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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K/A
(AMENDMENT NO. 1)
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
PLD TELEKOM INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 0-20444 13-3950002
(STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) FILE NUMBER) ID NO.)
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505 PARK AVENUE, 21ST FLOOR 10022
NEW YORK, NEW YORK (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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(212) 527-3800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
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PLD TELEKOM INC. HEREBY AMENDS THIS CURRENT REPORT ON FORM 8-K, FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1999.
ITEM 5. OTHER EVENTS.
On May 18, 1999 PLD Telekom Inc. (the "Company") entered into an agreement
(the "Merger Agreement") with MMG International Group, Inc. ("MMG") pursuant to
which the Company would merge with Moscow Communications, Inc., a newly formed,
wholly owned subsidiary of MMG.
MMG is a global communications company engaged in the development and
operation of a variety of communications businesses, including cellular
telecommunications, fixed telephony, international and long distance telephony,
cable television, paging and radio broadcasting, in Eastern Europe, the former
Soviet Union, China and other selected emerging markets. Its common stock is
listed on the American and Pacific Stock Exchanges, under the symbol MMG.
Upon consummation of the merger (the "Merger"), the Company will become a
wholly owned subsidiary of MMG, and the holders of shares of common stock (the
"Common Stock") of the Company will receive shares of MMG on the basis of an
exchange ratio determined in the manner set forth below:
(a) if the Average MMG 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 MMG Stock Price;
(b) if the Average MMG 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 MMG Stock Price is greater than $8.00, the exchange
ratio will be equal to $4.48 divided by the Average MMG Stock Price;
and
(d) if the Average MMG Stock Price is less than $5.25, then the exchange
ratio will be 0.6667. However, the Company has the right to terminate
the Merger Agreement if the Average MMG Stock Price is less than $5.25
if MMG does not agree to increase (or "top up") the exchange ratio to
an amount equal to $3.50 divided by the Average MMG Stock Price, and
the further right to terminate the Merger Agreement in all events
(without MMG having any "top up" right) if the Average MMG Stock Price
is less than $4.00.
The "Average MMG Stock Price" is to be determined by taking the average of
the daily closing prices of the common stock of MMG on the American Stock
Exchange Composite Transactions Tape for the twenty consecutive trading days
ending on the third business day immediately prior to the meeting of the
shareholders of the Company which will be called to approve the Merger.
The Company's Series II and Series III Preferred Shares will be redeemed
for cash for a redemption price of Cdn. $1.00 per share. Outstanding options and
warrants to acquire the Company's Common Stock will be converted into options
and warrants of MMG on the basis of the exchange ratio, and any of the Company's
9% Convertible Subordinated Notes due 2006 (the "Convertible Notes"), which are
not exchanged under the terms of the exchange offer described below and are
still outstanding, will be assumed by MMG and may be convertible into common
stock of MMG also on the basis of the exchange ratio.
Salomon Smith Barney Inc., who have acted as financial advisors to the
Company, have opined to the Board of Directors of the Company that the exchange
ratio is fair from a financial point of view to the Company, and Donaldson,
Lufkin & Jenrette Securities Corporation, who have acted as financial advisors
to MMG, have opined to the Board of Directors of MMG that the exchange ratio is
fair from a financial point of view to MMG.
In connection with the Merger Agreement, News America Incorporated ("News
America") which, through an affiliate, owns approximately 38% of the Company's
Common Stock, has entered into an agreement (the "Voting Agreement") with MMG
pursuant to which News America has agreed to vote its Common Stock in favor of
the Merger Agreement and not to vote for, solicit, discuss or support any other
2
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transaction involving the Company which could have the effect of interfering
with, preventing or materially delaying the Merger.
In addition, MMG has entered into a bridge loan agreement with the Company
pursuant to which MMG has agreed to lend the Company up to $7 million secured by
an approximately 58% interest in the Company's subsidiary, Technocom Limited
("Technocom") at an annual interest rate of 10% to fund its ongoing operations
during the period from the execution of the Merger Agreement to the date that
the Merger is consummated (or the Merger Agreement is terminated).
