstanding the above, the Shareholder may take any
actions in the Shareholder's role as a director or officer of the Company
permitted under the Merger Agreement.
Section 5.2 Termination. This Agreement shall terminate upon the
earlier to occur of (i) the closing of the transactions contemplated by the
Merger Agreement and (ii) the termination of the Merger Agreement in accordance
with its terms; provided, however, that nothing in this Agreement shall relieve
any party from liability for the breach of any of its representations and
warranties or the breach of any of its covenants and agreements set forth in
this Agreement which shall survive any such termination.
<PAGE>
6
Section 5.3 Additional Shares. If, after the date hereof, a Shareholder
acquires the right to vote any additional shares of Company Common Stock (any
such shares shall be referred to herein as "Additional Shares"), including,
without limitation, upon exercise or conversion of any Derivative Security or
through any stock dividend or stock split, the provisions of this Agreement
applicable to the Shares shall be applicable to such Additional Shares as if
such Additional Shares had been outstanding Shares as of the date hereof. The
provisions of the immediately preceding sentence shall be effective with respect
to Additional Shares without action by any Person immediately upon the
acquisition by a Shareholder of record or Beneficial Ownership of such
Additional Shares.
Section 5.4 Registration Statement. Prior to the closing of the
transactions contemplated by the Merger Agreement, the Buyer shall enter into a
registration rights agreement with the Shareholders and, as contemplated
thereby, agrees to file promptly after the Registration Statement (as defined in
the Merger Agreement) is declared effective and use its reasonable best efforts
to have declared effective by the SEC not later than six months after the
Effective Time a registration statement covering the shares of common stock of
the Buyer ("Buyer Common Stock") to be received by the Shareholders in the
Merger in exchange for their Shares and use its reasonable best efforts to
maintain the effectiveness of such registration statement until the earlier of
(x) the date all such shares are disposed of and (y) two years from the date of
its effectiveness.
Section 5.5 Tag-Along Rights.
(a) In the event at any time prior to the date News America
Incorporated and its affiliates no longer Beneficially Own in excess of 5% of
the outstanding shares of Buyer Common Stock, Metromedia proposes to sell,
transfer or assign any shares of Buyer Common Stock to a non-affiliated third
party (other than a sale pursuant to an effective registration under the
Securities Act or Rule 144 promulgated under the Securities Act), Metromedia
shall have the obligation, and each of News America Incorporated, News PLD LLC
and any affiliate thereof that owns Buyer Common Stock (collectively, "News")
shall have the right (the "Tag- along Right"), to require the proposed
transferee to purchase from News a number of shares of Buyer Common Stock up to
or equal to the product (rounded up to the nearest integer) of (i) the quotient
determined by dividing the number of shares of the Buyer Common Stock held by
News by the number of shares of Buyer Common Stock owned by Metromedia, and (ii)
the number of shares of the Buyer Common Stock proposed to be transferred in the
contemplated sale, and at the same price per share and upon the same terms and
conditions offered to Metromedia. Metromedia shall give notice to News of each
proposed transfer giving rise to the Tag-along Right, at least 10 days prior to
the proposed consummation of such transfer, setting forth the maximum number of
shares of Buyer Common Stock proposed to be transferred, the name and address of
the transferee, the proposed amount of consideration and the other terms and
conditions of the transactions, and the
<PAGE>
7
maximum number of shares News may require the transferee to purchase from such
Investor under the Tag-along Right (in accordance with the first sentence of
this Section 5.5).
(b) The Tag-along Right provided by this Section 5.5 must be
exercised by News within 5 days following the receipt of the notice required by
the preceding paragraph (a), by delivery prior to the end of such 5-day period
of a written notice to Metromedia indicating News' desire to exercise its rights
under this Section 5.5 and specifying the number of shares it desires to sell.
(c) The closing of the purchase of the shares of Buyer Common
Stock owned by News by the transferee shall be held (i) at the principal office
of the Buyer on the same day as the closing of the sale from Metromedia to the
transferee; or (ii) at such other time and place as the parties to the
applicable transaction may agree. At such closing, Metromedia and News shall
deliver certificates representing the shares of Buyer Common Stock being sold,
duly authenticated by another officer of the corporation, for transfer and
accompanied by all requisite transfer taxes, if any, and such shares of Buyer
Common Stock shall be free and clear of any Liens other than those arising
hereunder. News shall further represent and warrant that it beneficially owns
such shares, that it or its designee is the record holder of such shares and
that the delivery of such shares shall convey good and marketable title to such
shares. At such closing the transferee shall deliver payment in full in
immediately available funds for the Buyer Common Stock purchased by such
transferee.
Section 5.6 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 5.7 Entire Agreement. This Agreement constitutes the entire
agreement between Buyer and the Shareholders with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, between Buyer and the Shareholders with respect to the subject matter
hereof.
Section 5.8 Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
Section 5.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being
<PAGE>
8
enforced, the parties hereby shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in a mutually
acceptable manner in order that the terms of this Agreement remain as originally
contemplated.
Section 5.10 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made and shall be effective upon receipt, if delivered personally, upon
receipt of a transmission confirmation if sent by facsimile (with a confirming
copy sent by overnight courier) and on the next business day if sent by Federal
Express, United Parcel Service, Express Mail or other reputable overnight
courier to the parties at the following addresses (or at such other address for
a party as shall be specified by notice):
If to a Stockholder, to:
Arthur M. Siskind, Esq.
Senior Executive Vice President and
Group General Counsel
The News Corporation Limited
1211 Avenue of the Americas
New York, NY 10036
Telephone: (212) 852-7000
Fax: (212) 768-2029
If to Metromedia International Group, Inc., to:
Arnold L. Wadler, Esq.
One Meadowlands Plaza
East Rutherford, NJ 07073-2137
with a copy to:
Douglas A. Cifu, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Telephone: (212) 373-3000
Fax: (212) 757-3990
Section 5.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
<PAGE>
9
Section 5.12 Obligations of Stockholders. The obligations of the
Stockholders hereunder shall be "several" and not "joint" or "joint and
several." Without limiting the generality of the foregoing, under no
circumstances will any Stockholder have any liability or obligation with respect
to any misrepresentation or breach of covenant of any other Stockholder.
Section 5.13 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be an original and all of which, when
taken together, shall constitute one and the same instrument.
<PAGE>
10
IN WITNESS WHEREOF, each of the Shareholders and Buyer have caused this
Agreement to be duly executed on the date hereof.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
NEWS AMERICA INCORPORATED
By: /s/ Lawrence A. Jacobs
----------------------
Name: Lawrence A. Jacobs
Title: Senior Vice President and Deputy
General Counsel
NEWS PLD LLC
By: /s/ Lawrence A. Jacobs
----------------------
Name: Lawrence A. Jacobs
Title:
For Purposes of Section 5.5 only:
METROMEDIA COMPANY
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Senior Vice President
<PAGE>
11
SCHEDULE 1
NAME OF SHAREHOLDER NUMBER OF SHARES
- ------------------- ----------------
News America Incorporated 18,436,149
(includes 3,804,369 shares issuable upon
the conversion of notes held by News
America Incorporated and 250,000 shares
issuable upon the exercise of warrants held
by News PLD LLC)
News PLD LLC 14,631,780
(includes 250,000 shares issuable
upon the exercise of warrants held
by News PLD LLC)
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of May 18, 1999, by and among Metromedia International Group,
Inc., a Delaware corporation (the "Parent"), News America Incorporated, a
Delaware corporation, and News PLD LLC, a Delaware limited liability company
(each, an "Investor," and collectively the "Investors").
WHEREAS, the Investors own shares of common stock, par value $.01 per
share (the "Company Shares"), of PLD Telekom, Inc., a Delaware corporation (the
"Company");
WHEREAS, in connection with the Agreement and Plan of Merger, dated as
of the date hereof (the "Merger Agreement"), by and among the Parent, the
Company, and Moscow Communications, Inc., a Delaware corporation and wholly
owned subsidiary of the Parent ("Merger Sub"), Merger Sub will be merged with
and into the Company and the Company Shares will be converted into shares of
Common Stock (as defined below); and
WHEREAS, in connection with the execution of the Merger Agreement, the
Buyer, the Shareholders and, for the purposes of Section 5.5 thereto only,
Metromedia Company, a Delaware general partnership, entered into a Voting
Agreement, dated as of the date hereof (the "Voting Agreement"); and
WHEREAS, this Agreement is entered into pursuant to Section 5.4 of the
Voting Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties thereto, intending to
be legally bound hereby, agree as follows:
SECTION 1. Definitions.
(a) As used in this Agreement, the following terms shall have the
following meanings:
Affiliate means, with respect to any specified person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
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2
Business Day means any day that is not a Saturday, a Sunday or legal
holiday on which banking institutions in the State of New York are not required
to be open.
Capital Stock means, with respect to any person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock issued by such person, including each class of common stock and preferred
stock of such person.
Common Stock means the common stock, par value $1.00 per share, of the
Parent issued pursuant to the Merger Agreement, or any other shares of Capital
Stock or other securities into which such shares of Common Stock shall be
reclassified or changed, including, without limitation, by reason of a merger,
consolidation, exchange, reorganization or recapitalization. If the Common Stock
has been so reclassified or changed, or if the Parent pays a dividend or makes a
distribution on the Common Stock in shares of Capital Stock or other securities,
or subdivides (or combines) its outstanding shares of Common Stock into a
greater (or smaller) number of shares of Common Stock, a share of Common Stock
shall be deemed to be such number of shares of Capital Stock and amount of other
securities to which a holder of a share of Common Stock outstanding immediately
prior to such change, reclassification, exchange, dividend, distribution,
subdivision or combination would be entitled.
Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Holder means a person who owns Registrable Securities and is either (i)
an Investor or (ii) a person that has agreed to be bound by the terms of this
Agreement as if such person were an Investor and is (A) a person to whom an
Investor has transferred Registrable Securities in a transaction not involving a
public offering, (B) upon the death of any Investor, the executor of the estate
of such Investor or such Investor's heirs, devisees, legatees or assigns or (C)
upon the disability of any Investor, any guardian or conservator of such
Investor.
person means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Prospectus means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement and all
other amendments and supplements to such prospectus, including post-effective
amendments and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
<PAGE>
3
Registrable Securities means shares of Common Stock of an Investor
unless (i) such securities have previously been disposed of by a Holder pursuant
to an effective Registration Statement under Section 5 of the Securities Act, or
(ii) at any time hereafter, such securities have become freely transferable
without restriction under the Securities Act.
Registration Statement means any registration statement under the
Securities Act including the Prospectus included therein, amendments and
supplements to such registration statement, including pre-and post-effective
amendments, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Shelf Registration means the registration under the Securities Act of
the offering of Registrable Securities on a delayed or continuous basis pursuant
to Rule 415 under the Securities Act (or any similar rule that may be adopted by
the SEC).
Shelf Registration Statement means a Registration Statement intended to
effect a Shelf Registration.
underwritten registration or underwritten offering means a registration
under the Securities Act in which securities of the Parent are sold to an
underwriter for reoffering to the public.
(b) Capitalized terms not otherwise defined shall have the meanings
specified in the Merger Agreement.
SECTION 2A. Shelf Registration.
(a) Promptly after the Registration Statement filed pursuant
to Section 5.5 of the Merger Agreement is declared effective, the Parent shall
prepare and file with the SEC a Shelf Registration Statement on Form S-3 or such
other form for which the Parent then qualifies (the "Shelf Registration"). The
Parent shall include in the Shelf Registration all Registrable Securities with
respect to which a Holder has, not later than the tenth day prior to the
effectiveness of such Shelf Registration Statement, given the Parent written
notice of such Holder's intention to sell thereunder. The Parent shall use its
reasonable best efforts to cause such Shelf Registration to be declared
effective by the SEC not later than six (6) months after the Effective Time. If
the Parent receives written notice from a Holder after the date on which such
Shelf Registration has become effective that such Holder desires to include
additional Registrable Securities in such Shelf Registration Statement, the
Parent shall use its reasonable best efforts to so
<PAGE>
4
include such additional Registrable Securities as promptly as possible,
including, if required, filing an additional registration statement, either
pursuant to Rule 462(b) under the Securities Act or otherwise.
(b) The Parent agrees to use its reasonable best efforts to
keep any Shelf Registration Statement filed pursuant to this Section 2
continuously effective and usable for the sale of Registrable Securities until
the earlier of (x) the date all the Registrable Securities covered by such Shelf
Registration Statement have been sold pursuant to such Shelf Registration
Statement or otherwise cease to be Registrable Securities and (y) two years from
the date of effectiveness of the Shelf Registration (plus, if applicable, the
amount of time which has elapsed during any Delay Periods or Interruption
Periods (each as defined below)). Notwithstanding the foregoing, the Parent
shall have the right to suspend the use of any Shelf Registration Statement for
a period not in excess of 30 days (a "Delay Period") if any executive officer of
the Parent determines that in such executive officer's reasonable judgment and
good faith (after consultation with outside counsel) the registration and
distribution of the Registrable Securities covered or to be covered by such
Shelf Registration Statement would materially interfere with any pending
financing, acquisition or corporate reorganization or other material transaction
that the Parent is not otherwise required to disclose. The Parent will promptly
give the Holders written notice of such determination and an approximation of
the period of the anticipated delay; provided, however, that the aggregate
number of days included in all Delay Periods during any consecutive 12 months
shall not exceed the aggregate of (x) 60 days minus (y) the number of days
occurring during the Interruption Periods during such consecutive 12 months.
Each Holder agrees to cease all disposition efforts under such Shelf
Registration Statement with respect to Registrable Securities held by such
Holder immediately upon receipt of notice of the beginning of any Delay Period.
The Parent shall provide written notice to the Holders of the end of each Delay
Period.
(c) The Parent shall not include any securities that are not
Registrable Securities in any Shelf Registration Statement filed pursuant to
this Section 2A without the prior written consent of the Holders of a majority
in number of the Registrable Securities covered by such Shelf Registration
Statement, such consent not to be unreasonably withheld, conditioned or delayed.
SECTION 2B. Incidental Registration.
(a) If, at any time prior to the effectiveness of the Shelf
Registration Statement, the Parent proposes to register any of its securities
under the Securities Act (other than by (i) the Registration Statement (as
defined in the Merger Agreement) or the Exchange Offer Registration Statement
(as defined in the Merger Agreement) or (ii) by a registration in connection
with an acquisition in a manner which would not permit registration of
Registrable Securities for sale to the public, on Form S-8, or any successor
form thereto, relating to a stock option plan, stock purchase plan, managing
directors' plan, savings or similar plan and other than pursuant to Section 2A),
<PAGE>
5
whether or not for sale for its own account, it will each such time give prompt
written notice to all Holders of its intention to do so and of such Holders'
rights under this Section 2B. Upon the written request of any such Holder made
within 30 days after the receipt of any such notice (which request shall specify
the Registrable Securities intended to be disposed of by such Holder and the
intended method of disposition thereof), the Parent will, subject to the terms
of this Agreement, use its reasonable best efforts to effect the registration
under the Securities Act of all Registrable Securities which the Parent has been
so requested to register by the Holders thereof, to the extent required to
permit the disposition of the Registrable Securities to be registered, by
inclusion of such Registrable Securities in the Registration Statement which
covers the securities which the Parent proposes to register; provided that if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the Registration Statement filed
in connection with such registration, the Parent shall determine for any reason
either not to register or to delay registration of such securities, the Parent
shall give written notice of such determination to each Holder and, thereupon,
(i) in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay any expenses incurred in
connection with such registration as provided in Section 4 hereof), and (ii) in
the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected under this Section
2B shall relieve the Parent of its obligation to effect any registration under
Section 2A, nor shall any such registration hereunder be deemed to have been
effected pursuant to Section 2A.
(b) If (i) a registration pursuant to this Section 2B involves
an underwritten offering of the securities being so registered, whether or not
for sale for the account of the Parent, to be distributed (on a firm commitment
basis) by or through one or more underwriters of recognized standing under
underwriting terms appropriate for such a transaction and (ii) the managing
underwriter of such underwritten offering shall inform the Holders requesting
such registration of its belief that the number of securities requested to be so
included in such registration exceeds the number which can be sold in (or during
the time of) such offering, then the Parent will include in such registration,
to the extent of the number which the Parent is so advised can be sold in (or
during the time of) such offering, first, all securities proposed by the Parent
to be sold for its own account and second, the Registrable Securities and all
other securities held by third parties that had requested that their securities
be included in such registration, pro rata on the basis of the number of shares
of such securities so proposed to be sold and so requested to be included by all
such selling stockholders.
SECTION 3. Registration Procedures.
In connection with the registration obligations of the Parent pursuant
to and in accordance with Section 2A or Section 2B hereof (and subject to the
Parent's rights under Section 2A), the Parent will use its reasonable best
efforts to effect such registration to permit the sale of such Registrable
Securities in accordance with the
<PAGE>
6
Holders' intended method or methods of disposition thereof, and pursuant thereto
the Parent shall as expeditiously as possible:
(a) prepare and file with the SEC the Shelf Registration or
the requisite Registration Statement to effect such registration under Section
2B for the sale of the Registrable Securities on any form for which the Parent
then qualifies or which the counsel for the Parent shall deem appropriate in
accordance with such Holders' intended method or methods of distribution thereof
and, subject to Section 2A(b), use its reasonable best efforts to cause such
Registration Statement to become effective and remain effective as provided
herein;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such supplements
to the Prospectus, as may be required by the rules, regulations or instructions
applicable to the Securities Act during the applicable period in accordance with
the intended method or methods of disposition specified by the Holders owning
any Registrable Securities covered by such Registration Statement, make
generally available earnings statements satisfying the provisions of Section
11(a) of the Securities Act (provided that the Parent shall be deemed to have
complied with this clause if it has complied with Rule 158 under the Securities
Act), and cause the Prospectus as so supplemented to be filed pursuant to Rule
424 under the Securities Act; provided, that within a reasonable time before
filing such Registration Statement or Prospectus, or any amendments or
supplements thereto (other than reports required to be filed by it under the
Exchange Act), the Parent will furnish to the Holders owning Registrable
Securities covered by such Registration Statement, and their counsel, for review
and comment, copies of all documents required to be filed;
(c) notify the Holders owning any Registrable Securities
covered by such Registration Statement promptly and confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to such Registration Statement or
any post-effective amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to such Registration Statement
or related Prospectus or for additional information regarding such Holders,
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of such Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by the Parent of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (v) of the happening of any
event that in the reasonable opinion of the Parent requires the making of any
changes in such a Registration Statement, Prospectus or documents incorporated
or deemed to be incorporated therein by reference so that they will not contain
any untrue statement or a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
<PAGE>
7
(d) use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of such Registration Statement, or the
lifting of any suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction in the United
States;
(e) furnish to each of the Holders disposing of Registrable
Securities covered by such Registration Statement and counsel for such Holders,
without charge, one conformed copy of such Registration Statement, as declared
effective by the SEC, and of each post-effective amendment thereto, in each
case, including financial statements and schedules and all exhibits and reports
incorporated or deemed to be incorporated therein by reference; and deliver,
without charge, such number of copies of the preliminary prospectus, any amended
preliminary prospectus, each final Prospectus and any post-effective amendment
or supplement thereto, as each such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities covered by such
Registration Statement in conformity with the requirements of the Securities
Act;
(f) prior to any public offering of Registrable Securities,
use its reasonable best efforts to register or qualify such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions in the United States as the Holders disposing of Registrable
Securities covered by such Registration Statement shall reasonably request in
writing; provided, however, that the Parent shall in no event be required to
qualify generally to do business as a foreign corporation or as a dealer in any
jurisdiction where it is not at the time so qualified or to execute or file a
general consent to service of process in any such jurisdiction where it has not
theretofore done so or to take any action that would subject it to general
service of process or taxation in any such jurisdiction where it is not then
subject;
(g) except during any Delay Period, upon the occurrence of any
event contemplated by paragraph 3(c)(v) above, promptly file a supplement or
post-effective amendment to such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference or
any other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities being sold thereunder, such Registration Statement
or Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(h) use its reasonable best efforts to cause all Registrable
Securities covered by such Registration Statement to be listed on the American
Stock Exchange, Inc.;
(i) on or before the effective date of such Registration
Statement, provide the transfer agent of the Parent for the Registrable
Securities with
<PAGE>
8
printed certificates for the Registrable Securities in a form eligible for
deposit with The Depository Trust Company;
(j) if such offering is an underwritten offering, make
available for inspection by any Holder disposing of Registrable Securities
included in such Registration Statement, any underwriter of such offering, and
any attorney, accountant or other agent retained by any such Holder or
underwriter (collectively, the "Inspectors"), all financial and other records
and other information, pertinent corporate documents and properties of any of
the Parent and its subsidiaries (collectively the "Records"), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility; provided, however, that the Records that the Parent determines,
in good faith, to be confidential shall not be disclosed to any Inspector unless
(i) such Inspector signs a confidentiality agreement reasonably satisfactory to
the Parent (which shall permit the disclosure of such Records in such
Registration Statement or the related Prospectus if necessary to avoid or
correct a material misstatement in or material omission from such Registration
Statement or Prospectus), (ii) after consultation with counsel for the
applicable Inspectors, the Holders and the Parent, the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement or (iii) the release of such Records is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction, provided
that each Holder shall, promptly after learning that disclosure of such Records
is sought in a court having jurisdiction, give notice to the Parent and allow
the Parent, at the Parent's expense, to undertake appropriate action to prevent
disclosure of such Records; and
(k) if such offering is an underwritten offering, enter into
such agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such other
appropriate and reasonable actions requested by the Holders owning a majority of
the Registrable Securities being sold in connection therewith (including those
reasonably requested by the managing underwriters) in order to expedite or
facilitate the disposition of such Registrable Securities, and in such
connection, (i) use its reasonable best efforts to obtain opinions of counsel to
the Parent and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters and
counsel to the Holders disposing of Registrable Securities), addressed to each
Holder selling Registrable Securities covered by such Registration Statement and
each of the underwriters as to the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested in underwritten offerings and such other matters as may be reasonably
requested by such counsel and underwriters, (ii) use its reasonable best efforts
to obtain "cold comfort" letters and updates thereof from the independent
certified public accountants of the Parent (and, if necessary, any other
independent certified public accountants of any subsidiary of the Parent or of
any business acquired by the Parent for which financial statements and financial
data are, or are required to be, included in such Registration Statement),
addressed to each Holder selling Registrable Securities covered by such
Registration Statement (unless such accountants shall be prohibited from so
addressing such letters by
<PAGE>
9
applicable standards of the accounting profession) and each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings, and (iii) if requested and if an underwriting agreement is entered
into, provide indemnification provisions and procedures substantially to the
effect set forth in Section 6 hereof with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each closing
under such underwriting or similar agreement, or as and to the extent required
thereunder.
Upon receipt of any notice from the Parent of the happening of any
event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(c)(v)
hereof, each Holder shall (i) forthwith discontinue disposition of any
Registrable Securities covered by such Registration Statement or Prospectus
until receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(g) hereof, or until such Holder is advised in writing
(the "Advice") by the Parent that the use of the applicable Prospectus may be
resumed, and has received copies of any amended or supplemented Prospectus or
any additional or supplemental filings which are incorporated, or deemed to be
incorporated, by reference in such Prospectus (such period during which
disposition is discontinued being an "Interruption Period") and (ii) if
requested by the Parent, deliver to the Parent (at the expense of the Parent)
all copies then in its possession, other than permanent file copies then in its
possession, of the Prospectus covering such Registrable Securities at the time
of receipt of such request. No Holder shall utilize any material other than the
applicable current preliminary prospectus or Prospectus in connection with the
offering of Registrable Securities pursuant to Section 2A or 2B hereunder.
SECTION 4. Registration Expenses.
Whether or not any Registration Statement is filed or becomes
effective, the Parent shall pay all costs, fees and expenses incident to the
Parent's performance of or compliance with this Agreement including, without
limitation, (i) all registration and filing fees, including AMEX or any other
exchange or market listing or filing fees on which the Parent's Common Stock is
then listed or quoted for trading, (ii) fees and expenses of compliance with
securities or Blue Sky laws, including reasonable fees and disbursements of
counsel in connection therewith, (iii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses (including preliminary prospectuses) if the printing of
prospectuses is requested by the Holders or the managing underwriter, if any),
(iv) messenger, telephone and delivery expenses, (v) fees and disbursements of
counsel for the Parent, (vi) fees and disbursements of all independent certified
public accountants of the Parent (including, without limitation, expenses of any
of "cold comfort" letters required in connection with this Agreement) and all
other persons retained by the Parent in connection with the Registration
Statement, (vii) reasonable fees and disbursements of one counsel, other than
the Parent's counsel, selected to represent all such Holders by Holders owning a
majority in number of the Registrable Securities being registered,
<PAGE>
10
(viii) fees and expenses customarily reimbursed or paid by issuers or selling
securityholders on behalf of underwriters in underwritten offerings (other than
any marketing or distribution expenses) and (ix) all other costs, fees and
expenses incident to the Parent's performance or compliance with this Agreement.
Notwithstanding the foregoing, any discounts, commissions or brokers' fees or
fees of similar securities industry professionals, and any transfer taxes
relating to the disposition of the Registrable Securities by a Holder, will be
payable by such Holder, and the Parent will have no obligation to pay any such
amounts.
SECTION 5. Underwriting Requirements.
(a) Subject to Section 5(b) hereof, any Holder shall have the
right, by written notice, to specify that it intends to dispose of Registrable
Securities covered by a Shelf Registration Statement pursuant to an underwritten
offering.
(b) The Holders selling securities in such underwritten
offering shall select the institution or institutions that shall manage or lead
the offering or placement, subject to the prior written approval of the Parent
(which approval shall not be unreasonably withheld). Any selection or other
decision by Holders pursuant to this paragraph (b) shall be made by the Holders
of a majority in number of the Registrable Securities to be sold pursuant to the
applicable underwritten offering. The Holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Parent to and for
the benefit of such underwriters shall also be made to and for the benefit of
such Holders. Any such Holders shall not be required to make any representations
and warranties to or agreements with the Parent or the underwriters other than
representations and warranties or agreements regarding such Holder, such
Holder's Registrable Securities and such Holder's intended method of
distribution.
SECTION 6. Indemnification.
(a) Indemnification by the Parent. The Parent shall indemnify
and hold harmless, to the full extent permitted by law, each Holder whose
Registrable Securities are covered by a Shelf Registration Statement or
Prospectus, the officers, directors and agents and employees of each of them,
each Person who controls each such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling person, from and
against any and all losses, claims, damages, liabilities, judgment, costs
(including, without limitation, costs of preparation and reasonable attorneys'
fees) and expenses (collectively, "Losses"), as incurred, arising out of or
based upon any untrue or alleged untrue statement of a material fact contained
in or incorporated by reference into such Registration Statement or Prospectus
or in any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make
<PAGE>
11
the statements therein not misleading, except (i) insofar as the same are based
upon information furnished in writing to the Parent by or on behalf of such
Holder expressly for use therein and (ii) to the extent such Losses arise from
or are caused by the delivery by a Holder of a Prospectus during a Delay Period
or an Interruption Period of which such Holder shall have actual notice.
(b) Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement in which a Holder is participating,
and as a condition to such participation, such Holder shall (i) furnish to the
Parent in writing such information as the Parent reasonably requests regarding
such Holder and such Holder's plan of distribution for use in connection with
any Registration Statement or Prospectus and (ii) be deemed to have agreed to
indemnify, to the full extent permitted by law, the Parent, its directors,
officers. agents and employees, each Person who controls the Parent (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons,
from and against all Losses (i) arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus or any amendment or supplement thereto, or any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, to the extent, but only to the extent,
that such untrue or alleged untrue statement or omission or alleged omission is
based upon any information so furnished in writing by or on behalf of such
Holder to the Parent expressly for use in such Registration Statement or
Prospectus or (ii) arising out of or caused by the delivery by such Holder of a
Prospectus during a Delay Period or an Interruption Period of which such Holder
shall have actual notice.
(c) Conduct of Indemnification Proceedings. If any Person
shall be entitled to indemnity hereunder (an "indemnified party"), such
indemnified party shall give prompt notice to the party from which such
indemnity is sought (the "indemnifying party") of any claim or of the
commencement of any proceeding with respect to which such indemnified party
seeks indemnification or contribution pursuant hereto; provided, however, that
the delay or failure to so notify the indemnifying party shall not relieve the
indemnifying party from any obligation or liability except to the extent that
the indemnifying party has been actually and materially prejudiced by such delay
or failure. The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party promptly after the receipt of written
notice from such indemnified party of such claim or proceeding, to assume, at
the indemnifying party's expense, the defense of any such claim or proceeding,
with counsel reasonably satisfactory to such indemnified party; provided,
however, that an indemnified party shall have the right to employ separate
counsel in any such claim or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless: (1) the indemnifying party agrees to pay such
fees and expenses; (2) the indemnifying party fails promptly to assume the
defense of such claim or proceeding or fails to employ counsel reasonably
satisfactory to such indemnified party; or (3) the named parties to any
proceeding (including impleaded parties) include
<PAGE>
12
both such indemnified party and the indemnifying party, and such indemnified
party shall have been advised by counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party); in which case the indemnified party shall have the right to
employ counsel and to assume the defense of such claim or proceeding; provided,
however, that subject to clause (3) above, the indemnifying party shall not, in
connection with any one such claim or proceeding or separate but substantially
similar or related claims or proceedings in the same jurisdiction, arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one firm of attorneys (together with appropriate local
counsel) at any time for all of the indemnified parties, or for fees and
expenses that are not reasonable. Whether or not such defense is assumed by the
indemnifying party, neither the indemnifying party nor any indemnified party
will be subject to any liability for any settlement made without its consent.
The indemnifying party shall not consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release, in form and
substance reasonably satisfactory to the indemnified party, from all liability
in respect of such claim or litigation for which such indemnified party would be
entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party in respect of any Losses (other
than in accordance with its terms), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party, on the one hand, and indemnified party, on the
other hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
taken by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any legal or other fees or expenses incurred by such party
in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provision of this Section 6(d), an indemnifying
party that is a Holder shall not be required to contribute any amount which is
in excess of the amount by which the total proceeds
<PAGE>
13
received by such Holder from the sale of Registrable Securities (net of all
underwriting discounts and commissions) exceeds the amount of any damages that
such indemnifying party has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
SECTION 7. Miscellaneous.
7.1 Notices. All notices or communications hereunder shall be in
writing (including facsimile or similar writing), addressed as follows:
To the Parent:
Metromedia International Group, Inc.
