Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
by and among
CAUCUSCOM VENTURES L.P.,
CAUCUSCOM MERGERCO CORP.
and
METROMEDIA INTERNATIONAL GROUP, INC.
Dated as of July 17, 2007
Table of Contents
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ARTICLE I THE TENDER OFFER AND THE MERGER......................................2
Section 1.1 The Offer......................................................2
Section 1.2 Company Action.................................................4
Section 1.3 Directors......................................................6
Section 1.4 Top-Up Option..................................................7
Section 1.5 The Merger.....................................................9
Section 1.6 Closing........................................................9
Section 1.7 Effective Time.................................................9
Section 1.8 Effects of the Merger..........................................9
Section 1.9 Certificate of Incorporation and Bylaws of the Surviving
Corporation...................................................9
Section 1.10 Directors.....................................................10
Section 1.11 Officers......................................................10
Section 1.12 Merger Without Meeting of Stockholders........................10
Section 1.13 Effect on Capital Stock.......................................10
Section 1.14 Exchange of Certificates......................................12
Section 1.15 Preferred Shares; Stock Options; Warrants; Restricted Stock...14
Section 1.16 Further Actions...............................................15
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................15
Section 2.1 Organization, Qualification, etc..............................15
Section 2.2 Capitalization................................................16
Section 2.3 Subsidiaries..................................................17
Section 2.4 Authorization; No Conflicts...................................17
Section 2.5 Company SEC Documents; Financial Statements; Indebtedness.....18
Section 2.6 No Undisclosed Material Liabilities...........................20
Section 2.7 Compliance with Law; Permits..................................20
Section 2.8 Environmental Laws and Regulations............................21
Section 2.9 Employee Benefit Plans........................................21
Section 2.10 Absence of Certain Changes or Events..........................22
Section 2.11 Litigation....................................................22
Section 2.12 Tax Matters...................................................23
Section 2.13 Intellectual Property.........................................24
Section 2.14 Real Property.................................................25
Section 2.15 Contracts.....................................................25
Section 2.16 Interested Party Transactions.................................26
Section 2.17 Insurance.....................................................26
Section 2.18 Schedule 14D-9, Offer Documents; Other Information; Proxy
Statement....................................................26
Section 2.19 Vote Required.................................................27
Section 2.20 Opinion of Financial Advisors.................................27
Section 2.21 Finders or Brokers............................................27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...........27
Section 3.1 Organization, Qualification, etc..............................27
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Section 3.2 Capitalization and Operations of Merger Sub...................28
Section 3.3 Authorization; No Conflicts...................................28
Section 3.4 Litigation....................................................29
Section 3.5 Offer Documents; Schedule 14D-9, Other Information............29
Section 3.6 Financing.....................................................30
Section 3.7 Finders or Brokers............................................30
Section 3.8 Investigation.................................................30
ARTICLE IV COVENANTS AND AGREEMENTS...........................................31
Section 4.1 Conduct of Business by the Company and Parent.................31
Section 4.2 Access to Information; Confidentiality........................34
Section 4.3 No Solicitation...............................................35
Section 4.4 Filings; Other Actions........................................38
Section 4.5 Employee Matters..............................................39
Section 4.6 Commercially Reasonable Efforts...............................39
Section 4.7 Takeover Statutes.............................................41
Section 4.8 Public Announcements..........................................41
Section 4.9 Indemnification and Insurance.................................41
Section 4.10 Control of Operations.........................................43
Section 4.11 Stockholder Litigation........................................43
Section 4.12 Notification of Certain Matters...............................43
Section 4.13 Metromedia Name, Trademark and Logo...........................43
Section 4.14 FIRPTA Certificate............................................44
Section 4.15 Section 16 Matters............................................44
Section 4.16 Back-End Merger...............................................45
Section 4.17 Preferred Stock...............................................45
Section 4.18 Financial Information.........................................46
ARTICLE V CONDITIONS TO THE MERGER............................................46
Section 5.1 Conditions to Each Party's Obligation to Effect the Merger....46
ARTICLE VI TERMINATION........................................................46
Section 6.1 Termination or Abandonment....................................46
Section 6.2 Effect of Termination.........................................48
Section 6.3 Termination Fee...............................................48
ARTICLE VII MISCELLANEOUS.....................................................49
Section 7.1 No Survival of Representations and Warranties.................49
Section 7.2 Expenses......................................................49
Section 7.3 Counterparts; Effectiveness...................................49
Section 7.4 Governing Law.................................................49
Section 7.5 Jurisdiction..................................................50
Section 7.6 WAIVER OF JURY TRIAL..........................................50
Section 7.7 Notices.......................................................50
Section 7.8 Assignment; Binding Effect....................................51
Section 7.9 Severability..................................................52
Section 7.10 Entire Agreement; No Third-Party Beneficiaries................52
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Section 7.11 Amendments; Waivers...........................................52
Section 7.12 Headings; Exhibits; Disclosure Letters........................53
Section 7.13 Interpretation................................................53
Section 7.14 Specific Performance..........................................53
Section 7.15 No Recourse...................................................54
Section 7.16 Definitions...................................................54
ANNEXES
Annex I - Tender Offer Conditions
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 17, 2007 (this "Agreement"),
by and among CaucusCom Ventures L.P., a British Virgin Islands limited
partnership ("Parent"), CaucusCom Mergerco Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and Metromedia International
Group, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H :
WHEREAS, on the terms and subject to the conditions set forth herein,
Merger Sub has agreed to commence a cash tender offer (such tender offer, as it
may be amended and supplemented from time to time as permitted by this
Agreement, the "Offer") to purchase any and all of the issued and outstanding
shares of common stock, par value $0.01 per share, of the Company (the "Common
Shares"), at a price of $1.80 per Common Share, net to the seller in cash (such
price, or any higher price as may be paid for Common Shares in the Offer in
accordance with this Agreement, the "Common Per Share Amount");
WHEREAS, following consummation of the Offer and, as applicable, the Top-up
Option (as defined below) or the Company Stockholder Approval (as defined
below), Merger Sub shall merge with and into the Company (the "Merger"), with
the Company as the Surviving Corporation (as defined below), and (i) each Common
Share that is issued and outstanding immediately prior to the Effective Time (as
defined below) (other than (x) any Common Shares owned directly or indirectly by
Parent, Merger Sub or the Company, which will be canceled with no consideration
issued in exchange therefor and (y) any Common Shares held by holders who comply
with the provisions of the DGCL regarding the right of stockholders to dissent
from the Merger and require appraisal of their shares) will be canceled and
converted into the right to receive cash in an amount equal to the Common Per
Share Amount, without interest, and (ii) each share of 7.25% cumulative
convertible preferred stock of the Company, par value $1.00 per share
(collectively, the "Preferred Shares" and, together with the Common Shares, the
"Shares"), that is issued and outstanding immediately prior to the Effective
Time will remain outstanding as a Surviving Corporation Preferred Share (as
defined below) (other than Preferred Shares held by holders who comply with the
provisions of the DGCL regarding the right of stockholders to dissent from the
Merger and require appraisal of their Preferred Shares), all upon the terms and
conditions set forth herein;
WHEREAS, the parties intend that the Company shall survive the Merger as a
subsidiary of Parent;
WHEREAS, the board of directors of the Company (the "Board of Directors")
has (i) determined that it is advisable for the Company to enter into this
Agreement, (ii) approved the execution, delivery and performance of this
Agreement, and (iii) determined to recommend that the holders of Common Shares
accept the Offer and tender their Common Shares to Merger Sub and, to the extent
applicable, adopt this Agreement;
WHEREAS, the board of directors of each of Parent and Merger Sub have
approved this Agreement and declared it advisable for Parent and Merger Sub,
respectively, to enter into the transactions contemplated hereby;
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, Merger Sub and certain stockholders of the Company are entering into
certain Tender and Support Agreements, each dated as of the date hereof, in
connection with the Offer, the Merger and the other transactions contemplated
hereby; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements specified herein in
connection with this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, Parent, Merger Sub and
the Company agree as follows:
ARTICLE I
THE TENDER OFFER AND THE MERGER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 6.1, as promptly as practicable, and in any event within
five (5) Business Days, following the execution of this Agreement (or such other
later date as the parties may mutually agree in writing), (i) Merger Sub shall,
and Parent shall cause Merger Sub to, commence (within the meaning of Rule 14d-2
under Exchange Act) the Offer to purchase all issued and outstanding Common
Shares at the Common Per Share Amount. The Common Per Share Amount shall be net
to the seller in cash, subject to reduction only for any applicable taxes.
Subject to Section 1.1(b), the obligations of Merger Sub to accept for payment
and pay for any Common Shares tendered pursuant to the Offer shall be subject to
only those conditions set forth in Annex I (the "Tender Offer Conditions"). The
Company agrees that no Common Shares held by the Company or any of its
Subsidiaries (other than any Common Shares held on behalf of third parties) will
be tendered pursuant to the Offer.
(b) Parent on behalf of itself and Merger Sub expressly reserves the right
from time to time, subject to Sections 1.1(c) and (d), to waive any Tender Offer
Condition or increase the Common Per Share Amount; provided, however, that
without the prior written consent of the Company, Merger Sub shall not, and
Parent shall cause Merger Sub not to, (i) decrease the Common Per Share Amount
or change the form of consideration payable in the Offer, (ii) decrease the
number of Common Shares sought to be purchased in the Offer, (iii) amend or
waive satisfaction of the Minimum Condition (as defined in Annex I, the
"Original Minimum Condition"), except that Merger Sub may on a single occasion
decrease the Minimum Condition to a level not less than (x) 56,182,474 Common
Shares plus (y) 50% of the total number of Common Shares, if any, issued or
issuable (solely in the case of Common Shares issuable, such Common Shares
issuable but not yet issued in response to any notice, duly and validly given
(and not subsequently withdrawn) by a holder to the Company on or prior to the
Expiration Date, of election to exercise a Company Stock Option or Warrant or to
convert Preferred Shares) after the date of this Agreement and prior to the
Expiration Date (the "Lowered Minimum Condition"); (iv) impose additional
conditions to the Offer or (v) make any change in the Offer that would require
an extension or delay of the then current Expiration Date (other than an
increase in the Common Per Share Amount or a one-time decrease in the Original
Minimum Condition to an amount not less than the Lowered Minimum Condition).
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(c) On the date of commencement of the Offer, but after affording the
Company reasonable opportunity to review and comment thereon, Parent and Merger
Sub shall file or cause to be filed with the SEC, with respect to the Offer, a
Tender Offer Statement on Schedule TO (together with all amendments and
supplements thereto, the "Schedule TO") that shall contain the Offer, together
with a related letter of transmittal, summary advertisement and other ancillary
documents and instruments pursuant to which the Offer will be made
(collectively, together with any supplements or amendments thereto, and all
deliveries, mailings and telephonic notices required by Rule 14d-3 under the
Exchange Act, the "Offer Documents") that will comply in all material respects
with the provisions of all applicable Federal and other securities laws. Parent
and Merger Sub further agree to disseminate the Offer Documents to holders of
Common Shares as and to the extent required by applicable Federal and other
securities laws. Parent, Merger Sub and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents, if and to
the extent that it shall have become false or misleading in any material
respect, and Parent and Merger Sub shall, and Parent further agrees to cause
Merger Sub to, take all steps necessary to cause the Schedule TO, as so
corrected or supplemented, to be filed with the SEC, and to cause the Offer
Documents, as so corrected or supplemented, to be disseminated to holders of
Common Shares as and to the extent required by applicable Federal and other
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on any Offer Documents (including each
amendment or supplement thereto) before they are filed with the SEC. Parent and
Merger Sub shall, and Parent agrees to cause Merger Sub to, provide the Company
with (in writing, if written), and to consult with the Company regarding, any
comments (written or oral) that may be received by Parent, Merger Sub or their
counsel from the SEC or its staff with respect to the Offer Documents as
promptly as practicable after receipt thereof. The Company and its counsel shall
be given a reasonable opportunity to review and comment on any such written and
oral comments and proposed responses.