The consummation of the Merger Agreement is subject to a number of
conditions, including the approval of the Merger by the shareholders of the
Company and of MMG, the receipt of various governmental clearances and consents,
the absence of any material adverse change in the Company's or MMG's respective
businesses and operations and other customary closing conditions. In addition,
it is subject to a number of other conditions, as follows:
(a) Exchange Offer. At least 95% in aggregate principal amount of each of
the Company's 14% Senior Discount Notes due 2004 (the "Senior Notes")
and of the Convertible Notes (and, together with the Senior Notes, the
"Outstanding Company Notes") shall have amended the indentures
governing the Outstanding Company Notes (the "Existing Indentures") and
exchanged such Notes for new 10 1/2% Senior Notes due 2007 of MMG (the
"New MMG Notes"). In this connection substantially all of the holders
of the Outstanding Company Notes have entered into an agreement with
MMG, subject to the consummation of the Merger and certain other
conditions, to: (i) defer to the date the Merger is consummated all
interest payable on the Outstanding Company Notes during the period
from the execution of the Merger Agreement to the date the Merger is
consummated; (ii) amend the Existing Indentures, and (iii) tender all
Outstanding Company Notes held by them for New MMG Notes.
(b) Modification of Travelers Revolving Credit Agreement. The Travelers
Insurance Company and The Travelers Indemnity Company (collectively,
the "Travelers Parties") shall have consummated the transactions
contemplated by a note and warrant modification agreement (the
"Travelers Note Modification Agreement") entered into between them
simultaneous with the execution of the Merger Agreement. Under the
Travelers Note Modification Agreement the Travelers Parties have agreed
not to exercise any warrants held by them, or certain other rights
which they have due under the Revolving Credit and Warrant Agreement
dated November 26, 1997 with the Company, as amended (the "Travelers
Revolving Credit Agreement"), until the Merger is consummated (or the
Merger Agreement is terminated). In addition, MMG and the Travelers
Parties have agreed that, in the event that the Merger is consummated:
(i) the guarantees given by News America with respect to $3.1 million
of the amount due to the Travelers Parties will be released; (ii) the
amount due to the Travelers Parties will be paid, as to $8.5 million,
on the date the Merger is consummated, and as to the remaining $4.92
million in August 2000, together with interest at an annual rate of
10.5%; (iii) in lieu of their rights under the Travelers Revolving
Credit Agreement to receive warrants to purchase Common Stock of the
Company, the Travelers Parties will receive at closing 100,000 shares
of the Company's Common Stock (which will be converted at closing into
shares of MMG at the applicable exchange ratio) and 10-year warrants to
purchase 700,000 shares of common stock of MMG at a price based upon
125% of the average closing price of such common stock during December
2000, but not to be less than $10 per share or more than $15 per share;
and (iv) the Travelers Revolving Credit Agreement will be amended and
restated to reflect the foregoing matters and to provide certain
additional guarantees of the amounts due to the Travelers Parties.
(c) News Letter Agreement. News America and MMG shall have consummated the
arrangements contemplated by a letter agreement (the "News Letter
Agreement") entered into between them simultaneous with the execution
of the Merger Agreement. Under the News Letter Agreement News America
has agreed not to exercise any rights under its Revolving Credit
Agreement dated as
3
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of September 30, 1998 with the Company, as amended (the "News Revolving
Credit Agreement") until the Merger is consummated (or the Merger
Agreement is terminated), and MMG has agreed that, on the date that the
Merger is consummated, it will cause: (i) the amount advanced by News
America under the News Revolving Credit Agreement, namely, $6.45
million, to be repaid in full, together with interest at an annual rate
of 10% (in lieu of the 20% rate specified in the News Revolving Credit
Agreement); and (ii) the guarantees given by News America to the
Travelers Parties to be cancelled.
(d) Technocom Put/Call Agreement. The Company shall have completed the
purchase of the shares of Technocom from Plicom Limited ("Plicom") and
Elite International Limited ("Elite") in accordance with option
modification agreements with each of them (the "Option Modification
Agreements") being entered into simultaneous with the execution of the
Merger Agreement. Under the Option Modification Agreements, Plicom and
Elite have agreed not to exercise their rights under their current put
and call agreements with the Company to require the Company to purchase
their interests in Technocom (currently exercisable after June 30,
1999) until the Merger is consummated (or the Merger Agreement is
terminated), and the Company has agreed that, on the date that the
Merger is consummated, it will purchase Plicom's remaining 14.57%
interest in Technocom for $8.75 million, and Elite's remaining 5.03%
interest in Technocom for $3.85 million, such sums representing 50% of
the amounts to which such parties would have otherwise been entitled
had they exercised their rights under their current put and call
agreements. In addition, the Company has agreed to pay various other
amounts due to Plicom and to cause its release from any guarantees of
obligations undertaken at the request of the Company, and various other
agreements with Plicom and Elite will be terminated.