215 East 67th Street, 6th Floor
New York, NY 10021
Attn: Silvia Kessel
With a copy (which shall not constitute notice, provided, however, that
notice shall not be complete absent delivery of such copy) to:
Metromedia International Group, Inc.
One Meadowlands Plaza
East Rutherford, NJ 07073-2137
Attn: Arnold L. Wadler, Esq.
To the Holders (and the parties designated to receive copies) at their
addresses set forth in Schedule I hereto.
Any such notice or communication shall be deemed given (i) when made,
if made by hand delivery, (ii) one business day after being deposited with a
next-day courier, postage prepaid, or (iii) three business days after being sent
certified or registered mail, return receipt requested, postage prepaid, in each
case addressed as above (or to such other address as such party may designate in
writing from time to time).
7.2 Separability. If any provision of this Agreement shall be declared
to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
7.3 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, devisees, legatees,
legal
<PAGE>
14
representatives, successors and assigns. Except as set forth herein, neither the
Parent nor any Holder shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Parent and the other Holders,
with respect to an assignment by any Holder, or the Holders, with respect to an
assignment by the Parent; provided, that no consent of the Parent or the other
Holders shall be required for the assignment by any Holder of this Agreement or
any of the rights and obligations of such Holder hereunder to any person
described in clause (ii) of the definition of "Holder" to whom Registrable
Securities are transferred by such Holder.
7.4 Entire Agreement. This Agreement, together with the Voting
Agreement, represents the entire agreement of the parties and shall supersede
any and all previous contracts, arrangements or understandings between the
parties hereto with respect to the subject matter hereof.
7.5 Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Parent has obtained the written consent of Holders of at least a
majority in number of the Registrable Securities then outstanding.
7.6 Expenses. Whether or not the transactions contemplated hereby are
consummated, except as otherwise provided herein, all costs and expenses
incurred in connection with the execution of this Agreement shall be paid by the
party incurring such costs or expenses, except as otherwise set forth herein.
7.7 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
7.8 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when two or more such counterparts have been signed by
each of the parties and delivered to the other party.
7.9 Governing Law. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of New York, without reference to rules
relating to conflicts of law.
7.10 Calculation of Time Periods. Except as otherwise indicated, all
periods of time referred to herein shall include all Saturdays, Sundays and
holidays; provided, that if the date to perform the act or give any notice with
respect to this Agreement shall fall on a day other than a Business Day, such
act or notice may be timely performed or given if performed or given on the next
succeeding Business Day.
<PAGE>
15
IN WITNESS WHEREOF, the parties hereto have executed this Agree ment as
of the day and year first written above.
METROMEDIA INTERNATIONAL GROUP,
INC.
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
NEWS AMERICA INCORPORATED
By: /s/ Lawrence A. Jacobs
----------------------
Name: Lawrence A. Jacobs
Title: Senior Vice President and Deputy
General Counsel
NEWS PLD LLC
By: /s/ Lawrence A. Jacobs
----------------------
Name: Lawrence A. Jacobs
Title:
AGREEMENT TO EXCHANGE AND CONSENT
AGREEMENT TO EXCHANGE AND CONSENT (the "Agreement"), dated as of May
18, 1999 by and among Metromedia International Group, Inc., a Delaware
corporation (the "Company"), PLD Telekom Inc., a Delaware corporation ("PLD"),
and each of the Noteholders listed on Schedule I hereto (the "Noteholders").
WITNESSETH
WHEREAS, PLD and the Company are concurrently herewith entering into an
Agreement and Plan of Merger (the "Merger Agreement"), dated the date hereof,
which provides for, among other things, the merger of a wholly owned subsidiary
of the Company with and into PLD with PLD as the surviving corporation (the
"Merger").
WHEREAS, in connection with the Merger and as a condition to the
consummation thereof, the Company proposes (i) to exchange (A) $1,000 accreted
amount of its 10.5% Senior Discount Notes due 2007 (the "New Notes") having
terms substantially as set forth in the Summary of Principal Terms attached as
Exhibit A hereto (the "Summary of Terms"), for each $1,000 principal amount of
PLD's outstanding 14.5% Senior Discount Notes due 2004 (the "Senior Notes"),
plus an additional accreted amount of New Notes equal to the amount of all
accrued but unpaid interest on such Senior Notes to the date of exchange, and
(B) $900 accreted amount of New Notes for each $1,000 principal amount of PLD's
outstanding 9% Convertible Subordinated Notes due 2006 (the "Convertible Notes"
and, together with the Senior Notes, the "Old Notes"), plus an additional
accreted amount of New Notes equal to the amount of all accrued but unpaid
interest on such Convertible Notes to the date of exchange, and (ii) to seek the
consent of each of the holders of the Old Notes to (x) certain amendments to the
Indentures (as defined below) pursuant to which the Old Notes were issued and
(y) waivers of certain defaults under the Indentures (clauses (x) and (y) being
collectively referred to as the "Amendments") pursuant to a Second Supplemental
Indenture, Amendment, Consent and Waiver to each of the Indentures, which will
have substantially the terms and provisions specified in the term sheets
attached hereto as Exhibit B (the "Second Supplemental Indentures") (clauses (i)
and (ii) being collectively referred to as the "Exchange Offers");
WHEREAS, it is a condition to the consummation of the Exchange Offers
and the Merger that the holders of at least 95% of each of the Senior Notes and
the Convertible Notes validly tender and not withdraw their Old Notes and
consent to the Amendments, in each case, pursuant to the Exchange Offers;
<PAGE>
2
WHEREAS, as a condition and inducement to its willingness to enter into
the Merger Agreement, the Company has requested that the Noteholders agree, and
each of the Noteholders has agreed to enter into this Agreement; and
WHEREAS, each of the Noteholders has agreed to direct its respective
nominee to exchange its Old Notes and consent to the Amendments pursuant to the
Exchange Offers.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and conditions hereinafter contained, the parties agree as
follows:
1. Agreement to Exchange.
(a) At the Closing (as defined in the Merger Agreement) and
subject only to (i) the simultaneous consummation of the Merger and of the
transactions contemplated by the Note and Warrant Modification Agreement, the
Elite Option Modification Agreement, the Plicom Option Modification Agreement
and the News Letter Agreement (each, as defined in the Merger Agreement)
(collectively, the "Transactions"), each on the economic terms contemplated by
the forms of such agreements attached as exhibits to the Merger Agreement and
(ii) the declaration by the Securities and Exchange Commission (the "SEC") of
the effectiveness of the Exchange Offer Registration Statement (as defined
below) or, alternatively, of the Shelf Registration Statement (as defined below)
if the Company determined under Section 8.1 that the Registered Exchange Offer
(as defined below) is not available or may not be consummated, each Noteholder
hereby agrees to, and to direct its nominee to, exchange all of such
Noteholder's Old Notes listed on Schedule I hereto, together with any other Old
Notes the beneficial ownership (as defined below) of which is acquired by such
Noteholder during the period from and including the date hereof through and
including the date on which this Agreement is terminated pursuant to Section
10.9 hereof (collectively, the "Subject Debentures"), for New Notes with the
terms and provisions specified in the Summary of Terms. For purposes of this
Agreement, "beneficial ownership" or "beneficially owned" shall have the meaning
ascribed to those terms by Section 13 under the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder (the "Exchange
Act"). The New Notes will be issued pursuant to an indenture between the Company
and a Trustee reasonably satisfactory to the Noteholders and will set forth the
Summary of Terms and such other terms and conditions as are reasonably agreed to
by the Company and the Noteholders.
(b) Delivery of the New Notes to each Noteholder under this
Agreement shall be made on the Closing Date (as defined in the Merger
Agreement).
2. Consent. At the Closing and subject only to the simultaneous
consummation of the Merger and of the Transactions, each substantially as
<PAGE>
3
contemplated by the forms of agreements for such Transactions attached as
exhibits to the Merger Agreement, each Noteholder hereby agrees to consent, and
agrees to cause its nominee as record holder of all Subject Debenture
beneficially owned by it to consent, to the Amendments and to direct each of the
Trustee for the Senior Notes and the Trustee for the Convertible Notes, as the
case may be, to execute and deliver on behalf of the holders of Old Notes each
of the Second Supplemental Indentures pursuant (i) to Section 9.2 of the
Indenture for the Senior Notes, dated as of May 31, 1996, among PLD as issuer,
the Subsidiary Guarantors named therein and The Bank of New York as trustee, as
amended (the "Senior Notes Indenture"), and (ii) Section 9.2 of the Indenture
for the Convertible Notes, dated as of May 31, 1996, among PLD as issuer, the
Subsidiary Guarantors named therein and The Bank of New York as trustee, as
amended (the "Convertible Notes Indenture" and, together with the Senior Notes
Indenture, the "Indentures"), which agreement to consent shall be effective with
respect to all Subject Debentures during the period from and including the date
hereof through and including the date on which this Agreement is terminated
pursuant to Section 10.9 hereof, after which such consent shall expire and no
longer be effective. In addition, each of the Noteholders hereby consents to the
execution by PLD of the Bridge Loan Agreement dated as of the date hereof (the
"Bridge Loan Agreement") between the Company and PLD providing for certain loans
to be made to PLD and to the grant of the security interest to the Company by
PLD contemplated by the Security Agreement dated the date hereof made by PLD in
favor of the Company to secure the advances made under the Bridge Loan
Agreement.
3. Waiver. Pursuant to the Indentures, each Noteholder hereby waives and
agrees to cause its nominee as record holder of all Subject Debentures
beneficially owned by it to waive its right to (i) receive the payment of
interest in cash on the Subject Debentures (including Additional Amounts, if
any, and Special Interest, if any (each as defined in the Indentures)) or demand
the payment of such interest from amounts deposited in the Company Senior Note
Escrow Account (as defined in the Senior Notes Indenture) or the Company
Convertible Note Escrow Account (as defined in the Convertible Notes Indenture)
and (ii) declare or instruct the respective Trustee for each of the Senior Notes
and the Convertible Notes, as the case may be, to declare the occurrence of an
Event of Default (as defined under each of the Indentures), to demand or take
any other action to cause the acceleration of the entire principal amount
represented by the Subject Debentures or take any other action as a result of
such non-payment, in each of (i) and (ii) above, from the date hereof until the
earlier of (x) the termination of this Agreement or (y) the consummation of the
Exchange Offers. The parties hereby agree that this waiver constitutes a waiver
of the time of payment of the interest under the Subject Debentures only and
does not constitute a foreclosure on the right of each Noteholder to receive the
payment when due of interest and principal and other amounts owed to it under
the Subject Debentures at maturity or otherwise.
<PAGE>
4
4. Representations and Warranties of the Noteholder. Each Noteholder
hereby represents and warrants to the Company that:
4.1 Authority. The Noteholder has all necessary power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Noteholder and the consummation by such
Noteholder of the transactions contemplated hereby have been duly and validly
authorized by its board of directors or other governing body, and no other
proceedings on its part are necessary to authorize this Agreement or to
consummate such transactions. This Agreement has been duly and validly executed
and delivered by the Noteholder and, assuming the due authorization, execution
and delivery by the other parties hereto, constitutes its legal, valid and
binding obligation, enforceable against such Noteholder in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally or by general principles governing the availability of equitable
remedies.
4.2 No Conflict.
(a) The execution and delivery of this Agreement by
the Noteholder do not, and the performance of this Agreement by such Noteholder
shall not, (i) conflict with or violate its organizational documents, (ii)
conflict with or violate any agreement, arrangement, law, rule, regulation,
order, judgment or decree to which it is a party or by which it is (or the
Subject Debentures held of record or beneficially owned by it are) bound or
affected or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the Subject
Debentures held of record or beneficially owned by such Noteholder pursuant to
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which it is a party or by
which it (or the Subject Debentures held of record or beneficially owned by it)
is bound or affected, except, in the case of clauses (ii) and (iii) of this
Section 4.2, for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or delay the performance by the Noteholder
of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by
the Noteholder do not, and the performance of this Agreement by such Noteholder
shall not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental entity except for applicable
requirements, if any, of the Exchange Act and except where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by the Noteholder of
its obligations under this Agreement.
<PAGE>
5
4.3 Title to the Old Notes. As of the date hereof, the
Noteholder is the record or beneficial owner of the Old Notes listed on Schedule
I hereto. The Old Notes listed on Schedule I hereto are all the securities of
the Company either held of record or beneficially owned by the Noteholder. The
Noteholder has not appointed or granted any proxy, which appointment or grant is
still effective, with respect to the Old Notes held of record or beneficially
owned by such Noteholder. The Old Notes listed on Schedule I hereto are owned
and all other Subject Debentures will be owned by the Noteholder free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreement, limitations on the Noteholders voting rights, charges and
other encumbrances of any nature whatsoever (collectively, "Liens"), other than
Liens arising as a result of this Agreement.
4.4 Investment Purpose; QIB Status. The Noteholder is agreeing
to exchange its Subject Debentures and shall receive New Notes under this
Agreement and pursuant to the Exchange Offers for its own account solely for the
purpose of investment and not with a view to, or for offer or sale in connection
with, any distribution of the New Notes in violation of the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act"). The Noteholder has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an
investment in the New Notes and is able to bear the economic risk of such
investment. The Noteholder acknowledges that none of the New Notes has been
registered under the Securities Act and that such securities may be sold or
disposed of in the absence of such registration only pursuant to an exemption
from such registration. The Noteholder is a qualified institutional buyer as
defined in Rule 144A under the Securities Act.
5. Representations and Warranties of PLD and the Company. Each of PLD
and the Company hereby represents and warrants to each of the Noteholders that:
5.1 Authority. Each of PLD and the Company has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by each of PLD and the Company and
the consummation by each of PLD and the Company of the transactions contemplated
hereby have been duly and validly authorized by the board of directors or other
governing body of each of PLD and the Company and no other proceedings on its
part are necessary to authorize this Agreement or to consummate such
transactions. This Agreement has been duly and validly executed and delivered by
each of PLD and the Company and, assuming the due authorization, execution and
delivery by the other parties hereto, constitutes its legal, valid and binding
obligation, enforceable against each of PLD and the Company in accordance with
its terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally or by general principles governing the availability of equitable
remedies.
<PAGE>
6
5.2 No Conflict.
(a) The execution and delivery of this Agreement by
each of PLD and the Company do not, and the performance of this Agreement by
each of PLD and the Company shall not, (i) conflict with or violate its
organizational documents, (ii) conflict with or violate any agreement,
arrangement, law, rule, regulation, order, judgment or decree to which it is a
party or by which it is bound or affected, except, in the case of clause (ii) of
this Section 5.2, for any such conflicts, violations, breaches, defaults or
other occurrences which would not prevent or delay the performance by each of
PLD and the Company of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by
each of PLD and the Company do not, and the performance of this Agreement by
each of PLD and the Company shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
entity except for applicable requirements, if any, of the Exchange Act and
except where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
the performance by each of PLD and the Company of its obligations under this
Agreement.
(c) The execution and delivery of this Agreement by
PLD does not, and the performance of this Agreement by PLD shall not result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which it is a party or by which its assets or properties are bound
or affected, except for any such conflicts, violations, breaches, defaults or
other occurrences which would not prevent or delay the performance by PLD of its
obligations under this Agreement.
6. Transfer of Title. Each Noteholder hereby covenants and agrees that
it will not, prior to the termination of this Agreement, either directly or
indirectly, offer or otherwise agree to sell, assign, pledge, hypothecate,
transfer, exchange, or dispose of any Subject Debentures, owned either directly
or indirectly by it or with respect to which each such Noteholder has the power
of disposition, whether now or hereafter acquired, without the prior written
consent of the Company, unless the person or entity to whom Subject Debentures
have been sold, assigned, pledged, hypothecated, transferred, exchanged or
disposed agrees to be bound by this Agreement as if a party hereto. Each
Noteholder hereby agrees and consents to the entry of stop transfer instructions
by the Company or the Trustee, as the case may be, against the transfer of any
Subject Debentures inconsistent with the terms of this Section 6.
<PAGE>
7
7. Legend. (a) Each Noteholder agrees to the placement on certificates
representing the New Notes to be received by such Noteholder under this
Agreement, of a legend substantially as set forth below, unless the Company
determines otherwise in accordance with an opinion of counsel:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR NON-U.S. JURISDICTION AND MAY NOT BE OFFERED, SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OF SUCH OTHER STATE
OR NON-U.S. JURISDICTIONS. THE HOLDER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS."
(b) In addition to any other legend on certificates
representing the Old Notes, each Noteholder agrees to the placement on
certificates representing the Old Notes of a legend substantially as set forth
below:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF AN AGREEMENT TO EXCHANGE AND CONSENT, DATED AS OF MAY 18,
1999, AMONG METROMEDIA INTERNATIONAL GROUP, INC. (THE "COMPANY") AND
CERTAIN NOTEHOLDERS LISTED ON SCHEDULE I THERETO COPIES OF WHICH ARE ON
FILE AT THE OFFICES OF THE SECRETARY OF THE COMPANY."
8. Registered Exchange Offer.
8.1 Registration Statement. The Company agrees that on or
prior to the Closing Date (as defined in the Merger Agreement) the Company's
Registration Statement on Form S-4 (or another appropriate form under the
Securities Act) (the "Exchange Offer Registration Statement") with respect to
the proposed offer to the Noteholders (the "Registered Exchange Offer") to issue
and deliver to such Noteholders, in exchange for New Notes received in the
Exchange Offers, a like aggregate principal amount of debt securities of the
Company (such debt securities referred to as the "Exchange Notes") that are
identical in all respects to the New Notes, except for transfer restrictions
relating to the Securities Act, will be declared
<PAGE>
8
effective by the SEC; provided, however, in the event that the Company
determines that the Registered Exchange Offer is not available or may not be
consummated because it would violate applicable law or applicable
interpretations of the Staff of the SEC, the Company will use its best efforts
to cause to be filed as soon as practicable after such determination a shelf
registration statement (the "Shelf Registration Statement") providing for the
sale by the Noteholders of all of the New Notes and to have such Shelf
Registration Statement declared effective by the SEC; provided further, however,
that no Noteholder shall be entitled to have the New Notes held by it covered by
such Shelf Registration Statement unless such Noteholder furnishes to the
Company in writing the information specified in Items 507 and 508 of
Registration S-K. In the event the Company makes the determination specified in
the preceding sentence, the Company agrees that it shall enter into a
registration rights agreement with the Noteholders, which agreement shall be
reasonably satisfactory in form and substance to such Noteholders and shall
contain representations, covenants and indemnities that shall be no less
favorable to the Noteholders than those currently contained in the Company's
Registration Rights Agreement, dated as of May 18, 1999, with News America
Incorporated and News PLD LLC. The Company further agrees that if the Exchange
Offer Registration Statement is declared effective, it will keep the Exchange
Offer Registration Statement effective for not less than 30 days (or longer if
required by applicable law) after the date on which notice of the Registered
Exchange Offer is mailed to the Noteholders, it being the objective of the
Registered Exchange Offer that each Noteholder electing to exchange New Notes
for Exchange Notes (assuming, among other things, that such Noteholder (i) is
not an affiliate of the Company, (ii) acquires the Exchange Notes during the
ordinary course of such Noteholder's business and (iii) has no arrangements or
understandings with any person to participate in and does not participate in,
and does not intend to participate in, the distribution of the Exchange Notes)
be permitted to trade such Exchange Notes from and after their receipt without
any limitation or restrictions under the Securities Act. The Exchange Notes will
be issued pursuant to an indenture between the Company and a trustee that is
reasonably satisfactory to the holders of Notes, which indenture will be
identical to (or will be the same indenture as) the indenture for the New Notes,
except for the transfer restrictions under the Securities Act relating to the
New Notes.
8.2 Registered Exchange Offer. In connection with the
Registered Exchange Offer, the Company will:
(a) mail to each Noteholder a copy of the prospectus
forming part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not
less than 30 days (or longer, if required by applicable law) after the date on
which notice of the Registered Exchange Offer is mailed to the Noteholders;
<PAGE>
9
(c) utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough of Manhattan, The City
of New York;
(d) permit Noteholders to withdraw tendered New Notes
at any time prior to the close of business, New York City time, on the last
business day on which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws
that are applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
(a) accept for exchange all New Notes tendered and
not validly withdrawn pursuant to the Registered Exchange Offer;
(b) deliver to or deposit with the Trustee for the
New Notes for cancellation all New Notes so accepted for exchange; and
(c) cause the Trustee for the New Notes, promptly to
authenticate and deliver to each Noteholder, Exchange Notes with an equal
principal amount to the New Notes of such Noteholder so accepted for exchange.
8.3 Effectiveness. If the Company is required to file a Shelf
Registration Statement in accordance with Section 8.1, the Company shall use its
reasonable best efforts to keep the Shelf Registration Statement effective and
to amend and supplement the prospectus contained therein in order to permit such
prospectus to be used by all persons subject to the prospectus delivery
requirements of the Securities Act for the period of time specified in Rule
144(k) or such shorter period of time as all New Notes covered thereby shall
have been sold thereunder.
8.4 Indenture. The indenture for the New Notes or the
indenture for the Exchange Notes, as the case may be, shall provide that the New
Notes and the Exchange Notes shall vote and consent together on all matters as
one class and that none of the New Notes or the Exchange Notes will have the
right to vote or consent as a separate class on any matter.
8.5 Additional Representations. Each Noteholder participating
in the Registered Exchange Offer shall be required to represent to the Company
that at the time of the consummation of the Registered Exchange Offer (i) any
Exchange Notes received by such Noteholder will be acquired in the ordinary
course of such Noteholder's business, (ii) such Noteholder will have no
arrangements or understanding with any person to participate in and is not
participating in, and does not intend to participate in, the distribution of the
New Notes or the Exchange Notes
<PAGE>
10
within the meaning of the Securities Act and (iii) such Noteholder is not an
affiliate (as defined in Rule 405 under the Securities Act) of the Company.
8.6 Certain Information. The Company may require each
Noteholder to furnish to the Company such information regarding the distribution
of such securities and other matters as may be required to be included in the
Exchange Offer Registration Statement or Shelf Registration Statement and each
such Noteholder shall be obligated to provide any such information for inclusion
in the Exchange Offer Registration Statement or Shelf Registration Statement as
the Company shall reasonably request.
8.7 Notification. The Company shall, as expeditiously as
possible, notify each Noteholder of the happening of any event as a result of
which the prospectus included in the Exchange Offer Registration Statement or
Shelf Registration Statement contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and prepare and file with the SEC a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Exchange Notes or New Notes, as applicable, such prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Each
Noteholder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in this Section 8.7, it shall
forthwith discontinue disposition of Exchange Notes or New Notes, as applicable,
pursuant to the Exchange Offer Registration Statement or Shelf Registration
Statement, as applicable, covering such notes until its receipt of the copies of
the supplemented or amended prospectus and, if so directed by the Company, each
such Noteholder shall deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in its possession, of the
prospectus covering such notes current at the time of receipt of such notice. If
the Company shall give any such notice, the Company shall extend the period
during which such Exchange Offer Registration Statement or Shelf Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the giving of such
notice pursuant to this Section 8.7 to and including the date when each
Noteholder shall have received the copies of the supplemented or amended
prospectus.
9. Indemnification; Contribution.
9.1 Indemnification by the Company. The Company agrees to
indemnify to the fullest extent permitted by law, each Noteholder, its officers,
directors and agents and each person, if any, who controls each such Noteholder
(within the meaning of the Securities Act), against any and all losses, claims,
damages, liabilities and expenses caused by any untrue or alleged untrue
statement of
<PAGE>
11
a material fact contained in the Exchange Offer Registration Statement or Shelf
Registration Statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein (in the case of a prospectus, in light of the circumstances
under which they were made) not misleading, except to the extent, and only to
the extent, the same are caused by or contained in any information with respect
to a Noteholder furnished in writing to the Company by such Noteholder expressly
for use therein or by a Noteholder's failure to deliver a copy of the prospectus
or any amendments or supplements thereto after the Company has furnished such
Noteholder with a sufficient number of copies of the same or by the delivery of
prospectuses by a Noteholder after the Company notified such Noteholder in
writing to discontinue delivery of prospectuses.
9.2 Indemnification by the Noteholder. Each Noteholder shall
furnish to the Company in writing such information and affidavits with respect
to each such Noteholder as the Company reasonably requests for use in connection
with the Exchange Offer Registration Statement, Shelf Registration Statement or
prospectus included therein and agrees to indemnify, severally and not jointly,
to the fullest extent permitted by law, the Company, its officers, directors and
agents and each person, if any, who controls the Company (within the meaning of
the Securities Act) against any and all losses, claims, damages, liabilities and
expenses resulting from any untrue or alleged untrue statement of a material
fact or any omission or alleged omission of a material fact required to be
stated in the Exchange Offer Registration Statement, Shelf Registration
Statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein (in the case of a
prospectus, in light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue or alleged
untrue statement or omission is caused by or contained in or improperly omitted
from, as the case may be, any information or affidavit with respect to such
Noteholder so furnished in writing by it or by the delivery of prospectuses by a
Noteholder after the Company notified such Noteholder in writing to discontinue
delivery of prospectuses.
9.3 Contribution. If the indemnification provided for in
Section 9 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying party, to the extent such
indemnification is unavailable, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions that resulted in
such losses, claims, damages, liabilities or expenses. The relative fault of
such indemnifying party and indemnified parties shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged
<PAGE>
12
untrue statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.3 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person.
If indemnification is available under this Section 9.3, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Sections 9.1 and 9.2 hereof without regard to the relative fault of
said indemnifying parties or indemnified party.
10. Miscellaneous.
10.1 Permission to Disclose. Each Noteholder hereby agrees and
consents to the disclosure by the Company of this Agreement in connection with
the Exchange Offers or as otherwise required by law (except that such
Noteholders name will not be disclosed in any press release, filing or other
notice or report unless required by law or the SEC).
10.2 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
10.3 Entire Agreement. This Agreement constitutes the entire
agreement between the Company and the Noteholders with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between the Company and the Noteholders with respect to the
subject matter hereof.
10.4 Amendment. This Agreement may not be amended and no other
actions may be taken under this Agreement except by an instrument in writing
signed by the Company and each of the holders of the Subject Debentures covered
by this Agreement.
<PAGE>
13
10.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereby shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in a mutually acceptable manner in order that the terms of this Agreement remain
as originally contemplated.
10.6 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made and shall be effective upon receipt, if delivered personally, upon
receipt of a transmission confirmation if sent by facsimile (with a confirming
copy sent by overnight courier) and on the next business day if sent by Federal
Express, United Parcel Service, Express Mail or other reputable overnight
courier to the parties at the following addresses (or at such other address for
a party as shall be specified by notice):
If to the Noteholders, to the addresses specified on Schedule I.
With a copy to:
Douglas Bartner, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telephone: (212) 848-8000
Fax: (212) 848-7179
If to the Company, to:
Arnold L. Wadler, Esq.
Metromedia International Group, Inc.
One Meadowlands Plaza
East Rutherford, N.J. 07076
Facsimile: (201) 531-2803
<PAGE>
14
with a copy to:
Douglas A. Cifu, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Telephone: (212) 373-3000
Fax: (212) 757-3990
If to PLD, to:
PLD Telekom Inc.
505 Park Avenue, 21st floor
New York, NY 10022
Facsimile: (212) 527-3995
Attention: General Counsel
10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such state.
10.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be an original and all of which, when
taken together, shall constitute one and the same instrument.
10.9 Termination. This Agreement shall terminate on the first
to occur of (x) written agreement to terminate of the Company and a majority in
principal amount of the Noteholders (determined as a single class), (y)
termination of the Merger Agreement in accordance with its terms or (z) October
31, 1999, unless in any such case it is extended by the Company and each of the
Noteholders. Upon termination, this Agreement shall be of no further force and
effect among the parties except for the provisions of Section 10.10 which shall
survive the termination of this Agreement.
10.10 Fees and Expenses. Except as otherwise provided in this
Agreement, each party shall bear its own expenses, including the fees and
expenses of accountants, financial or other advisors or representatives engaged
by it, incurred in connection with this Agreement and the transactions
contemplated hereby; provided, however, that the Company shall pay the
reasonable fees and disbursements of one firm of attorneys for all of the
Noteholders.
10.11 Survival of Representations, Warranties, Consents and
Covenants. The consent, representations and warranties contained in or made
pursuant to this Agreement shall survive the Closing without limitation and the
covenants and agreements contained in or made pursuant to this Agreement which
by
<PAGE>
15
their terms are to survive after the Closing shall survive for the period
specified herein, provided, that if a claim or notice is given with respect to
any representation, warranty, covenant or agreement prior to any such expiration
date, the claim with respect to such representation, warranty, covenant or
agreement shall continue indefinitely until such claim is finally resolved.
10.12 Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
respective successors or assigns.
<PAGE>
16
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by its respective officers thereunto duly authorized all
as of the date first above written.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
PLD TELEKOM INC.
By: /s/ James R.S. Hatt
-------------------
Name: James R.S. Hatt
Title: Chairman, President and Chief
Executive Officer
MERRILL LYNCH GLOBAL ALLOCATION
FUND, INC.