(d) The Offer shall provide for an initial expiration date on the 20th
Business Day following (and including the day of) the commencement of the Offer
(such date, or such subsequent date to which the expiration of the Offer is
extended pursuant to and in accordance with the terms of this Agreement, the
"Expiration Date"). Parent and Merger Sub shall not, and Parent agrees that it
shall cause Merger Sub not to, terminate or withdraw the Offer other than in
connection with the effective termination of this Agreement in accordance with
Section 6.1 hereof. So long as this Agreement has not been terminated pursuant
to Section 6.1, if at any scheduled Expiration Date, any of the Tender Offer
Conditions (including the Original Minimum Condition or the Lowered Minimum
Condition, as applicable) shall not have been satisfied or waived, (i) Parent
shall, and shall cause Merger Sub to, extend the Offer at any time and from time
to time, at the request of the Company, until such time as such Tender Offer
Conditions are satisfied or waived, this Agreement is terminated pursuant to
Section 6.1 or it becomes reasonably apparent that such Tender Offer Conditions
are not reasonably capable of being satisfied by the End Date; provided,
however, that any extension shall be in increments of not more than five (5)
Business Days; and provided, further, that in no event shall such extensions
exceed an aggregate of twenty (20) Business Days beyond the original Expiration
Date without the prior written consent of Parent, and (ii) Parent and Merger Sub
may, without the consent of the Company, further extend the Offer beyond the
applicable Expiration Date until such time as such Tender Offer Conditions are
satisfied or waived, in increments of not more than five (5) Business Days,
provided that such extensions shall not in the aggregate exceed sixty-five (65)
Business Days (less the aggregate period of any extensions pursuant to clause
(i) of this sentence) without the prior written consent of the Company.
Notwithstanding the foregoing, except as expressly provided in Section 1.1(b)
above, Parent shall not, and shall cause Merger Sub not to, extend the Offer if
all of the Tender Offer Conditions have been satisfied or waived and it is
permitted under applicable Law to accept for payment and pay for Common Shares
tendered in the Offer and not validly withdrawn; provided, however, that if (i)
Parent or Merger Sub decreases the Original Minimum Condition to an amount not
less than the Lowered Minimum Condition in accordance with clause (iii) of
Section 1.1(b), (ii) following such change to the Minimum Condition, all of the
Tender Offer Conditions are satisfied or waived and (iii) all Common Shares
tendered in the Offer and not validly withdrawn have been accepted for payment
by Merger Sub and the total number of Common Shares thereby acquired by Merger
Sub is less than the Original Minimum Condition, then Parent shall, and shall
cause Merger Sub to, extend the Offer for an aggregate period of not less than
ten (10) or more than twenty (20) Business Days as a "subsequent offering
period" in accordance with Rule 14d-11 under the Exchange Act. Notwithstanding
anything to the contrary herein, unless this Agreement has been terminated in
accordance with Section 6.1, (x) Parent shall, and shall cause Merger Sub to,
extend the Offer for any period required by any rule, regulation, interpretation
or position of the SEC or its staff applicable to the Offer and (y) the offering
period of the Offer shall be tolled for and during any period that a
Governmental Entity of competent jurisdiction shall have enacted, issued or
entered any temporary restraining order or preliminary injunction or similar
order or legal restraint or prohibition that remains in effect and that enjoins
or otherwise prohibits consummation of the Offer, and the offering period of the
Offer shall be extended by a number of days equal to the number of days that any
such temporary restraining order or preliminary injunction or similar order or
legal restraint or prohibition remains in effect. Nothing contained in this
Section 1.1(d) shall affect any termination rights in Article VI.
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(e) Subject solely to the satisfaction or waiver by Parent and Merger Sub
of the Tender Offer Conditions in accordance with Section 1.1(b), as soon as
practicable after the applicable Expiration Date, (i) Merger Sub shall, and
Parent shall cause Merger Sub to, accept for payment and pay for all Common
Shares validly tendered and not withdrawn pursuant to the Offer (the date of
such acceptance for payment, the "Acceptance Date"). Parent shall provide or
cause to be provided to Merger Sub on a timely basis the funds necessary to
purchase any Common Shares that Merger Sub becomes obligated to purchase
pursuant to the Offer.
Section 1.2 Company Action.
(a) The Board of Directors, at a duly called and held meeting, has adopted
resolutions: (i) determining that the terms of the Offer, the Merger and the
other transactions contemplated by this Agreement are fair and declaring it
advisable to enter into this Agreement; (ii) approving the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby, including the Offer and the Merger; (iii) approving the
Recommendation; (iv) rendering the limitations on business combinations
contained in Section 203 of the DGCL inapplicable to this Agreement, the Offer,
the Merger and the other transactions contemplated hereby; and (v) electing that
the Offer and the Merger, to the extent of the Board of Directors' power and
authority and to the extent permitted by applicable Law, not be subject to any
Takeover Laws that may purport to be applicable to this Agreement.
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(b) As promptly as practicable following the filing of the Schedule TO with
the SEC pursuant to Section 1.1(c), the Company shall file with the SEC, with
respect to the Schedule TO, a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any amendments or supplements thereto, a "Schedule 14D-9")
that will comply in all material respects with the provisions of all applicable
Federal securities laws. The Company agrees to use its commercially reasonable
efforts to disseminate the Schedule 14D-9 to the stockholders of the Company
reasonably promptly after the commencement of the Offer as required by Rule
14d-9 promulgated under the Exchange Act. To the extent practicable, the Company
shall cooperate with Parent and Merger Sub in mailing or otherwise disseminating
the Schedule 14D-9 with the appropriate Offer Documents to the holders of Common
Shares. Subject to any Change of Recommendation in accordance with this
Agreement, the Schedule 14D-9 relating to the Offer shall contain the
Recommendation. The Company agrees to (i) reasonably promptly correct the
Schedule 14D-9, if and to the extent that it may become false or misleading in
any material respect (and each of Parent and Merger Sub, with respect to written
information supplied by it specifically for use in the Schedule 14D-9, shall
promptly notify the Company of any required corrections of such information and
shall cooperate with the Company with respect to correcting such information),
(ii) supplement the information contained in the Schedule 14D-9 to include any
information that shall become necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(iii) use commercially reasonable efforts to cause the Schedule 14D-9, as so
corrected or supplemented, to be filed with the SEC and disseminated to the
Company's stockholders to the extent required by applicable Federal securities
laws. Parent and Merger Sub and their counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 (and any corrections or
supplements thereto) before it is filed with the SEC. The Company shall provide
Parent and Merger Sub (in writing, if written), and consult with Parent and
Merger Sub regarding, any comments (written or oral) the Company or its counsel
may receive from the SEC or its staff with respect to the Schedule 14D-9 (and
any corrections or supplements thereto) as promptly as practicable after receipt
of such comments. Parent and Merger Sub and their counsel shall be given a
reasonable opportunity to review any such written and oral comments and proposed
responses.
(c) In connection with the Offer, the Company shall, reasonably promptly
following execution of this Agreement, furnish Parent with (i) mailing labels
containing the names and addresses of all record holders of Common Shares,
non-objecting beneficial owners list and security position listings of Common
Shares held in stock depositories, each as of the most recent practicable date,
and (ii) such additional available information, including updated lists of
stockholders, mailing labels, security position listings and computer files, and
such other information and assistance as Merger Sub or its agents may reasonably
request for the purpose of communicating the Offer to the record and beneficial
holders of Common Shares. Subject to the requirements of applicable Laws, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Parent, Merger Sub and
their affiliates, associates, agents and advisors, shall keep such information
confidential and use the information contained in any such labels, listings and
files only in connection with the Offer and the Merger and, should the Offer
terminate or if this Agreement shall be terminated, will deliver to the Company
all copies of such information then in their possession.
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Section 1.3 Directors.
(a) Promptly upon the payment by Merger Sub for all Common Shares tendered
pursuant to the Offer that represent at least a majority of the Common Shares
outstanding, and from time to time thereafter as Common Shares are acquired by
Merger Sub, subject to compliance with Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, Parent shall be entitled to designate for
election or appointment to the Board of Directors such number of directors,
rounded up to the next whole number, as will give Parent representation on the
Board of Directors equal to at least that number of directors that equals the
product of (x) the total authorized number of directors of the Company (giving
effect to the directors appointed or elected pursuant to this sentence and
including (I) current directors serving as officers of the Company and (II) the
directors, if any, that the holders of the Preferred Shares, voting separately
as a class, are entitled to elect pursuant to Section 6.1 of the Certificate of
Designation) multiplied by (y) the percentage that the aggregate number of
Common Shares beneficially owned by Parent or any affiliate of Parent
(including, for purposes of this Section 1.3, any Common Shares that are
accepted for payment pursuant to the Offer, but excluding any Common Shares held
by the Company or any of its Subsidiaries) bears to the number of Common Shares
outstanding; provided, however, that, in the event that Parent's designees are
elected or appointed to the Board of Directors, (A) the Board of Directors shall
continue to include any directors that the holders of the Preferred Shares are
entitled to elect pursuant to Section 6.1 of the Certificate of Designation and
(B) until the Effective Time (as defined in Section 1.7), the Board of Directors
shall have at least two directors (in addition to any directors entitled to be
elected pursuant to Section 6.1 of the Certificate of Designation, as provided
in clause (A) above) who are directors of the Company on the date hereof and who
are neither officers of the Company nor designees, stockholders, affiliates or
associates (within the meaning of the Federal securities laws) of Parent (each
such director, an "Independent Director" and, collectively, the "Independent
Directors"); and provided, further, that, (i) if there are in office fewer than
two Independent Directors, the Board of Directors will take all action necessary
to cause an individual designated by the remaining Independent Director, which
individual shall be neither an officer of the Company nor a designee,
stockholder, affiliate or associate of Parent, to fill such vacancy, and such
individual shall be deemed to be an Independent Director for purposes of this
Agreement, or (ii) if no Independent Directors remain in office, the other
directors shall designate two individuals, each of whom shall be neither an
officer of the Company nor a designee, stockholder, affiliate or associate of
Parent, to fill the vacancies, and each such individual shall be deemed to be an
Independent Director for purposes of this Agreement. At each such time, the
Company shall also, subject to any limitations imposed by applicable Law, cause
(A) each committee of the Board of Directors, (B) if requested by Parent, the
board of directors of each of the Company's Subsidiaries and (C) if requested by
Parent, each committee of the board of directors of each of the Company's
Subsidiaries, to include individuals designated by Parent and constituting the
same percentage of each such committee or board as Parent's designees constitute
of the Board of Directors; provided, however, that until the Effective Time each
committee of the Board of Directors shall have one member who is an Independent
Director; and provided, further, that the relevant percentage of Parent
designees to any Subsidiary board of directors shall be with respect to the
number of directors that the Company may appoint to such Subsidiary's board of
directors.