The Merger Agreement and the Merger have been unanimously approved by the
Boards of Directors of both MMG and the Company, and each Board is recommending
their approval by their respective stockholders.
The Merger Agreement may be terminated in its entirety by either MMG or the
Company 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. MMG also has the right to terminate the Merger Agreement in the event
that the Board of Directors of the Company withdraws or modifies its approval of
the Merger or recommends (or fails to recommend against) a different transaction
to the stockholders of the Company.
In the event that MMG terminates the Merger Agreement as a result of the
Company'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 the Company of the Merger Agreement, or as a
result of the stockholders of the Company not approving the Merger at a time
when a different transaction had been announced, the Company will pay MMG a
termination fee of $6.25 million plus its expenses (up to a maximum of $1
million).
The Company hereby incorporates by reference the press release relating to
the Merger and the related transactions, which is attached hereto as Exhibit
99.1 and made a part hereof, into this Item 5.
In addition, the Merger Agreement among MMG, Moscow Communications, Inc.
and the Company, together with the agreements entered into by the Company in
connection with the Merger Agreement, are filed as exhibits to this Report, and
are incorporated into and made a part of this Item 5.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired: None
(b) Pro Forma Financial Information: None
4
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(c) Exhibits:
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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 Bridge Loan Agreement, dated as of May 18, 1999, between PLD
Telekom Inc., as borrower, and Metromedia International
Group, Inc., as lender.
99.4 Pledge and Security Agreement, dated as of May 18, 1999,
between PLD Telekom Inc., as pledgor, and Metromedia
International Group, Inc.
99.5 Agreement to Exchange and Consent, dated as of May 18, 1999,
entered into between Metromedia International Group, Inc.
and the holders of PLD Telekom Inc.'s outstanding 14% Senior
Discount Notes due 2004 and 9% Convertible Subordinated
Notes due 2006.
99.6 Letter 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 Voting Agreement, dated as of May 18, 1999, among Metromedia
International Group, Inc., PLD Telekom Inc., News America
Incorporated and News PLD LLC.
99.11 Registration Rights Agreement, dated as of May 18, 1999,
among Metromedia International Group, Inc., PLD Telekom
Inc., News America Incorporated and News PLD LLC.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment No. 1 to this report to be signed on
its behalf by the undersigned thereunto duly authorized.
PLD TELEKOM INC.
By: /s/ SIMON EDWARDS
------------------------------------
Simon Edwards
Chief Financial Officer
and Treasurer
Date: August 30, 1999
6
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EXHIBIT INDEX
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EXHIBIT
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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 Bridge Loan Agreement, dated as of May 18, 1999, between PLD
Telekom Inc., as borrower, and Metromedia International
Group, Inc., as lender.
99.4 Pledge and Security Agreement, dated as of May 18, 1999,
between PLD Telekom Inc., as pledgor, and Metromedia
International Group, Inc.
99.5 Agreement to Exchange and Consent, dated as of May 18, 1999,
entered into between Metromedia International Group, Inc.
and the holders of PLD Telekom Inc.'s outstanding 14% Senior
Discount Notes due 2004 and 9% Convertible Subordinated
Notes due 2006.
99.6 Letter 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 Voting Agreement, dated as of May 18, 1999, among Metromedia
International Group, Inc., PLD Telekom Inc., News America
Incorporated and News PLD LLC.
99.11 Registration Rights Agreement, dated as of May 18, 1999,
among Metromedia International Group, Inc., PLD Telekom
Inc., News America Incorporated and News PLD LLC.
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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 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
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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.
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
<PAGE> 3
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.
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EXECUTION COPY
EXHIBIT 99.2
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AGREEMENT AND PLAN OF MERGER
among
PLD TELEKOM INC.,
METROMEDIA INTERNATIONAL GROUP, INC.
and
MOSCOW COMMUNICATIONS, INC.
Dated as of May 18, 1999
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TABLE OF CONTENTS
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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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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
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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
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
</TABLE>
v
<PAGE> 7
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
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)
</TABLE>
vi
<PAGE> 8
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
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)
</TABLE>
vii
<PAGE> 9
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
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)
</TABLE>
viii
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<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
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)
</TABLE>
ix
<PAGE> 11
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> 12
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> 13
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> 14
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> 15
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> 16
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> 17
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> 18
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> 19
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.