By: /s/ Lisa Ann O'Donnell
----------------------
Name: Lisa Ann O'Donnell
Title: VP MLAM, Authorized Signatory
MERRILL LYNCH EQUITY/CONVERTIBLE
SERIES-GLOBAL ALLOCATION PORTFOLIO
By: MERRILL LYNCH ASSET MANAGEMENT,
L.P., AS INVESTMENT ADVISER
By: /s/ Lisa Ann O'Donnell
----------------------
Name: Lisa Ann O'Donnell
Title: VP MLAM, Authorized Signatory
<PAGE>
17
OPPENHEIMER FUNDS, INC. AS INVESTMENT
SUB-ADVISER FOR ATLAS STRATEGIC INCOME
FUND
By: /s/ David P. Negri
------------------
Name: David P. Negri
Title: Senior Vice President
OPPENHEIMER CHAMPION INCOME FUND
By: /s/ David P. Negri
------------------
Name: David P. Negri
Title: Vice President
OPPENHEIMER HIGH INCOME FUND
By: /s/ David P. Negri
------------------
Name: David P. Negri
Title: Vice President
OPPENHEIMER STRATEGIC INCOME FUND
By: /s/ David P. Negri
------------------
Name: David P. Negri
Title: Vice President
OPPENHEIMER VARIABLE ACCOUNT FUNDS
FOR THE ACCOUNT OF OPPENHEIMER
STRATEGIC BOND FUND
By: /s/ David P. Negri
------------------
Name: David P. Negri
Title: Vice President
<PAGE>
18
OPPENHEIMER HIGH YIELD FUND
By: /s/ David P. Negri
------------------
Name: David P. Negri
Title: Vice President
NORTHSTAR HIGH TOTAL RETURN FUND
By: /s/ Jeffrey Aurigemma
---------------------
Name: Jeffrey Aurigemma
Title: Vice President
NORTHSTAR HIGH TOTAL RETURN FUND II
By: /s/ Jeffrey Aurigemma
---------------------
Name: Jeffrey Aurigemma
Title: Vice President
HIGH YIELD PORTFOLIO
By: /s/
Name:
Title:
TOTAL RETURN PORTFOLIO
By: /s/
Name:
Title:
<PAGE>
19
IDS LIFE SPECIAL INCOME FUND
By: /s/
Name:
Title:
IDS LIFE INCOME ADVANTAGE FUND
By: /s/
Name:
Title:
GENERAL RETIREMENT SYSTEM OF THE
CITY OF DETROIT
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
BEA INCOME FUND, INC. HIGH YIELD
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
BEA STRATEGIC GLOBAL INCOME FUND,
HIGHYIELD
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
<PAGE>
20
OMAHA PUBLIC SCHOOL EMPLOYEE
RETIREMENT SYSTEM
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
WARBURG PINCUS HIGH YIELD FUND
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
RJR NABISCO DOMESTIC HIGH YIELD
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
SEI INSTITUTIONAL MANAGED TRUST
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
VAIL
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
<PAGE>
21
THE COMMON FUND
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
NORTHWESTERN UNIVERSITY
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
PERKIN ELMER CORP EMPLOYEE
PENSION & SAVINGS PLAN
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
TEXACO INC.
By: /s/ Richard J. Lindquist
------------------------
Name: Richard J. Lindquist
Title: Managing Director
PHOENIX EMERGING MARKET FUND
By: /s/ Daniel Senecal
------------------
Name: Daniel Senecal
Title: Director
<PAGE>
22
PHOENIX MULTI-SECTOR FIXED INCOME FUND
By: /s/ Daniel Senecal
------------------
Name: Daniel Senecal
Title: Director
PHOENIX EDGE MULTI-SECTOR FIXED INCOME
FUND
By: /s/ Daniel Senecal
------------------
Name: Daniel Senecal
Title: Director
<PAGE>
23
SCHEDULE I
1. Merrill Lynch Global Allocation Fund, Inc.
800 Scudders Mill Road
Plainsboro, NJ 08536
Beneficial ownership of Senior Notes:
Principal amount: $74,500,000
Beneficial ownership of Convertible Notes:
Principal amount: $18,700,000
2. Merrill Lynch Equity/Convertible Series: Global Allocation Portfolio
800 Scudders Mill Road
Plainsboro, NJ 08536
Beneficial ownership of Senior Notes:
Principal amount: $1,900,000
Beneficial ownership of Convertible Notes:
Principal amount: $500,000
3. Oppenheimer Champion Income Fund
World Trade Center - 31st Floor
New York, NY 10048
Beneficial ownership of Senior Notes:
Principal amount: $3,500,000
Beneficial ownership of Convertible Notes:
Principal amount: $200,000
4. Oppenheimer Strategic Income Fund
World Trade Center - 31st Floor
New York, NY 10048
Beneficial ownership of Senior Notes:
Principal amount: $16,650,000
Beneficial ownership of Convertible Notes:
Principal amount: $1,500,000
5. Oppenheimer High Yield Fund
World Trade Center - 31st Floor
New York, NY 10048
Beneficial ownership of Senior Notes:
Principal amount: $--
Beneficial ownership of Convertible Notes:
Principal amount: $630,000
<PAGE>
24
6. Oppenheimer High Income Fund
World Trade Center - 31st Floor
New York, NY 10048
Beneficial ownership of Senior Notes:
Principal amount: $--
Beneficial ownership of Convertible Notes:
Principal amount: $170,000
7. Atlas Strategic Income Fund
World Trade Center - 31st Floor
New York, NY 10048
Beneficial ownership of Senior Notes:
Principal amount: $50,000
Beneficial ownership of Convertible Notes:
Principal amount: $--
8. Oppenheimer Strategic Bond Fund
World Trade Center - 31st Floor
New York, NY 10048
Beneficial ownership of Senior Notes:
Principal amount: $300,000
Beneficial ownership of Convertible Notes:
Principal amount: $--
9. Northstar High Total Return Fund
300 First Stamford Place
Stamford, CT 06902
Beneficial ownership of Senior Notes:
Principal amount: $7,000,000
Beneficial ownership of Convertible Notes:
Principal amount: $--
10. Northstar High Total Return Fund II
300 First Stamford Place
Stamford, CT 06902
Beneficial ownership of Senior Notes:
Principal amount: $--
Beneficial ownership of Convertible Notes:
Principal amount: $2,000,000
<PAGE>
25
11. High Yield Portfolio
IDS Tower 10, T30-216
Minneapolis, MN 55440
Beneficial ownership of Senior Notes:
Principal amount: $4,000,000
Beneficial ownership of Convertible Notes:
Principal amount: $--
12. Total Return Portfolio
IDS Tower 10, T30-216
Minneapolis, MN 55440
Beneficial ownership of Senior Notes:
Principal amount: $3,000,000
Beneficial ownership of Convertible Notes:
Principal amount: $--
13. IDS Life Special Income Fund
IDS Tower 10, T30-216
Minneapolis, MN 55440
Beneficial ownership of Senior Notes:
Principal amount: $5,000,000
Beneficial ownership of Convertible Notes:
Principal amount: $--
14. IDS Life Income Advantage Fund
IDS Tower 10, T30-216
Minneapolis, MN 55440
Beneficial ownership of Senior Notes:
Principal amount: $100,000
Beneficial ownership of Convertible Notes:
Principal amount: $--
15. General Ret System of the City of Detroit
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $490,000
Beneficial ownership of Convertible Notes:
Principal amount: $70,000
<PAGE>
26
16. BEA Income Fund, Inc.
High Yield
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $1,610,000
Beneficial ownership of Convertible Notes:
Principal amount: $230,000
17. BEA Strategic Global Income Fund High Yield
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $560,000
Beneficial ownership of Convertible Notes:
Principal amount: $80,000
18. Omaha Public School Employee Ret. System
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $210,000
Beneficial ownership of Convertible Notes:
Principal amount: $30,000
19. Warburg Pincus High Yield Fund
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $1,010,000
Beneficial ownership of Convertible Notes:
Principal amount: $230,000
20. RJR Nabisco Domestic High Yield
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $350,000
Beneficial ownership of Convertible Notes:
Principal amount: $50,000
<PAGE>
27
21. SEI Institutional Managed Trust
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $830,000
Beneficial ownership of Convertible Notes:
Principal amount: $90,000
22. VAIL
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $1,140,000
Beneficial ownership of Convertible Notes:
Principal amount: $220,000
23. The Common Fund
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $30,000
Beneficial ownership of Convertible Notes:
Principal amount: $--
24. Northwestern University
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $150,000
Beneficial ownership of Convertible Notes:
Principal amount: $--
25. Perkin Elmer Corp. Emp. Pen & Savings Plan
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $150,000
Beneficial ownership of Convertible Notes:
Principal amount: $--
<PAGE>
28
26. Texaco Inc.
151 E. 53rd Street - 57th Street
New York, NY 10022
Beneficial ownership of Senior Notes:
Principal amount: $200,000
Beneficial ownership of Convertible Notes:
Principal amount: $--
27. Phoenix Emerging Market Fund
56 Prospect Street - 2nd Floor
Hartford, CT 06115
Beneficial ownership of Senior Notes:
Principal amount: $--
Beneficial ownership of Convertible Notes:
Principal amount: $600,000
28. Phoenix Multi-Sector Fixed Income Fund
56 Prospect Street - 2nd Floor
Hartford, CT 06115
Beneficial ownership of Senior Notes:
Principal amount: $--
Beneficial ownership of Convertible Notes:
Principal amount: $600,000
29. Phoenix Edge Multi-Sector Fixed Income Fund
56 Prospect Street - 2nd Floor
Hartford, CT 06115
Beneficial ownership of Senior Notes:
Principal amount: $--
Beneficial ownership of Convertible Notes:
Principal amount: $600,000
<PAGE>
29
EXHIBIT A
Term Sheet for New Notes will be attached as Exhibit A.
<PAGE>
30
EXHIBIT B
The following is a summary of the material provisions of the proposed
amendments and waivers to the Senior Notes Indenture and the Convertible Notes
Indenture. Additional technical or conforming changes will be made to the
Indentures.
I. PROPOSED AMENDMENTS TO THE SENIOR NOTES INDENTURE.
1. Elimination in their entirety of the following Sections from the
Senior Notes Indenture:
o Section 4.4: Corporate existence covenant.
o Section 4.5: Maintenance of property covenant.
o Section 4.9: Limitation on indebtedness covenant.
o Section 4.10: Limitation on issuances of guarantees by
restricted subsidiaries covenant.
o Section 4.11: Limitation on liens covenant.
o Section 4.12: Limitation on sale and leaseback
transactions covenant.
o Section 4.13: Restricted payments covenant.
o Section 4.14: Limitations on dividends and other payment
restrictions affecting restricted subsidiaries covenant.
o Section 4.15: Limitation on issuance and sale of preferred
stock of restricted subsidiaries covenant.
o Section 4.16: Transactions with affiliates covenant.
o Section 4.17: Restricted and unrestricted subsidiaries
covenant.
o Section 4.18: Limitations on line of business covenant.
o Section 4.19: Limitation on sales of telecommunications
assets agreements or qualified investments covenant.
<PAGE>
31
o Section 4.20: Reports covenant.
o Section 4.21: Compliance certificate; notice of default or
event of default covenant.
o Sections 4.24 and 4.26: Certain subsidiaries covenants.
o Article V: Consolidation, merger, conveyance, lease or
transfer covenant.
2. Amendments to Article XI of the Senior Notes Indenture to
authorize the release of all of the collateral including all cash
held in escrow from the security interest, liens, pledge and
escrow agreements of the Senior Notes Indenture.
3. Waiver of all past defaults arising from the failure to pay
interest on the notes or otherwise.
II. PROPOSED AMENDMENTS TO THE CONVERTIBLE NOTES INDENTURE
1. Elimination in their entirety of the following Sections from the
Convertible Notes Indenture:
o Section 4.4: Corporate existence covenant.
o Section 4.5: Maintenance of property covenant.
o Section 4.9: Limitation on issuances of guarantees by
restricted subsidiaries covenant.
o Section 4.10: Restricted and unrestricted subsidiaries
covenant
o Section 4.11: Reports covenant.
o Section 4.12: Compliance certificate; notice of default or
event of default covenant.
o Sections 4.16 and 4.18: Certain subsidiaries covenants.
o Article V: Consolidation, merger, conveyance, lease or
transfer covenant.
2. Amendments to Article XI of the Convertible Notes Indenture to
authorize the release of all of the collateral including all cash
held in
<PAGE>
32
escrow from the security interest, liens, pledge and escrow
agreements of the Convertible Notes Indenture.
3. Waiver of all past defaults arising from the failure to pay
interest on the notes or otherwise.
<PAGE>
SUMMARY OF PRINCIPAL TERMS
ISSUER Metromedia International Group, Inc. (the
"Company")
EXCHANGE OFFER The Company will offer to exchange (i) $1,000
accreted value ($1,291.55 face value) of 10.5%
Senior Discount Notes, due 2007 (the "Notes") for
each $1,000 principal amount of the existing 14.5%
Senior Discount Notes due 2004 (the "PLD Senior
Notes") of PLD Telekom Inc. ("PLD"); and $900
Accreted Value of the Notes for each $1,000
principal amount of the existing PLD's 9%
Convertible Subordinated Notes due 2006 (the "PLD
Convertible Notes"; and together with the PLD
Senior Notes, the "PLD Notes"). The exchange
offers described in the preceding sentence will be
consummated simultaneously with the consummation
of the merger of a wholly owned subsidiary of the
Company with and into PLD pursuant to a Merger
Agreement dated as of the date hereof among the
Company, PLD and Moscow Communications, Inc.
Accrued interest on the PLD Notes through the date
of consummation of the exchange offers will be
paid through the issuance of additional Notes with
an accreted value equal to 100% of the outstanding
amount of such accrued, but unpaid, interest.
MATURITY 8 years.
YIELD & INTEREST The Notes will be issued at a discount and will
accrete, but will not pay interest in cash, at a
rate of 10 1/2% per annum, compounded
semi-annually, to a principal amount of $1,291.55
per Note at the end of 2 1/2 years. Cash interest
will not accrue on the Notes for 5 semi-annual
periods (2 1/2 years). Thereafter, cash interest
on the Notes will be payable semi-annually at 10
1/2% per annum.
OPTIONAL REDEMPTION The Notes will not be redeemable prior to 2 1/2
years following the Issue Date. The Notes will be
redeemable at any time thereafter, at the option
of the Company, in whole or in part, at a
redemption price equal to the principal amount of
the Notes, plus accrued and unpaid interest, if
any, to but excluding the date of redemption.
RANKING The Notes will be senior unsecured obligations of
the
<PAGE>
Company. The Notes will rank pari passu in right
of payment with all senior indebtedness of the
Company and will rank senior in right of all
payments to all subordinated indebtedness of the
Company. The Notes will not be guaranteed by any
of the Company's Subsidiaries.
CHANGE OF CONTROL Upon the occurrence of a Change of Control, the
Company will be required to make an offer to
repurchase the Notes at an offer price in cash
equal to 101% of the accreted value of the Notes,
plus accrued and unpaid interest, if any, to the
date of purchase.
CHANGE OF CONTROL means the occurrence of any of
the following: (i) the sale, lease, exchange or
other transfer by the Company of all or
substantially all of the assets of the Company and
its Restricted Subsidiaries taken as a whole to
any person other than a Wholly Owned Restricted
Subsidiary of the Company; (ii) a merger or
consolidation in which the shareholders of the
Company immediately prior to the merger or
consolidation do not hold a majority of the voting
power of the Company immediately after the merger
or consolidation, (iii) any person other than a
Permitted Holder becomes the beneficial owner of
>50% of the total voting power of all classes of
the voting stock of the Company; or (iv) the first
day on which a majority of the members of the
Board of Directors of the Company are not
continuing directors; or (v) the Company is
liquidated or dissolved or adopts a plan of
liquidation or dissolution other than in a
transaction which complies with the provisions set
forth in "Limitations on Merger, Consolidation or
Sale of Assets"; PROVIDED, however, that the sale
or disposition of (x) all or substantially all of
the assets or voting stock of Snapper, Inc.
("Snapper") or (y) all or any portion of the PLD
Assets (as defined below) will not be deemed to be
a Change of Control. The sale of any of the PLD
Assets shall be governed by the provisions set
forth in "Limitation on Asset Sales".
PERMITTED HOLDER means Metromedia Company, its
Related Parties, and any Person controlling,
controlled by, or under common control of,
Metromedia Company.
2
<PAGE>
PLD ASSETS will mean all of the assets (including
shares of capital stock of any Subsidiary) owned
by PLD Telekom Inc. ("PLD") or any direct or
indirect Subsidiary of PLD on the Issue Date,
accounts receivable generated by such assets, and
the Additional PLD Assets.
SUBSIDIARY means, with respect to any Person, any
corporation, association or other business entity
of which more than 50% of the total voting power
of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to
vote in the election of directors, managers,
trustees or similar governing body thereof is at
the time owned or controlled, directly or
indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a
combination thereof).
LIMITATIONS ON INDEBTEDNESS The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or
indirectly, create, incur or assume any additional
Indebtedness or to issue Disqualified Capital
Stock and the Company will not permit any of its
Restricted Subsidiaries to issue any shares of
Preferred Stock, unless the Consolidated Leverage
Ratio at the end of the Company's most recently
completed quarter is less than or equal to 5.5 to
1.0 prior to June 30, 2002, or less than 5.0 to
1.0 on or after June 30, 2002, determined on a pro
forma basis (including the application of the
proceeds therefrom), as if the additional
Indebtedness or Preferred Stock had been incurred
or issued at the beginning of the Reference
Period.
Except with respect to the PLD Companies, the
foregoing limitations will not prohibit:
(a) Existing Indebtedness of the Company or any of
its Restricted Subsidiaries;
(b) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness consisting
of Capital Lease Obligations, Purchase Money
Obligations, or other obligations incurred for the
purpose of financing all or any part of the
purchase price, development, acquisition,
construction or improvement of real or personal
property, tangible or intangible, used or to be
used in a Related Business (including capital
stock of a
3
<PAGE>
Person engaged in a Related Business) or a credit
facility or debt securities entered into for the
purpose of providing such financing, PROVIDED that
such Indebtedness (inclusive of the interest
portion thereof and reasonable costs of financing)
does not exceed the lesser of Fair Market Value or
the purchase price and related costs of design,
development, acquisition, construction or
improvement of such assets or property at the time
of such incurrence;
(c) the incurrence by the Company of Indebtedness
in an aggregate principal amount not to exceed two
(2) times the sum of the Net Cash Proceeds
received by the Company after the date of the
Indenture in connection with any Public Equity
Offerings or sale of Capital Stock (other than
Disqualified Capital Stock) to any Strategic
Investor to the extent that such Net Cash Proceeds
have not been used to make Restricted Payments
pursuant to paragraphs (c)(ii) and (c)(2) of the
"Limitations on Restricted Payments" covenant,
provided that such Indebtedness does not mature
prior to six (6) months following the Stated
Maturity of the Notes;
(d) the incurrence by the Company or any
Subsidiary of any Indebtedness entered into in the
ordinary course of business (i) pursuant to
interest rate agreements entered into to protect
the Company or any Subsidiary against fluctuations
in interest rates in respect of Indebtedness of
the Company or any Subsidiary so long as the
notional principal amount of such interest rate
agreements does not exceed the aggregate principal
amount of such Indebtedness then outstanding or
(ii) under any currency hedging arrangements
entered into to protect the Company or any
Subsidiary against fluctuations in the value of
any currency and not for speculative purposes;
(e) ordinary course performance bonds, letters of
credit and appeal and surety bonds entered into
not in connection with borrowed money;
4
<PAGE>
(f) inter-company indebtedness owed to the Company
or any Restricted Subsidiary or any guarantee by
the Company or any Restricted Subsidiary of any
Indebtedness permitted to be incurred hereunder;
(g) the incurrence by the Company or any of its
Restricted Subsidiaries of additional
Indebtedness, so long as the aggregate principal
amount of such Indebtedness does not exceed $200
million at any one time outstanding; and
(h) Permitted Refinancing Indebtedness of any of
the Indebtedness permitted by clauses (a-g) above.
"INDEBTEDNESS" will mean at any time (without
duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of
such Person, and whether or not contingent, (i)
any obligation of such Person for money borrowed,
(ii) any obligation of such Person evidenced by
bonds, debentures, notes, guarantees or other
similar instruments, including, without
limitation, any such obligations incurred in
connection with acquisition of property, assets or
businesses, excluding trade accounts payable made
in the ordinary course of business, (iii) any
reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances
or similar facilities issued for the account of
such Person, (iv) any obligation of such Person
issued or assumed as the deferred purchase price
of property or services (but excluding trade
accounts payable or accrued liabilities arising in
the ordinary course of business, which in either
case are not more than 60 days overdue or which
are being contested in good faith), (v) any
Capital Lease Obligation of such Person, (vi) the
maximum fixed redemption or repurchase price of
Disqualified Capital Stock of such Person and, to
the extent held by other Persons, the maximum
fixed redemption or repurchase price of
Disqualified Capital Stock of such Person's
Restricted Subsidiaries at the time of
determination, (vii) the notional amount of any
interest hedging obligations or exchange rate
obligations of such Person at the time of
determination, (viii) any Attributable
Indebtedness with respect to any Sale and
Leaseback Transaction to which such Person is a
party and (ix) any obligation of the type referred
to in clauses (i) through (viii) of this
definition of
5
<PAGE>
another Person and all dividends and distributions
of another Person the payment of which, in either
case, such Person has guaranteed or is responsible
or liable, directly or indirectly, as obligor,
guarantor or otherwise. For purposes of the
preceding sentence, the maximum fixed repurchase
price of any Disqualified Capital Stock that does
not have a fixed repurchase price shall be
calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified
Capital Stock were repurchased on any date on
which Indebtedness shall be required to be
determined pursuant hereto; PROVIDED that if such
Disqualified Capital Stock is not then permitted
to be repurchased, the repurchase price shall be
the book value of such Disqualified Capital Stock.
The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date
of all unconditional obligations as described
above and the maximum liability of any guarantees
at such date; PROVIDED that for purposes of
calculating the amount of the Notes outstanding at
any date, such amount shall be the accreted value
thereof as of such date unless cash interest has
commenced to accrue pursuant to the terms of the
Notes, in which case the amount of the Notes
outstanding will be determined pursuant to the
terms of the Notes.
"ATTRIBUTABLE INDEBTEDNESS" will mean, with
respect to any Sale and Leaseback Transaction of
any Person, as at the time of determination, the
greater of (i) the capitalized amount in respect
of such transaction that would appear on the
balance sheet of such Person in accordance with
GAAP and (ii) the present value (discounted at a
rate consistent with accounting guidelines, as
determined in good faith by such Person) of the
payments during the remaining term of the lease
(including any period for which such lease has
been extended or may, at the option of the lessor,
be extended) or until the earliest date on which
the lessee may terminate such lease without
penalty or upon payment of a penalty (in which
case the rental payments shall include such
penalty).
"SALE AND LEASEBACK TRANSACTION" means, with
respect to any Person, any direct or indirect
arrangement pursuant to which property is sold or
transferred by such Person or a Restricted
Subsidiary of such Person and is thereafter
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<PAGE>
leased back from the purchaser or transferee
thereof by such Person or one of its Restricted
Subsidiaries.
LIMITATION ON PLD Notwithstanding the foregoing, neither PLD nor any
INDEBTEDNESS of its direct or indirect Subsidiaries (including,
without limitation, PeterStar Company Limited,
Baltic Communications Limited, Technocom Limited,
ALTEL and CPY Yellow Pages Limited) (collectively,
the "PLD Companies") will directly or indirectly,
create, incur, assume or suffer to exist any
additional Indebtedness or any guarantees of any
Indebtedness.
The foregoing limitations will not prohibit:
(a) Existing Indebtedness of the PLD Companies;
(b) the incurrence by the PLD Companies of
Indebtedness consisting of Capital Lease
Obligations, Purchase Money Obligations, or other
obligations incurred for the purpose of financing
all or any part of the purchase price,
development, acquisition, construction or
improvement of real or personal property, tangible
or intangible, used or to be used in a Related
Business (other than any business specified in
clause (v) of the definition of Related Business)
or a credit facility or debt securities entered
into for the purpose of providing such financing,
PROVIDED that such Indebtedness (inclusive of the
interest portion thereof and reasonable costs of
financing) does not exceed the lesser of Fair
Market Value or the purchase price and related
costs of design, development, acquisition,
construction or improvement of such assets or
property at the time of such incurrence;
(c) the incurrence by the PLD Companies of any
Indebtedness entered into in the ordinary course
of business (i) pursuant to interest rate
agreements entered into to protect the PLD
Companies against fluctuations in interest rates
in respect to Indebtedness of any of the PLD
Companies so long as the notional principal amount
of such interest rate agreements does not exceed
the
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aggregate principal amount of such Indebtedness
then outstanding or (ii) under any currency
hedging arrangements entered into to protect the
PLD Companies against fluctuations in the value of
any currency and not for speculative purposes;
(d) ordinary course performance bonds, letters of
credit and appeal and surety bonds entered into
not in connection with borrowed money;
(e) Indebtedness between any of the PLD Companies
or any guarantee by any PLD Company of any
Indebtedness permitted to be incurred by any other
PLD Company hereunder;
(f) the incurrence by the PLD Companies of
additional Indebtedness, so long as the aggregate
principal amount of such Indebtedness does not
exceed $25.0 million at any one time outstanding;
and
(g) Permitted Refinancing Indebtedness of any of
the Indebtedness permitted by clauses (a-f) above.
RESTRICTED SUBSIDIARIES will mean (x) Metromedia
International Telecommunications, Inc., Snapper
and all other direct or indirect wholly-owned
subsidiaries of the Company that are incorporated
in any state in the United States, (y) Paging One
Services, GmbH (Austria), Romsat Cable TV & Radio,
SA (Romania) and Radio Balalon Juventus Kft.
(Hungary), to the extent each of the foregoing
constitutes Subsidiaries, and (z) each of the PLD
Companies, to the extent each of them constitutes
Subsidiaries.
DISQUALIFIED CAPITAL STOCK means, with respect to
any person, any Capital Stock which, by its terms
(or by the terms of any security into which it is
convertible or for which it is exchangeable), or
upon the happening of any event or the passage of
time, matures or becomes mandatorily redeemable,
pursuant to a sinking fund obligation or
otherwise, or becomes exchangeable for
Indebtedness at the option of the holder thereof,
or becomes redeemable at the option of the holder
thereof, in whole or in part, on or prior to the
Stated Maturity of
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<PAGE>
the Notes; PROVIDED such Capital Stock shall only
constitute Disqualified Capital Stock to the
extent it so matures or becomes so redeemable or
exchangeable on or prior to the Stated Maturity of
the Notes; PROVIDED, FURTHER, that any Capital
Stock that would not constitute Disqualified
Capital Stock but for provisions thereof giving
holders thereof the right to require such person
to repurchase or redeem such Capital Stock upon
the occurrence of an "asset sale" or "change of
control" occurring prior to the Stated Maturity of
the Notes shall not constitute Disqualified
Capital Stock if the "asset sale" or "change of
control" provisions applicable to such Capital
Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in
"Limitation on Asset Sales" and "Change of
Control" described herein and such Capital Stock
specifically provides that such person will not
repurchase or redeem any such stock pursuant to
such provision prior to the Company's repurchase
of such Notes as are required to be repurchased
pursuant to the "Limitation on Asset Sales" and
"Change of Control" provisions described herein.
CONSOLIDATED LEVERAGE RATIO will mean the ratio of
(a) the total consolidated Indebtedness of the
Company and its consolidated Subsidiaries as of
the date of calculation (the "Determination Date")
to (b) two times the Consolidated Operating Cash
Flow of the Company and its consolidated
Subsidiaries for the most recent two fiscal
quarters for which financial information is
available (the "Reference Period") immediately
preceding such Determination Date, calculated in
accordance with GAAP and on a pro forma basis to
(i) include the results of any Person that is a
consolidated Subsidiary on such Determination Date
(or would become a consolidated Subsidiary in
connection with the transaction that requires the
determination of such Consolidated Operating Cash
Flow), (ii) exclude any Person that is not a
consolidated Subsidiary on such Determination Date
(or would cease to be a consolidated Subsidiary in
connection with the transaction that requires the
determination of such Consolidated Operating Cash
Flow ) and (iii) include or exclude, as the case
may be, the results of any operating business
acquired or disposed of by the Company or a
consolidated Subsidiary in such Reference Period.
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<PAGE>
CONSOLIDATED OPERATING CASH FLOW will mean, with
respect to any period, Consolidated Net Income for
such period increased (without duplication), to
the extent deducted in calculating such
Consolidated Net Income by,
(a) Consolidated Income Tax Expense for such
period,
(b) Consolidated Interest Expense for such period,
and
(c) depreciation, amortization, minority interest
and any other non-cash items for such period
(other than any non-cash item which requires the
accrual of, or reserve for, cash charges for any
future period) of the Company and any consolidated
Subsidiary.
RELATED BUSINESS will mean, when used in reference
to any Person, that such Person is engaged
primarily in the business of, or providing
services related to the business of, (i) the
transmission of voice, video or data, including,
but not limited to, local and long-distance
wireline and wireless telephone services and
internet services, (ii) multi-channel television
services including wireline and wireless cable
television service, (iii) broadcast radio, (iv)
paging, (v) lawn and garden products and related
services and (vi) in the case of each of (i)
through (v) above, the construction of any
facilities related thereto or any businesses
reasonably related thereto, which determination
shall be made in good faith by the Board of
Directors.
PUBLIC EQUITY OFFERING will mean an underwritten
sale of Capital Stock (excluding Disqualified
Capital Stock) of the Company with gross proceeds
to the Company of at least $25 million.
STRATEGIC INVESTOR will mean any Person that is
(or a controlled Affiliate of any Person that is)
engaged principally in a Related Business.
AFFILIATE of any specified Person means any other
Person directly or indirectly controlling,
controlled by or under direct or indirect common
control with such specified Person. For purposes
of this definition, "control" (including, with
correlative meanings, the terms "controlling,"
"controlled by" and "under common
10
<PAGE>
control with"), as used with respect to any
Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the
direction of the management or policies of such
Person, whether through the ownership of voting
securities, by agreement or otherwise, provided
that the ability to vote 10% or more of the voting
securities of such Person shall constitute
control.
PERMITTED REFINANCING INDEBTEDNESS will mean any
amendments, supplements, modifications, deferrals,
renewals, extensions, substitutions, refundings,
defeasance, refinancings or replacements
(collectively, a "refinancing") of any
Indebtedness, including successive refinancings so
long as (i) the borrower under such refinancing is
the Company or, if not the Company, the same as
the borrower (or its successor) of the
Indebtedness being refinanced, (ii) the aggregate
principal amount (or accreted value) of the new
Indebtedness does not exceed the sum of (a) the
aggregate principal amount (or accreted value)
being refinanced, (b) the accrued interest
represented thereby, (c) the amount of expenses of
the Company or such borrower incurred in
connection with such refinancing, and (d) the
lesser of (x) the stated amount of any premium or
other payment required to be paid in connection
with such refinancing pursuant to the terms of the
Indebtedness being refinanced and (y) the amount
of premium actually paid at such time to refinance
the Indebtedness and (iii) in the case of any
refinancing of Subordinated Indebtedness, such new
Indebtedness is made subordinated to the Notes at
least to the same extent as the Indebtedness being
refinanced and such refinancing does not reduce
the Average Life to Stated Maturity or the Stated
Maturity of such Subordinated Indebtedness.
EXISTING INDEBTEDNESS of a Person means
Indebtedness of such Person in existence on the
Issue Date, until such amounts are repaid.
CAPITAL LEASE OBLIGATION means any obligation of a
Person and its subsidiaries on a consolidated
basis under any capital lease of real or personal
property which, in accordance with GAAP, has been
recorded as a capital lease obligation.