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(b) The Company shall, upon request by Parent, subject to the Company's
Certificate of Incorporation, increase the size of the Board of Directors or
exercise its commercially reasonable efforts to secure the resignations of such
number of directors as is necessary to enable Parent's designees to be elected
or appointed to the Board of Directors in accordance with this Section 1.3, and
shall cause Parent's designees to be so elected or appointed. Subject to
applicable Law, the Company shall take all action necessary pursuant to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to
fulfill its obligations under this Section 1.3 and shall include in the Schedule
14D-9 mailed to stockholders promptly after the commencement of the Offer (or an
amendment thereof or an information statement pursuant to Rule 14f-1, if Parent
has not complied with its obligation to supply the Company the information
required by Section 14(f) and Rule 14-f-1 at least two (2) Business Days in
advance of the date the Schedule 14D-9 is to be filed with the SEC) such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 1.3. Parent shall promptly supply to the Company any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees pursuant to
this Section 1.3 and prior to the Effective Time, (i) any amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or Merger Sub hereunder, the waiver of any of the Company's rights hereunder, or
the taking of any other action by the Company in connection with this Agreement
or the transactions contemplated hereby required to be taken by the Company's
Board of Directors or any committee thereof will require the concurrence of all
of the Independent Directors then in office if such amendment, termination,
extension or waiver would or could reasonably be expected to have an adverse
effect on the stockholders of the Company (other than Parent, Merger Sub and
their affiliates), and (ii) the directors of the Company who are not Parent
designees shall have the authority to retain such counsel (which may include
current counsel to the Company) and other advisors at the reasonable expense of
the Company as determined appropriate by these directors in connection with the
exercise of their duties as directors and shall have the authority to institute
any action on behalf of the Company to enforce the performance of this
Agreement.
Section 1.4 Top-Up Option.
(a) The Company hereby grants to Merger Sub an irrevocable option (the
"Top-Up Option") to purchase, at a price per share equal to the Common Per Share
Amount, a number of Common Shares (the "Top-Up Option Shares") that, when added
to the number of Common Shares owned by Parent or Merger Sub or any wholly-owned
Subsidiary of Parent or Merger Sub at the time of exercise of the Top-Up Option,
constitutes one Common Share more than 90% of the number of Common Shares that
will be issued and outstanding immediately after the issuance of the Top-Up
Option Shares. The Top-Up Option shall be exercised by Merger Sub, in whole or
in part, at any time on or after the Expiration Date and on or prior to the
fifth Business Day after the later of (x) the Expiration Date or (y) the
expiration of any subsequent offering period (the date on which the Top-Up
Option is exercised, the "Top-Up Option Exercise Date"); provided, however, that
the obligation of the Company to deliver Top-Up Option Shares upon the exercise
of the Top-Up Option is subject to the conditions that (i) neither any provision
of any applicable Law nor any judgment, injunction, order or decree of any
Governmental Entity shall prohibit the exercise of the Top-Up Option or the
delivery of the Top-Up Option Shares in respect of such exercise, (ii) the
issuance of Top-Up Option Shares pursuant to the Top-Up Option would not require
approval of the Company's stockholders under applicable Law, (iii) upon exercise
of the Top-Up Option, the number of Common Shares owned by Parent or Merger Sub
or any wholly-owned Subsidiary of Parent or Merger Sub will constitute one
Common Share more than 90% of the number of Common Shares that will be issued
and outstanding immediately after the issuance of the Top-Up Option Shares, (iv)
Merger Sub has accepted for payment and paid for all Common Shares validly
tendered in the Offer and not withdrawn and (v) this Agreement has not been
terminated in accordance with Section 6.1; and provided, further, that the
aggregate number of Top-Up Option Shares may not exceed the aggregate number of
authorized but unissued Common Shares as of the Top-Up Option Exercise Date. The
parties shall cooperate to ensure that the issuance of the Top-Up Option Shares
is effected consistent with all applicable Laws, including compliance with an
applicable exemption from registration of the Top-Up Option Shares under the
Securities Act.
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(b) Upon the exercise of the Top-Up Option in accordance with Section
1.4(a), Merger Sub shall give the Company a written notice of such exercise,
which notice shall set forth (i) the number of Common Shares that are expected
to be owned by Parent, Merger Sub or any wholly-owned Subsidiary of Parent or
Merger Sub immediately preceding the purchase of the Top-Up Option Shares and
(ii) a place and time for the closing of the purchase of the Top-Up Option
Shares. The Company shall, as soon as practicable following receipt of such
notice, notify Parent and Merger Sub of the number of Common Shares then issued
and outstanding and the number of Top-Up Option Shares to be purchased in
connection with such exercise. At the closing of the purchase of the Top-Up
Option Shares, Merger Sub shall pay the Company the aggregate price required to
be paid for the Top-Up Option Shares, and the Company shall cause to be issued
to Parent or Merger Sub a certificate representing the Top-Up Option Shares. The
purchase price for the Top-Up Option Shares attributable to the par value of
each of the Top-Up Option Shares shall be payable by Merger Sub to the Company
in cash by wire transfer of immediately available funds to an account designated
by the Company, and the balance of the aggregate purchase price payable for the
Top-Up Option Shares may be paid by Merger Sub, at its option, either in cash by
wire transfer of immediately available funds to an account designated by the
Company or by executing and delivering to the Company a promissory note having a
principal amount equal to the balance of the aggregate purchase price of the
Top-Up Shares and bearing interest at the rate of interest per annum equal to
the Interest Rate. Any such promissory note shall mature on the first
anniversary of the date of execution and delivery of such promissory note and
may be prepaid without premium or penalty, provided that it is understood that
such promissory note shall be canceled upon the Closing (as defined below).
Merger Sub hereby represents and warrants to the Company that it will not offer
to sell or otherwise dispose of any Top-Up Option Shares acquired by it pursuant
to this Top-Up Option in violation of the Securities Act or prior to
consummation of the Merger.
8
Section 1.5 The Merger. On the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, at the Effective Time,
Merger Sub will merge with and into the Company, whereupon the separate
corporate existence of Merger Sub will cease, and the Company will continue its
corporate existence under Delaware law as the surviving corporation in the
Merger (the "Surviving Corporation") and a subsidiary of Parent with all of its
rights, privileges, immunities, powers and franchises.
Section 1.6 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of Debevoise & Xxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 at 10:00 a.m., local time, on a date that shall be the third
Business Day after the satisfaction or waiver (to the extent permitted by
applicable Law) of the conditions set forth in Article V (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of such conditions), or at such other place, date
and time as the Company and Parent may agree in writing (the date on which the
Closing occurs being hereinafter referred to as the "Closing Date").
Section 1.7 Effective Time. Subject to the provisions of this Agreement, at
the Closing and as soon as practicable following the satisfaction or wavier of
the conditions set forth in Article V, the Company and Merger Sub shall cause a
certificate of merger (the "Certificate of Merger") to be executed and
acknowledged and the Company shall cause the Certificate of Merger to be filed
with the Secretary of State of the State of Delaware in accordance with Section
251 of the DGCL (or, in the event a Short-Form Merger is effected pursuant to
Section 1.12, in accordance with Section 253 of the DGCL) and the Company and
Merger Sub shall make all other filings or recordings and take all such other
action required with respect to the Merger under the DGCL. The Merger will
become effective at such time as the Certificate of Merger has been duly
accepted for record with the Secretary of State of the State of Delaware, or at
such later date or time as may be agreed by the Company and Merger Sub in
writing and specified in the Certificate of Merger in accordance with the DGCL
(the effective time of the Merger being hereinafter referred to as the
"Effective Time"), it being understood that the parties shall cause the
Effective Time to occur concurrently with or as soon as practicable after the
Closing.
Section 1.8 Effects of the Merger. The Merger shall have the effects set
forth in this Agreement and the applicable provisions of the DGCL.
Section 1.9 Certificate of Incorporation and Bylaws of the Surviving
Corporation. Subject to Section 4.9, at the Effective Time, (i) the certificate
of incorporation of the Surviving Corporation shall be amended in its entirety
to read as the certificate of incorporation of Merger Sub as in effect
immediately prior to the Effective Time (except that the name of the Surviving
Corporation shall be Metromedia International Group, Inc. and the provision in
the certificate of incorporation of Merger Sub naming its incorporator shall be
omitted), provided that the Certificate of Designation shall continue to apply
to the Surviving Corporation and shall form part of the certificate of
incorporation of the Surviving Corporation, and (ii) the bylaws of the Company
as in effect immediately prior to the Effective Time shall constitute the bylaws
of the Surviving Corporation, in each case, until thereafter amended in
accordance with applicable Law.
9
Section 1.10 Directors. Subject to applicable Law, the directors of Merger
Sub as of the Effective Time shall be the initial directors of the Surviving
Corporation and shall hold office until their respective successors are duly
elected and qualified, or until their earlier death, resignation or removal, in
accordance with the Surviving Corporation's certificate of incorporation and
by-laws; provided, however, that the initial directors of the Surviving
Corporation shall include any directors that the holders of the Preferred Shares
are entitled to elect pursuant to Section 6.1 of the Certificate of Designation.
Section 1.11 Officers. The officers of the Company as of the Effective Time
shall be the initial officers of the Surviving Corporation and shall hold office
until their respective successors are duly elected and qualified, or until their
earlier death, resignation or removal.
Section 1.12 Merger Without Meeting of Stockholders. Notwithstanding
anything in this Agreement to the contrary, if, following the Acceptance Date,
any subsequent offering period and the closing of the purchase of the Top-Up
Option Shares, as applicable, Parent or any direct or indirect Subsidiary of
Parent shall own at least 90% of the outstanding Common Shares, the parties
hereto shall, subject to the satisfaction or waiver of the conditions set forth
in Article V, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable thereafter, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL (such
Merger, a "Short-Form Merger").
Section 1.13 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the Company, Merger Sub or the
holders of any securities of the Company or Merger Sub:
(a) Conversion of Common Shares. Each Common Share outstanding immediately
prior to the Effective Time, other than (x) Common Shares to be canceled
pursuant to Section 1.13(b) and (y) any Dissenting Shares, shall be converted
automatically into, and shall thereafter represent, the right to receive in cash
an amount equal to the Common Per Share Amount (such amount, the "Merger
Consideration"). All Common Shares that have been converted into the right to
receive the Merger Consideration as provided in this Section 1.13(a) shall be
automatically canceled and shall cease to exist, and the holders of certificates
that immediately prior to the Effective Time represented such Common Shares
shall cease to have any rights with respect to such Common Shares, other than
the right to receive (i) the Merger Consideration and (ii) any then unpaid
dividend or other distribution with respect to any such Common Shares that have
a record date prior to the Effective Time.
(b) Parent and Merger Sub-Owned Common Shares. Each Common Share that is,
immediately prior to the Effective Time, (i) owned, directly or indirectly, by
Parent or Merger Sub or (ii) held by the Company (in each case, other than any
such Common Shares held on behalf of third parties) (such Common Shares, the
"Canceled Shares") shall, by virtue of the Merger and without any action on the
part of the holder thereof, be canceled and retired and shall cease to exist,
and no consideration shall be payable to the holder thereof in exchange for such
cancellation and retirement.
(c) Conversion of Merger Sub Common Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder thereof, each
share of common stock, par value $0.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one (1) validly issued, fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation, which shares of
common stock of the Surviving Corporation shall have the same rights, powers and
privileges as the shares of common stock of Merger Sub so converted and shall
constitute the only shares of common stock of the Surviving Corporation
outstanding immediately following the Effective Time. From and after the
Effective Time, all certificates representing shares of common stock of Merger
Sub shall be deemed for all purposes to represent the number of shares of common
stock of the Surviving Corporation into which such shares of common stock of
Merger Sub were converted in accordance with the immediately preceding sentence.