<PAGE> 20
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> 21
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.
<PAGE> 22
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> 23
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> 24
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> 25
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> 26
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> 27
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 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 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
<PAGE> 28
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.
<PAGE> 29
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> 30
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. Section 9601
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Clean
Air Act, 42 U.S.C. Section 7401 et seq., the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Section 121 et seq., the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq., the Asbestos Hazard Emergency
Response Act, 15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act, 42
U.S.C. Section 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
<PAGE> 31
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,
<PAGE> 32
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
Intellectual 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
<PAGE> 33
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
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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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(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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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 section 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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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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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
Intellectual 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. 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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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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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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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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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.
<PAGE> 54
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,
<PAGE> 56
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,
recapitalization, 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 Transaction 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 foregoing; 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
Transaction 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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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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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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(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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(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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(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;
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(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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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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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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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 Sections 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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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 UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS 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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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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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.
<PAGE> 74
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.
<PAGE> 75
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
<PAGE> 1
EXECUTION COPY
EXHIBIT 99.3
- -------------------------------------------------------------------------------
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> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
</TABLE>
Exhibit A - Form of Note
Exhibit B - Form of Pledge Agreement
ii
<PAGE> 4
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).
<PAGE> 5
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> 6
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
<PAGE> 7
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> 8
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> 9
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.
<PAGE> 10
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
<PAGE> 11
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.
<PAGE> 12
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.
<PAGE> 13
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 subdivision 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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(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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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
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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> 17
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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> 18
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> 19
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> 20
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
erger 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.
<PAGE> 21
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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> 22
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> 23
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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> 24
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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> 25
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> 26
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> 27
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> 28
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> 29
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> 30
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> 31
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> 32
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> 33
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> 34
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> 35
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> 36
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> 37
SCHEDULE 4.9 LEGAL PROCEEDINGS, ETC.:
None.
SCHEDULE 4.10 PERMITS:
None.
2
<PAGE> 38
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> 39
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> 40
Schedule of Principal Advances and Repayments
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Amount of Amount of Amount of
Principal Interest Principal
Date Advance Payment Repayment
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3
<PAGE> 1
EXECUTION COPY
EXHIBIT 99.4
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
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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
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
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(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
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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
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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
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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
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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
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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
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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
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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
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Exhibit A
---------
115 Ordinary Shares of Technocom Limited.
<PAGE> 13
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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
<PAGE> 1
EXECUTION COPY
EXHIBIT 99.5
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
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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
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
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
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
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
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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
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
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(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
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
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
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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
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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
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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
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
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
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
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
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
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
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/ DAVID SENECAL
---------------------------------------
Name: David Senecal
Title: Director
<PAGE> 22
22
PHOENIX MULTI-SECTOR FIXED INCOME FUND
By: /s/ DAVID SENECAL
---------------------------------------
Name: David Senecal
Title: Director
PHOENIX EDGE MULTI-SECTOR FIXED INCOME
FUND
By: /s/ DAVID SENECAL
---------------------------------------
Name: David Senecal
Title: Director
<PAGE> 23
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
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
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
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
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
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
29
EXHIBIT A
Term Sheet for New Notes will be attached as Exhibit A.
<PAGE> 30
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
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
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> 1
EXECUTION COPY
EXHIBIT 99.6
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
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
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
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
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
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
<PAGE> 1
EXECUTION COPY
EXHIBIT 99.7
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
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
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
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
<PAGE> 1
EXECUTION COPY
EXHIBIT 99.8
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
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
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
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
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
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
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
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
<PAGE> 1
EXECUTION COPY
EXHIBIT 99.9
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
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
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
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
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
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
<PAGE> 1
Exhibit 99.10
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
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
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
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
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
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
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
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
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
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: Senior Vice President and
Deputy General Counsel
For Purposes of Section 5.5 only:
METROMEDIA COMPANY
By: /s/ SILVIA KESSEL
--------------------------------
Name: Silvia Kessel
Title: Senior Vice President
<PAGE> 11
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)
<PAGE> 1
EXHIBIT 99.11
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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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.
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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
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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
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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
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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
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(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
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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
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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,
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(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
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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
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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
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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
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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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ SILVIA KESSEL
-----------------------------------------
Name: Silvia Kessel
Title: Executive Vice President,
Chief Financial Officer, 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: Senior Vice President and Deputy
General Counsel