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<PAGE>
PURCHASE MONEY OBLIGATION of any Person means any
Indebtedness secured by a Lien on assets related
to the business of such Person and any additions,
replacements, modifications and accessions
thereto, which are purchased by such Person at any
time after the Notes are issued; PROVIDED that (i)
the security agreement or conditional sales or
other title retention contract pursuant to which
the Lien on such assets is created (collectively a
"Purchase Money Security Agreement") shall be
entered into within 180 days after the purchase or
substantial completion of the construction of such
assets and shall at all times be confined solely
to the assets so purchased or acquired, any
additions, replacements, modifications and
accessions thereto and any proceeds and products
therefrom, (ii) at no time shall the aggregate
principal amount of the outstanding Indebtedness
secured thereby be increased except in connection
with the purchase of additions and accessions
thereto and except in respect of commitment or
facility fees or other similar fees and other
similar obligations in respect of the incurrence
of such Indebtedness, and (iii) (A) the aggregate
outstanding principal amount of Indebtedness
secured thereby (determined on a per asset basis
in the case of any additions and accessions) shall
not at the time such Purchase Money Security
Agreement is entered into exceed 90% of the
purchase price to such Person of the assets
subject thereto or (B) the Indebtedness secured
thereby shall be with recourse solely to the
assets so purchased or acquired, any additions,
replacements, modifications and accessions thereto
and any proceeds and products therefrom.
FAIR MARKET VALUE means, with respect to any asset
or property, the sale value that would be
reasonably expected to be obtained in an arm's
length transaction between an informed and willing
seller under no compulsion to sell and an informed
and willing buyer under no compulsion to buy. Fair
Market Value shall be determined by the Board of
Directors of the Company acting in good faith and
shall be evidenced by a resolution of the Board of
Directors.
LIMITATIONS ON RESTRICTED The Company will not, and will not permit any
PAYMENTS Restricted Subsidiary to, (i) declare or pay any
dividends on, or make any distribution on account
of the Company's or
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<PAGE>
any of its Restricted Subsidiaries' Capital Stock
(other than dividends or distributions solely in
Qualified Capital Stock or options, warrants or
other rights to acquire Qualified Capital Stock);
(ii) purchase, redeem or otherwise acquire or
retire for value any of the Company's Capital
Stock; (iii) make any principal payment on, or
purchase, redeem, defease, retire or otherwise
acquire for value, prior to any scheduled
principal payment or maturity, any Subordinated
Indebtedness; or (iv) make any Investment in any
Person unless, and after giving effect thereto:
(a) no Default of Event of Default shall have
occurred; and
(b) after such Restricted Payment, the Company
could incur at least $1.00 of additional
indebtedness under the test given in "Limitation
on Indebtedness;"
(c) on a pro forma basis, the aggregate amount of
all Restricted Payments shall not exceed (in each
case without duplication) the sum of:
(i) the Cumulative Consolidated Operating
Cash Flow LESS a minority equity interest in
such Consolidated Operating Cash Flow in the
event a minority interest has not already
been deducted from Consolidated Operating
Cash Flow, LESS 150% of the Cumulative
Consolidated Interest Expense; PLUS
(ii) the Net Cash Proceeds received upon the
sale of Qualified Capital Stock or any
options, warrants or rights to purchase such
Qualified Capital Stock from the Company to
the extent not utilized to incur
Indebtedness under paragraph (c) of
"Limitations on Indebtedness" above; PLUS
(iii) the Net Cash Proceeds upon the
exercise of any options, warrants or rights
to purchase Qualified Capital Stock of the
Company; PLUS
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<PAGE>
(iv) Net Cash Proceeds received from the
conversion or exchange of debt securities or
Redeemable Capital Stock into Qualified
Capital Stock of the Company plus, to the
extent such debt securities or Redeemable
Capital Stock were issued after the issue
date the Net Cash Proceeds from their
original issuance; PLUS
(v) In the case of the disposition or
repayment of any Investment constituting a
Restricted Payment, an amount equal to the
lesser of (x) the cash return of capital
resulting from sale proceeds, dividends,
distributions, interest payments, return of
capital or principal, management fees or
other transfers of assets to the Company or
any Restricted Subsidiary or (y) the initial
amount of such Investment; LESS
(vi) amounts paid or payments made pursuant
to any of clauses (2), (3), (5) and (6)
below.
So long as no Default of Event of Default has
occurred and is continuing or would be caused
thereby, the foregoing provisions will not
prohibit:
(1) The payment of any dividend within 60 days
after the date of declaration, if at said date of
declaration such dividend would have complied with
(c) above;
(2) the repurchase, redemption, or other
acquisition or retirement for value of any shares
of any class of Qualified Capital Stock of the
Company in exchange for, or out of the Net Cash
Proceeds of a substantially concurrent sale of
Qualified Capital Stock of the Company;
(3) the repurchase, redemption, defeasance,
retirement, refinancing, acquisition for value or
payment of principal of any Subordinated
Indebtedness in exchange for, or out of the Net
Cash Proceeds of a substantially
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<PAGE>
concurrent sale of Permitted Refinancing
Indebtedness;
(4) the payment of any dividend or other
distribution by a Restricted Subsidiary to holders
of its Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other
acquisition or retirement for value of any
Qualified Capital Stock of the Company or any of
its Restricted Subsidiaries held by a member of
the Company's or such Restricted Subsidiary's
management, provided that the aggregate amount of
such repurchases in any calendar year shall not
exceed $1 million in any twelve-month period, plus
the aggregate cash proceeds provided to the
Company during such period from any reissuance of
Qualified Capital Stock to management;
(6) Investments in any Person engaged, or to be
engaged, principally in a Related Business on the
date of such investments; and
(7) Investments by Restricted Subsidiaries which
are lessees or buyers of Telecommunications Assets
under Telecommunications Assets Agreements in
transactions in which the monetary consideration
for such Telecommunications Assets is paid
immediately or is payable over time, PROVIDED that
such Investments shall be made as a sublease or
installment sale of the Telecommunications Assets
subject to the Telecommunications Asset Agreement
to which such Restricted Subsidiary is party as
lessee or buyer.
(8) Permitted Payments.
PERMITTED PAYMENTS will include:
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<PAGE>
(a) Payments made under any tax sharing agreement
between or among the Company and its Restricted
Subsidiaries;
(b) The payment of dividends on the Company's
Convertible Preferred Stock in an aggregate amount
not to exceed $15.1 million in any calendar year;
and
(c) payments to Metromedia Company and any of its
Affiliates for reasonable legal, tax, accounting,
financial advisory and other management services
in the ordinary course of business, subject to
approval by disinterested members of the board of
directors of the Company.
QUALIFIED CAPITAL STOCK means any and all Capital
Stock of a Person other than Disqualified Capital
Stock.
CAPITAL STOCK means (i) with respect to any Person
that is a corporation, any and all shares,
interests, participations or other equivalents
(however designated and whether or not voting) of
corporate stock, including each class of common
stock and preferred stock of such Person and (ii)
with respect to any Person that is not a
corporation, any and all partnership, membership
or other equity interest of such Person.
STATED MATURITY means, when used with respect to
any Indebtedness or any installment of interest
thereon, the dates specified in such Indebtedness
as the fixed date on which the principal of such
Indebtedness or such installment of interest, as
the case my be, is due and payable.
CONSOLIDATED INTEREST EXPENSE will mean, without
duplication, for any period, the sum of (a) the
interest expense of such person and its
subsidiaries for such period, on a consolidated
basis in accordance with GAAP, including without
limitation, (i) amortization of debt discount,
(ii) the net costs associated with Interest Rate
Agreements and Currency Hedging Agreements, (iii)
the interest portion of any deferred payment
obligation, and (iv) accrued interest, plus (b)
the interest component
16
<PAGE>
of capital lease obligations paid, accrued and/or
scheduled to be paid or accrued by such Person and
its consolidated Subsidiaries, plus (c) the
aggregate amount for such period of cash dividends
paid on any Redeemable Capital Stock or Preferred
Stock of the Company and its consolidated
Subsidiaries, in each case on a consolidated basis
in accordance with GAAP.
CUMULATIVE CONSOLIDATED OPERATING CASH FLOW and
CUMULATIVE CONSOLIDATED INTEREST EXPENSE will
mean, on any date of determination, the cumulative
Consolidated Operating Cash Flow and Consolidated
Interest Expense, as the case may be, realized
during the period commencing on the issue date of
the Notes and ending on the last day of the most
recent fiscal quarter immediately preceding the
date of determination for which consolidated
financial information is available.
TELECOMMUNICATIONS ASSETS means, with respect to
any Person, assets (including, without limitation,
rights of way, trademarks and licenses and
licenses to use copyrighted material), that are
utilized by such Person, directly or indirectly,
in a Telecommunications Business.
Telecommunications Assets shall also include
stock, joint venture or partnership interest in
another Person, provided that substantially all of
the assets of such other Person consist of
Telecommunications Assets. The determination of
what constitutes Telecommunications Assets shall
be made by the Board of Directors of the Company.
TELECOMMUNICATIONS ASSET AGREEMENT means a lease
or installment sale agreement where title is
transferred to the buyer pursuant to which a
Leasing Company leases or sells, in a transaction
in which the monetary consideration therefor is
paid immediately or is payable over time,
Telecommunications Assets that consist of
equipment and rights acquired in connection with
the lease or sale thereof (including, without
limitation, software licenses) to a Restricted
Subsidiary or Qualified Joint Venture in the
Russian Federation and Kazakhstan, which lease or
installment sale agreement will be Collateral,
provided that if the lessor or seller does not
retain title to such Telecommunications Assets
until payment of the full amount of the lease
payments or purchase price due from
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<PAGE>
the lessee or purchaser, such Telecommunications
Assets are subject to all necessary pledges,
assignments, mortgages, trusts, liens or other
security interests which are valid and perfected
so as to create a first priority interest under
Russian or Kazakh law, as applicable.
TELECOMMUNICATIONS BUSINESS means the business of
(i) transmitting, or providing services relating
to the transmission of, voice, video or data
through owned or leased transmission facilities,
(ii) creating, developing or marketing
communications related network equipment, software
and other devices for use in (i) above or (iii)
evaluating, participating or pursuing any other
activity or opportunity that is related to those
specified in (i) or (ii) above and includes,
without limitation, any business which the PLD and
its direct and indirect Subsidiaries are currently
engaged.
LEASING COMPANY means a special purpose Cypriot
corporation which is a wholly-owned Subsidiary
organized for the limited purpose of acquiring
Telecommunications Assets and leasing such
Telecommunications Assets to direct or indirect
Subsidiaries of PLD pursuant to Telecommunications
Asset Leases and/or making investments in a
Telecommunications Company primarily engaged or
proposing to engage in the Telecommunications
Business in the Russian Federation or Kazakhstan.
QUALIFIED JOINT VENTURE means a Joint Venture in
which PLD owns directly or indirectly Voting Stock
thereof and any future Joint Venture in which PLD
owns 20% or more of the Voting Stock thereof.
JOINT VENTURE means a Telecommunications Company
of which less than 50 percent of the Voting Stock
is held by PLD, provided that the
Telecommunications Business of such Person is
principally conducted in the Russian Federation
and/or Kazakhstan.
TELECOMMUNICATIONS COMPANY means any Person
substantially all of the assets of which consist
of Telecommunications Assets.
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<PAGE>
VOTING STOCK means, with respect to any Person,
securities of any class or classes of Capital
Stock in such Person entitling the holders thereof
(whether at all times or at the times that such
class of Capital Stock has voting power by reason
of the happening of any contingency) to vote in
the election of members of the board of directors
or comparable body of such Person.
TRANSACTIONS WITH AFFILIATES The Company will not permit, and will not permit
any of its Restricted Subsidiaries to, engage in
an Affiliate Transaction unless (a) such Affiliate
Transaction is on terms that are not materially
less favorable, in the aggregate, to the Company
or such Restricted Subsidiary, as applicable, than
those that would have been obtained in a
comparable transaction by the Company or such
Restricted Subsidiary, as applicable, on an arms
length basis with a Person that is not an
Affiliate; and (b) the Company delivers to the
Trustee:
(i) for transactions >$5 million, a
resolution of the Board of Directors
certifying that the transaction complies
with (a) above and has been approved by a
majority of the disinterested members of the
Board of Directors; and
(ii) for transactions >$10 million, an
opinion as to the fairness of the
transaction issued by an investment banking
firm.
PROVIDED, however that this covenant does not
apply to:
(i) compensation or employee benefit
arrangements in the ordinary course of
business;
(ii) any transaction solely between or among
the Company and/or any Restricted
Subsidiary;
(iii) transactions with any Persons engaged
in a Related Business that is an Affiliate
solely because the Company has a direct or
indirect equity interest in such Person;
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<PAGE>
(iv) payment of reasonable and customary fees to
directors who are not employees of the Company;
(v) sales of equity interests of the Company
(other than Disqualified Capital Stock) to
Affiliates of the Company;
(vi) any transaction permitted under the covenant
"Limitation on Restricted Payments;"
(vii) advances to employees in the ordinary course
of business in an aggregate amount not to exceed
$2.0 million;
(viii) any transaction with an officer or director
in the ordinary course of business not involving
more than $100,000 in any one case and in an
aggregate amount not to exceed $2.0 million; and
(ix) Affiliate Transactions (and replacements
thereof) in effect or approved by the Board of
Directors at the time of the Issue Date.
CREATION OF ADDITIONAL The Company agrees that (i) from May 18, 1999
PLD ASSETS through the second anniversary of the Issue Date,
at least $15.0 million of additional PLD Assets
that would be classified as "property and
equipment" on PLD's consolidated balance sheet
will be acquired by one of the PLD Companies (such
assets referred to as the "Additional PLD Assets")
and (ii) to the extent it acquires Pivotel Assets
or properties prior to such date, without using
Purchase Money Obligations, it shall cause such
assets to become Additional PLD Assets.
PIVOTEL ASSETS means the Pivotel
telecommunications switches and nodes located in
New York and London, transatlantic cables,
European cables, upgraded switches in St.
Petersburg and Moscow and related
telecommunications equipment.
LIMITATION ON LIENS The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly,
create, incur, assume or suffer to exist or affirm
any Lien of any kind upon any
20
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property or assets of the Company or any
Restricted Subsidiary unless the Notes are
directly secured equally and ratably with the
obligation or liability secured by such Lien
except for any Permitted Liens.
PERMITTED LIENS will include:
(a) Any Lien existing on the date of the
Indenture;
(b) Any Lien arising in connection with court
judgements, taxes, workmen's compensation, zoning
restrictions, easements and rights of way that do
not materially impair operation of the business,
performance bids, contracts, leases, statutory
obligations, surety and appeal bonds, letters of
credit and other obligations incurred in the
ordinary course of business;
(c) any lien securing obligations in connection
with Indebtedness permitted under that Section of
the Indenture described in clauses (b), (d), (e),
(g) and (h) (to the extent the Indebtedness to
which the Permitted Refinancing Indebtedness
relates was secured) of the first paragraph of
"Limitations on Indebtedness" above; and
(d) any PLD Company Permitted Liens.
LIMITATIONS ON LIENS OF PLD In addition to the foregoing, none of the PLD
ASSETS Companies will directly or indirectly create,
incur, assume or suffer to incur or affirm any
Lien of any kind upon any PLD Asset, unless the
Notes are directly secured equally and ratably
with the obligation or liability secured by such
Lien except for any PLD Company Permitted Liens.
PLD COMPANY PERMITTED LIENS will include:
(a) any Lien existing on the date of the
Indenture;
(b) any Lien arising in connection with court
judgments, taxes, workmen's compensation, zoning
restrictions, easements and rights of way that do
not materially impair operation of the business,
performance bids, contracts, leases, statutory
allegations, surety and
21
<PAGE>
appeal bonds, letters of credit and other
obligations incurred in the ordinary course of
business; and
(c) any Lien securing obligations in connection
with Indebtedness permitted under that section of
the Indenture described in clauses (b), (c), (d),
(f) and (g) (to the extent the Indebtedness to
which the Permitted Refinancing Indebtedness
relates was secured) of "Limitations on PLD
Indebtedness" above.
LIMITATION ON ASSET The Company and its Restricted Subsidiaries will
SALES not engage in an Asset Sale unless: (a) the
Company receives consideration equal to the Fair
Market Value of the assets sold, and (b) at least
80% of the consideration received is cash paid at
closing of such transaction, marketable securities
or comparable consideration, provided that the
amount of any liabilities of the Company or any
Restricted Subsidiary as shown on the Company's or
such Restricted Subsidiary's most recent balance
sheet or in the notes thereto that are assumed by
the transferee of any such assets shall be deemed
to be cash for the purpose of this paragraph. To
the extent that the Company or any of its
Restricted Subsidiaries receives securities or
other noncash property or assets as proceeds of an
Asset Sale, such securities or other noncash
proceeds will not be treated as Net Proceeds of an
Asset Sale unless and until the Company receives
cash or Cash Equivalents from a sale, repayment,
exchange or other return of capital on, such
securities or other noncash property and then only
to the extent of the cash received.
In the event of an Asset Sale involving PLD Assets
(other than Telecommunications Assets subject to a
Telecommunications Asset Agreement), the Company
will, after applying the net proceeds therefrom to
repay and permanently reduce other Existing
Indebtedness that by its terms requires such
repayment from such Asset Sale, be required to use
50% of the net proceeds of such Asset Sale to make
an offer to purchase Notes at 100% of their
accreted value, provided, however, that the
Company will not be required to make an offer to
purchase the Notes under this provision in an
amount less than $10 million; provided, further,
that to the extent that 50% of the net proceeds of
an Asset Sale of PLD Assets
22
<PAGE>
do not exceed $10 million, such amount shall
constitute Excess Proceeds and once such Excess
Proceeds exceed $10 million, the Company will be
required to use such Excess Proceeds to make an
offer to purchase the Notes at 100% of their
accreted value.
The Company or a Restricted Subsidiary will be
permitted to apply the net proceeds from an Asset
Sale or the remaining proceeds from an Asset Sale
of PLD Assets following the offer to purchase
described above to (a) repay the Notes, any
Existing Indebtedness (or any Permitted
Refinancing Indebtedness thereof) or any PARI
PASSU Indebtedness if required by the terms
thereof or (b) reinvest in Assets of a Related
Business, provided that (i) in the case of PLD
Assets, the net proceeds remaining after the offer
to purchase described above, if any, must be
applied within 365 days of such Asset Sale and
(ii) in the case of an Asset Sale of any assets
other than PLD Assets, the net proceeds must be
applied within 2 years of such Asset Sale. To the
extent that the net proceeds from an Asset Sale
are not so applied within such periods, the
remaining net proceeds will constitute Excess
Proceeds. Once Excess Proceeds exceed $10 million,
the Company will be required to use such Excess
Proceeds to make an offer to purchase the Notes at
100% of their accreted value.
ASSET SALE will mean any sale, issuance,
conveyance, transfer, lease or other disposition,
directly or indirectly, in one or a series of
transactions, of (i) any Capital Stock of any
Subsidiary, (ii) all or substantially all of the
properties and assets of any division or line of
business of the Company or its Subsidiaries, or
(iii) any other properties and assets of the
Company or any Subsidiary other than in the
ordinary course of business, provided, however,
that the term "Asset Sale" shall not include any
sale or transfer of properties and assets (A) that
is by the Company to any Restricted Subsidiary or
by any Restricted Subsidiary to the Company or any
other Restricted Subsidiary, (B) that is of
obsolete equipment in the ordinary course of
business, (C) the Fair Market Value of which in
the aggregate does not exceed $10 million in any
transaction or series of related transactions, (D)
that is permitted under the "Limitations on
Restricted Payments" covenant above, (E) which
constitutes the
23
<PAGE>
granting of any Permitted Lien or (F) that is
transferred in exchange for Related Assets.
LIMITATION ON SALE AND The Company will not, and will not permit any
LEASEBACK TRANSACTIONS Restricted Subsidiary to, directly or indirectly,
enter into any Sale-Leaseback Transaction with
respect to any property or assets unless:
(a) The consideration received at the time of the
Sale-Leaseback Transaction is at least equal to
the Fair Market Value of the property or asset;
(b) the sale or transfer of such property or
assets to be leased is treated as an Asset Sale
and complies with the "Limitation on Sale of
Assets" covenant;
(c) the Company or such Restricted Subsidiary
would be entitled under the "Limitation on
Indebtedness" covenant to incur any Indebtedness.
The foregoing restriction does not apply to any
Sale-Leaseback Transaction if:
(i) the lease is for a period, including renewal
rights, not in excess of three years;
(ii) the transaction is solely between the Company
and any Restricted Subsidiary or any Restricted
Subsidiary and any other Restricted Subsidiary;
and
(iii) the transaction is consummated within 180
days of the acquisition by the Company or its
Subsidiary of the property or entered into within
180 days after the purchase or substantial
completion of the construction of such property or
assets or 270 days in the event that the only
condition delaying such consummation is the
receipt of applicable regulatory approvals.
DIVIDEND AND OTHER PAYMENT The Company will not, and will not permit any of
RESTRICTIONS AFFECTING its Restricted Subsidiaries to, create or cause or
SUBSIDIARIES suffer to exist or become effective any
encumbrance or restriction on the ability of any
Subsidiary to (a) pay dividends or make any other
distribution to the Company or any of its
Restricted Subsidiaries (i) on its capital stock
or (ii) with
24
<PAGE>
respect to any other interests or participation
in, or measured by, its profits, (b) pay any
Indebtedness owed to the Company or any of its
Restricted Subsidiaries (c) sell, lease or
transfer any of its properties or assets to the
Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions
under:
(i) Existing Indebtedness;
(ii) Applicable law;
(iii) agreements in effect at the time of the
acquisition of any Person by the Company or any of
its Restricted Subsidiaries, which agreements are
not entered into in connection with, as a result
of, or in anticipation of, such acquisition;
(iv) encumbrances or restrictions imposed pursuant
to contracts in connection with Permitted Liens;
(v) any encumbrances or restrictions imposed
pursuant to contracts for the sale of assets;
(vi) any encumbrance or restriction existing under
any agreement that extends, renews, refinances or
replaces the agreements containing the
encumbrances or restrictions in the foregoing
clauses, provided that such provisions are no less
favorable to the Company.
LIMITATIONS ON MERGER, The Company may not consolidate or merge with or
CONSOLIDATION OR SALE OF into or sell, assign, transfer, lease, convey or
ASSETS otherwise dispose of all or substantially all of
its assets unless:
(a) the Company is the surviving corporation, or
the entity surviving such consolidation or merger
is a corporation existing under the laws of the
United States or a state thereof;
(b) the surviving entity expressly assumes all the
obligations of the Company pursuant to a
supplemental indenture;
25
<PAGE>
(c) except for a transaction with a Wholly Owned
Subsidiary, the entity formed by such transaction
could incur at least $1.00 of additional
Indebtedness under the covenant "Limitation on
Indebtedness" described above;
(d) the Company shall have delivered to the
Trustee, an Officers' Certificate and an opinion
of counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture
comply with the Indenture; and
(e) before and after giving effect to such
transaction, no Default or Event of Default shall
have occurred and be continuing.
Metromedia International Group, Inc. PLD Telekom Inc.
One Meadowlands Plaza 505 Park Avenue
East Rutherford, NJ 07073-2137 New York, NY 10022
May 18, 1999
The Travelers Insurance Company
One Tower Square
Hartford, CT 06183-2030
The Travelers Indemnity Company
One Tower Square
Hartford, CT 06183-2030
Reference is made to (i) the Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), by and among PLD Telekom, Inc., a
Delaware corporation (the "Company"), Metromedia International Group, Inc., a
Delaware corporation (the "Parent") and Moscow Communications, Inc., a Delaware
corporation and wholly owned subsidiary of the Parent ("Merger Sub"), pursuant
to which, at the Effective Time (as defined in the Merger Agreement), Merger Sub
will merge with and into the Company (the "Merger"), and following such Merger,
the Company will become a wholly-owned subsidiary of the Parent and (ii) the
Revolving Credit Note and Warrant Agreement, dated as of November 26, 1997, as
amended (the "Travelers Credit Agreement") between The Travelers Insurance
Company, The Travelers Indemnity Company (collectively, "Travelers") and the
Company, pursuant to which Travelers made a revolving line of credit available
to the Company. Capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement.
In connection with and as a condition precedent to the obligations of
the Parent and the Merger Sub to effect the Merger and consummate the other
transactions contemplated by the Merger Agreement, the Parent and Travelers are
entering into this letter agreement (the "Travelers Note Modification
Agreement") which provides as follows:
1. Notwithstanding anything to the contrary set forth in the Travelers
Credit Agreement, Travelers shall defer payment by the Company of the
<PAGE>
2
mandatory repayments of the outstanding Revolving Credit Loans (and waive any
related Events of Default as provided in Section 3 below) until the earlier to
occur of (x) the Closing Date and (y) the date the Merger Agreement is
terminated or expires (such date referred to as the "Termination Date"). On the
Closing Date, the Company and Travelers will amend and restate the Travelers
Credit Agreement (the "Restated Credit Agreement") to provide that all amounts
payable under the Travelers Credit Agreement shall be payable in the manner set
forth in Section 4 below.
2. Travelers agrees that it shall not exercise any warrants that it
owns or may acquire to purchase shares of the Company's common stock, par value
$.01 per share (the "Company Common Stock") between the date hereof and the
Closing Date.
3. Travelers hereby waives the occurrence of any default or any Event
of Default (as defined in the Travelers Credit Agreement) under Section 11 of
the Travelers Credit Agreement, provided that, notwithstanding such waiver,
through the Closing Date subject to the provisions of Section 2 above, Travelers
shall continue to be entitled to all rights it may have under Section 9.27 of
the Travelers Credit Agreement and/or Section 2A of the Warrant Agreement (the
"Warrant Agreement"), dated as of November 26, 1997, between the Company and the
Bank of New York, resulting from the failure of the Company to make the payment
in full of the principal and any accrued but unpaid interest on the Series A
Notes as and when due on December 31, 1998, or as extended thereafter, or the
payment in full of the principal and any accrued but unpaid interest on the
Series B Notes as and when due on September 30, 1998, or as extended thereafter,
(including, in each case, all payments of principal previously deferred);
provided, further that notwithstanding the foregoing agreement not to exercise
any remedies as a result of any default or Event of Default prior to the
Termination Date, any amounts otherwise coming due under the Travelers Credit
Agreement or any promissory note, guarantee or other instrument issued
thereunder prior to the Termination Date, whether at maturity in accordance to
the terms thereof or otherwise, shall be immediately due and payable, without
any action required on the part of Travelers or the Company, and shall in all
respects be deemed to be a currently payable obligation which shall be paid by
the Company and may be asserted by Travelers as a claim in any proceeding to the
fullest extent permitted by law, if the Company shall be adjudged bankrupt or
insolvent, or shall commence any voluntary case (or become the subject of any
involuntary case that remains undismissed for a period of 30 days) under the
United States Bankruptcy Code. Travelers agrees that the Restated Credit
Agreement will provide that in consideration for the payments and issuance of
the warrants specified in Section 4 below, Travelers will on the Closing Date
forever waive any rights and relinquishes any claim it might now have or have
had in the past with regard to (i) the reset of the exercises prices of the
Initial Warrants or the Additional Warrants to $.01, (ii) the issuance of
Default Warrants (each as defined in the Warrant Agreement) with an exercise
price of $.01 or (iii) the issuance of any additional Default Warrants.
<PAGE>
3
4. (a) The Restated Credit Agreement will provide that on the Closing
Date, in consideration for the undertakings of the Company in Section 4(b)
hereunder, any and all warrants to purchase the Company's common stock, par
value $.01 per share, held by Travelers (including the Initial Warrants, the
Additional Warrants and any Default Warrants) shall be canceled and shall
thereafter, no longer be exercisable.
(b) The Restated Credit Agreement will further provide that in
consideration for the cancellation of the warrants held by Travelers
contemplated by Section 4(a) above, the Company shall:
(i) pay to Travelers on the Closing Date the sum of $8,500,000
by wire transfer to an account designated in advance by Travelers,
which amount will be applied first, to the repayment of the entire
outstanding Series B Revolving Credit Loans (as defined in the
Travelers Credit Agreement), and second, after all Series B Revolving
Credit Loans have been paid in full, to the repayment of outstanding
Series A Revolving Credit Loans;
(ii) issue to Travelers on the Closing Date 100,000 shares of
Company Common Stock which will be immediately converted pursuant to
Section 2.1 of the Merger Agreement into shares of the Parent's common
stock, par value $1.00 per share (the "Parent Common Stock"); provided,
however, that Travelers will agree not to sell, assign, pledge or
otherwise transfer such shares of Parent Common Stock prior to June 30,
2000;
(iii) issue to Travelers on the Closing Date warrants to
purchase 700,000 shares of Parent Common Stock (the "Warrants"). The
Warrants will be exercisable during the period beginning on the date of
the third anniversary of the Closing Date and ending on the date of the
tenth anniversary of the Closing Date at an exercise price (the
"Exercise Price") calculated as follows:
(A) the Exercise Price for the Warrants will be equal
to 125% of the average of the daily closing price of the
Parent Common Stock as reported on the American Stock Exchange
Composite Transactions Tape (as reported by The Wall Street
Journal (national edition)) (or if the Parent Common Stock is
no longer listed on the American Stock Exchange, such exchange
upon which the Parent Common Stock is principally traded) for
each trading day in December 2000; and
(B) notwithstanding Section 4(b)(iii)(A), if the
Exercise Price calculated pursuant to such section is at least
$15.00 then the Exercise Price will be $15.00 or if the
Exercise
<PAGE>
4
Price is less than $10.00 then the Exercise Price will be
$10.00; and
(C) notwithstanding anything in this Section
4(b)(iii)(A) or (B) if the new Series A Notes are not repaid
in full on or prior to the Maturity Date (as defined below),
then the Exercise Price will be $.01;
(iv) amend and restate the existing Series A Notes which
evidence the Series A Revolving Credit Loans which remain outstanding
after giving effect to the repayment contemplated by the foregoing
clause (ii) such that (x) the interest rate on the Series A Revolving
Credit Loans evidenced thereby shall be changed to 10.5% and (y) the
Series A maturity date shall be changed to the date (the "Maturity
Date") which is the earlier of (I) August 30, 2000 or (II) one year
from the Closing Date, and issue to Travelers new Series A Notes
reflecting such amendment and restatement in substitution for such
existing Series A Notes;
(v) pay interest on the new Series A Notes at the rate of
10.5% per annum, payable monthly in arrears; and
(vi) secure the Note with the following collateral:
(1) the existing guarantee from Wireless
Technology Corporations Limited;
(2) the existing guarantee from Baltic
Communications Limited;
(3) a guarantee from PLD Holdings Limited in
form and substance satisfactory to the parties;
(4) a guarantee from Metromedia
International Group Inc. in form and substance
satisfactory to the parties;
(5) the existing pledge of 28 ordinary
shares of Technocom Limited; and
(6) the existing lien on the receivables of
the Company.