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(d) Dissenters' Rights. Any provision of this Agreement to the contrary
notwithstanding, all Common Shares and Preferred Shares that are issued and
outstanding immediately prior to the Effective Time (other than Canceled Shares)
and that are held by holders who have demanded and perfected their right to
dissent from the Merger and to be paid the fair value of such Common Shares or
Preferred Shares, as the case may be, in accordance with the DGCL and, as of the
Effective Time, have not effectively withdrawn or lost such dissenters' rights
(such Common Shares or Preferred Shares, as the case may be, the "Dissenting
Shares") shall, in the case of Common Shares, not be converted into or represent
the right to receive the Merger Consideration, and in the case of the Preferred
Shares, not continue to be outstanding as Surviving Corporation Preferred
Shares, but in each case instead holders of such Dissenting Shares shall be
entitled only to such rights as are granted by the DGCL; provided, however, that
if any holder of Common Shares or Preferred Shares who demands dissenters'
rights under the DGCL with respect to such holder's Common Shares or Preferred
Shares effectively withdraws or loses such rights (whether through failure to
perfect or otherwise) in accordance with the DGCL, then, as of the Effective
Time or the occurrence of such event, whichever occurs later, such holder's
Common Shares shall automatically be converted into and represent only the right
to receive the Merger Consideration as provided in Section 1.13(a), without
interest thereon, upon surrender of the certificate or certificates formerly
representing such Common Shares, and such holder's Preferred Shares shall
automatically continue to be outstanding as Surviving Corporation Preferred
Shares, with the rights and preferences set forth in the Certificate of
Designation (including with respect to all unpaid accumulated and accrued
dividends on such Preferred Shares). The Company shall give Parent (i) prompt
written notice of any notice of intent to demand appraisal of any Shares
received by the Company, withdrawals of such notices or demands, and any other
instruments relating to stockholders' rights of appraisal that are served
pursuant to the DGCL and received by the Company and (ii) the opportunity to
participate in all negotiations and proceedings with respect to such notices and
demands. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisal of any
Shares or settle, or offer to agree to settle, any such demands.
(e) Adjustments. If, at any time during the period between the date of this
Agreement and the Effective Time, any change in the Common Shares shall occur as
a result of (i) any reclassification, recapitalization, stock split (including a
reverse stock split), subdivision, combination, exchange or readjustment of the
Common Shares, (ii) any stock dividend or stock distribution with respect to the
Common Shares with a record date during such period, or (iii) any merger,
consolidation or other similar transaction, the Merger Consideration shall be
equitably adjusted to reflect such change (it being understood that nothing
herein shall be construed to permit the Company to take any action with respect
to the Common Shares or any other securities of the Company that is prohibited
by the terms of this Agreement).
11
Section 1.14 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
U.S. bank or trust company reasonably acceptable to the Company to act, pursuant
to an agreement in form and substance reasonably acceptable to Parent and the
Company, as a paying agent in connection with the Merger (the "Paying Agent"),
to receive in trust for the benefit of holders of Common Shares the aggregate
Merger Consideration to which holders of Common Shares shall become entitled
pursuant to Section 1.13(a). On or before the Effective Time, Parent shall
deposit or cause to be deposited with the Paying Agent a cash amount in U.S.
dollars (such cash amount, the "Exchange Fund") sufficient to pay the aggregate
Merger Consideration for all of the Common Shares outstanding immediately prior
to the Effective Time (other than Canceled Shares and Dissenting Shares). The
Paying Agent shall pay the Merger Consideration out of the Exchange Fund in
accordance with this Agreement. The Exchange Fund shall not be used for any
other purpose.
(b) Payment Procedures.
(i) As soon as reasonably practicable after the Effective Time, and in
any event not later than the third Business Day following the Closing Date,
Parent and the Surviving Corporation shall cause to be mailed to each
holder of record, as of the Effective Time, of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding Common Shares (the "Certificates") or non-certificated
outstanding Common Shares represented by book-entry ("Book-Entry Shares"),
(A) a letter of transmittal in customary form (which shall specify that
delivery shall be effected, and risk of loss and title to Certificates
shall pass, only upon delivery of Certificates (or effective affidavits of
loss in lieu thereof) or Book-Entry Shares to the Paying Agent) and (B)
instructions for use in effecting the surrender of Certificates (or
effective affidavits of loss in lieu thereof) or Book-Entry Shares in
exchange for the Merger Consideration. The form of the letter of
transmittal and instructions shall be reasonably agreed upon by Parent and
the Company.
(ii) Upon surrender of Certificates (or effective affidavits of loss
in lieu thereof) or Book-Entry Shares to the Paying Agent, together with a
letter of transmittal duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may customarily
be required by the Paying Agent, the holder of such Certificates or
Book-Entry Shares shall be entitled to receive in exchange therefor, and
the Paying Agent shall promptly distribute to such holder, a check in an
amount equal to the product of (x) the number of Common Shares represented
by such holder's properly surrendered Certificates (or effective affidavits
of loss in lieu thereof) or Book-Entry Shares and (y) the Merger
Consideration. No interest will be paid or accrued on any amount payable
upon due surrender of Certificates (or effective affidavits of loss in lieu
thereof) or Book-Entry Shares. In the event of a transfer of ownership of
Common Shares that is not registered in the transfer records of the
Company, a check for any cash to be paid upon due surrender of the
Certificate may be paid to such a transferee if the Certificate formerly
representing such Common Shares is presented to the Paying Agent,
accompanied by all documents required to evidence and effect such transfer
and to evidence that any applicable stock transfer Taxes have been paid.
12
(iii) Notwithstanding any other provision in this Agreement, Parent,
Merger Sub, the Surviving Corporation and the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
under this Agreement (whether pursuant to the Offer, the Merger or
otherwise) to any holder of Shares such amounts as are required to be
withheld or deducted under the Code or any provision of any applicable Law
relating to Taxes with respect to the making of such payment. To the extent
that any amounts are so withheld or deducted, such withheld or deducted
amounts shall be paid over to the applicable Governmental Entity in
accordance with applicable Law and treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of
which such deduction and withholding was made.
(c) Closing of Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
Common Shares that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or Parent for transfer, they shall be canceled and exchanged for a
check in the proper amount pursuant to this Section 1.14.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
(including the proceeds of any investments thereof) that remains undistributed
to the former holders of Common Shares on the first anniversary of the Effective
Time shall be delivered to the Surviving Corporation upon demand, and any former
holders of Common Shares who have not surrendered their Common Shares in
accordance with this Section 1.14 shall thereafter look only to the Surviving
Corporation for payment of their claim for the Merger Consideration, without
interest thereon, upon due surrender of their Common Shares.
(e) No Liability. Anything herein to the contrary notwithstanding, none of
the Company, Parent, Merger Sub, the Surviving Corporation, the Paying Agent or
any other Person shall be liable to any former holder of Common Shares for any
amount properly delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(f) Investment of Exchange Fund. The Paying Agent shall invest all cash
included in the Exchange Fund as reasonably directed by Parent (so long as such
directions do not impair the rights of the holders of Common Shares or the
ability of the Paying Agent to make timely payments as required hereby);
provided, however, that any investment of such cash shall be limited to direct
short-term obligations of, or short-term obligations fully guaranteed as to
principal and interest by, the U.S. government; provided that no such investment
or losses thereon shall affect the Merger Consideration or other amounts payable
pursuant to this Article I, and that Parent shall promptly provide, or shall
cause the Surviving Corporation to provide, additional funds to the Paying Agent
in the amount of any shortfall in funds payable pursuant to this Article I. Any
interest and other income resulting from such investments shall be paid to the
Surviving Corporation pursuant to Section 1.14(d).
13
(g) Lost, Stolen or Destroyed Certificates. In the case of any Certificate
that has 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, if required by the Paying Agent, the posting by such Person of a bond in
customary amount as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent will issue in exchange for such
lost, stolen or destroyed Certificate a check in an amount equal to the number
of Common Shares represented by such lost, stolen or destroyed Certificate
multiplied by the Merger Consideration.
Section 1.15 Preferred Shares; Stock Options; Warrants; Restricted Stock.
(a) Each Preferred Share that is not a Dissenting Share and is issued and
outstanding immediately prior to the Effective Time shall remain outstanding
immediately following the Effective Time and shall automatically become one (1)
share of 7.25% cumulative convertible preferred stock of the Surviving
Corporation, having the rights and preferences set forth in the Certificate of
Designation (including with respect to all unpaid accumulated and accrued
dividends on such Preferred Shares) (a "Surviving Corporation Preferred Share").
(b) Each option to purchase Common Shares (collectively, the "Company Stock
Options") granted under the Company Stock Plans, whether vested or unvested,
that is outstanding immediately prior to the Effective Time shall at the
Effective Time be canceled, and the holder of such Company Stock Option shall,
in full settlement of such Company Stock Option, receive from the Surviving
Corporation an amount (subject to any applicable withholding Tax) in cash (such
aggregate cash amount, the "Option Consideration") equal to the product of (x)
the excess, if any, of the Merger Consideration over the exercise price per
share of such Company Stock Option multiplied by (y) the total number of Common
Shares subject to such Company Stock Option. If the exercise price per share of
any Company Stock Option outstanding immediately prior to the Effective Time
equals or exceeds the Merger Consideration, then such Company Stock Option shall
be canceled at the Effective Time and shall be of no further force and effect,
and no consideration shall be payable in respect to such Company Stock Option.
The Surviving Corporation shall make the payments in respect of the Option
Consideration as promptly as practicable following the cancellation of the
Company Stock Options as contemplated by this Section 1.15(b) by checks payable
to the holders of such Company Stock Options. Upon written notice from the
Surviving Corporation, Parent shall cause Merger Sub to pay to the Surviving
Corporation an amount in cash sufficient to fund the Surviving Corporation's
payment obligation under this Section 1.15(b) as such amounts are paid (such
amount to be set forth in such written notice).
(c) Each Warrant outstanding immediately prior to the Effective Time,
whether vested or unvested, shall at the Effective Time be canceled, and the
holder of such Warrant shall, in full settlement of such Warrant, receive from
the Surviving Corporation an amount (subject to any applicable withholding Tax)
in cash (such aggregate cash amount, the "Warrant Consideration") equal to the
product of (x) the excess, if any, of the Merger Consideration over the exercise
price per share of such Warrant multiplied by (y) the total number of Common
Shares subject to such Warrant. If the exercise price per share of any Warrant
outstanding immediately prior to the Effective Time equals or exceeds the Merger
Consideration, then such Warrant shall be canceled at the Effective Time and
shall be of no further force and effect, and no consideration shall be payable
in respect to such Warrant. The Surviving Corporation shall make the payments in
respect of the Warrant Consideration, if any, as promptly as practicable
following the cancellation of the Warrants as contemplated by this Section
1.15(c) by checks payable to the holders of such Warrants. Upon written notice
from the Surviving Corporation, Parent shall cause Merger Sub to pay to the
Surviving Corporation an amount in cash sufficient to fund the Surviving
Corporation's payment obligation under this Section 1.15(c), if any, as such
amounts are paid (such amount to be set forth in such written notice).
14
(d) In connection with the Merger, as of immediately prior to the Effective
Time, any restrictions with respect to outstanding restricted Common Shares
shall terminate or lapse. Upon the termination or lapse of such restrictions,
such Common Shares shall be outstanding Common Shares and shall be converted
into the right to receive the Merger Consideration in accordance with Section
1.13(a) of this Agreement.
(e) At or prior to the Effective Time, the Company shall take or cause to
be taken all action as may reasonably be required to effectuate the provisions
of this Section 1.15.
Section 1.16 Further Actions. If, at any time after the Effective Time, the
Surviving Corporation shall determine or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Merger Sub or the Company or to otherwise carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of Merger Sub or
the Company, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of Merger Sub or the Company, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as (a) specifically disclosed in the Company SEC Documents filed
with the SEC prior to the date hereof (excluding any disclosures set forth in
any risk factor disclosure contained in any such Company SEC Document under the
heading "Risks Associated with the Company" or forward looking statements
contained therein) or (b) otherwise disclosed in the disclosure letter delivered
by the Company to Parent immediately prior to the execution of this Agreement
(the "Company Disclosure Letter), the Company hereby represents and warrants to
Parent and Merger Sub as follows:
Section 2.1 Organization, Qualification, etc.