5. The new Series A Notes will not be secured by any guarantee from
News America Incorporated ("News") and at the Closing Date the existing
guarantee of News of certain amounts payable under the Travelers Credit
Agreement will be terminated and canceled by Travelers and returned to News
marked "canceled."
6. Travelers hereby consents pursuant to the Travelers Credit Agreement
(a) to the execution and delivery of the Merger Agreement and
<PAGE>
5
consummation of the Merger and (b) to the execution by the Company of (i) the
Bridge Loan Agreement and Pledge Agreement, each dated as of the date hereof
between Parent and Company, and (ii) the pledge of the collateral by the Company
to the Parent contemplated by the Pledge Agreement to secure the Company's
obligations under the Bridge Loan Agreement.
7. Except for those amendments expressly contemplated by this Travelers
Note Modification Agreement and to permit the issuance of the new Parent Senior
Notes to the holders of the Company's existing senior notes and convertible
notes as contemplated by the Agreement to Exchange and Consent dated as of the
date hereof, the Restated Credit Agreement shall continue, ratify and confirm,
the terms, covenants and conditions contained in the Travelers Credit Agreement
as in effect on the date hereof and the Travelers Credit Agreement, as so
amended and restated by the Restated Credit Agreement, shall remain in full
force and effect.
8. This Travelers Note Modification Agreement shall terminate on the
Termination Date, in which event the parties hereto will have no further
liability to each other.
9. This letter agreement shall be governed in all respects by the laws
of the State of New York without reference to the choice of laws principles
thereof.
10. This letter agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
11. No amendment, modification, termination or waiver or any provision
of this letter agreement shall be effective unless it shall be in writing and
signed by each of the parties to this agreement.
<PAGE>
6
If the foregoing sets forth your understanding with regard to the
matter specified herein, please so indicate by signing a copy of this letter and
returning an original to us at the address set forth above.
Sincerely,
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
PLD TELEKOM INC.
By: /s/ James R.S. Hatt
-------------------
Name: James R.S. Hatt
Title: Chairman, President and Chief
Executive Officer
ACCEPTED AND AGREED
as of the date first written above:
THE TRAVELERS INSURANCE COMPANY
By: /s/ Craig Farnsworth
--------------------
Name: Craig Farnsworth
Title: 2nd Vice President
THE TRAVELERS INDEMNITY COMPANY
By: /s/ Craig Farnsworth
--------------------
Name: Craig Farnsworth
Title: 2nd Vice President
Metromedia International Group
One Meadowlands Plaza
East Rutherford, N.J. 07073
May 18, 1999
News America Incorporated
1211 Avenue of the Americas
New York, New York 10036
Reference is made to (i) the Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), by and among PLD Telekom, Inc., a
Delaware corporation (the "Company"), Metromedia International Group, Inc., a
Delaware corporation (the "Buyer") and Moscow Communications, Inc., a Delaware
corporation and wholly owned subsidiary of the Buyer ("Merger Sub"), pursuant to
which, at the Effective Time (as defined in the Merger Agreement), Merger Sub
will merge with and into the Company (the "Merger"), and following such Merger,
the Company will become a wholly-owned subsidiary of the Buyer and (ii) the
Revolving Credit Agreement, dated as of September 30, 1998, as amended (the
"News Credit Agreement"), between the Company and News America Incorporated
("News") pursuant to which News made short-term financing available to the
Company. Capitalized terms used but not defined herein shall have the meanings
set forth in the Merger Agreement.
On the date hereof, there are (a) $6.45 million aggregate principal
amount of loans outstanding under the News Credit Agreement (the "Loans") and
(b) guarantees of $3.1 million aggregate principal amount of other indebtedness
of the Company outstanding under the News Credit Agreement (the "Guarantees").
In connection with and as a condition precedent to the obligations of
the Buyer and the Merger Sub to effect the Merger and consummate the other
transactions contemplated by the Merger Agreement, the Buyer and News are
entering into this letter agreement (the "News Letter Agreement") which provides
as follows:
1. News agrees that it will not exercise any of its rights under the
News Credit Agreement or any note or guarantee issued thereunder from the date
<PAGE>
2
hereof until the earlier to occur of (x) the Closing Date (as defined in the
Merger Agreement) or (y) the date the Merger Agreement is terminated or expires
in accordance with its terms (the period ending on the earlier of such dates
being referred to as the "Pre-Closing Period").
2. News agrees that during the Pre-Closing Period it will not exercise
its rights under Section 8 of the News Credit Agreement or any note issued under
the News Credit Agreement to convert any amounts owed News under the News Credit
Agreement into shares of Company Common Stock.
3. News hereby agrees that during the Pre-Closing Period it will not
exercise its rights upon the occurrence of any default (including, without
limitation, the failure to make any payment of principal, interest or any other
Obligation (as defined in the News Credit Agreement) during the Pre-Closing
Period) under the News Credit Agreement or any Event of Default (as defined in
the News Credit Agreement) occurring as a result of the execution by the Company
of the Merger Agreement or the transactions contemplated thereby; provided,
however, that notwithstanding the foregoing agreement not to exercise remedies
during the Pre- Closing Period, any amounts otherwise coming due under the News
Credit Agreement or any promissory note, guarantee or other instrument issued
thereunder during the Pre-Closing Period, whether at maturity in accordance with
the terms thereof or otherwise, shall be immediately due and payable, without
any action required on the part of News or the Company, and shall in all
respects be deemed to be a currently payable obligation which shall be paid by
the Company and may be asserted by News as a claim in any proceeding to the
fullest extent permitted by law, (a) upon the termination or expiration of the
Merger Agreement and (b) if the Company shall be adjudged bankrupt or insolvent,
or shall commence any voluntary case (or become the subject of any involuntary
case that remains undismissed for a period of 30 days) under the United States
Bankruptcy Code.
4. Substantially simultaneously with the completion of the Merger, in
consideration for the cancellation of the Loans and all other Obligations
outstanding under the News Credit Agreement, the Buyer shall, or shall cause the
Company to, (i) pay to News, by wire transfer of immediately available funds to
an account designated in advance by News, the principal amount of the Loans
outstanding on such date together with interest accrued on the Loans at a rate
of 10% per annum (in lieu of the rate of 20% per annum that is specified in
Section 2.6 of the News Credit Agreement) from the date each such Loan was
advanced by News to the Company under the News Credit Agreement to and including
the date of such payment and (ii) cause the Guarantees and all obligations of
News thereunder to be canceled with no liability to News. Upon receipt of such
payments, News shall return to the Company all promissory notes issued by the
Company in favor of News marked "paid in full."
5. News acknowledges and consents to the Company entering into and
performing under each of the Bridge Loan Agreement and Pledge Agreement
<PAGE>
3
dated as of the date hereof substantially in the form of Exhibit A hereto
pursuant to which Buyer has agreed to make loans available to the Company during
the Pre- Closing Period and pledged certain collateral to the Buyer to secure
such loans and further agrees that the proceeds of such Loans may be used for
any purposes permitted by such Bridge Loan Agreement. Further, in consideration
of the agreements made by News herein, Buyer agrees that in the event that any
demand is made on News under any of the Guarantees during the Pre-Closing
Period, Buyer will indemnify News for any payments made thereunder within two
business days of receiving notice that such payments were made by News.
6. This agreement shall remain in effect so long as the Merger
Agreement is effective and shall terminate in the event that the Merger
Agreement is terminated or expires, in which case the parties will have no
further liability or obligations to each other. The obligations of the Buyer
under Section 4 of this letter agreement are expressly conditioned upon the
completion of the transactions contemplated by the Merger Agreement, including
the Merger.
7. This letter agreement shall be governed in all respects by the laws
of the State of New York without reference to the choice of laws principles
thereof.
8. This letter agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one and the same instrument.
9. No amendment, modification, termination or waiver or any provision
of this letter agreement shall be effective unless it shall be in writing and
signed by each of the parties to this agreement.
<PAGE>
4
If the foregoing sets forth your understanding with regard to the
matter specified herein, please so indicate by signing a copy of this letter and
returning an original to us at the address set forth above.
Sincerely,
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
ACCEPTED AND AGREED
as of the date first written above:
NEWS AMERICA INCORPORATED
By: /s/ Lawrence A. Jacobs
----------------------
Name: Lawrence A. Jacobs
Title: Senior Vice President and Deputy General Counsel
Modification Agreement ("Plicom Option Modification Agreement") dated
as of May 18, 1999 by and among PLD Telekom, Inc., a Delaware corporation (the
"Company"), Metromedia International Group, Inc., a Delaware corporation (the
"Parent"), Technocom Limited, a company incorporated under the Irish Companies
Acts 1963 to 1990 with registered number 183622 ("Technocom"), Plicom Limited, a
company incorporated under the Irish Companies Acts 1963 to 1990 with registered
number 214427 ("Plicom"), Elite International Limited, a company incorporated
under the Irish Companies Act of 1963 to 1990 with registered number 178152
("Elite"), Mark Klabin and Boris Antoniuk.
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as the
date hereof (the "Merger Agreement"), by and among the Company, the Parent and
Moscow Communications, Inc., a Delaware corporation and wholly owned subsidiary
of the Parent ("Merger Sub"), Merger Sub will merge with and into the Company
(the "Merger"), and following such Merger, the Company will become a
wholly-owned subsidiary of the Parent;
WHEREAS, the parties hereto desire to modify and then terminate (i) the
Put and Call Option Agreement, dated December 28, 1994, as amended, between the
Company and Plicom (the "Put Agreement"), (ii) the Share Purchase Agreement,
dated as of November 26, 1997, between Plicom, Technocom, the Company and Mark
Klabin, (iii) the Consultancy Agreement, dated December 28, 1994, as amended,
between Technocom, Plicom and Mark Klabin, (iv) the Promissory Note, dated
November 26, 1997, executed by the Company in favor of Plicom (the "Note"), (v)
the Promissory Note, dated the date hereof, executed by the Company in favor of
Plicom (the "New Note"), (vi) the Subscription and Shareholders Agreement, dated
December 28, 1994, as amended, between the Company, Plicom, Elite, Technocom,
Mark Klabin and Boris Antoniuk (the "Shareholders Agreement"), and (vii) the
Consultancy Agreement, dated December 28, 1994, between the Company, Plicom and
Mark Klabin (collectively, the "Agreements");
WHEREAS, in connection with and as a condition precedent to the
obligations of the Parent and the Merger Sub to effect the Merger and consummate
the other transactions contemplated by the Merger Agreement, the parties are
entering into this Plicom Option Modification Agreement in order to modify and
then terminate the Agreements; and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement.
NOW THEREFORE, the parties hereto hereby agree as follows:
<PAGE>
2
1. Purchase and Sale. Notwithstanding anything to the contrary
contained in any of the Agreements, on the Closing Date (as defined in the
Merger Agreement), in reliance on the representations and warranties and subject
to the terms and conditions set forth herein:
(a) the Company shall, and the Parent shall procure that the
Company shall, pay to Plicom the sum of US $8,750,000 by wire transfer to an
account designated in advance by Plicom and Plicom shall, with the prior consent
of the Company pursuant to clause 7.2(a) of the Shareholders Agreement, which
consent is hereby given, sell, transfer and assign to the Company its remaining
29 Ordinary Shares of Technocom (the "Shares") free and clear of all security
interests, pledges, rights of first refusal, agreements, claims, charges, liens,
encumbrances, options or rights of pre-emption ("Liens");
(b) The Company and Technocom shall, and the Parent shall
procure that the Company shall, pay or procure payment of the following sums due
as at June 30, 1999 to Plicom for itself and/or as trustee for Mark Klabin to
the extent not already paid:
(i) US $50,000.00 (representing US $25,000.00 x
2 for the first two quarters of 1999),
together with an additional US $25,000 for
each quarter (or part thereof) commencing on
July 1, 1999 until and including the Closing
Date in respect of the PLD consultancy
agreement;
(ii) US $49,999.98 (representing US $16,666.66 x
3 for April, May and June 1999), together
with an additional US $16,666.66 for each
month (or part thereof) commencing with July
1999 and ending with the month in which the
Closing takes place in respect of the
Technocom consultancy agreement;
(iii) US $35,196.12 (representing US $10,500.00 x
3 for the last quarter of 1998 and the first
two quarters of 1999 plus US $3,696.12 as
expenses), together with an additional US
$10,500 for each quarter (or part thereof)
commencing on July 1, 1999 until and
including the Closing Date in respect of
office expenses;
(iv) US $360,000.00 in respect of the repayment
of a loan to cover a settlement between
Vimpelkom and MTR, subject to receipt by the
Parent of a copy of a satisfactory complete
release from Vimpelkom; and
(v) any sums paid by Plicom under the guarantees
or undertakings referred to in Section 1(c)
below.
<PAGE>
3
(c) At the Closing, the Parent and the Company shall procure
that Plicom is released from any guarantees or undertakings that Plicom has
issued or entered into at the request, or with the written consent, of the
Parent, the Company or any of the Company's subsidiaries or affiliates in
respect of equipment ordered by any such subsidiaries or affiliates from Rosh
Telecom Limited or ECI Telecom Limited, and the Parent or the Company shall
issue or arrange to be issued such guarantees or other credit support as may be
required to replace any such Plicom guarantees or undertakings. Furthermore, the
Parent or the Company shall reimburse Plicom for any amounts paid under any such
guarantees or undertakings prior to the Closing.
(d) Plicom shall deliver to the Company a transfer in respect
of the Shares duly executed by it in favor of the Company and a certificate for
the Shares and any other documents which may be required to give good title to
the Shares and to enable the Company to procure registration of the same in its
name or as it may direct; and
(e) All of the Agreements shall terminate, be void and of no
further force and effect.
2. Registration. The Company shall, following the Closing Date,
promptly deliver to the Revenue Commissioners of Ireland the share transfer
referred to in Section 1(d) above for assessment of stamp duty and shall
promptly pay the duty thus assessed. Prior to the registration of such duly
stamped stock transfer form in the register of shareholders of Technocom, Plicom
shall, in respect of the Shares, cooperate in any manner required by the Company
for the convening, holding at short notice and conduct of general meetings of
Technocom, execute on a timely basis all proxy forms, appointments of
representatives, documents of consent to short notice and such others that the
Company may reasonably require and shall generally act in all respects as the
nominee and at the direction of the Company in respect of the Shares and all
rights and interests attached thereto.
3. Representations and Warranties. In order to induce the Company to
purchase the Shares, Plicom hereby represents and warrants to the Company as
follows:
(a) Organization. Plicom is a corporation duly organized,
validly existing and in good standing under the laws of Ireland.
(b) Due Authorization and Execution. Plicom has all necessary
corporate power and authority to enter into this agreement and to consummate the
transactions contemplated herein. No additional corporate proceeding or action
on the part of Plicom is necessary to authorize and approve the execution and
delivery of this agreement or the performance by Plicom of its obligations under
this agreement other than actions already taken. This agreement has been duly
executed and delivered by Plicom and, assuming due execution and delivery by the
Company, constitutes the legal, valid and binding obligation of Plicom
enforceable against Plicom in accordance with its terms.
<PAGE>
4
(c) Conflicts. Neither the execution and delivery of, nor the
consummation of the transactions contemplated in, this agreement will result in
any of the following: (a) a violation of the charter, bylaws or other governing
instruments of Plicom; (b) a default or an event that, with notice or lapse of
time, or both, would constitute a default, breach or violation of any contract,
agreement, license or instrument to which Plicom is a party or by which it is
bound; (c) an event that would permit any person or entity to terminate any
contract, agreement, license or instrument to which Plicom is a party relating
to the Shares or to accelerate the maturity of any obligation of Plicom; (d) the
creation or imposition of any Lien (as defined below) upon the Shares of Plicom;
(e) a violation or breach of any statute, ordinance, rule or regulation
applicable to Plicom or the Company or any writ, injunction or decree of any
court or governmental instrumentality to which Plicom or the Company is a party
or by which any of its properties is bound; or (f) the necessity to obtain the
consent or approval of, or give notice to or register with any government or
nongovernment third party.
(d) Ownership. Except for the Shares, Plicom does not own or
have any right to acquire any Ordinary Shares of Technocom or any other shares
of capital stock or equity of Technocom.
(e) No Liens. Each of the Shares to be delivered by Plicom to
the Company pursuant to this agreement is duly authorized, validly issued, fully
paid and not subject to preemptive rights and each such share is owned by Plicom
free and clear of all Liens except for those rights held by the Company under
any of the Agreements.
(f) Good Title. The transfer of the Shares from Plicom to the
Company pursuant to Section 1(a) of this Agreement will convey good and valid
title to the Company in and to the Shares, free and clear of all Liens, except
for those rights held by the Company under any of the Agreements.
4. Revenue Matters. Plicom hereby declares for purposes of the
Financial Transfers Act of 1992 of the Republic of Ireland that it is not
resident in any jurisdiction to which financial transfers within the meaning of
such Act are restricted by order of the Minister of Finance in accordance with
the provisions of that Act and does not hold the Shares and will not receive any
part of the consideration hereunder as nominee for any persons that so reside,
and the Company declares for the purpose of such Act that it is not so resident,
it is not acquiring the Shares as nominee for any persons so resident and it is
not to its knowledge controlled directly or indirectly with a person so
resident.
5. Covenants.
(a) Plicom hereby covenants with and undertakes to the Company
that it shall not at any time prior to the Closing Date dispose or attempt to
dispose, transfer or assign any interest in the Shares or grant any option over
or mortgage, charge or otherwise encumber or dispose of the Shares; provided,
that, Plicom may transfer the Shares to any entity owned and controlled by
either Plicom or Mark Klabin (which does not need to be an Irish Company) as
long as prior to such transfer such entity agrees to be bound by the terms and
provisions of this
<PAGE>
5
agreement and enters into an assumption agreement with Parent in a form
reasonably satisfactory to Parent evidencing such agreement to be so bound. The
parties agree that if Plicom transfers the Shares as aforesaid, such transferee
shall be deemed to have assumed all rights and obligations under the Agreements.
From the date hereof until the earlier of (x) the Closing Date or (y) the
termination of this agreement pursuant to Section 6, Plicom agrees that it will
not take any action under either the Put Agreement, the Note or the New Note to
require either the Parent or the Company to purchase the Shares or make any
other payments on the Note or the New Note.
(b) Plicom hereby covenants with and undertakes to the Company
that it will as soon as reasonably practicable notify to the Company in writing
any matter or thing which may arise or become known to it after the date hereof
and prior to the Closing Date which constitutes (or would with the passage of
time constitute) a breach of the representations and warranties or breach of any
of the covenants or undertakings or obligations of Plicom under this agreement.
(c) Plicom hereby undertakes with the Company at the request
and at the expense of the Company to do or to procure to be done all such
further acts of things and execute or procure to be executed all such further
deeds and documents as may be necessary or desirable on or after the Closing
Date to (i) fully and effectively vest in the Company the legal and beneficial
ownership of the Shares and the benefits of this Agreement and pending such
vesting, Plicom shall, from the Closing Date, hold such Shares and benefits in
trust for the Company and shall receive all monies in connection therewith as
trustee of the Company and shall account to the Company forthwith upon receipt
thereof and (ii) acknowledge that the Agreements have been terminated.
6. Termination.
(a) This agreement shall be effective so long as the Merger
Agreement is effective and shall terminate in the event that the Merger
Agreement is terminated or expires. The obligations of the parties hereto under
Sections 1 and 2 of this agreement are expressly conditioned upon the completion
of the transactions contemplated by the Merger Agreement. This Agreement shall
in any event terminate at the option of Plicom if the transactions contemplated
under Sections 1 and 2 have not taken place by October 31, 1999.
(b) If any material breach of the representations, warranties
or covenants contained herein shall come to the attention of either the Company
or Plicom before the Closing Date or if any act or event shall occur which, had
it occurred on or before the date hereof, would have constituted a material
breach of the representations, warranties or covenants set forth herein, then
the Company shall at its own election terminate this agreement and its
obligations to purchase the Shares without any liability to Elite.
7. Consent. Each of Plicom, Elite, Technocom, Mark Klabin and Boris
Antoniuk hereby consent, pursuant to the Shareholders Agreement, to (i) the
pledge, pursuant to the Pledge Agreement dated as of the date hereof (the
"Pledge Agreement"), made by the Company in favor of the Parent, by the Company
of 115
<PAGE>
6
Ordinary Shares of Technocom to the Parent to secure certain loans being made by
the Parent to the Company pursuant to a Bridge Loan Agreement dated the date
hereof, (ii) the transfer of such 115 Ordinary Shares to the Parent in the event
the Parent forecloses on such shares in accordance with the terms of the Pledge
Agreement and (iii) hold a meeting of shareholders of Technocom and vote to
amend Technocom's Articles of Association as promptly as practicable to permit
the pledge of shares of Technocom and the transfer of such shares as
contemplated by the Pledge Agreement. The Parent acknowledges and agrees that
prior to the occurrence of an Event of Default (as defined in the Bridge Loan
Agreement, dated as of the date hereof between the Company and Parent) it shall
have no rights to control the management and operations of Technocom by virtue
of the Pledge Agreement. Parent further agrees that, in the event it forecloses
on the shares of Technocom and takes possession of such shares (i) neither
Parent nor any of Parent's subsidiaries or affiliates will enter into any
transaction with Technocom (including, without limitation, the issuance or
subscription for additional shares of Technocom) that is not consummated on an
arm's length basis, (ii) Parent will not cause Technocom to cease or propose to
cease to carry on its business or be wound up unless Technocom is insolvent, and
(iii) to use its best commercial efforts to ensure that any assignee or
transferee of the Technocom shares foreclosed upon by Parent is bound by the
restrictions set forth in clauses (i) and (ii) of this sentence.
8. Survival; Indemnification.
(a) The representations, warranties and covenants set forth in
this Plicom Option Modification Agreement shall survive the consummation of the
purchase of the Shares hereunder. Plicom hereby indemnifies and holds harmless
the Parent and the Company and their respective affiliates from any claims,
losses, damages, costs, expenses (including attorney's fees and expenses)
arising in connection with the transfer by Plicom of the Shares pursuant to this
agreement that they suffer or incur as a result of any breach or default of any
representation, warranty or covenant set forth herein.
(b) The total aggregate liability of Plicom and Mark Klabin to
all other parties hereto arising out of or in connection with this agreement
shall be limited to the amount of consideration received by Plicom from the
Company pursuant to Section 1(a).
9. Expenses. Each of the parties hereto shall pay its own fees,
expenses and other costs incurred in connection with the negotiation, execution
and delivery of this Agreement.
10. Governing Law. This agreement shall be governed in all respects by
the laws of the State of New York without reference to the choice of laws
principles thereof.
11. Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
<PAGE>
7
12. No Amendment. No amendment, modification, termination or waiver or
any provision of this agreement shall be effective unless it shall be in writing
and signed by each of the parties to this agreement.
<PAGE>
8
IN WITNESS WHEREOF, this Plicom Option Modification Agreement has been
duly executed and delivered by the parties hereto as of the date first written
above.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
PLD TELEKOM INC.
By: /s/ James R.S. Hatt
-------------------
Name: James R.S. Hatt
Title: Chairman, President and Chief
Executive Officer
PLICOM LIMITED
By: /s/ Mark Klabin
---------------
Name: Mark Klabin
Title: Director
TECHNOCOM LIMITED
By: /s/ James R.S. Hatt
-------------------
Name: James R.S. Hatt
Title: Director
/s/ Mark Klabin
---------------
MARK KLABIN
ELITE INTERNATIONAL LIMITED
By: /s/ Boris Antoniuk
------------------
Name: Boris Antoniuk
Title: Director
/s/ Boris Antoniuk
------------------
BORIS ANTONIUK
Modification Agreement ("Elite Option Modification Agreement") dated as
of May 18, 1999 by and among PLD Telekom, Inc., a Delaware corporation (the
"Company"), Metromedia International Group, Inc., a Delaware corporation
("Parent"), Technocom Limited, a company incorporated under the Irish Companies
Acts 1963 to 1990 with registered number 183622 ("Technocom"), Elite
International Limited, a company incorporated under the Irish Companies Acts
1963 to 1990 with registered number 178152 ("Elite") and Boris Antoniuk.
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as the
date hereof (the "Merger Agreement"), by and among the Company, Parent and
Moscow Communications, Inc., a Delaware corporation and wholly owned subsidiary
of the Parent ("Merger Sub"), Merger Sub will merge with and into the Company
(the "Merger"), and following such Merger, the Company will become a
wholly-owned subsidiary of the Parent;
WHEREAS, the parties hereto desire to modify and then terminate (i) the
Put and Call Option Agreement, dated December 28, 1994, as amended, between the
Company and Elite (the "Put Agreement"), and (ii) the Share Purchase Agreement,
dated as of November 26, 1997, between Elite, Technocom and the Company
(collectively, the "Agreements");
WHEREAS, in connection with and as a condition precedent to the
obligations of the Parent and the Merger Sub to effect the Merger and consummate
the other transactions contemplated by the Merger Agreement, the parties are
entering into this Elite Option Modification Agreement in order to modify and
then terminate the Agreements; and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Purchase and Sale. Notwithstanding anything to the contrary
contained in any of the Agreements, on the Closing Date (as defined in the
Merger Agreement), in reliance on the representations and warranties and subject
to the terms and conditions set forth herein:
(a) the Company shall, and the Parent shall procure that the
Company shall, pay to Elite the sum of US $3,844,500 by wire transfer to an
account designated in advance by Elite and Elite shall sell, transfer and assign
to the Company its remaining 10 Ordinary Shares of Technocom (the "Shares") free
and clear of all security interests, pledges, rights of first refusal,
agreements, claims, charges, liens, encumbrances, options or rights of
pre-emption ("Liens");
(b) Elite shall deliver to the Company a transfer in respect
of the Shares duly executed by it in favor of the Company and a certificate for
the
<PAGE>
2
Shares and any other documents which may be required to give good title to the
Shares and to enable the Company to procure registration of the same in its name
or as it may direct; and
(c) All of the Agreements shall terminate, be void and of no
further force and effect.
2. Registration. The Company shall, following the Closing Date,
promptly deliver to the Revenue Commissioners of Ireland the share transfer
referred to in Section 1(b) above for assessment of stamp duty and shall
promptly pay the duty thus assessed. Prior to the registration of such duly
stamped stock transfer form in the register of shareholders of Technocom, Elite
shall, in respect of the Shares, cooperate in any manner required by the Company
for the convening, holding at short notice and conduct of general meetings of
Technocom, execute on a timely basis all proxy forms, appointments of
representatives, documents of consent to short notice and such others that the
Company may reasonably require and shall generally act in all respects as the
nominee and at the direction of the Company in respect of the Shares and all
rights and interests attached thereto.
3. Representations and Warranties. In order to induce the Company to
purchase the Shares, Elite hereby represents and warrants to the Company as
follows:
(a) Organization. Elite is a corporation duly organized,
validly existing and in good standing under the laws of Ireland.
(b) Due Authorization and Execution. Elite has all necessary
corporate power and authority to enter into this agreement and to consummate the
transactions contemplated herein. No additional corporate proceeding or action
on the part of Elite is necessary to authorize and approve the execution and
delivery of this agreement or the performance by Elite of its obligations under
this agreement other than actions already taken. This agreement has been duly
executed and delivered by Elite and, assuming due execution and delivery by the
Company, constitutes the legal, valid and binding obligation of Elite
enforceable against Elite in accordance with its terms.
(c) Conflicts. Neither the execution and delivery of, nor the
consummation of the transactions contemplated in, this agreement will result in
any of the following: (a) a violation of the charter, bylaws or other governing
instruments of Elite; (b) a default or an event that, with notice or lapse of
time, or both, would constitute a default, breach or violation of any contract,
agreement, license or instrument to which Elite is a party or by which it is
bound; (c) an event that would permit any person or entity to terminate any
contract, agreement, license or instrument to which Elite is a party relating to
the Shares or to accelerate the maturity of any obligation of Elite; (d) the
creation or imposition of any Lien (as defined below) upon the Shares of Elite;
(e) a violation or breach of any statute, ordinance, rule or regulation
applicable to Elite or the Company or any writ, injunction or decree of any
court or governmental instrumentality to which Elite or the Company is a party
<PAGE>
3
or by which any of its properties is bound; or (f) the necessity to obtain the
consent or approval of, or give notice to or register with any government or
nongovernment third party.
(d) Ownership. Except for the Shares, Elite does not own or
have any right to acquire any Ordinary Shares of Technocom or any other shares
of capital stock or equity of Technocom.
(e) No Liens. Each of the Shares to be delivered by Elite to
the Company pursuant to this agreement is duly authorized, validly issued, fully
paid, nonassessable and not subject to preemptive rights and each such share is
owned by Elite free and clear of all Liens except for those rights held by the
Company under any of the Agreements.
(f) Good Title. The transfer of the Shares from Elite to the
Company pursuant to Section 1(a) of this Agreement will convey good and valid
title to the Company in and to the Shares, free and clear of all Liens, except
for those rights held by the Company under any of the Agreements.
4. Revenue Matters. Elite hereby declares for purposes of the Financial
Transfers Act of 1992 of the Republic of Ireland that it is not resident in any
jurisdiction to which financial transfers within the meaning of such Act are
restricted by order of the Minister of Finance in accordance with the provisions
of that Act and does not hold the Shares and will not receive any part of the
consideration hereunder as nominee for any persons that so reside, and the
Company declares for the purpose of such Act that it is not so resident, it is
not acquiring the Shares as nominee for any persons so resident and it is not to
its knowledge controlled directly or indirectly with a person so resident.
5. Covenants.
(a) Elite hereby covenants with and undertakes to the Company
that it shall not at any time prior to the Closing Date dispose or attempt to
dispose, transfer or assign any interest in the Shares or grant any option over
or mortgage, charge or otherwise encumber or dispose of the Shares; provided,
that, Elite may transfer the Shares to any entity owned and controlled by Elite
as long as prior to such transaction such entity agrees to be bound by the terms
and provisions of this agreement and enters into an assumption agreement with
Parent in a form reasonably satisfactory to Parent evidencing such agreement to
be so bound. The parties agree that if Elite transfers the Shares as aforesaid,
such transferee shall be deemed to have assumed all rights and obligations under
the Agreements. From the date hereof until the earlier of (x) the Closing Date
or (y) the termination of this agreement pursuant to Section 6, Elite agrees
that it will not take any action under the Put Agreement to require either the
Parent or the Company to purchase the Shares or make any other payments.