(a) Each of the Company and its Subsidiaries is a corporation or other form
of legal entity duly organized, validly existing and in good standing under the
Laws of its respective jurisdiction of organization. Each of the Company and its
Subsidiaries has all requisite corporate or similar power and authority to own,
lease and operate its properties and assets and to carry on its business as
presently conducted, except where the failure to be so organized, validly
existing or in good standing, or to have such power or authority, would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect. Each of the Company and its Subsidiaries is qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction (to the extent such concepts exist in such jurisdictions) where the
ownership, leasing or operation of its assets or properties or conduct of its
business requires such qualification, except where the failure to be so
qualified or in good standing would not reasonably be expected, individually or
in the aggregate, to have a Company Material Adverse Effect.
15
(b) The Company has made available to Parent accurate and complete copies
of the Certificate of Incorporation and Bylaws of the Company and the
organizational documents of each of its Subsidiaries, in each case, as currently
in effect. Except for any minutes that the Company reasonably believes (i) are
protected by the attorney-client privilege or (ii) relate to the sale of the
Company and/or certain assets or securities of the Company, the Company has made
available to Parent correct and complete copies of the minutes of all meetings
of the stockholders, the Board of Directors and each committee thereof, in each
case, held since January 1, 2005.
Section 2.2 Capitalization.
(a) The authorized capital stock of the Company consists of 400,000,000
Common Shares and 70,000,000 shares of preferred stock, par value $1.00 per
share. As of the close of business on June 13, 2007, there were (i) 103,254,947
Common Shares issued and outstanding, with no Common Shares issued and held by
the Company in its treasury, (ii) 4,140,000 Preferred Shares issued and
outstanding, (iii) issued and outstanding Company Stock Options, granted under
the Company Stock Plans, to purchase an aggregate of 240,000 Common Shares, with
a weighted average exercise price of $2.73 per share, of which Company Stock
Options to purchase in the aggregate 70,000 Common Shares have an exercise price
of less than $1.80 per share, (iv) issued and outstanding warrants (the
"Warrants") to purchase an aggregate of 700,000 Common Shares, none of which
have an exercise price of less than $1.80 per share, and (v) 9,110,000
restricted Common Shares granted to the Company's Chief Executive Officer on May
25, 2007 pursuant to the 2007 Stock Incentive Plan (which restricted Common
Shares are included in the number of issued and outstanding Common Shares
described under clause (i) above). All of the issued and outstanding Shares are,
and all Common Shares that may be issued pursuant to the exercise of any
outstanding Company Stock Options or Warrants or the conversion of any Preferred
Shares, when issued upon the terms and subject to the conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable, and none of the outstanding
securities of the Company were issued in violation of any Federal or state
securities Laws or any preemptive rights, purchase options, call rights, rights
of first refusal or any similar rights.
(b) As of the date hereof, there are no outstanding subscriptions, options,
warrants, calls, agreements, arrangements or commitments of any nature to which
the Company or any of the Company's Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound, (i) relating to (A) any issued or
unissued Shares or other equity interests of the Company or any Subsidiary of
the Company, (B) any securities convertible into or exchangeable for Shares or
such other equity interests or (C) any stock appreciation rights, phantom equity
or similar rights or (ii) obligating the Company or any of its Subsidiaries to
(A) issue, transfer or sell any Shares or other equity interests of the Company
or any Subsidiary of the Company, any securities convertible into or
exchangeable for Shares or such other equity interests or any stock appreciation
rights, phantom equity or similar rights, (B) grant, extend or enter into any
such subscription, option, warrant, call, agreement, arrangement or commitment
or (C) redeem, repurchase or otherwise acquire any Shares or other equity
interests of the Company or any Subsidiary of the Company.
16
(c) Neither the Company nor any of its Subsidiaries has any outstanding
bonds, debentures, notes or other debt securities or other indebtedness, the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) together with the
stockholders of the Company on any matter.
(d) There are no stockholder agreements, voting trusts or other agreements
or understandings to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries is bound, relating to the
Company capital stock or any other equity interests of the Company or any of its
Subsidiaries.
Section 2.3 Subsidiaries. Section 2.3 of the Company Disclosure Letter sets
forth a complete and correct list of each "significant subsidiary" of the
Company, as such term is defined in Regulation S-X promulgated by the SEC (each,
a "Significant Subsidiary"). Section 2.3 of the Company Disclosure Letter also
sets forth the jurisdiction of organization and percentage of outstanding equity
interests of each Significant Subsidiary owned by the Company and each of its
Subsidiaries. All equity interests of the Significant Subsidiaries held by the
Company or any of its Subsidiaries have been duly and validly authorized and are
validly issued, fully paid and non-assessable. None of such equity interests
were issued in violation of any Federal or state securities Laws or any
preemptive rights, purchase options, call rights, rights of first refusal or any
similar rights. All such equity interests owned by the Company or any of its
Subsidiaries are free and clear of any Liens, other than restrictions imposed by
applicable Law. Except for equity interests held in other Subsidiaries, neither
the Company nor any of its Subsidiaries owns any shares of capital stock or
other equity interests (including any securities exercisable or exchangeable for
or convertible into capital stock or other voting or equity interests in) of any
other Person.
Section 2.4 Authorization; No Conflicts.
(a) The Company has requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder. The Board of Directors,
at a duly called and held meeting, has adopted resolutions (i) determining that
the terms of the Offer, the Merger and the other transactions contemplated by
this Agreement are fair and declaring it advisable to enter into this Agreement,
(ii) approving the execution, delivery and performance of this Agreement and,
subject to the terms and conditions set forth herein, the consummation of the
Offer, the Merger and the other transactions contemplated hereby, (iii) subject
to the terms and conditions set forth herein, recommending that the stockholders
of the Company accept the Offer and tender their Common Shares in the Offer and,
if necessary, adopt this Agreement, the Merger and the other transactions
contemplated hereby (the "Recommendation"); (iv) rendering the limitations on
business combinations contained in Section 203 of the DGCL inapplicable to this
Agreement, the Offer, the Merger and the other transactions contemplated hereby
and (v) electing that the Offer, the Merger and the other transactions
contemplated hereby, to the extent of the Board of Directors' power and
authority and to the extent permitted by applicable Law, not be subject to any
Takeover Laws that may purport to be applicable to this Agreement. Other than
the Company Stockholder Approval, if applicable, no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding agreement of Parent and Merger Sub,
constitutes the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other Laws of
general applicability relating to or affecting creditors' rights and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
17
(b) The execution and delivery by the Company of this Agreement and the
performance by the Company of its obligations hereunder do not and will not
require any Consents other than (i) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware in accordance with the DGCL,
(ii) Consents of the SEC or under state securities or "blue sky" laws or the
securities laws of any foreign country, and such Consents as may be required in
any jurisdiction where the Company is qualified or authorized to do business as
a foreign corporation in order to maintain such qualification or authorization
and (iii) any other Consents that, if they were not obtained or made, would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect or to prevent or materially delay the consummation of
the Offer, the Merger and the other transactions contemplated hereby.
(c) Assuming compliance with the matters referenced in Section 2.4(b), the
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby do not and
will not (i) contravene or conflict with the organizational or governing
documents of the Company or any of its Subsidiaries, (ii) contravene or conflict
with or constitute a violation of any provision of any Law binding upon or
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets, or (iii) result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of
any benefit under any loan, guarantee of indebtedness or credit agreement, note,
bond, mortgage, indenture, lease, agreement, contract, instrument, permit,
concession, franchise, right or license binding upon the Company or any of its
Subsidiaries or result in the creation of any Lien (other than Permitted Liens)
upon any of the properties or assets of the Company or any of its Subsidiaries;
provided, however, that no representation or warranty is made in the foregoing
clauses (ii) and (iii) with respect to matters that would not reasonably be
expected, individually or in the aggregate, to have a Company Material Adverse
Effect.
Section 2.5 Company SEC Documents; Financial Statements; Indebtedness.
(a) The Company has made available to Parent (by public filing with the SEC
or otherwise) each form, document, statement and report filed by the Company
with the SEC since December 14, 2006, including the Annual Report on Form 10-K
for the fiscal year ended December 31, 2004 filed on such date, and any
amendments to any such documents (collectively, the "Company SEC Documents").
Except for the Restatement and Related Matters, the Company SEC Documents, as
finally amended and publicly available and except to the extent that statements
in the Company SEC Documents have been modified or superseded by later Company
SEC Documents filed and publicly available prior to the date hereof, (i)
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, in each case as in
effect at the time of its filing and (ii) did not contain any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
18
(b) The Company is not required to file any forms, reports, schedules,
statements or other documents with any foreign Governmental Entity that performs
a similar function to that of the SEC or any securities exchange or quotation
service. No Subsidiary of the Company is subject to the periodic reporting
requirements of the Exchange Act or is otherwise required to file any forms,
reports, schedules, statements or other documents with the SEC, any foreign
Governmental Entity that performs a similar function to that of the SEC or any
securities exchange or quotation service.
(c) The consolidated financial statements (including all related notes and
schedules) of the Company included in the Company SEC Documents (after giving
effect to any amendments or supplements thereto filed prior to the date of this
Agreement) fairly present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries, as at the respective
dates thereof, and the consolidated results of their operations and their
consolidated cash flows for the respective periods then ended (subject, in the
case of the unaudited statements, to normal year-end audit adjustments and any
other adjustments described therein, including the notes thereto) and were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto or,
in the case of the unaudited statements, as permitted by the SEC).
(d) Each of Magticom's financial statements (including all related notes
and schedules) included in the Company SEC Documents (after giving effect to any
amendments or supplements thereto filed prior to the date of this Agreement)
fairly present in all material respects the financial position of Magticom, as
at the respective dates thereof, and the results of Magticom's operations and
its cash flows for the respective periods then ended (subject, in the case of
the unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein, including the notes thereto) and were prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto or, in the case of
the unaudited statements, as permitted by the SEC).
(e) There are no outstanding loans made by the Company or any of its
Subsidiaries to any executive officer (as defined in Rule 3b-7 under the
Exchange Act) or director of the Company or any of its Subsidiaries. Except for
(x) intercompany loans among the Company's wholly-owned Subsidiaries or the
Company and its wholly-owned Subsidiaries or (y) as set forth in Section 2.5(e)
of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries has any outstanding indebtedness.
19
Section 2.6 No Undisclosed Material Liabilities. Other than (i) liabilities
or obligations set forth in Section 2.6 of the Company Disclosure Letter, (ii)
liabilities or obligations reflected or reserved against in the Company Balance
Sheet or Magticom Balance Sheet or specifically disclosed in the notes thereto,
(iii) liabilities or obligations that were incurred in the ordinary course of
business since the Balance Sheet Date, (iv) liabilities or obligations arising,
or specifically permitted to be incurred, under this Agreement (including
Section 4.1), (v) liabilities or obligations arising out of the Company's
retention of Xxxxx Xxxxx Xxxxxx and Evercore Group L.L.C. and (vi) such other
liabilities or obligations as would not reasonably be expected, individually or
in the aggregate, to have a Company Material Adverse Effect, neither the Company
nor any Subsidiary of the Company has any material liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, whether known or
unknown and whether due or to become due.
Section 2.7 Compliance with Law; Permits.
(a) Other than the Restatement and Related Matters, the Company and each of
the Company's Subsidiaries are in compliance with and are not in default under
or in violation of any material requirement of any applicable Law, except where
the failure to be so compliant and not in default or in violation would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect. Anything contained in this Section 2.7(a) to the
contrary notwithstanding, no representation or warranty shall be deemed to be
made in this Section 2.7(a) in respect of the matters referenced in Section 2.5,
Section 2.8 and Section 2.9.