(b) Elite hereby covenants with and undertakes to the Company
that it will as soon as reasonably practicable notify to the Company in
<PAGE>
4
writing any matter or thing which may arise or become known to it after the date
hereof and prior to the Closing Date which constitutes (or would with the
passage of time constitute) a breach of the representations and warranties or
breach of any of the covenants or undertakings or obligations of Elite under
this agreement.
(c) Elite hereby undertakes with the Company at the request
and at the expense of the Company to do or to procure to be done all such
further acts of things and execute or procure to be executed all such further
deeds and documents as may be necessary or desirable to (i) fully and
effectively vest in the Company the legal and beneficial ownership of the Shares
and the benefits of this Agreement and pending such vesting, Elite shall hold
such Shares and benefits in trust for the Company and shall receive all monies
in connection therewith as trustee of the Company and shall account to the
Company forthwith upon receipt thereof and (ii) acknowledge that the Agreements
have been terminated.
6. Termination.
(a) This agreement shall be effective so long as the Merger
Agreement is effective and shall terminate in the event that the Merger
Agreement is terminated or expires. The obligations of the parties hereto under
Sections 1 and 2 of this agreement are expressly conditioned upon the completion
of the transactions contemplated by the Merger Agreement. This agreement shall
in any event terminate at the option of Elite if the transactions contemplated
in Sections 1 and 2 have not taken place by October 31, 1999.
(b) If any material breach of the representations, warranties
or covenants contained herein shall come to the attention of either the Company
or Elite before the Closing Date or if any act or event shall occur which, had
it occurred on or before the date hereof, would have constituted a material
breach of the representations, warranties or covenants set forth herein, then
the Company shall at its own election terminate this agreement and its
obligations to purchase the Shares without any liability to Elite.
7. Consent. Each of Elite, Technocom and Boris Antoniuk hereby consent,
pursuant to the Shareholder Agreement (as defined in the Put Agreement), to (i)
the pledge, pursuant to the Pledge Agreement dated as of the date hereof (the
"Pledge Agreement"), made by the Company in favor of the Parent, by the Company
of 115 Ordinary Shares of Technocom to the Parent to secure certain loans being
made by the Parent to the Company pursuant to a Bridge Loan Agreement dated the
date hereof, (ii) the transfer of such 115 Ordinary Shares to the Parent in the
event the Parent forecloses on such shares in accordance with the terms of the
Pledge Agreement and (iii) hold a meeting of shareholders of Technocom and vote
to amend Technocom's Articles of Association as promptly as practicable to
permit the pledge of shares of Technocom and the transfer of such shares as
contemplated by the Pledge Agreement. The Parent acknowledges and agrees that
prior to the occurrence of an Event of Default (as defined in the Bridge Loan
Agreement, dated as of the date hereof between the Company and Parent) it shall
have no rights to control the management and operations of Technocom by virtue
of the Pledge Agreement. Parent
<PAGE>
5
further agrees that, in the event it forecloses on the shares of Technocom and
takes possession of such shares (i) neither Parent nor any of Parent's
subsidiaries or affiliates will enter into any transaction with Technocom
(including, without limitation, the issuance or subscription for additional
shares of Technocom) that is not consummated on an arm's length basis, (ii)
Parent will not cause Technocom to cease or propose to cease to carry on its
business or be wound up unless Technocom is insolvent, and (iii) to use its best
commercial efforts to ensure that any assignee or transferee of the Technocom
shares foreclosed upon by Parent is bound by the restrictions set forth in
clauses (i) and (ii) of this sentence.
8. Survival; Indemnification. (a) The representations, warranties and
covenants set forth in this Elite Option Modification Agreement shall survive
the consummation of the purchase of the Shares hereunder. Elite hereby
indemnifies and holds harmless, the Parent, the Company and their respective
officers, directors and affiliates from any claims, losses, damages, costs,
expenses (including attorney's fees and expenses) arising in connection with the
transfer by Elite of the Shares pursuant to this agreement that they suffer or
incur as a result of any breach or default of any representation, warranty or
covenant set forth herein.
(b) The total aggregate liability of Elite and Boris Antoniuk
to all other parties hereto arising out of or in connection with this agreement
shall be limited to the amount of consideration received by Elite from the
Company pursuant to Section 1(a).
9. Expenses. Each of the parties hereto shall pay its own fees,
expenses and other costs incurred in connection with the negotiation, execution
and delivery of this Agreement.
10. Governing Law. This agreement shall be governed in all respects by
the laws of the State of New York without reference to the choice of laws
principles thereof.
11. Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
12. No Amendment. No amendment, modification, termination or waiver or
any provision of this agreement shall be effective unless it shall be in writing
and signed by each of the parties to this agreement.
<PAGE>
6
IN WITNESS WHEREOF, this Elite Option Modification Agreement has been
duly executed and delivered by the parties hereto as of the date first written
above.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
PLD TELEKOM INC.
By: /s/ James R.S. Hatt
-------------------
Name: James R.S. Hatt
Title: Chairman, President and Chief
Executive Officer
ELITE INTERNATIONAL LIMITED
By: /s/ Boris Antoniuk
------------------
Name: Boris Antoniuk
Title: Director
TECHNOCOM LIMITED
By: /s/ James R.S. Hatt
-------------------
Name: James R.S. Hatt
Title: Director
/s/ Boris Antoniuk
------------------
BORIS ANTONIUK
================================================================================
BRIDGE LOAN AGREEMENT
between
PLD TELEKOM INC.
as Borrower,
and
METROMEDIA INTERNATIONAL GROUP, INC.
as Lender
Dated as of May 18, 1999
$7,000,000
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS........................................................1
Section 1.1 Definitions..............................................1
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITY................................7
Section 2.1 Revolving Loans..........................................7
Section 2.2 Notice of Borrowing......................................8
Section 2.3 Disbursement of Funds....................................8
Section 2.4 The Notes................................................8
Section 2.5 Interest.................................................9
Section 2.6 Voluntary Prepayments....................................9
Section 2.7 Method and Place of Payment..............................9
Section 2.8 Taxes...................................................10
SECTION 3. CONDITIONS PRECEDENT..............................................10
Section 3.1 Conditions Precedent to Initial Loans...................10
Section 3.2 Conditions Precedent to All Loans.......................12
SECTION 4. REPRESENTATIONS AND WARRANTIES....................................13
Section 4.1 Qualification...........................................13
Section 4.2 Capitalization of Borrower..............................13
Section 4.3 Authority Relative to this Agreement....................14
Section 4.4 Consents and Approvals; No Violation....................14
Section 4.5 Reports.................................................14
Section 4.6 Financial Statements....................................15
Section 4.7 Undisclosed Liabilities.................................15
Section 4.8 Absence of Certain Changes or Events....................15
Section 4.9 Legal Proceedings, etc..................................17
Section 4.10 Permits.................................................17
Section 4.11 Margin Regulations......................................18
SECTION 5. AFFIRMATIVE COVENANTS.............................................18
Section 5.1 Information Covenants...................................18
Section 5.2 Officer's Certificate...................................20
SECTION 6. NEGATIVE COVENANTS................................................21
Section 6.1 Restriction on Fundamental Changes......................21
Section 6.2 Limitation on Modifications of Certain Documents........21
Section 6.3 Changes in Business.....................................22
Section 6.4 Limitation on Indebtedness..............................22
i
<PAGE>
Section 6.5 Limitation on Issuances of Guarantees
by Restricted Subsidiaries..............................22
Section 6.6 Limitation on Liens.....................................22
Section 6.7 Use of Proceeds.........................................22
SECTION 7. EVENTS OF DEFAULT.................................................22
Section 7.1 Events of Default.......................................22
Section 7.2 Rights and Remedies.....................................24
SECTION 8. MISCELLANEOUS.....................................................25
Section 8.1 Payment of Expenses, Indemnity, etc.....................25
Section 8.2 Right of Setoff.........................................25
Section 8.3 Notices.................................................26
Section 8.4 Successors and Assigns; Assignments.....................26
Section 8.5 Amendments and Waivers..................................27
Section 8.6 No Waiver; Remedies Cumulative..........................27
Section 8.7 Governing Law, Submission to Jurisdiction...............28
Section 8.8 Counterparts............................................28
Section 8.9 Effectiveness...........................................28
Section 8.10 Headings Descriptive....................................28
Section 8.11 Marshalling; Recapture..................................28
Section 8.12 Severability............................................29
Section 8.13 Survival................................................29
Section 8.14 Limitation of Liability.................................29
Section 8.15 Calculations; Computations..............................29
Section 8.16 Waiver of Trial by Jury.................................29
Section 8.17 Interest Rate Limitation................................29
Exhibit A - Form of Note
Exhibit B - Form of Pledge Agreement
ii
<PAGE>
BRIDGE LOAN AGREEMENT, dated as of May 18, 1999, between PLD Telekom
Inc., a Delaware corporation (the "Borrower"), and Metromedia International
Group, Inc., a Delaware corporation (the "Lender").
WHEREAS, the Lender and the Borrower have entered into an Agreement and
Plan of Merger, dated the date hereof (the "Merger Agreement") pursuant to which
a wholly owned subsidiary of the Lender will be merged with and into the
Borrower with the Borrower as the surviving corporation (the "Merger"); and
WHEREAS, in connection with the Merger, the Borrower has requested that
the Lender make available to it certain short term financing to satisfy working
capital needs of the Borrower from the date hereof until the earlier of the
consummation of the Merger or the termination of the Merger Agreement; and
WHEREAS, the Lender is willing to make loans to the Borrower upon the
terms and conditions set forth herein,
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and intending to be legally bound
hereby, the Borrower and the Lender hereby agree as follows:
SECTION 1. DEFINITIONS.
Section 1.1 Definitions. As used herein, the following terms shall have
the meanings herein specified unless the context otherwise requires. Defined
terms in this Agreement shall include in the singular number the plural and in
the plural number the singular.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to (i) vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise. The term "Affiliate" shall not include the
Lender or any of its direct or indirect Subsidiaries or Affiliates.
"Agreement" shall mean this Credit Agreement as the same may from time
to time hereafter be modified, supplemented or amended.
"Assignee" shall have the meaning provided in Section 8.4(b).
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2
"Attributable Indebtedness" means, with respect to any Sale and
Leaseback Transaction of any Person, as at the time of determination, the
greater of (i) the capitalized amount in respect of such transaction that would
appear on the balance sheet of such Person in accordance with GAAP and (ii) the
present value (discounted at a rate consistent with accounting guidelines, as
determined in good faith by such Person) of the payments during the remaining
term of the lease (including any period for which such lease has been extended
or may, at the option of the lessor, be extended) or until the earliest date on
which the lessee may terminate such lease without penalty or upon payment of a
penalty (in which case the rental payments shall include such penalty).
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the incurrence of a Loan from the Lender on a
given date.
"Business Day" shall mean any day excluding Saturday, Sunday and any
day which shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government actions to
close.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents in the equity interest (however designated)
in any Person and any rights (other than Indebtedness convertible into an equity
interest), warrants or options to acquire an equity interest in such Person.
"Capitalized Lease" shall mean (i) any lease of property, real or
personal, the obligations under which are capitalized on the consolidated
balance sheet of the Borrower and its Subsidiaries, and (ii) any other such
lease to the extent that the then present value of the minimum rental commitment
thereunder should, in accordance with GAAP, be capitalized on a balance sheet of
the lessee.
"Capitalized Lease Obligations" shall mean all obligations of the
Borrower and its Subsidiaries under or in respect of Capitalized Leases.
"Closing Date" shall have the meaning provided in Section 2.1(a).
"Closing Price" on any Trading Day with respect to the per share price
of any shares of Capital Stock means the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock
<PAGE>
3
Exchange or, if such shares of Capital Stock are not listed or admitted to
trading on such exchange, on the principal national securities exchange on which
such shares are listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, on The Nasdaq National Market or,
if such shares are not listed or admitted to trading on any national securities
exchange or quoted on such automated quotation system but the issuer is a
Foreign Issuer (as defined in Rule 3b- 4(b) under the Exchange Act) and the
principal securities exchange on which such shares are listed or admitted to
trading is a Designated Offshore Securities Market (as defined in Rule 902(a)
under the Securities Act), the average of the reported closing bid and asked
prices regular way on such principal exchange, or, if such shares are not listed
or admitted to trading on any national securities exchange or quoted on such
automated quotation system and the issuer and principal securities exchange do
not meet such requirements, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange member
firm that is selected from time to time by the Borrower for that purpose and is
reasonably acceptable to the Lender.
"Common Stock" shall mean the Common Stock, par value $0.01 per share,
of the Borrower, and as the context shall require shall also include any stock
of any class of any other Person which has no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of such Person and which is not subject to redemption
by such Person.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Default Rate" shall have the meaning provided in Section 2.5(b).
"Disqualified Stock" means any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchange able), or upon the happening of any event, or otherwise, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof or is exchangeable for
Indebtedness at any time, in whole or in part, on or prior to the date on which
the Loans mature.
"Event of Default" shall have the meaning provided in Section 7.
"Exchange Rate Obligations" means, with respect to any Person, any
currency swap agreements, forward exchange rate agreements, foreign currency
futures or options, exchange rate collar agreements, exchange rate insurance and
other agreements or arrangements, or combination thereof, designed to provide
protection against fluctuations in currency exchange rates.
"Existing Convertible Note Indenture" means the Indenture, dated as of
May 31, 1996, as amended, among the Borrower, the Existing Convertible Note
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4
Guarantors (as defined therein), Apropos Investments Ltd, Clayton A. Waite and
The Bank of New York, as trustee thereunder, relating to the Existing
Convertible Notes, as amended and supplemented from time to time.
"Existing Convertible Notes" means the 9% Convertible Subordinated
Notes due 2006 of the Borrower issued pursuant to the Existing Convertible Note
Indenture.
"Existing Debt Agreements" means the Existing Convertible Note
Indenture, the Existing Senior Note Indenture, the documentation related to the
Travelers Revolving Credit Notes, the documentation relating to the News
Promissory Notes and all ancillary agreements related to any of the foregoing.
"Existing Senior Note Indenture" means the Indenture, dated as of May
31, 1996, as amended, among the Borrower, the Existing Senior Note Guarantors
(as defined therein), Apropos Investments Ltd, Clayton A. Waite and The Bank of
New York, as trustee thereunder, relating to the Existing Senior Notes, as
amended and supplemented from time to time.
"Existing Senior Notes" means the 14% Senior Discount Notes due 2004 of
the Borrower issued pursuant to the Existing Senior Note Indenture.
"Final Maturity Date" shall mean the earlier of (a) the consummation of
the Merger pursuant to the terms of the Merger Agreement or (b) the termination
or expiration of the Merger Agreement.
"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date hereof and consistent with those utilized in
the preparation of the financial statements referred to in Section 5.1.
"Governmental Authority" means (a) the government of the United States
of America or any State or other political subdivision thereof, or any
jurisdiction in which the Borrower or any Subsidiary conducts all or any part of
its business, or which asserts jurisdiction over any property of the Borrower or
any Subsidiary, or (b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Indebtedness" means at any time (without duplication), with respect to
any Person, whether recourse is to all or a portion of the assets of such
Person, and whether or not contingent, (i) any obligation of such Person for
money borrowed, (ii) any obligation of such Person evidenced by bonds,
debentures, notes, guarantees or other similar instruments, including, without
limitation, any such obligations incurred in connection with the acquisition of
Property, assets or businesses, exclud ing trade accounts payable made in the
ordinary course of business, (iii) any reim bursement obligation of such Person
with respect to letters of credit, bankers'
<PAGE>
5
acceptances or similar facilities issued for the account of such Person, (iv)
any obligation of such Person issued or assumed as the deferred purchase price
of Property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business, which in either case are
not more than 60 days overdue or which are being contested in good faith) (v)
any Capitalized Lease Obligations of such Person, (vi) the maximum fixed
redemption or repurchase price of Disqualified Stock of such Person and, to the
extent held by other Persons, the maximum fixed redemption or repurchase price
of Disqualified Stock of such Person's Restricted Subsidiaries, at the time of
determination, (vii) the notional amount of any Interest Hedging Obligations or
Exchange Rate Obligations of such Person at the time of determination, (viii)
any Attributable Indebtedness with respect to any Sale and Leaseback Transaction
to which such Person is a party and (ix) any obligation of the type referred to
in clauses (i) through (viii) of this definition of another Person and all
dividends and distributions of another Person the payment of which, in either
case, such Person has guaranteed or is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise. For the purposes of the
preceding sentence, the maximum fixed repurchase price of any Disqualified Stock
that does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Stock as if such Disqualified Stock were
repurchased on any date on which Indebtedness shall be required to be determined
pursuant hereto; provided that if such Disqualified Stock is not then permitted
to be repurchased, the repurchase price shall be the book value of such
Disqualified Stock. The amount of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability of any guarantees at such date.
"Interest" shall have the meaning given in Section 2.5 hereof.
"Interest Hedging Obligation" means, with respect to any Person, an
obligation of such Person pursuant to any interest rate swap agreement, interest
rate cap, collar or floor agreement or other similar agreement or arrangement
designed to protect against or manage such Person's or any of its Restricted
Subsidiaries' exposure to fluctuations in interest rates.
"Investment" shall mean all investments in and all loans, advances and
extensions of credit to any Person, all stock, notes, bonds, leases or other
securities or evidences of indebtedness of or any capital contribution to any
corporation, partnership, firm, joint venture or other business entity.
"Lien" means, with respect to any Property or other asset, any mortgage
or deed of trust, pledge, hypothecation, assignment, deposit arrangement,
security interest, lien (statutory or other), charge, easement, encumbrance,
preference, priority or other security or similar agreement or preferential
arrangement of any nature whatsoever on or with respect to such Property or
other asset
<PAGE>
6
(including, without limitation, any conditional sale or title retention
agreement having substantially the same economic effect as any of the
foregoing).
"Loan Commitment" means the maximum aggregate amount of $7,000,000.
"Loan Documents" shall mean this Agreement, the Note or Notes and the
Pledge Agreement.
"Loan Party" shall mean and include the Borrower and its Subsidiaries.
"Loans" shall have the meaning provided in 2.1(a).
"News Promissory Notes" shall mean the Borrower's promissory notes
issued pursuant to the Revolving Credit Agreement, dated as of September 30,
1998, between the Borrower and News America Incorporated as lender, as the same
may be amended from time to time.
"Note" and "Notes" shall have the meanings provided in Section 2.4.
"Notice of Borrowing" shall have the meaning provided in Section 2.2.
"Obligations" shall mean all obligations, liabilities and Indebtedness
of every nature of the Borrower from time to time owing to the Lender under or
in connection with this Agreement or any other Loan Document.
"Payment Date" shall mean the last day of each month.
"Person" shall mean and include any individual, partnership, joint
venture, firm, corporation, association, trust, limited liability company or
other enterprise or any government or political subdivision or agency,
department or instrumentality thereof.
"Pledge Agreement" means the Pledge Agreement, dated the date hereof,
to be executed by the Borrower, a form of which is attached as Exhibit B hereto.
"Pledged Shares" means the 115 ordinary shares of Technocom that are
subject to the Lien of the Pledge Agreement and any and all dividends,
distributions, payments and proceeds thereof, as more particularly defined in
the Pledge Agreement.
"Property" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, excluding Capital Stock in any other Person.
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7
"Restricted Subsidiary" means any Subsidiary of the Borrower that has
not been classified as an "Unrestricted Subsidiary."
"Sale and Leaseback Transaction" means, with respect to any Person, any
direct or indirect arrangement pursuant to which Property is sold or transferred
by such Person or a Restricted Subsidiary of such Person and is thereafter
leased back from the purchaser or transferee thereof by such Person or one of
its Restricted Subsidiaries.
"Subsidiary" of any Person shall mean and include (i) any corporation
50% or more of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person, directly or indirectly through
Subsidiaries, is either a general partner or has a 50% or more equity interest
at the time.
"Technocom" means Technocom Limited, an Irish corporation and a
Restricted Subsidiary.
"Trading Day" means, with respect to a securities exchange or automated
quotation system, a day on which such exchange or system is open for a full day
of trading.
"Transactions" shall mean each of the transactions contemplated by the
Loan Documents.
"Travelers Revolving Credit Notes" shall mean the Borrower's 12% Series
A Senior Secured Revolving Credit Notes due 1998 and 12% Series B Revolving
Credit Notes due 1998.
"Unrestricted Subsidiary" means any Subsidiary of the Borrower that the
Borrower has classified as an "Unrestricted Subsidiary," and that has not been
reclassified as a Restricted Subsidiary, pursuant to the terms of the
documentation pursuant to which the Revolving Credit Notes were issued.
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITY.
Section 2.1 Revolving Loans. (a) Subject to and upon the terms and
conditions herein set forth, the Lender agrees, at the times and in the amounts
specified on Schedule 2.1 hereto from the date hereof (the "Closing Date") and
prior to the Final Maturity Date, to make revolving loans (collectively,
"Loans") to the
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8
Borrower, which Loans shall not at any time exceed in aggregate principal amount
at any time outstanding the Loan Commitment.
(b) Loans may be voluntarily prepaid pursuant to Section 2.6,
and, subject to the other provisions of this Agreement, any amounts so prepaid
may be reborrowed. The Loan Commitment shall expire and the Loans shall mature
on the Final Maturity Date, without further action on the part of the Lender.
(c) Each Borrowing of Loans under this Section 2.1 shall be in
the aggregate minimum amount of the lesser of (i) $250,000 or any integral
multiple of $100,000 in excess thereof or (ii) the remaining unborrowed amount
of the Loan Commitment.
Section 2.2 Notice of Borrowing. Whenever the Borrower desires to
borrow hereunder, the Borrower's Chief Financial Officer shall make a formal
request to the Lender for such Borrowing by giving the Lender prior written
notice thereof (each such notice, a "Notice of Borrowing") on or before 10:00
a.m., New York City time, at least five Business Days prior to the date
requested for such Borrowing, at the Lender's office at One Meadowlands Plaza,
East Rutherford, N.J. 07076; attention: Robert A. Maresca, Senior Vice
President; Fax number 201-531- 2804. Each Notice of Borrowing shall specify (a)
the aggregate principal amount of the requested Loan, (b) the proposed date of
the Borrowing (which shall be a Business Day and which shall not exceed the
aggregate amount available for each such month as specified on Schedule 2.1) and
(c) the proposed use of the proceeds of any such Loan, which use of proceeds
shall be solely to make 120% or a lesser portion of each of the items specified
under the headings "operating cash outflows, "investing cash outflows" or
"financing cash outflows" specified on Schedule 2.2 hereto.
Section 2.3 Disbursement of Funds. Upon receipt of a Notice of
Borrowing delivered in accordance with and in compliance with Section 2.2 above,
on the date specified in such Notice of Borrowing, the Lender will make
available the Loans requested to be made on such date, in U.S. dollars by wire
transfer in immediately available funds to an account specified in a written
instrument signed by the Chief Financial Officer of the Borrower and delivered
to Robert A. Maresca, Senior Vice President of the Lender, together with any
Notice of Borrowing.
Section 2.4 The Notes. The Borrower's obligation to pay the principal
of, and interest on, each Loan made hereunder, shall be evidenced by a
promissory note (each a "Note", and collectively the "Notes"), duly executed and
delivered by the Borrower, substantially in the form of Exhibit A hereto in a
principal amount equal to the principal amount of the Loan represented thereby,
with blanks appropriately completed in conformity herewith. Each Note shall (x)
be payable to the order of the Lender, (y) be dated the date of the Loan, and
(z) mature on the Final Maturity Date.
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9
Section 2.5 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Loan ("Interest") from the date
of the making of such Loan until such Loan shall be paid in full at a rate per
annum which shall be equal to ten percent (10%) per annum, such Interest to be
computed on the basis of a 360-day year and the actual number of days elapsed.
(b) In the event that, and for so long as, any Event of
Default shall have occurred and be continuing, the outstanding principal amount
of all Loans and, to the extent permitted by law, overdue interest in respect of
all Loans, shall bear interest at a rate per annum (the "Default Rate") equal to
twelve percent (12%) per annum, computed on the basis of a 360-day year and the
actual number of days elapsed; provided that nothing in any Loan Document shall
permit the Lender to receive interest in excess of the maximum rate of interest
permitted by law.
(c) Interest on each Loan shall accrue from and including the
date of the Borrowing thereof to but excluding the date of any repayment thereof
(provided that any Loan borrowed and repaid on the same day shall accrue one
day's interest) and shall be payable on the last Business Day of each calendar
month while any Loan is outstanding unless otherwise specified in the Note
relating to such Loan. Any accrued but otherwise unpaid interest shall also be
payable on the Final Maturity Date and concurrently with the amount of each
voluntary prepayment, as provided in Section 2.6 hereof.
Section 2.6 Voluntary Prepayments. The Borrower shall have the right to
prepay the Loan represented by each Note in whole or in part from time to time
on the following terms and conditions: (i) the Borrower shall give the Lender
written notice (or telephonic notice promptly confirmed in writing), which
notice shall be irrevocable, of its intent to prepay the Loan, at least five
Business Days prior to a prepayment, which notice shall specify the date (which
shall be a Business Day) and the amount of such prepayment and (ii) each
prepayment shall be in an aggregate principal amount of $250,000 or any integral
multiple of $100,000 in excess thereof.
Section 2.7 Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Notes shall be made to the Lender not later than 12:00 noon, New York
City time, on the date when due and shall be made in lawful money of the United
States of America by wire transfer in immediately available funds to Chase
Manhattan Bank, New York, NY, ABA number 021000021, to the account of Metromedia
International Group, Inc., Account No. 323-012671, or such other account as
specified in a written instrument signed by Vincent Sasso or a senior vice
president of the Lender and delivered to the Chief Financial Officer of the
Borrower, and any funds received by the Lender after such time shall, for all
purposes hereof, be deemed to have been paid on the next succeeding Business
Day.
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10
(b) Whenever any payment to be made hereunder or under the
Notes shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable at the applicable
rate during such extension.
(c) All payments made by the Borrower hereunder and under any
Note shall be made irrespective of, and without any reduction for, any setoff or
counterclaims, including, without limitation, any setoff or counterclaims
arising due to a breach or alleged breach by the Lender or any of its
Subsidiaries or Affiliates of any other agreement to which the Lender or any of
its Subsidiaries or Affiliates and any of the Loan Parties are parties.
Section 2.8 Taxes. All payments made by the Borrower under this
Agreement shall be made free and clear of, and without reduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority excluding, in the case of the Lender, net income and franchise taxes
imposed on the Lender by the jurisdiction under the laws of which the Lender is
organized or any political subdivi sion or taxing authority thereof or therein
(all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes"). If any Taxes are required to be
withheld from any amounts payable to the Lender hereunder or under any Note, the
amounts so payable to the Lender shall be increased to the extent necessary to
yield to the Lender (after payment of all Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the specific Note. Whenever any Taxes are payable by the Borrower,
as promptly as possible thereafter, the Borrower shall send to the Lender a
certified copy of an original official receipt received by the Borrower showing
payment thereof. If the Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Lender the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Lender for any incremental taxes, interest or penalties that may become
payable by the Lender as a result of any such failure. The agreements in this
Section 2.9 shall survive the termination of this Agreement and the payment of
the Notes and all other Obligations.
SECTION 3. CONDITIONS PRECEDENT.
Section 3.1 Conditions Precedent to Initial Loans. In addition to the
provisions of Section 2.2, the obligation of the Lender to make its initial
Loans is subject to the satisfaction on the Closing Date of the following
conditions precedent:
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11
(a) Loan Documents.
(i) Credit Agreement. The Borrower shall have
executed and delivered this Agreement to the Lender.
(ii) Note. The Borrower shall have executed and
delivered to the Lender a Note in the amount of the initial Loan at
maturity and as otherwise provided herein.
(iii) Pledge Agreement. The Borrower shall have
executed and delivered the Pledge Agreement to the Lender.
(b) Opinion of Counsel. The Lender shall have received a legal
opinion, dated the Closing Date, from Clive Anderson, Esq., Senior Vice
President, General Counsel and Secretary of the Borrower, in form reasonably
satisfactory to the Lender.
(c) Corporate Documents. The Lender shall have received the
Certificate of Incorporation of the Borrower as in effect on the Closing Date,
certified to be true, correct and complete by the Secretary of State of the
State of Delaware.
(d) Certified Resolutions, etc. The Lender shall have received
a certificate of the Secretary or Assistant Secretary of the Borrower dated the
Closing Date certifying (i) the names and true signatures of the incumbent
officers of such Person authorized to sign the applicable Loan Documents, (ii)
the By-Laws of such Person as in effect on the Closing Date, (iii) the
resolutions of such Person's Board of Directors approving and authorizing the
execution, delivery and performance the Loan Documents, and (iv) that there have
been no changes in the Certificate of Incorporation of such Person since the
date of the most recent certification thereof by the appropriate Secretary of
State.
(e) Delivery of Pledged Shares and Registration in Share
Registry. The Borrower shall have delivered to the Lender stock certificates
representing the Pledged Shares, registered in the name of the Borrower,
accompanied by undated stock powers duly executed in blank and the Lender shall
have been registered in the share register of Technocom as the registered owner
of the Pledged Shares. The Pledge Agreement and/or prior notices, statements or
other instruments in respect thereof, including, without limitation, financing
statements on Form UCC-1, shall have been duly recorded, published, registered
and filed in such manner and in such places as are required by law to establish,
perfect and preserve and protect the security interests of the Lender in the
Pledged Shares; and all taxes, fees and other charges in connection with the
execution, delivery, recording, publishing, registration and filing of such
instruments and the offer, issue and delivery of the
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12
Notes and the making by the Lender of the Loans and any other Obligations shall
have been paid in full.
(f) Technocom Organizational Documents. The Lender shall have
received complete and correct copies of:
(i) the Memorandum of Association and Articles of
Association and other constitutive documents of Technocom together with a
certified copy of a written resolution of the shareholders of Technocom amending
Articles 11 and 32 of such Articles of Association and approving the transfer of
the Pledged Shares pursuant to the Pledge Agreement upon a foreclosure; and
(ii) all agreements with respect to the Technocom
Capital Stock as amended from time to time.
(g) Representations. The representations and warranties set
forth in Section 4 shall be true and correct on such date before and after
giving effect to the making of the Loan on such date (except for representations
and warranties which refer to another date, which shall be true and correct as
of such date).
(h) Additional Matters. The Lender shall have received such
other certificates, opinions, documents and instruments relating to the Transac
tions as may have been reasonably requested by the Lender, and all corporate and
other proceedings and all other documents (including, without limitation, all
docu ments referred to herein and not appearing as exhibits hereto) and all
legal matters in connection with the Transactions shall be satisfactory in form
and substance to the Lender.
Section 3.2 Conditions Precedent to All Loans. In addition to the
provisions of Section 2.2, the obligation of the Lender to make any Loan
(including any initial Loan made on the Closing Date) is subject to the
satisfaction on the date such Loan is made of the following conditions
precedent:
(a) Notes. The Borrower shall have executed and delivered to
the Lender a Note in the amount of the principal amount of the Loan represented
thereby at maturity and as otherwise provided herein.
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date either before or
after giving effect to the making of such Loans.
(c) Representations. The representations and warranties set
forth in Section 4 shall be true and correct on such date before and after
giving effect to the making of the Loan on such date (except for representations
and
<PAGE>
13
warranties which refer to another date, which shall be true and correct as of
such date).
(d) No Injunction. No law or regulation shall have been
adopted, no order, judgment or decree of any Governmental Authority shall have
been issued, and no litigation shall be pending or threatened, which in the
judgment of the Lender would enjoin, prohibit or restrain, or impose or result
in the imposition of any material adverse condition upon, the making or
repayment of the Loans.
The acceptance of the proceeds of each Loan shall constitute a
representation and warranty by the Borrower to the Lender that all of the
conditions required to be satisfied under this Section 3 in connection with the
making of such Loan have been satisfied.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender to enter into this Agreement and to make
the Loans, the Borrower makes the following representations and warranties,
which shall survive the execution and delivery of this Agreement and the Notes
and the making of the Loans:
Section 4.1 Qualification. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own, lease, and
operate its proper ties and to carry on its business as now being conducted. The
Borrower is duly qualified or licensed to do business as a foreign corporation
and is in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary. Schedule 4.1 sets forth, as of the date of this
Agreement, each jurisdiction in which the Borrower is qualified to do business
as a foreign corporation. The Borrower has heretofore delivered to the Lender
complete and correct copies of its Certificate of Incorporation and By-laws as
currently in effect.
Section 4.2 Capitalization of Borrower. Set forth on Schedule 4.2 is
the number of shares of Capital Stock or other equity interests of the Borrower
which are issued and outstanding as of the date of this Agreement. All such
shares are validly issued, fully paid and nonassessable. Other than this
Agreement, or as set forth in Schedule 4.2, there is no subscription, option,
warrant, call, right, agreement or commitment relating to the issuance, sale,
delivery or transfer by the Borrower of any of its shares of Capital Stock or
other equity interests (including any right of conversion or exchange under any
outstanding security or other instrument). There are no outstanding contractual
obligations of the Borrower to repurchase, redeem or otherwise acquire any
outstanding shares of its Capital Stock or other equity interests of the
Borrower. There are no restrictions or limitations contained in the
organizational documents of the
<PAGE>
14
Borrower or in any contract, agreement, document or other instrument to which
the Borrower or any of its direct or indirect subsidiaries is a party or of
which the Borrower or any of its direct or indirect subsidiaries is aware that
restricts, or purports to restrict, the ability of the Borrower or any of its
direct or indirect subsidiaries to enter into and perform its obligations under
the Loan Documents.
Section 4.3 Authority Relative to this Agreement. The Borrower has full
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and all ancillary agreements to which it is a party and to
consummate the Transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and all ancillary agreements to which it is a party
and the consummation of the Transactions contemplated hereby and thereby have
been duly and validly authorized by all corporate and shareholder action, and no
other corporate proceedings on the part of the Borrower are necessary to
authorize this Agreement or to consummate the Transactions contemplated hereby
and thereby. The Loan Documents have been duly and validly executed and
delivered by the Borrower, and assuming that this Agreement constitutes a valid
and binding agreement of the Lender, constitute valid and binding agreements of
the Borrower, enforceable against the Borrower in accordance with its terms,
except that such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally or general principles of equity.
Section 4.4 Consents and Approvals; No Violation. (a) Except as set
forth in Schedule 4.4, the execution and delivery by the Borrower of this
Agreement and each other Loan Document will not (i) conflict with or result in
any breach of any provision of the Certificate of Incorporation or Bylaws or
similar charter documents of the Borrower, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, (iii) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Borrower or any of its Subsidiaries is a
party or by which the Borrower or any of its Subsidiaries or any of their assets
may be bound, except for such defaults (or rights of termination, cancellation
or acceleration) as to which requisite waivers or consents have been obtained,
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Borrower, any of its Subsidiaries or any of their assets.
(b) No declaration, filing or registration with, or notice to,
or authorization, consent or approval of any governmental or regulatory body or
authority is necessary for the consummation by the Borrower of the Transactions.
Section 4.5 Reports. Since January 1, 1999, the Borrower has, pursuant
to the Securities Act of 1933, as amended (the "Securities Act",) and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), filed or
caused to be filed with the SEC all material forms, statements, reports and
documents (including
<PAGE>
15
all exhibits, amendments and supplements thereto) required to be filed by it
with respect to the business and operations of the Borrower and its Subsidiaries
under each of the Securities Act and the Exchange Act and the respective rules
and regulations thereunder, all of which complied in all material respects with
all applicable requirements of the appropriate act and the rules and regulations
thereunder in effect on the date each such report was filed. True and complete
copies of each of such forms, statements, reports and documents, and such
exhibits, have been delivered to the Lender.
Section 4.6 Financial Statements. The Borrower has previously furnished
to the Lender copies of (a) the Borrower's audited (i) consolidated balance
sheets as of December 31, in each of the years 1998, 1997 and 1996 and (ii)
related consolidated statements of income and retained earnings and consolidated
changes in financial position of the Borrower for the fiscal years then ended,
together with the respective reports thereon of KPMG Peat Marwick LLP and KPMG,
as independent auditors of the Borrower for 1998, and 1997 and 1996,
respectively; and (b) the Borrower's unaudited (i) consolidated balance sheet as
of March 31, 1999 and (ii) related consolidated statements of income and
retained earnings and consolidated changes in financial position. Each of the
balance sheets included in the financial statements referred to in this Section
4.6 (including the related notes thereto) present fairly the financial
information purported to be set therein as of the dates thereof, and the other
related statements included therein (including the related notes thereto)
present fairly the results of operations and changes in financial position for
the periods then ended, all in conformity with GAAP applied on a consistent
basis, except as otherwise noted therein. For purposes of this Agreement, the
audited consolidated balance sheet of the Borrower as of December 31, 1998 are
hereinafter referred to as the "Borrower's Balance Sheet".
Section 4.7 Undisclosed Liabilities. Except as set forth in Schedule
4.7 or in the unaudited balance sheet or the notes thereto as of December 31,
1998, the Borrower does not have any material liability or obligation, secured
or unsecured (whether absolute, accrued, contingent or otherwise, and whether
due or to become due), of a nature required by generally accepted accounting
principles to be reflected in a corporate balance sheet or disclosed in the
notes thereto, which is not accrued or reserved against in the Borrower's
Balance Sheet or disclosed in the notes thereto in accordance with GAAP.
Section 4.8 Absence of Certain Changes or Events. Except as set forth
in Schedule 4.8 or in the Borrower's Annual Report on Form 10-K/A for the year
ended December 31, 1998, or the Borrower's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1999, since the date of the Borrower's Balance
Sheet there has not been:
(a) any material adverse change in the business, prospects,
operations, properties, assets, liabilities, competition, earnings, or condition
(financial or otherwise) of the Borrower and its Subsidiaries, or any failure by
the Borrower or any of its Subsidiaries to pay its debts when due;
<PAGE>
16
(b) any event or condition of any character which either
individually or in the aggregate, might reasonably be expected to have a
material adverse effect on the business, prospects, operations, properties,
assets, liabilities, competition, earnings or condition (financial or
otherwise), of the Borrower and its Subsidiaries;
(c) any damage, destruction or loss (regardless of whether
covered by insurance) that might reasonably be expected to have a material
adverse effect on the business, prospects, operations, properties, assets,
liabilities, competition, earnings, or condition (financial or otherwise), of
the Borrower and its Subsidiaries;
(d) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock, property, or any combination of
the foregoing) with respect to the capital stock or other equity interest of the
Borrower, except as specifically provided for in this Agreement or the Merger
Agreement and the transactions contemplated thereby;
(e) any increase in the compensation paid, payable or to
become payable by the Borrower to its officers, directors or employees (other
than increases for employees in the ordinary course of business and consistent
with past practice), any hiring of new officers, directors or employees (other
than hiring of new employees in the ordinary course of business consistent with
past practice) or any increase in any bonus, insurance, pension or other
employee benefit plan, payments or arrangement (including loans) made to, for or
with any officers, directors, or employees (other than increases for employees
in the ordinary course of business and consistent with past practice or other
increases pursuant to written employee benefit plans);
(f) except for the Merger Agreement and the transactions
contemplated thereby or in this Agreement, any entry into, material amendment
of, or termination of, any material agreement, material commitment or material
transaction by the Borrower, including, without limitation, any (i) merger,
consolidation, share exchange, acquisition or disposition of assets or stock or
any financing transaction or capital expenditure, (ii) indenture, mortgage,
note, agreement or other instrument relating to the borrowing of money (other
than inter company accounts), (iii) partnership or joint venture agreement, (iv)
material license agreement relating to intellectual property (other than
off-the-shelf software licenses), or (v) agreement to amend its charter or other
organizational documents or any other document, contract, agreement,
arrangement, undertaking or instrument relating to any of the foregoing;
(g) any entry into, material change to the terms or conditions
of termination of, any license, permit, franchise, governmental approval or
decree pursuant to which the Borrower or its Subsidiaries provide telephony,
data transmission or other telecommunications services;
<PAGE>
17
(h) any notes or accounts receivable or portions of notes or
accounts receivable written off by the Borrower or its Subsidiaries as
uncollectible, other than in the ordinary course of business and consistent with
past practice;
(i) any material obligation or material liability paid
(whether absolute, accrued, contingent or otherwise), or any lien or encumbrance
in connection therewith discharged, by the Borrower or any of its Subsidiaries,
other than (i) in the ordinary course of business and consistent with past
practice, or (ii) current liabilities shown on the financial statements and
current liabilities incurred since their date;
(j) except as specifically provided for in the Merger
Agreement and the transactions contemplated thereby or in this Agreement, any
properties or assets, real, personal or mixed, tangible or intangible, of the
Borrower or any of its Subsidiaries mortgaged, pledged or subjected to any
security interest, Lien or encumbrance;
(k) except as specifically provided for in the Merger
Agreement and the transactions contemplated thereby or in this Agreement, any
sale, assignment transfer, lease, dividend, distribution or other disposition of
any of property or assets by the Borrower or any of its Subsidiaries, other than
sales of products in the ordinary course of business; or
(l) except as specifically provided for in the Merger
Agreement and the transactions contemplated thereby or in this Agreement, any
agreement, understanding or undertaking to do any of the foregoing by the
Borrower or any of its Subsidiaries.
Section 4.9 Legal Proceedings, etc. Except as set forth in Schedule
4.9, there are no claims, actions, or proceedings pending or investigation
pending or, to the Borrower's knowledge, threatened against or relating to the
Borrower before any court, governmental or regulatory authority or body acting
in an adjudicative capacity. Except as set forth in Schedule 4.9, the Borrower
is not subject to any outstanding judgment rule, order, writ, injunction or
decree of any court, governmental or regulatory authority.
Section 4.10 Permits. The Borrower and its Subsidiaries have all
material permits, licenses, franchises and other governmental authorizations,
consents and approvals (collectively, "Permits") necessary to conduct their
business as presently conducted. Except as set forth in Schedule 4.10, neither
the Borrower nor any of its Subsidiaries has received any written notification
that it is in violation of any of such Permits, or any law, statute, order,
rule, regulation, ordinance or judgment of any governmental or regulatory body
or authority applicable to it. The Borrower and its Subsidiaries are in
compliance with all material Permits, laws, statutes, orders, rules,
regulations, ordinances, or judgments of any governmental or regulatory body or
authority applicable to them.
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18
Section 4.11 Margin Regulations. No part of the proceeds of any Loan
will be used by the Borrower to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.
Neither the making of any Loan nor the use of the proceeds thereof will violate
or be inconsistent with the provisions of Regulations T, U or X of the Federal
Reserve Board.
SECTION 5. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that on and after the Closing Date
and until the Loan Commitment has terminated and the Obligations are paid in
full at the Final Maturity Date:
Section 5.1 Information Covenants. The Borrower will furnish to the
Lender:
(a) Quarterly Statements - within 45 days after the end of
each quarterly fiscal period in each fiscal year of the Borrower (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies of
(i) a consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such quarter, and
(ii) consolidated statement of operations,
shareholders equity and changes in financial position of the Borrower and its
Subsidiaries for such quarter and (in the case of the second and third quarters)
for the portion of the fiscal year ending with such quarter, in each case
setting forth in comparative form the figures for the corresponding periods in
the previous fiscal year, prepared in accordance with GAAP applicable to
quarterly financial statements generally, and certified by the Chief Financial
Officer of the Borrower as fairly presenting, in all material respects, the
financial position of the companies being reported on and their results of
operations and cash flows, except for the absence of footnotes and changes
resulting from year-end adjustments, provided that delivery within the time
period specified above of the Borrower's Quarterly Report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the SEC shall be
deemed to satisfy the requirements of this Section 5.1;
(b) Annual Statements - within 90 days after the end of each
fiscal year of the Borrower, duplicate copies of
(i) a consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such year, and
(ii) consolidated statements of operations,
shareholders' equity and changes in financial position of the Borrower and its
Subsidiaries for such
<PAGE>
19
year, setting forth in each case in comparative form the figures for the
previous fiscal year, prepared in accordance with GAAP, and accompanied by
(A) an opinion thereon of
independent certified public accountants of recognized national
standing, which opinion shall state that such financial statements
present fairly, in all material respects, the financial position of the
companies being reported upon and their results of operations and cash
flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for such
opinion in the circumstances, and
(B) a certificate of such
accountants stating that in making the examination necessary for
certification of such financial statements pursuant to the preceding
subclause (A), such accountants have obtained no knowledge of any
Default or Event of Default or, if in the opinion of such accountants
such a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof,
provided that the delivery within the time period specified above of the
Borrower's Annual Report on Form 10-K for such fiscal year (together with the
Borrower's annual report to shareholders, if any, prepared pursuant to Rule
14a-3 under the Exchange Act) prepared in accordance with the requirements
therefor and filed with the SEC, together with the accountant's certificate
described in subclause (B) above, shall be deemed to satisfy the requirements of
this Section 5.1(c);
(c) Audit Reports, etc. - promptly (and in any event within
five Business Days) after receipt thereof, copies of all management letters and
reports submitted to the Borrower or any of its Subsidiaries by independent
certified public accountants in connection with any annual, interim or special
audit of the Borrower or any Subsidiary made by such accountants;
(d) SEC and Other Reports - promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or proxy
statement sent by the Borrower or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic reports, each registration
statement (without exhibits except as expressly requested by the Lender), and
each prospectus and all amendments thereto filed by the Borrower or any
Subsidiary with the SEC and of all press releases and other statements made
available generally by the Borrower or any Subsidiary to the public concerning
developments that are material;
(e) Notice of Default or Event of Default - immediately (and
in any event within two Business Days) after the President, Chief Financial
Officer, General Counsel or other executive officer of the Borrower becomes
aware of the existence of any Default or Event of Default or that any Person has
given any notice or
<PAGE>
20
taken any action with respect to a claimed Default hereunder or that any Person
has given any notice or taken any action with respect to a claimed default of
the type referred to in Section 7.1(c), a written notice specifying the nature
and period of existence thereof and what action the Borrower is taking or
proposes to take with respect thereto;
(f) Notices with Respect to Existing Senior Note Indenture,
Existing Convertible Note Indenture, Travelers Revolving Credit Notes and News
Promissory Notes - promptly upon the delivery thereof to the holders of the
Existing Senior Notes, the Existing Convertible Notes, the Travelers Revolving
Credit Notes and the News Promissory Notes, respectively, or a trustee or other
representative on their behalf, copies of all notices delivered by the Borrower
or any of its Subsidiaries to such holders, trustee or other representative; and
promptly upon the execution and delivery thereof, true, complete and correct
copies of all amendments and modifications to and waivers under the Existing
Senior Note Indenture, the Existing Convertible Note Indenture, documentation
for the Travelers Revolving Credit Notes and the documentation for the News
Promissory Notes respectively;
(g) Notices from Governmental Authority - promptly, and in any
event within five days of receipt thereof, copies of any notice to the Borrower
or any Subsidiary from any federal, state or foreign Governmental Authority
relating to any order, ruling, statute or other law or regulation that could
reasonably be expected to have a material adverse effect on the assets,
liabilities (actual or contingent), business, financial condition, results of
operations or prospects of the Borrower or any of its Subsidiaries or that could
reasonably be expected to impair the ability of the Borrower to perform any of
its obligations hereunder or under any of the Loan Documents; and
(h) Requested Information - with reasonable promptness, such
other data and information relating to the business, operations, affairs,
financial condition, assets or property of the Borrower or any of its
Subsidiaries or relating to the ability of the Borrower to perform its
obligations hereunder, under the Notes and under the Pledge Agreement as from
time to time may be reasonably requested by the Lender.
Section 5.2 Officer's Certificate. Each set of financial statements
delivered to the Lender pursuant to Section 5.l(a), Section 5.l(b) or Section
5.l(c) hereof shall be accompanied by a certificate of the Chief Financial
Officer containing a statement that such officer has reviewed the relevant terms
hereof and has made, or caused to be made, under his or her supervision, a
review of the transactions and conditions of the Borrower and its Subsidiaries
from the beginning of the quarterly or annual period covered by the statements
then being furnished to the date of the certificate and that such review shall
not have disclosed the existence during such period of any condition or event
that constitutes a Default or an Event of Default or, if any such condition or
event existed or exists, specifying the nature and period of existence thereof
and what action the Borrower or its Subsidiaries shall have taken or proposes to
take with respect thereto.
<PAGE>
21
SECTION 6. NEGATIVE COVENANTS.
The Borrower covenants and agrees that on and after the Closing Date
until the Loan Commitment has terminated, and the Obligations are paid in full,
without the prior written consent of Lender:
Section 6.1 Restriction on Fundamental Changes.
(a) Except as contemplated by the Merger Agreement, the
Borrower shall not, and shall not permit any of its Subsidiaries to, enter into
any merger or consolidation, or liquidate, wind-up or dissolve (or suffer any
liquidation or dissolution), discontinue its business or convey, lease, sell,
transfer or otherwise dispose of, in one transaction or in a series of
transactions, all or any material part of its business or property, whether now
or hereafter acquired.
(b) Except as contemplated by the Merger Agreement, the
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, (i) make any dividend or other distribution of any kind whatsoever
on the Common Stock of the Borrower (including without limitation any
distribution paid exclusively in Common Stock), or make any Restricted Payment
(as such term is defined in the Existing Senior Note Indenture) except as
permitted by Section 4.13 of the Existing Senior Note Indenture, (ii) issue to
any holders of its Common Stock any rights, options or warrants entitling the
holders thereof to subscribe for or purchase any shares of Common Stock or
securities convertible into or exchangeable for Common Stock, other than
pursuant to the Equity Compensation Plan, (iii) reclassify, subdivide or combine
its outstanding shares of Common Stock, (iv) distribute to holders of its Common
Stock evidences of its indebtedness, shares of any class of its Capital Stock
cash or other assets, or any securities or other instruments representing the
right to buy, or convertible into or exchangeable for, evidences of its
indebtedness, shares of any class of its Capital Stock or cash or any other
assets, (v) issue shares of its Common Stock other than pursuant to the terms of
the Existing Convertible Notes or options or warrants existing as at the date of
this Agreement or (vi) purchase, in the open market or in any privately-
negotiated transaction or otherwise, or make any tender or exchange offer for,
all or any portion of the Common Stock of the Borrower.
(c) The Borrower shall not and shall not permit any of its
Subsidiaries to, amend its certificate of incorporation or by-laws or its
accounting policies or reporting practices.
Section 6.2 Limitation on Modifications of Certain Documents. Except as
contemplated by the Merger Agreement, the Borrower shall not, and shall not
permit any of its Subsidiaries to, amend, modify or waive, or permit the
amendment, modification or waiver of, any provision of any material contracts
(including, without limitation, any of the documentation pursuant to which the
Existing Senior Notes, the
<PAGE>
22
Existing Convertible Notes, the Travelers Revolving Credit Notes and the News
Promissory Notes were issued, and any of the documents ancillary thereto).
Section 6.3 Changes in Business. The Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into any business which is
substantially different from that conducted by the Borrower or such Loan Party,
as the case may be, on the Closing Date.
Section 6.4 Limitation on Indebtedness. The Borrower will not, and will
not permit its Restricted Subsidiaries to, directly or indirectly, incur any
Indebtedness and the Borrower will not issue any Disqualified Stock or permit
any of its Restricted Subsidiaries to issue any Disqualified Stock, in each
case, except as permitted by Section 4.9 of the Existing Senior Note Indenture.
Section 6.5 Limitation on Issuances of Guarantees by Restricted
Subsidiaries. The Borrower will not permit any Restricted Subsidiary to
guarantee, directly or indirectly, any Indebtedness of the Borrower other than
the Existing Senior Notes, the Existing Convertible Notes, the Travelers
Revolving Credit Notes, the News Promissory Notes and the Notes.
Section 6.6 Limitation on Liens. The Borrower will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into, create, incur, assume or suffer to exist any Liens of any kind other than
Permitted Liens (as such term is defined in the Existing Senior Note Indenture)
on or with respect to any of its Property or assets now owned or hereafter
acquired, or any interest therein or any income or profits therefrom, without
effectively providing that the Notes shall be secured equally and ratably with
(and provided that the Notes shall be secured prior to any secured obligation
that is subordinated in right of payment to the Notes) the obligations so
secured for so long as such obligations are so secured.
Section 6.7 Use of Proceeds. The Borrower will not use the proceeds of
any Loan for any purpose other than those specified on Schedule 2.2 hereto.
SECTION 7. EVENTS OF DEFAULT.
Section 7.1 Events of Default. Each of the following events, acts,
occurrences or conditions shall constitute an Event of Default under this
Agreement, regardless of whether such event, act, occurrence or condition is
voluntary or involuntary or results from the operation of law or pursuant to or
as a result of compliance by any Person with any judgment, decree, order, rule
or regulation of any court or administrative or governmental body:
(a) Failure to Make Payments. The Borrower shall (i) default
in the payment when due of any principal of the Loans or (ii) default in the
payment
<PAGE>
23
when due of any interest on the Loans or in the payment when due of any other
amounts owing hereunder, and in the case of the circumstances described in this
clause (ii), such default shall continue unremedied for three or more Business
Days.
(b) Breach of Covenants.
(i) The Borrower shall fail to perform or observe any
agreement, covenant or obligation arising under Sections 5 or 6.
(ii) The Borrower shall fail to perform or observe
any agreement, covenant or obligation arising under this Agreement
(except those described in subsections (a) and (b)(i) above), and such
failure shall continue for 30 days.
(c) Default Under Other Agreements. Any Loan Party shall
default in the payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) of any amount owing in respect of
any Indebtedness (including any Indebtedness under the Existing Senior Notes,
the Existing Convertible Notes, the Travelers Revolving Credit Notes or the News
Promissory Notes) (other than the Obligations); or any Loan Party shall default
in the performance or observance of any obligation or condition with respect to
any such Indebtedness or any other event shall occur or condition exist, if the
effect of such default, event or condition is to accelerate the maturity of any
such Indebtedness or to permit (without regard to any required notice or lapse
of time) the holder or holders thereof, or any trustee or agent for such
holders, to accelerate the maturity of any such Indebtedness, or any such
Indebtedness shall become or be declared to be due and payable prior to its
stated maturity other than as a result of a regularly scheduled payment.
(d) Pledge Agreement. The Pledge Agreement shall at any time
and for any reason not be or shall cease to be valid, binding and enforceable
against the Borrower or a permitted successor or assign or the Borrower shall
contest or deny the validity and enforceability of the Pledge Agreement or shall
disaffirm or repudiate any of its obligations thereunder, or the Notes (or any
of them) shall fail to be secured by a perfected security interest in the
Pledged Shares.
(e) Bankruptcy, etc. (i) Any Loan Party shall commence a
voluntary case concerning itself under the Bankruptcy Code; or (ii) an
involuntary case is commenced against any Loan Party and the petition is not
controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or (iii) a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of any Loan Party or any Loan Party commences any other proceedings
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to any Loan Party or there is
commenced against any Loan Party any such proceeding which remains undismissed
for a period of 60 days; or
<PAGE>
24
(iv) any order of relief or other order approving any such case or proceeding is
entered; or (v) any Loan Party is adjudicated insolvent or bankrupt; or (vi) any
Loan Party suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or (vii) any Loan Party makes a general assignment for the
benefit of creditors; or (viii) any Loan Party shall fail to pay, or shall state
that it is unable to pay, or shall be unable to pay, its debts generally as they
become due; or (ix) any Loan Party shall call a meeting of its creditors with a
view to arranging a composition or adjustment of its debts; or (x) any Loan
Party shall by any act or failure to act consent to, approve of or acquiesce in
any of the foregoing; or (xi) any corporate action is taken by any Loan Party
for the purpose of effecting any of the foregoing.
(f) Judgments. One or more judgments or decrees in an
aggregate amount of $1,000,000 or more shall be entered by a court or courts of
competent jurisdiction against the Loan Parties (other than any judgment as to
which, and only to the extent, a reputable insurance company has acknowledged
coverage of such claim in writing) and (i) any such judgments or decrees shall
not be stayed, discharged, paid, bonded or vacated within 10 days or (ii)
enforcement proceedings shall be commenced by any creditor on any such judgments
or decrees.
Section 7.2 Rights and Remedies. Upon the occurrence of any Event of
Default described in Section 7.1(e), the Loan Commitment shall automatically and
immediately terminate and the unpaid principal amount of, and any and all
accrued interest on, the Loan and any and all other Obligations shall
automatically become immediately due and payable, with all additional interest
from time to time accrued thereon and without presentation, demand, or protest
or other requirements of any kind (including, without limitation, valuation and
appraisement, due diligence, presentment, notice of intent to demand or
accelerate and notice of acceleration), all of which are hereby expressly waived
by the Borrower, and the obligation of the Lender to make any Loan hereunder
shall thereupon terminate; and upon the occurrence and during the continuance of
any other Event of Default, the Lender may, by written notice to the Borrower,
(i) declare that the Loan Commitment is terminated, whereupon the Loan
Commitment and the obligation of the Lender to make any Loan hereunder shall
immediately terminate, and (ii) declare the unpaid principal amount of and any
and all accrued and unpaid interest on the Loans and any and all other
Obligations to be, and the same shall thereupon be, immediately due and payable
with all additional interest from time to time accrued thereon and without
presentation, demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and notice of acceleration), all of which are
hereby expressly waived by the Borrower.
<PAGE>
25
SECTION 8. MISCELLANEOUS.
Section 8.1 Payment of Expenses, Indemnity, etc. The Borrower shall:
(a) pay all reasonable out-of-pocket costs and expenses of the
Lender in connection with the negotiation, preparation, execution and delivery
of the Loan Documents and the documents and instruments referred to therein
(including without limitation the fees, charges and disbursements of counsel to
the Lender) and any amendment, waiver or consent relating to any of the Loan
Documents, which costs and expenses shall accrue as of the Closing Date but
shall be payable at such time, if any, as the first Loan is made;
(b) pay all reasonable out-of-pocket costs and expenses of the
Lender in connection with the preservation of rights under, and enforcement of,
the Loan Documents and the documents and instruments referred to therein or in
connection with any restructuring or rescheduling of the Obligations (including,
without limitation, the reasonable fees and disbursements of counsel for the
Lender);
(c) pay, and hold the Lender harmless from and against, any
and all present and future stamp, excise and other similar taxes with respect to
the foregoing matters and hold the Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to the Lender) to pay such taxes; and
(d) indemnify the Lender, its officers, directors, employees,
representatives and agents (each an "Indemnitee") from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements of any
kind or nature whatsoever (including, without limitation, the fees and
disbursements of counsel for such Indemnitee in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, asserted against or incurred by any Indemnitee
as a result of, or arising out of, or in any way related to or by reason of, any
of the Transactions or the execution, delivery or performance of any Loan
Document.
Section 8.2 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default the Lender is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Loan
Party or any other Person, any such notice being hereby expressly waived, to set
off any other indebtedness or other obligation at any time held or owing by the
Lender to or for the credit or the account of any Loan Party against and on
account of the Obligations of the Loan Parties to the
<PAGE>
26
Lender under this Agreement or under any of the other Loan Documents, and all
other claims of any nature or description arising out of or connected with this
Agreement or any other Loan Document, irrespective of whether or not the Lender
shall have made any demand hereunder and although said Obligations, liabilities
or claims, or any of them, shall be contingent or unmatured.
Section 8.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed effectively given upon personal delivery
to the party to be notified; on the next Business Day after delivery to a
recognized overnight courier service; upon confirmation of receipt of a
facsimile transmission; or five days after deposit with the United States Post
Office, by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice; provided that notices of a change
of address shall be effective only upon receipt thereof):
If to the Borrower, to:
PLD Telekom Inc.
505 Park Avenue, 21st floor
New York, NY 10022
Facsimile: (212) 527-3995
Attention: General Counsel
If to the Lender, to:
Metromedia International Group, Inc.
One Meadowlands Plaza
East Rutherford, N.J. 07076
Facsimile: (201) 531-2803
Attention: Arnold L. Wadler, Esq.
(with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Facsimile: (212) 757-3990
Attention: Douglas A. Cifu, Esq.)
Section 8.4 Successors and Assigns; Assignments.
(a) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Lender, all future holders of
the Notes and their respective successors and assigns, except that the Borrower
may not
<PAGE>
27
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Lender.
(b) Assignments. The Lender may, in accordance with applicable
law, at any time assign to any other Person (each an "Assignee") all or any part
of its rights and obligations under this Agreement, the Notes and any other Loan
Documents. The Borrower and the Lender agree that to the extent of any
assignment, the Assignee shall be deemed to have the same rights and benefits
under the Loan Documents as the Lender hereunder; provided that if the Assignee
is an Affiliate of the Lender, the Borrower shall be entitled to continue to
deal solely and directly with the Lender in connection with the interests so
assigned to the Assignee.