(b) The Company and the Company's Subsidiaries are in possession of all
Company Permits. All of the Company Permits are valid and in full force and
effect, unimpaired by any material condition, except those conditions that may
be contained within the terms of such Company Permits and except where the
failure to be valid and in full force and effect would not reasonably be
expected, individually or in the aggregate, to have a Company Material Adverse
Effect. As of the date of this Agreement, no action by or before any
Governmental Entity that regulates telecommunications in each applicable
jurisdiction is pending or, to the Knowledge of the Company, threatened in which
the requested remedy is suspension or cancellation of any of the Company
Permits. As of the date of this Agreement, no Governmental Entity is claiming
or, to the Knowledge of the Company, is threatening to claim that the Company or
any of its Subsidiaries is not in compliance in all material respects with the
material terms and conditions of a Company Permit or that the Company or any of
its Subsidiaries have failed to fulfill and/or perform all material obligations
required under such Company Permits. As of the date of this Agreement, to the
Knowledge of the Company no event or condition has occurred or exists which
would result (with or without notice or lapse of time or both) in a violation
of, breach, default or loss of a benefit under, or acceleration of an obligation
of the Company or any of its Subsidiaries under, any Company Permit, except for
such event or condition which would not reasonably be expected, individually or
in the aggregate, to have a Company Material Adverse Effect.
20
Section 2.8 Environmental Laws and Regulations. Except as would not
reasonably be expected to have a Company Material Adverse Effect, (a) the
Company and its Subsidiaries are and have been in compliance with all applicable
Environmental Laws, and have obtained and are in compliance with all Permits
required under Environmental Laws, in each case since December 31, 2004; (b) no
notice of violation, notification of liability or request for information has
been received by the Company or any of its Subsidiaries since December 31, 2004
arising out of any Environmental Law; (c) there is no Order, claim, action or
proceeding pending or, to the Knowledge of the Company, threatened in writing
against the Company or any of its Subsidiaries pursuant to Environmental Laws;
(d) the Company is not otherwise subject to any liabilities under Environmental
Laws; and (e) to the Knowledge of the Company, all of the Company's and its
Subsidiaries' facilities which may intentionally or unintentionally radiate
radio frequency emissions, including their wireless base station transmitters,
are and have been since December 31, 2004 in compliance with all applicable
legal and regulatory requirements in effect in the relevant jurisdiction
relating to permissible levels of radio frequency emissions and to human
exposure to radio frequency radiation.
Section 2.9 Employee Benefit Plans.
(a) Section 2.9(a) of the Company Disclosure Letter lists (i) all
"multiemployer plans" within the meaning of Section 4001(a)(3) of ERISA (each a
"Multiemployer Plan") to which the Company or any of its Subsidiaries
contributes, (ii) all Company Benefit Plans that are employee welfare plans
within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), (iii) all Company Benefit Plans that are
employee pension benefit plans within the meaning of Section 3(2) of ERISA and
(iv) all other Company Benefit Plans, whether or not subject to ERISA.
(b) The Company has heretofore made available to Parent true and complete
copies of each Company Benefit Plan (or, with respect to unwritten plans, a
written description thereof) and, as applicable, all plan documents, trust
agreements, other funding arrangements and other material documents related to
such Company Benefit Plan, including, but not limited to, (i) each writing
constituting a part of such Company Benefit Plan, including all amendments
thereto, (ii) the three most recent Annual Reports (Form 5500 Series) and
accompanying schedules, if any, (iii) the most recent determination letter from
the IRS (if applicable) for such Company Benefit Plan and (iv) all material
communications received from or sent to the IRS, the Pension Benefit Guaranty
Corporation or the Department of Labor and any schedules thereto.
(c) Each Company Benefit Plan has been maintained and administered in
compliance with its terms and with applicable Law, including but not limited to
ERISA and the Code, to the extent applicable thereto except as would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect. Each Company Benefit Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code has received a favorable
determination letter from the IRS, is entitled to rely upon a favorable opinion
issued by the IRS or an application for a determination letter is currently
pending with the IRS and, to the Knowledge of the Company, there are no existing
circumstances or any events that have occurred that would reasonably be expected
to adversely affect the qualified status of any such Company Benefit Plan. No
Company Benefit Plan (i) is subject to Title IV of ERISA or (ii) provides
retiree medical or other welfare benefits, other than (A) coverage mandated by
applicable Law or (B) benefits under any "employee pension plan," and, to the
Knowledge of the Company, no liability under Title IV of ERISA has been incurred
by the Company, its Subsidiaries or any ERISA Affiliate of the Company that has
not been satisfied in full. "ERISA Affiliate" means, with respect to any entity,
trade or business, any other entity, trade or business that is a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
21
(d) Except as could not reasonably be expected to result in material
liability to the Company and its Subsidiaries taken as a whole, (i) all
contributions or other amounts payable by the Company or its Subsidiaries as of
the date hereof with respect to each Company Benefit Plan in respect of current
or prior plan years have been paid or accrued in accordance with GAAP (other
than with respect to amounts not yet due), (ii) neither the Company nor its
Subsidiaries has engaged in a transaction in connection with which the Company
or its Subsidiaries reasonably could be subject to either a civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a material tax imposed
pursuant to Section 4975 or 4976 of the Code, and (iii) there are no pending,
threatened or, to the Knowledge of the Company, anticipated claims (other than
claims for benefits in accordance with the terms of the Company Benefit Plans)
by, on behalf of or against any of the Company Benefit Plans or any trusts
related thereto.
(e) Neither the execution by the Company of this Agreement nor the
consummation of the transactions contemplated hereby will, whether alone or in
combination with any other event, (i) entitle any current or former employee,
consultant, officer or director of the Company or any of its Subsidiaries to
severance pay, unemployment compensation or any other payment, increase the
amount of compensation due to any such employee, consultant, officer or
director, or result in any payment becoming due, or accelerate the time of
payment or vesting of right of payment under, any Company Benefit Plan, (ii)
result in any forgiveness of indebtedness, trigger any funding obligation under
any Company Benefit Plan or impose any restrictions or limitations on the
Company's rights to administer, amend or terminate any Company Benefit Plan, or
(iii) result in any payment that could reasonably be construed, individually or
in combination with any other such payment, to constitute an "excess parachute
payment" (as defined in Section 280G(b)(1) of the Code). No Person is entitled
to receive any additional payment (including, without limitation, any tax
gross-up or other payment) from the Company or any of its Subsidiaries or any
other Person as a result of the imposition of the excise tax required by Section
4999(a) of the Code.
Section 2.10 Absence of Certain Changes or Events. Except as otherwise
expressly contemplated or required by this Agreement, from the Balance Sheet
Date until the date hereof, (i) the businesses of the Company and its
Subsidiaries have been conducted, in all material respects, in the ordinary
course of business, and (ii) there have not been any facts, circumstances,
events, changes, effects or occurrences that have had or would reasonably be
expected, individually or in the aggregate, to have a Company Material Adverse
Effect.
Section 2.11 Litigation. Except as would not be reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect, as
of the date hereof, (i) there are no litigations, arbitrations, claims,
investigations, proceedings, actions or suits, whether at law or in equity,
pending or, to the Knowledge of the Company, threatened in writing by any Person
against or affecting the Company or any of its Subsidiaries, or any material
portion of their respective properties or assets, and (ii) there are no orders,
judgments or decrees of any Governmental Entity against the Company or any of
its Subsidiaries or affecting any material portion of their respective
properties or assets.
22
Section 2.12 Tax Matters.
(a) Except as would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect:
(i) the Company and each of its Subsidiaries have timely filed (taking
into account any valid extension of time within which to file) all Tax
Returns required to be filed by any of them and all such filed Tax Returns
are complete and accurate in all respects;
(ii) the Company and each of its Subsidiaries have duly and timely
paid all Taxes that are required to be paid by any of them (whether or not
shown as due on any Tax Return);
(iii) there are not pending, outstanding or threatened in writing, any
audits, examinations, investigations or other proceedings in respect of
Taxes, including Tax Attributes, of the Company or any of its Subsidiaries;
(iv) no deficiency with respect to Taxes has been proposed, asserted
or assessed against the Company or any of its Subsidiaries which is
currently unresolved;
(v) there are no requests for rulings or determinations in respect of
any material Taxes or material Tax Returns pending between the Company or
any of its Subsidiaries on the one hand and any authority responsible for
such Taxes or Tax Returns on the other;
(vi) the Company and each of its Subsidiaries (A) has timely withheld
and paid all Taxes required to be withheld and paid in connection with
amounts paid or owing to any employee, creditor, independent contractor,
shareholder or any third party and (B) is in compliance with all applicable
rules and regulations regarding the solicitation, collection and
maintenance of any forms, certifications and other information required in
connection therewith;
(vii) neither the Company nor any of its Subsidiaries is a party to
any contract, agreement or arrangement relating to the sharing, allocation
or indemnification of Taxes or has any liability for Taxes of any Person
(other than members of the affiliated group, within the meaning of Section
1504(a) of the Code, filing consolidated federal income tax returns of
which the Company is the common parent) under Treasury Regulation ss.
1.1502-6, Treasury Regulation ss. 1.1502-78 or any similar state, local or
foreign Laws, as a transferee or successor, or otherwise;
23
(viii) neither the Company nor any of its Subsidiaries has been a
"controlled corporation" or a "distributing corporation" in any
distribution that was purported or intended to be governed by Section 355
of the Code within the two-year period ending on the date hereof;
(ix) neither the Company nor any of its Subsidiaries is a party to any
"gain recognition agreement," within the meaning of Treasury Regulations
Section 1.367(a)-8 or -8T, as applicable;
(x) neither the Company nor any of its Subsidiaries will be required
to include any item of income in, or exclude any item of deduction from,
taxable income for any taxable period, or portion thereof, beginning after
the Closing Date as a result of any agreement or requirement to make any
adjustments pursuant to Section 481(a) of the Code or any similar provision
of state, local or non-United States Law by reason of a change in
accounting methods initiated by the Company or any of its Subsidiaries
prior to Closing, or has any knowledge that any taxing authority has
proposed any such adjustment or change in accounting methods, or has any
application pending with any taxing authority requesting permission for any
changes in accounting methods that relate to the business or operations of
the Company or any of its Subsidiaries; and
(xi) neither the Company nor any of its Subsidiaries has participated
in any "listed transaction" within the meaning of Treasury Regulation
Section 1.6011-4(c)(3)(i)(A).
(b) Section 2.12(b) of the Company Disclosure Letter sets forth an
organization diagram of the Company and its Subsidiaries showing the ownership
of equity interests in each Subsidiary and the name, legal form of organization,
state and country of organization and classification for U.S. federal income tax
purposes of each Subsidiary.
(c) To the Knowledge of the Company, there are no facts that were not
disclosed to KPMG in the preparation of the KPMG Reports that, if disclosed in
connection with the preparation thereof, would result in a material and adverse
change in any conclusion set forth in any of the KPMG Reports. For purposes of
this Section 2.12(c), "KPMG Reports" means, collectively, (i) the KPMG
memorandum, dated March 19, 2007, regarding State Tax Due Diligence Report, (ii)
the KPMG memorandum, dated May 7, 2007, regarding Tax Basis in Subsidiary Stock
(estimated as of December 31, 2006), and (iii) the KPMG memorandum, dated May 9,
2007, regarding Section 382 Ownership Change Analysis.