(c) Disclosure of Information. The Borrower authorizes the
Lender to disclose to any Participant or Assignee (each, a "Transferee") and any
prospective Transferee any and all financial and other information in the
Lender's possession concerning the Borrower which has been delivered to the
Lender by the Borrower pursuant to this Agreement or which has been delivered to
the Lender by the Borrower in connection with the Lender's credit evaluation of
the Borrower prior to entering into this Agreement.
Section 8.5 Amendments and Waivers. Neither this Agreement, any other
Loan Document to which the Borrower is a party, nor any terms hereof or thereof
may be amended, supplemented, modified or waived except in accordance with the
provisions of this Section. The Lender and the Borrower may, from time to time,
enter into written amendments, supplements, modifications or waivers for the
purpose of adding, deleting, changing or waiving any provisions to this
Agreement or any Note. Any such amendment, supplement, modification or waiver
shall apply to and shall be binding upon the Borrower, the Lender and all future
holders of such Notes or any portion thereof or participation therein. In the
case of any waiver, the Borrower and the Lender shall be restored to their
former position and rights hereunder and under the outstanding Notes, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing, but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
Section 8.6 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Lender or any subsequent holder of a Note in exercising any right,
power or privilege hereunder or under any other Loan Document and no course of
dealing between any Loan Party and the Lender or the subsequent holder of any
Note shall operate as a waiver thereof, nor shall any single or partial exercise
of any right, power or privilege hereunder or under any other Loan Document
preclude any other or further exercise thereof of the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Lender or the subsequent holder of any Note would otherwise
have. No notice to or demand on any Loan Party in any case shall entitle any
Loan Party to any other or further notice or demand in similar or other
<PAGE>
28
circumstances or constitute a waiver of the rights of the Lender or the
subsequent holder of any Note to any other or further action in any
circumstances without notice or demand.
Section 8.7 Governing Law, Submission to Jurisdiction. (a) THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).
(b) Any legal action or proceeding with respect to this
Agreement or any other Loan Document and any action for enforcement of any
judgment in respect thereof may be brought in the courts of the State of New
York or of the United States of America for the District of New York, and, by
execution and delivery of this Agreement, the Borrower hereby accepts for itself
and in respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and appellate courts from any thereof. The
Borrower irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, the Borrower at its
address set forth in Section 8.3. The Borrower hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Loan Document brought in the courts referred to above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum. Nothing herein shall affect the right of the
Lender or any holder of a Note to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against the Borrower
in any other jurisdiction.
Section 8.8 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
Section 8.9 Effectiveness. This Agreement shall become effective on the
date on which the Lender and the Borrower shall have each signed a counterpart
hereof and the Borrower shall have delivered the same to the Lender.
Section 8.10 Headings Descriptive. The headings of the several Sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
Section 8.11 Marshalling; Recapture. The Lender shall be under no
obligation to marshall any assets in favor of any Loan Party or any other party
or against
<PAGE>
29
or in payment of any or all of the Obligations. To the extent the Lender
receives any payment by or on behalf of any Loan Party, which payment or any
part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to such Loan Party or its
estate, trustee, receiver, custodian or any other party under any bankruptcy
law, state or federal law, common law or equitable cause, then to the extent of
such payment or repayment, the obligation or part thereof which has been paid,
reduced or satisfied by the amount so repaid shall be reinstated by the amount
so repaid and shall be included within the liabilities of such Loan Party to the
Lender as of the date such initial payment, reduction or satisfaction occurred.
Section 8.12 Severability. In case any provision in or obligation under
this Agreement or any Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
Jurisdiction, shall not in any way be affected or impaired thereby.
Section 8.13 Survival. All indemnities set forth herein shall survive
the execution and delivery of this Agreement and the Notes and the making and
repayment of the Loans hereunder.
Section 8.14 Limitation of Liability. No claim may be made by any Loan
Party or any other Person against the Lender or any of its Affiliates,
directors, officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement or any act, omission or event occurring in
connection herewith; and each Loan Party hereby waives, releases and agrees not
to sue upon any claim for any such damages, whether or not accrued and whether
or not known or suspected to exist in its favor.
Section 8.15 Calculations; Computations. The financial statements to be
furnished to the Lender pursuant hereto shall be made and prepared in accordance
with GAAP consistently applied throughout the periods involved and consistent
with GAAP as used in the preparation of the financial statements referred to in
Section 6.1
Section 8.16 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVES
ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY MATTER
ARISING HEREUNDER OR THEREUNDER.
Section 8.17 Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the Interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the
<PAGE>
30
"Maximum Rate") which may be contracted for, charged, taken, received or
reserved by the Lender holding such Loan in accordance with applicable law, the
rate of interest payable in respect of such Loan hereunder, together with all
Charges payable in respect thereof, shall be limited to the Maximum Rate and, to
the extent lawful, the Interest and Charges that would have been payable in
respect of such Loan but were not payable as a result of the operation of this
Section 8.17 shall be cumulated and the Interest and Charges payable to such
Lender in respect of other Loans or periods shall be increased (but not above
the Maximum Rate therefor) until such cumulated amount shall have been received
by Lender.
<PAGE>
31
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
PLD TELEKOM INC.
By: /s/ James R.S. Hatt
-------------------
Name: James R.S. Hatt
Title: Chairman, President and Chief
Executive Officer
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
<PAGE>
PLD TELEKOM INC.
SCHEDULES TO
BRIDGE LOAN AGREEMENT, DATED AS OF MAY 18, 1999
BETWEEN PLD TELEKOM INC. AND
METROMEDIA INTERNATIONAL GROUP, INC.
SCHEDULE 2.1 PLD TELEKOM, INC. MAY REQUEST LOANS IN THE FOLLOWING AGGREGATE
AMOUNTS DURING THE FOLLOWING MONTHS:
DATE LOAN
- ---- ----
MAY, 1999 $1,000,000
JUNE, 1999 2,000,000
JULY, 1999 1,000,000
AUGUST, 1999 1,000,000
SEPTEMBER, 1999 1,000,000
OCTOBER, 1999 1,000,000
----------
TOTAL $7,000,000
TO THE EXTENT PLD TELEKOM INC. BORROWS LESS THAN THE AMOUNT AVAILABLE FOR ANY
MONTH SPECIFIED ABOVE (EACH, A "SHORTFALL"), PLD TELEKOM INC. MAY BORROW THE
AGGREGATE AMOUNT OF ALL SUCH SHORTFALLS IN ANY SUCCEEDING MONTH PRIOR TO THE
FINAL MATURITY DATE, UP TO A MAXIMUM AMOUNT OF $7,000,000.
SCHEDULE 2.2 USE OF PROCEEDS: SEE ATTACHED ANNEX A
SCHEDULE 4.1 JURISDICTION IN WHICH PLD TELEKOM INC. IS QUALIFIED TO DO BUSINESS
AS A FOREIGN CORPORATION:
State of New York.
SCHEDULE 4.2 CAPITALIZATION OF PLD TELEKOM INC.:
37,846,789 shares of Common Stock of PLD Telekom Inc. (the "Company")
are issued and outstanding as of the date of the Agreement.
Schedule of outstanding warrants and options to purchase shares of the
Company's Common Stock as of the date of the Agreement is attached.
<PAGE>
In addition, the terms of the Company's 12% Series A and Series B
Revolving Credit Notes due 1998 provide for the issuance, in certain
specified circumstances, of additional and/or default warrants, all as
more fully described in the Company's Annual Report on Form 10-K/A for
the fiscal year ended December 31, 1998 ("1998 10-K") and its Quarterly
Report on Form 10-Q for the quarter ended March 31, 1999.
In connection with the acquisition of additional interests in Technocom
Limited in November 1997, the Company entered into revised put and call
agreements with the minority shareholders of Technocom (Elite
International Limited and Plicom Limited) regarding put and call option
arrangements for their remaining minority stakes. Pursuant to the terms
of such agreements, which are fully described in the Company's Annual
Report on Form 10-K/A for the fiscal year ended December 31, 1998, the
Company may be required to issue additional shares of Common Stock, in
addition to the payment of cash, in respect of such arrangements.
Pursuant to a Revolving Credit Agreement with News America Incorporated
("News America"), News America has the right to convert loans made to
the Company into shares of Common Stock, on a basis more fully described
in the Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1998.
Consents to the borrowings and any pledge will be required from:
(a) the holders of the Senior and Convertible Notes, (b) the Travelers
Parties, (c) News America, and (d) Plicom Limited and Elite
International Limited.
SCHEDULE 4.4 CONSENTS AND APPROVALS:
The terms of the Bridge Loan Agreement and the notes issued thereunder
will be described in the Company's periodic filings under the Securities
Exchange Act of 1934, as amended.
SCHEDULE 4.7 UNDISCLOSED LIABILITIES:
None.
SCHEDULE 4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS:
None.
2
<PAGE>
SCHEDULE 4.9 LEGAL PROCEEDINGS, ETC.:
None.
SCHEDULE 4.10 PERMITS:
None.
3
<PAGE>
EXHIBIT A
PLD TELEKOM INC.
PROMISSORY NOTE
$7,000,000 New York, New York
May 18, 1999
FOR VALUE RECEIVED, the undersigned, PLD TELEKOM INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to
METROMEDIA INTERNATIONAL GROUP, INC., or registered assigns (the "Lender"), on
the Final Maturity Date (as defined in Credit Agreement referred to below), in
lawful money of the United States of America and in immediately available funds,
the principal amount of $7,000,000 or, if less, the aggregate amount outstanding
of the Loans (as defined in the Credit Agreement referred to below). The
Borrower hereby unconditionally further agrees to pay interest in like money on
the unpaid principal amount hereof from time to time from the date hereof at the
rates and on the dates specified in Section 2.5 of the Bridge Loan Agreement
dated as of May 18, 1999 between the Borrower and the Lender (as amended,
modified or supplemented from time to time, the "Credit Agreement").
This Note is one of the Notes referred to in Section 2.4 of the Credit Agreement
and is entitled to the benefits thereof. All of the terms, conditions, and
covenants of the Credit Agreement are expressly made a part of this Note by
reference in the same manner and with the same effect as if set forth herein.
This Note is a registered Note and, as provided in the Credit Agreement upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for like principal amount will be issued to and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Borrower
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the
Borrower will not be affected by any notice to the contrary. Any transferee of
this Note, by its acceptance hereof, agrees to be bound by all the terms,
conditions and covenants of the Credit Agreement applicable to the holder of a
Note.
The principal amount of this Note, together with all accrued and unpaid interest
thereon, is convertible into Common Stock of the Borrower at any time and from
time to time, as, and subject to the conditions and limitations, specified in
the Credit Agreement.
<PAGE>
As provided in the Credit Agreement, the Loans evidenced by this Note are
subject to optional and mandatory repayments, in whole and in part, all as
specified in the Credit Agreement.
If an Event of Default, as defined in the Credit Agreement, occurs and is
continuing, all amounts remaining unpaid on this Note shall become, or may be
declared to be, immediately due and payable, all as provided therein.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES
THEREOF RELATING TO CONFLICTS OF LAW).
PLD TELEKOM INC.
By: _______________________
Name:
Title:
2
<PAGE>
Schedule of Principal Advances and Repayments
Amount of Amount of Amount of
Principal Interest Principal
Date Advance Payment Repayment
- -------------- --------- --------- ---------
3
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT (this "Pledge Agreement"), dated as of
May 18, 1999, made by PLD Telekom Inc., a Delaware corporation (the "Pledgor"),
as a pledgor hereunder, and Metromedia International Group, Inc., a Delaware
corporation (the "Secured Party").
W I T N E S S E T H
WHEREAS, the Borrower has entered into a Bridge Loan Agreement, dated
as of the date hereof, with the Secured Party (as amended, supplemented or
otherwise modified from time to time, the "Loan Agreement" and capitalized terms
not defined herein but defined therein being used herein as therein defined);
WHEREAS, the Pledgor, is the legal and beneficial owner of the shares
of capital stock described on Exhibit A (the "Pledged Shares"); and
WHEREAS, it is a condition precedent to the effectiveness of the Loan
Agreement and the obligation of the Secured Party to make the Loan contemplated
thereby that the Pledgor shall have entered into this Pledge Agreement;
NOW, THEREFORE, in consideration of the premises, the Pledgor hereby
agrees with the Secured Party as follows:
SECTION 1. (a) Pledge Assignment and Grant of Security. The Pledgor
hereby assigns and pledges to the Secured Party, and hereby grants a security
interest to the Secured Party in the following (the "Collateral"):
(i) all of the Pledged Shares;
(ii) all of its rights and privileges with respect to the Pledged
Shares;
(iii) the certificates representing the shares referred to in clause
(i) above (clauses (i) and (ii) the "Pledged Collateral"); and
(iv) all dividends, distributions, income, profits, warrants, rights,
options, cash, instruments and other property or proceeds, from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing, including by way of split-up, spin-off,
reclassification or other corporate rearrangement.
<PAGE>
2
SECTION 2. Security for Obligations. This Pledge Agreement secures and
the Collateral is secured for, the full and prompt payment when due (whether at
stated maturity, by acceleration or otherwise) of, and the performance of, the
Loan and all other advances, debts, liabilities, obligations, covenants and
duties owing by the Pledgor to the Secured Party pursuant to the Loan Documents,
whether now or hereafter existing and whether for principal, interest, fees,
expenses or otherwise (the "Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of the Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, and, if applicable, with
annotation of the pledge on each of the stock certificates and the shareholders'
register of the issuer, each duly notarized, all in form and substance
satisfactory to the Secured Party. The Secured Party shall have the right, at
any time in its discretion and without notice to the Pledgor, to transfer to or
to register in its name or in the name of any of its nominees any or all of the
Pledged Collateral. In addition, the Secured Party shall have the right at any
time to exchange certificates or instruments representing or evidencing any of
the Pledged Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 4. Representations and Warranties. The Pledgor makes the
following representations:
(a) The Pledged Shares (i) have been duly authorized and validly
issued, (ii) are fully paid and non-assessable and (iii) constitute the
percentage of the issued and outstanding shares of stock of the respective
issuers thereof set forth on Exhibit A.
(b) The Pledgor is the legal and beneficial owner of the Pledged Shares
described on Exhibit A, all of which are free and clear of any lien, security
interest, option or other charge or encumbrance except for the lien created by
this Pledge Agreement.
(c) The pledge and grant of the Collateral pursuant to this Pledge
Agreement creates a valid and perfected first priority security interest in the
Collateral in favor of the Secured Party, securing the payment of all of the
Obligations.
(d) Except as set forth on Schedule 1 hereto, no consent,
authorization, approval, or other action by, and no notice to or filing with,
any foreign or domestic governmental authority is required either (i) for the
pledge by the Pledgor of the Collateral owned by the Pledgor pursuant to this
Pledge Agreement or for the due execution, delivery or performance of this
Pledge Agreement by the Pledgor or (ii) for the exercise by the Secured Party of
the voting or other rights
<PAGE>
3
provided for in this Pledge Agreement or of the remedies in respect of the
Collateral pursuant to this Pledge Agreement, except as may be required in
connection with the disposition of the Pledged Collateral by Laws affecting the
offering and sale of securities generally.
(e) Except as set forth on Schedule 1 hereto, the Pledgor is not and
will not become a party to or its otherwise bound or will become bound by, by
any agreement, other than this Pledge Agreement, which restricts in any manner
whatsoever the rights of any present or future holder of any of the Pledged
Shares.
(f) Upon delivery to the Secured Party of the Pledged Shares and
annotation of the pledge on the stock certificates and on the shareholders'
register of the issuer, the Secured Party will have a valid and perfected
security interest in the Pledged Shares pursuant to Irish law.
SECTION 5. Further Assurances, Etc. (a) The Pledgor agrees that at any
time and from time to time, at the cost and expense of the Pledgor, the Pledgor
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that the Secured
Party may request, in order to perfect and protect the lien granted or purported
to be granted hereby or to enable the Secured Party to exercise and enforce its
rights and remedies hereunder with respect to any Collateral.
(b) The Pledgor agrees to defend the title to the Collateral and the
lien thereon of the Secured Party against the claim of any other Person and to
maintain and preserve such lien until indefeasible payment in full of all of the
Obligations.
(c) As may be required pursuant to any applicable law (including
without limitation Irish law), (i) the Pledgor shall deliver all certificates or
other documents representing the Pledged Collateral to the Secured Party with
all necessary stock transfer or other powers duly indorsed in blank, and (ii) in
the event Pledgor obtains possession of any other stock certificates, or other
securities or instruments forming a part of the Collateral, Pledgor shall
promptly deliver same to Secured Party together with all necessary stock
transfer or other powers duly indorsed in blank. Prior to any such delivery, any
Collateral in Pledgor's possession shall be held by Pledgor in trust for the
Secured Party.
SECTION 6. Voting Rights; Dividends; Etc.
(a) As long as no Event of Default shall have occurred and be
continuing (or, in the case of subsection (a)(i) of this Section 6, as long as
no notice thereof shall have been given by the Secured Party to the Pledgor):
<PAGE>
4
(i) The Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Collateral owned by
the Pledgor or any part thereof for any purpose not inconsistent with the terms
of this Pledge Agreement or any other Loan Document; provided, however, that the
Pledgor shall not exercise or shall refrain from exercising any such right if,
in the Secured Party's judgment, such actions would have a material adverse
effect on the value of the Pledged Collateral or any part thereof; and provided,
further, that the Pledgor shall give the Secured Party at least five business
days' written notice of the manner in which it intends to exercise, or its
reasons for refraining from exercising, any such right.
(ii) The Pledgor shall be entitled to receive and retain any
and all dividends and other distributions paid in respect of the Pledged
Collateral owned by the Pledgor, other than any and all
(A) dividends and other distributions paid or payable other
than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in cash
in respect of any Pledged Shares in connection with a partial or total
liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid- in-surplus, and
(C) cash paid, payable or otherwise distributed in redemption
of, or in exchange for, any Pledged Collateral,
all of which shall be forthwith delivered to the Secured party to hold as
Pledged Collateral and shall, if received by the Pledgor, be received in trust
for the benefit of the Secured Party, be segregated from the other property or
funds of the Pledgor, and be forthwith delivered to the Secured Party as Pledged
Collateral in the same form as so received (with any necessary endorsement).
(iii) The Secured Party shall execute and deliver (or cause to
be executed and delivered) to the Pledgor all such proxies and other instruments
as the Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to paragraph (i) above and to receive the dividends or other distributions which
it is authorized to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default
(i) Upon notice by the Secured Party to the Pledgor, all
rights of the Pledgor to exercise the voting and other consensual rights which
it would otherwise
<PAGE>
5
be entitled to exercise pursuant to Section 6(a)(i) above shall cease, and all
such rights shall thereupon become vested in the Secured party who shall
thereupon have the sole right to exercise such voting and other consensual
rights.
(ii) All rights of the Pledgor to receive the dividends and
other distributions which it would otherwise be authorized to receive and retain
pursuant to Section 6(a)(ii) above shall cease, and all such rights shall
thereupon become vested in the Secured Party who shall thereupon have the sole
rights to receive and hold as Pledge Collateral such dividends and other
distributions.
(iii) All dividends and other distributions which are received
by the Pledgor contrary to the provisions of paragraph (ii) of this Section 6(b)
shall be received in trust for the benefit of the Secured Party, shall be
segregated from other funds of the Pledgor and shall be forthwith paid over to
the Secured Party as Pledged Collateral in the same form as so received (with
any necessary endorsement).
(iv) The Pledgor shall, if necessary to permit the Secured
Party to exercise the voting and other rights which it may be entitled to
exercise pursuant to Section 6(b)(i) above and to receive all dividends and
distributions which it may be entitled to receive under Section 6(b)(ii) above,
execute and deliver to the Secured Party, from time to time and upon written
notice of the Secured Party, appropriate proxies, dividend payment orders and
other instruments as the Secured Party may reasonably request. The foregoing
shall not in any way limit the Secured Party's power and authority granted
pursuant to Section 8 hereof.
SECTION 7. Transfers and Other Liens. (a) The Pledgor agrees that it
will not, without the prior written consent of the Secured Party (i) sell or
otherwise dispose of, or grant any option or warrant with respect to, any of the
Collateral, or (ii) create or permit to exist any lien, security interest,
option or other charge or encumbrance upon or with respect to any of the
Collateral, except for the lien created pursuant to this Pledge Agreement.
(b) The Pledgor agrees that it will cause each issuer of the
Pledged Shares not to issue any shares of stock or other securities in addition
to or in substitution for the Pledged Shares, except, with the written consent
of the Secured Party, to the Pledgor.
SECTION 8. Secured Party Appointed Attorney-in-Fact and Proxy. The
Pledgor hereby irrevocably constitutes and appoints the Secured Party and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact and proxy with full irrevocable power and authority in
the place and stead of the Pledgor and in the name of the Pledgor or in its own
name, from time to time in the Secured Party's discretion, for the purpose of
carrying out the terms of this Pledge Agreement, to take any and all appropriate
action and to execute and deliver any and all documents and instruments which
the Secured Party may deem
<PAGE>
6
necessary or advisable to accomplish the purposes of this Pledge Agreement,
including, without limitation, to receive, indorse and collect all instruments
made payable to the Pledgor representing any dividend or other distribution or
payment in respect of the Collateral or any part thereof, to give full discharge
for the same, and to vote or grant any consent in respect of the Pledged Shares
authorized by Section 6(b) hereof. The Pledgor hereby ratifies, to the extent
permitted by law, all that any said attorney shall lawfully do or cause to be
done by virtue hereof. This power, being coupled with an interest, is
irrevocable until the Obligations are indefeasibly paid in full.
SECTION 9. Secured Party May Perform. If the Pledgor fails to perform
any agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of the Secured Party incurred
in connection therewith shall be payable by the Pledgor under Section 12 hereof
and constitute Obligations secured hereby.
SECTION 10. Reasonable Care. The Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Secured Party accords its own property, it being understood that
the Secured Party shall not have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not the Secured Party has
or is deemed to have knowledge of any such matter, (ii) taking any necessary
steps to preserve rights against any person with respect to any Collateral or
(iii) any loss or damage to any of the Collateral or for any change in the value
thereof by reason of any good faith act or omission of Secured Party or its
agents.
SECTION 11. Remedies upon Default. If any Event of Default shall have
occurred and be continuing:
(a) The Secured Party may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party after
default under the Uniform Commercial Code (the "Code") in effect in the State of
New York at that time, and the Secured Party may also, without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange, broker's board or at any office of
the Secured Party or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Secured Party may deem commercially reasonable. The
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least 10 days' notice to the Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. The Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by announcement at
<PAGE>
7
the time and placed fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. The Pledgor hereby
waives any claims against the Secured Party arising by reason of the fact that
the price at which any Collateral may have been sold at such a private sale was
less than the price which might have been obtained at a public sale, even if the
Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree.
(b) If the Secured Party shall determine to exercise its right
to sell all or any of the Pledged Collateral pursuant to this Section 11, the
Pledgor agrees that, upon request of the Secured Party, the Pledgor will, at its
own cost and expense:
(i) execute and deliver, and use its best efforts to
cause each issuer of the Pledged Shares and its directors, officers and/or
partners to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts and things, as may be necessary or, in the
opinion of the Secured Party, necessary or advisable to register such Pledged
Shares under the provisions of the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and to cause the registration statement relating
thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make or cause to be
made all amendments and supplements thereto and to the related prospectus which,
in the opinion of the Secured Party, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission ("SEC") applicable
thereto;
(ii) use its best efforts to qualify the Pledged
Collateral under the state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Pledged Collateral, as
requested by the Secured Party;
(iii) make available to its security holders, as soon
as practicable, an earning statement which will satisfy the provisions of
Section 11(a) of the Securities Act;
(iv) obtain all approvals, authorizations and
consents as may be required under applicable law and regulations; and
(v) do or cause to be done all such other acts and
things as may be necessary to make such sale of the Pledged Collateral or any
part thereof valid and binding and in compliance with applicable law (including
without limitation under Irish law).
The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by the Secured Party by reason of the failure by
the Pledgor to perform any of the covenants in this Section 11 and,
consequently, agrees
<PAGE>
8
that, if the Pledgor shall fail to perform any of such covenants, it shall pay,
as liquidated damages and not as a penalty, an amount equal to the value of the
Collateral on the date the Secured Party shall demand compliance with this
Section.
(c) The Pledgor recognizes that, by reason of the
aforementioned requirements and certain prohibitions contained in the Securities
Act and applicable state securities laws, the Secured Party may, at its option,
elect not to require the Pledgor to register all or any part of the Pledged
Collateral and may therefore be compelled, with respect to any sale of all or
any part of the Pledged Collateral, to limit purchasers to those who will agree,
among other things, to acquire such securities for their own account, for
investment, and not with a view of the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale
without such restrictions and, notwithstanding such circumstances, agrees that
any such sale shall be deemed to have been made in a commercially reasonable
manner. The Secured Party shall be under no obligation to delay the sale of any
of the Pledged Collateral for the period of time necessary to permit the Pledgor
to register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Pledgor would agree to do so.
(d) If the Secured Party determines to exercise its right to
sell any or all of the Pledged Collateral, upon written request, the Pledgor
shall, and shall use best efforts to cause the issuers of the Pledged Shares to,
from time to time, furnish to the Secured Party all such information as the
Secured Party may request in order to determine the number of shares and other
instruments included in the Pledged Collateral which may be sold by the Secured
Party as exempt transactions under the Act and rules of the SEC thereunder, as
the same are from time to time in effect.
(e) Any cash held by the Secured Party as Collateral and all
cash proceeds received by the Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be applied by the Secured Party:
First, to the payment of the costs and expenses of such sale,
including, without limitation, reasonable expenses of the Secured Party and its
agents including the fees and expenses of its counsel, and all expenses,
liabilities and advances made or incurred by the Secured Party in connection
therewith or pursuant to Section 9 hereof;
Next, to the Secured Party for the payment in full of the
Obligations; and
<PAGE>
9
Finally, after payment in full of all of the Obligations to
the payment to the Pledgor or its successors or assigns, or to whomsoever may be
lawfully entitled to receive the same as a court of competent jurisdiction may
direct.
SECTION 12. Expenses. The Pledgor will upon demand pay to the Secured
Party the amount of any and all reasonable expenses, including, without
limitation, the reasonable fees and expenses of the Secured Party's counsel and
of any experts and agents, which the Secured Party may incur in connection with
(i) the administration of this Pledge Agreement, (ii) the custody or
preservation of, sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights and remedies
hereunder of the Secured Party, or (iv) the failure of the Pledgor to perform or
observe any of the provisions hereof.
SECTION 13. Security Interest Absolute. All rights of the Secured Party
and security interests hereunder, and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any provision of
this Pledge Agreement, the Loan Agreement, the Note or any other Loan Document
or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, or any increase in the amount of, all or any of the
Obligations, or any other amendment or waiver of any term of, or any consent to
any departure from any requirement of, this Pledge Agreement, the Loan
Agreement, the Note or any other Loan Documents;
(iii) any exchange, release or non-perfection of any lien on
any other collateral, or any release or amendment or waiver of any term of any
guaranty of, or consent to departure from any requirement of any guaranty of,
all or any of the Obligations; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, a borrowing or a pledgor.
SECTION 14. Amendments, Etc. No amendment or waiver of any provision of
this Pledge Agreement nor consent to any departure by the Pledgor herefrom shall
in any event be effective unless the same shall be in writing and signed by the
Secured Party, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 15. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing and shall be delivered to the
addresses set forth in, and deemed delivered as set forth in, the Loan
Agreement.
<PAGE>
10
SECTION 16. Continuing Security Interest Transfer of Notes or
Obligations. This Pledge Agreement shall create a continuing security interest
in the Collateral and shall (i) remain in full force and effect until
indefeasible payment in full of the Obligations, (ii) be binding upon the
Pledgor, the Pledgor's heirs, legal representatives, successors and assigns and
(iii) inure, together with the rights and remedies of the Secured Party
hereunder, to the benefit of and be enforceable by the Secured Party and its
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (iii), the Secured Party may assign or otherwise
transfer any note held by it or Obligation owing to it to any other Person, and
such other Person shall thereupon become vested with all the rights in respect
thereof granted to the Secured Party herein or otherwise with respect to such of
the notes or Obligations so transferred or assigned. Upon the indefeasible
payment in full of the Obligations, the Pledgor shall be entitled to the return,
upon its request and at its expense, of such of the Collateral owned by the
Pledgor as shall not have been sold or otherwise applied pursuant to the terms
hereof.
SECTION 17. Governing Law; Severability; Terms. This Pledge Agreement
shall be governed by, and be construed and interpreted in accordance with, the
law of the State of New York without regard to conflicts of law principles
thereof except as otherwise required by Irish law and except to the extent that
remedies provided by laws of any jurisdiction other than New York are governed
by the laws of such jurisdiction. Wherever possible, each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Pledge Agreement shall
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity and without
invalidating the remaining provisions of this Pledge Agreement. Unless otherwise
defined herein or in the Agreement, terms defined in Article 9 of the Uniform
Commercial Code as in effect in the State of New York are used herein as therein
defined.
Section 18. Waiver of Jury Trial. The Pledgor waives any right it may
have to a trial by jury in respect of any litigation based on, or arising out
of, under or in connection with, this Pledge Agreement or any other Loan
Document, or any course of conduct, course of dealing, verbal or written
statement or other action of the Pledgor or the Secured Party.
Section 19. Section Titles. The Section titles contained in this Pledge
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not part of this Pledge Agreement.
<PAGE>
11
IN WITNESS WHEREOF, the undersigned, as Pledgor hereunder, has duly
executed and delivered the Pledge Agreement on the date first above written.
PLD TELEKOM INC.
By: /s/ James R.S. Hatt
-------------------
Name: James R.S. Hatt
Title: Chairman, President and Chief
Executive Officer
Accepted and Acknowledged:
METROMEDIA INTERNATIONAL GROUP, INC. as Secured Party
By: /s/ Silvia Kessel
-----------------
Name: Silvia Kessel
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
<PAGE>
12
Exhibit A
---------
115 Ordinary Shares of Technocom Limited.
<PAGE>
13
Schedule 1
Required Consents, etc. (Section 4(d))
- -----------------------
Travelers Revolving Credit Agreement
Indentures, as amended, pursuant to which the 14% Senior Discount Notes and the
9% Convertible Subordinated Notes have been issued
Revolving Credit Agreement with News America Incorporated
Put and Call Option Agreements, as amended, with Plicom Limited and
Elite International Limited
Agreements affecting shares (Section 4(e))
- ---------------------------
Subscription and Shareholders Agreement relating to Technocom, as amended