Section 2.13 Intellectual Property. Except as set would not be reasonably
be expected, individually or in the aggregate, to have a Company Material
Adverse Effect, either the Company or a Subsidiary of the Company owns, or is
licensed or otherwise possesses legally enforceable rights to use, all material
trademarks, trade names, service marks, service names, xxxx registrations,
logos, assumed names, copyrights, copyright applications, patents or patent
applications and registrations necessary to be used in their respective
businesses as currently conducted as of the date of this Agreement
(collectively, the "Intellectual Property"). As of the date hereof, (i) there
are no pending or, to the Knowledge of the Company, threatened claims by any
Person alleging infringement by the Company or any of its Subsidiaries for their
use of the Intellectual Property of the Company or any of its Subsidiaries,
except as would not reasonably be expected, individually or in the aggregate, to
have a Company Material Adverse Effect, (ii) to the Knowledge of the Company,
except as set would not be reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect, the conduct of the
business of the Company and its Subsidiaries does not infringe in any material
respect upon any intellectual property rights of any Person and (iii) to the
Knowledge of the Company, no Person is infringing in any material respect upon
any Intellectual Property of the Company or any of its Subsidiaries.
24
Section 2.14 Real Property. The Company or a Subsidiary of the Company owns
and has good and marketable title to all of its owned real property as of the
date hereof and has valid leasehold interests in all of its leased or subleased
properties as of the date hereof, subject in each case only to Liens (other than
Permitted Liens) that would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect. Except as would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect, there is not, under any of the leases under which the
Company or any of its Subsidiaries leases any real property, any existing
default, or any event, fact or circumstance that, with notice or lapse of time
or both, would become a default, by the Company or any of its Subsidiaries or,
to the Knowledge of the Company, the counterparties thereto.
Section 2.15 Contracts.
(a) Except as filed with the SEC, as of the date hereof, neither the
Company nor any of its Subsidiaries is a party to or bound by, as of the date
hereof, any contract, agreement, instrument, loan, guarantee, note, bond,
mortgage, indenture, lease, concession, franchise, right or license (whether
written or oral) that (i) is a "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC) to the Company, (ii) constitutes a
contract or commitment relating to indebtedness for borrowed money or the
deferred purchase price of property (in either case, whether incurred, assumed,
guaranteed or secured by any asset) in excess of $2,000,000, (iii) is a customer
or supply agreement providing for the receipt or expenditure of more than
$2,500,000 on an annual basis or (iv) contains any provision that, whether prior
to or following the Acceptance Date, would materially restrict or alter the
conduct of business of, or purport to materially restrict or alter the conduct
of business of, whether or not binding on, Buyer or any affiliate of Buyer
(other than the Company, any of its Subsidiaries or any director, officer or
employee of any of the Company or any of its Subsidiaries) (all contracts of the
type described in this Section 2.15(a) (the contracts set forth in clauses (i)
through (iv) above, collectively, the "Company Material Contracts").
(b) Except as would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect, neither the Company nor
any Subsidiary of the Company is in breach of or default under the terms of any
Company Material Contract and, to the Knowledge of the Company, no other party
to any Company Material Contract is in breach of or default under the terms of
any Company Material Contract. Except as would not reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect,
each Company Material Contract is a valid, binding and enforceable obligation of
the Company or the Subsidiary of the Company that is party thereto and, to the
Knowledge of the Company, of each other party thereto, and is in full force and
effect, in each case in accordance with its terms, other than any Company
Material Contract which is by its terms no longer in force or effect and except
as enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and is subject to general principles of equity.
25
Section 2.16 Interested Party Transactions. Except for (x) employment
contracts, agreements or arrangements described in or filed or incorporated by
reference as an exhibit to a Company SEC Document filed prior to the date hereof
or (y) the Company Benefit Plans, Section 2.16 of the Company Disclosure Letter
sets forth a correct and complete list of the contracts, agreements or
arrangements that are in existence as of the date of this Agreement, under which
the Company has any existing or future liabilities between the Company or any of
its Subsidiaries, on the one hand, and (i) any present officer or director of
either the Company or any of its Subsidiaries or any Person that has served as
such an officer or director within the last two years or any of such officer's
or director's immediate family members, (ii) record or beneficial owner of more
than 5% of the Shares as of the date hereof, or (iii) to the Knowledge of the
Company, any affiliate of any such officer, director or owner (other than the
Company or any of its Subsidiaries), on the other hand (each such contract,
agreement or arrangement, an "Affiliate Transaction"), in each case that would
be required to be disclosed under Item 404 of Regulation S-K under the
Securities Act. The Company has made available to Parent correct and complete
copies of each contract, agreement or arrangement or other relevant
documentation (including any amendments or modifications thereto) providing for
each Affiliate Transaction.
Section 2.17 Insurance. Section 2.17 of the Company Disclosure Letter sets
forth a list of all material insurance policies (including information on the
premiums payable in connection therewith and the scope and amount of the
coverage and deductibles provided thereunder) maintained by the Company or any
of its Subsidiaries. All premiums due and payable with respect to such insurance
policies have been duly and timely paid. Neither the Company nor any of its
Subsidiaries is in material breach or default of any of the insurance policies
or has taken any action or failed to take any action that, with notice or the
lapse of time, would constitute such a material breach or default or permit
termination or modification of any of the material insurance policies. Neither
the Company nor any of its Subsidiaries has received any written notice of
termination or cancellation or denial of coverage with respect to any such
insurance policy.
Section 2.18 Schedule 14D-9, Offer Documents; Other Information; Proxy
Statement.
(a) None of the information supplied or to be supplied by or on behalf of
the Company specifically for inclusion in the Offer Documents will, at the times
the Offer Documents are filed with the SEC or mailed to stockholders of the
Company, contain any 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 are made, not
misleading, or necessary to correct any statement supplied by the Company and
made in any communication with respect to the Offer, the Merger or other
transactions contemplated hereby previously filed with the SEC or disseminated
to the stockholders of the Company. The Schedule 14D-9 will not, at the time it
is filed with the SEC or mailed to stockholders of the Company, and at all times
prior to the purchase of Common Shares by Merger Sub pursuant to the Offer,
contain any 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 are made, not misleading, except
that no representation or warranty is made by the Company with respect to
information supplied by Parent, Merger Sub or an affiliate of Parent or Merger
Sub that is contained in the Schedule 14D-9. The Schedule 14D-9 will comply as
to form in all material respects with the provisions of the Exchange Act and the
rules and regulations of the SEC thereunder.
26
(b) The proxy statement that may be filed by the Company with the SEC in
connection with seeking the adoption of this Agreement by the stockholders of
the Company (including the letter to stockholders, notice of meeting and form of
proxy, the "Proxy Statement") will not, at the time it is filed with the SEC, at
the time it is first mailed to the stockholders of the Company or at the time of
the Company Meeting, and at the time of any amendments or supplements thereto,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Company will cause the Proxy Statement to comply as to form in
all material respects with the requirements of the Exchange Act applicable
thereto as of the date of such filing. No representation is made by the Company
with respect to statements made in the Proxy Statement based on information
supplied, or required to be supplied, by Parent, Merger Sub or any of their
affiliates specifically for inclusion or incorporation by reference therein.
Section 2.19 Vote Required. The affirmative vote of the holders (including
Merger Sub and its affiliates following Merger Sub's acceptance of Common Shares
for payment under the Offer) of a majority of the outstanding Common Shares (the
"Company Stockholder Approval"), if necessary to approve the Merger and adopt
and approve the Merger Agreement in circumstances where a Short-Form Merger is
not possible, is the only vote of the holders of any class or series of equity
securities of the Company necessary to approve the Merger.Section 2.20 Opinion
of Financial Advisors. The Board of Directors has received from Evercore Group
L.L.C., the Company's financial advisor, a written opinion addressed to the
Board of Directors for inclusion in the Schedule 14D-9 and the Proxy Statement,
to the effect that, as of July 13, 2007, the consideration to be received by
holders of the Common Shares in the Offer and the Merger is fair, from a
financial point of view, to such holders of the Common Shares.
Section 2.21 Finders or Brokers. Except for Evercore Group L.L.C., neither
the Company nor any of its Subsidiaries has engaged any investment banker,
broker or finder in connection with the transactions contemplated by this
Agreement who may be entitled to any fee or any commission in connection with or
upon consummation of the Offer, the Merger or the other transactions
contemplated thereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the disclosure letter delivered by Parent to the
Company immediately prior to the execution of this Agreement (the "Parent
Disclosure Letter"), Parent and Merger Sub, jointly and severally, represent and
warrant to the Company as follows:
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Section 3.1 Organization, Qualification, etc. Each of Parent and Merger Sub
is a corporation or other form of legal entity duly organized, validly existing
and in good standing under the Laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own, lease and operate its properties and assets and to carry on its business as
presently conducted. Each of Parent and Merger Sub is qualified to do business
and is in good standing as a foreign corporation in each jurisdiction (to the
extent such concepts exist in such jurisdictions) where the ownership, leasing
or operation of its assets or properties or conduct of its business requires
such qualification, except where the failure to be so organized, validly
existing, qualified or in good standing, or to have such power or authority,
would not reasonably be expected, individually or in the aggregate, to prevent
or materially delay or materially impair the ability of Parent or Merger Sub to
timely consummate the Merger, the Offer and the other transactions contemplated
by this Agreement (a "Parent Material Adverse Effect"). Parent has heretofore
made available to the Company accurate and complete copies of the Certificate of
Incorporation and Bylaws of Parent and Merger Sub, as currently in effect, and
each such instrument is in full force and effect.
Section 3.2 Capitalization and Operations of Merger Sub. The authorized
capital stock of Merger Sub consists of 1,000 shares of common stock, par value
$0.01 per share, all of which are duly authorized, validly issued and
outstanding, fully paid and non-assessable, and none of the outstanding
securities of Merger Sub were issued in violation of any Federal or state
securities Laws or any preemptive rights, purchase options, call rights, rights
of first refusal or any similar rights. All of the issued and outstanding
capital stock of Merger Sub is, and at the Effective Time will be, owned by
Parent or a direct or indirect subsidiary of Parent and free and clear of all
Liens. Merger Sub has outstanding no options, warrants, rights or any other
agreements, arrangements or commitments pursuant to which any Person other than
Parent may acquire any equity security of Merger Sub. Merger Sub was formed
solely for the purposes of engaging in the transactions contemplated by this
Agreement and has not conducted any business prior to the date hereof and has,
and prior to the Effective Time will have, no assets, liabilities or obligations
of any nature other than those incident to its formation and pursuant to this
Agreement and the Offer, the Merger and the other transactions contemplated by
this Agreement.
Section 3.3 Authorization; No Conflicts.
(a) Each of Parent and Merger Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation by them of the transactions contemplated hereby have been
duly and validly authorized by all necessary action on the part the board of
directors of each of Parent and Merger Sub and by Parent, as the sole
stockholder of Merger Sub, and, except only, with respect to the Merger, for the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware pursuant to the DGCL, no other corporate proceedings on the part of
Parent or Merger Sub are necessary to authorize the execution, delivery and
performance of this Agreement and the consummation by them of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent and Merger Sub and, assuming this Agreement constitutes the
valid and binding agreement of the Company, this Agreement constitutes the valid
and binding agreement of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other Laws of general applicability relating to or affecting
creditors' rights and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
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(b) The execution and delivery by Parent and Merger Sub of this Agreement
and the performance by Parent and Merger Sub of their obligations hereunder do
not and will not require any Consents other than (i) with respect to the Merger,
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware in accordance with the DGCL, (ii) Consents of the SEC or under state
securities or "blue sky" laws and the securities laws of any foreign country,
and such Consents as may be required in any jurisdiction where Parent or Merger
Sub is qualified or authorized to do business as a foreign corporation in order
to maintain such qualification or authorization, and (iii) any other Consents
that, if they were not obtained or made, would not reasonably be expected,
individually or in the aggregate, to have a Parent Material Adverse Effect.
(c) Assuming compliance with the matters referenced in Section 3.3(b), the
execution, delivery and performance by Parent and Merger Sub of this Agreement
and the consummation by Parent and Merger Sub of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the organizational or
governing documents of Parent or Merger Sub, (ii) contravene or conflict with or
constitute a violation of any provision of any Law binding upon or applicable to
Parent or Merger Sub or any of their respective properties or assets or (iii)
result in the creation of any Lien (other than Permitted Liens) upon any of the
properties or assets of Parent or Merger Sub; provided, however, than no
representation or warranty is made in the foregoing clauses (ii) and (iii) with
respect to matters that would not reasonably be expected, individually or in the
aggregate, to have a Parent Material Adverse Effect.
Section 3.4 Litigation. As of the date hereof, (i) there are no
litigations, arbitrations, claims, investigations, proceedings, actions or
suits, whether at law or in equity, pending or, to the Knowledge of Parent,
threatened in writing by any Person against or affecting Parent or Merger Sub or
any material portion of their respective properties or assets, and (ii) there
are no orders, judgments or decrees of any Governmental Entity against Parent or
Merger Sub or affecting any material portion of their respective properties or
assets.
Section 3.5 Offer Documents; Schedule 14D-9, Other Information. None of the
information supplied or to be supplied by or on behalf of by Parent or Merger
Sub specifically for inclusion in the Schedule 14D-9 or the Proxy Statement
will, at the times the Schedule 14D-9 or the Proxy Statement are filed with the
SEC or mailed to stockholders of the Company, or at the time of the Company
Meeting, contain any 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 are made, not
misleading, or necessary to correct any statement supplied by Parent or Merger
Sub and made in any communication with respect to the Offer, the Merger or other
transactions contemplated hereby previously filed with the SEC or disseminated
to the stockholders of the Company. The Schedule TO will not, at the time it is
filed with the SEC or mailed to stockholders of the Company, and at all times
prior to the purchase of Common Shares by Parent or Merger Sub pursuant to the
Offer, contain any 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 are made, not
misleading, except that no representation or warranty is made by Parent or
Merger Sub with respect to information supplied by the Company or an affiliate
of the Company that is contained in the Schedule TO. The Schedule TO will comply
as to form in all material respects with the provisions of the Exchange Act and
the rules and regulations of the SEC thereunder.
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Section 3.6 Financing. Parent has available, and Parent will provide to
Merger Sub at the time it becomes obligated to accept for payment and pay for
any Shares pursuant to the Offer, and at the Effective Time, sufficient cash and
cash equivalent resources available for Parent and Merger Sub to consummate the
Offer, the Merger and all of the other transactions contemplated by this
Agreement and to pay all related fees and expenses. Parent has delivered to the
Company true and complete copies of the executed commitment letters, addressed
to Parent, from the parties listed in Section 3.6 of the Parent Disclosure
Letter (the "Equity Funding Parties"), to provide equity financing (the
"Financing") in the aggregate amounts set forth therein (the "Equity Funding
Letters"). No Equity Funding Letter has been amended, supplemented or modified
except as permitted in accordance with their respective terms, and the
respective commitments contained in the Equity Funding Letters have not been
withdrawn or rescinded in any respect. Each of the Equity Funding Letters in the
form so delivered is in full force and effect and is a legal, valid and binding
obligation of each of the Equity Funding Parties to Parent. No event has
occurred which, with or without notice, lapse of time, or both, would constitute
a default of Parent or any other party thereto under any of the Equity Funding
Letters. There are no conditions precedent or other contingencies related to the
funding of the full amount of the Financing, other than as set forth in or
contemplated by the Equity Funding Letters. The aggregate proceeds contemplated
by the Equity Funding Letters will be sufficient for Parent and Merger Sub to
pay the aggregate consideration contemplated by the Offer and, if applicable,
the Merger and to pay all related transaction fees and expenses upon the terms
contemplated by this Agreement. Each of the Equity Funding Parties has access to
sufficient cash to satisfy its obligations under its Equity Funding Letter.
Section 3.7 Finders or Brokers. There is no investment banker, broker,
finder, intermediary or other Person who may be entitled to any broker's,
finder's or other similar fee or commission in connection with or upon
consummation of the Offer, the Merger or any of the other transactions
contemplated hereby based upon arrangements made by or on behalf of Parent or
Merger Sub.
Section 3.8 Investigation.
(a) Each of Parent and Merger Sub acknowledges and agrees that it has
conducted its own independent investigation, review and analysis of the
business, operations, assets, liabilities and prospects of the Company and its
Subsidiaries, which investigation, review and analysis was conducted by such
party and its representatives. Each of Parent and Merger Sub acknowledges that
it and its representatives have been provided access to the personnel,
properties, premises and records of the Company and its Subsidiaries for such
purpose. In entering into this Agreement, each of Parent and Merger Sub
acknowledges that it has not relied on any factual representations of the
Company or its Subsidiaries, or their respective Representatives, except for the
specific representations and warranties of the Company set forth in Article II.
(b) Each of Parent and Merger Sub acknowledges and agrees that (i) none of
the Company, any of its Subsidiaries or any of their respective Representatives
makes or has made any representation or warranty, either express or implied, as
to the Company or any of its Subsidiaries or as to the accuracy or completeness
of any of the information regarding the Company or any of its Subsidiaries
(including materials furnished or made available by the Company or its
Representatives in any "data rooms," "virtual data rooms," management
presentations or projections, or in any other form provided or made available to
Parent or Merger Sub or their representatives (except for the specific
representations and warranties of the Company set forth in Article II), and (ii)
none of the Company, its Subsidiaries or any of their respective Representatives
shall have or be subject to any liability to Parent, Merger Sub or any other
Person resulting from the distribution to such Person, or such Person's use of
or reliance on, any such information or any information, documents or material
made available to Parent, Merger Sub or any other Person in any "data rooms,"
"virtual data rooms," management presentations or in any other form in
expectation of, or in connection with, the transactions contemplated by this
Agreement. Each of Parent and Merger Sub specifically disclaims any reliance on
any financial or operating projections or other forward-looking statements with
respect to the Company, its Subsidiaries and their respective businesses that
may have been provided to Parent, Merger Sub or their representatives in the
course of due diligence and negotiations.
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ARTICLE IV
COVENANTS AND AGREEMENTS
Section 4.1 Conduct of Business by the Company and Parent.
(a) From and after the date hereof and prior to the earlier of (x) the date
on which a majority of the Company's directors are designees of Parent or Merger
Sub and (y) the date, if any, on which this Agreement is earlier terminated
pursuant to Section 6.1 (the "Termination Date"), and except (i) as may be
required by applicable Law, (ii) with the prior written consent of Parent, (iii)
as expressly contemplated, required or permitted by this Agreement or (iv) as
set forth in Section 4.1 of the Company Disclosure Letter, the Company shall,
and shall cause each of its Subsidiaries to, (A) conduct its business in the
ordinary course and (B) use commercially reasonable efforts to maintain and
preserve intact its business organization and advantageous business
relationships and to retain the services of its key officers and key employees.
For the avoidance of doubt, "conduct of business in the ordinary course" as
referenced in clause (A) above shall include (x) the initiation of
lines-of-business or launch of new services consistent with the basic strategy
of each Subsidiary of the Company, (y) the introduction or withdrawal of service
packages within present lines-of-business of any Subsidiary of the Company, when
such action is consistent with prevailing market or competitive circumstances or
in response to opportunities which might emerge, and (z) minor additions to the
capital construction programs of any Subsidiary of the Company, not included
within the annual business plan, but advantageous to furtherance of such
Subsidiary's basic business.
(b) Without limiting the generality of Section 4.1(a), from the date hereof
and ending on the earlier of (x) the date on which a majority of the Company's
directors are designees of Parent or Merger Sub and (y) the Termination Date,
except as may be required by applicable Law, as set forth in Section 4.1 of the
Company Disclosure Letter or as expressly contemplated, required or permitted by
this Agreement, without the prior written consent of Parent, the Company shall
not, and shall cause each of its Subsidiaries not to:
31
(i) amend or waive any provision of the Certificate of Incorporation or
Bylaws of the Company or any organizational documents of its Subsidiaries or, in
the case of the Company, enter into any agreement with any of its stockholders
in their capacity as such;
(ii) make, declare or pay any dividend, or make any other distribution with
respect to, or directly or indirectly redeem, purchase or otherwise acquire or
encumber, any Shares or any other securities of the Company or any of its
Subsidiaries, or any securities convertible (whether currently convertible or
convertible only after the passage of time or the occurrence of certain events)
into or exchangeable for Shares or any other securities of the Company or any of
its Subsidiaries, except in connection with (x) cashless exercises or similar
transactions - pursuant to the exercise of Company Stock Options or other awards
issued and outstanding as of the date hereof under the Company Stock Plans or
permitted hereunder to be granted after the date hereof, (y) paid by
Subsidiaries of the Company in the ordinary course of business - consistent with
past practice or (z) Common Shares issued by the Company upon conversion of -
Preferred Shares in accordance with Section 8 of the Certificate of Designation;
(iii) adjust, split, combine or reclassify the Shares or any other
securities of the Company or any of its Subsidiaries, or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for any Shares or any other securities of the Company or any of its
Subsidiaries (other than Common Shares issued by the Company upon (x) conversion
of Preferred Shares in accordance with Section 8 of the Certificate of
Designation or (y) exercise of any Company Stock Options or Warrants;
(iv) make any material change (or file any such change) in any method of
Tax accounting or any Tax election (except, in each case, as in the ordinary
course of business or as is consistent with past practice), settle or compromise
any material Tax liability or enter into any agreement relating to Taxes, in
each case for an amount materially in excess of the amount reserved therefor on
the financial statements included in the Company SEC Documents;
(v) except as required by existing compensation arrangements or Company
Benefit Plans, as set forth in Section 4.1(b)(v) of the Company Disclosure
Letter or as required by applicable Law, (A) increase the compensation or other
benefits payable or provided to the Company's directors or executive officers,
except for increases to executive officers in the ordinary course of business
consistent with past practice, (B) enter into any employment, change in control,
- severance or retention agreement with any employee of the Company or (C)
establish, adopt, - enter into or amend any collective bargaining agreements, or
Company Benefit Plans, except to the extent required to comply with Section 409A
of the Code;
(vi) enter into or make any loans to any of its officers, directors,
employees, agents or consultants (other than loans or advances in the ordinary
course of business consistent with past practice) or make any change in its
existing borrowing or lending arrangements for or on behalf of any of such
Persons, except as required by the terms of any Company Benefit Plan;
32
(vii) materially change financial accounting policies or procedures or any
of its methods of reporting income, deductions or other material items for
financial accounting purposes, except as required by GAAP, the Georgian tax
code, SEC rule or policy or applicable Law or as may arise in response to
findings of the Company's independent auditors;
(viii) except for transactions among the Company and its wholly owned
Subsidiaries or among the Company's wholly owned Subsidiaries, issue, sell,
pledge, dispose of or encumber, or authorize the issuance, sale, pledge,
disposition or encumbrance of, any Shares or other equity interests in the
Company or any of its Subsidiaries, or any securities convertible into or
exchangeable for any Shares or other equity interests, or any rights, warrants
or options to acquire or with respect to any Shares, other equity interests in
the Company or any of its Subsidiaries or any securities convertible into or
exchangeable for any Shares or other equity interests, or take any action to
cause to be exercisable any otherwise unexercisable Company Stock Options
(except as otherwise provided in this Agreement or by the express terms of any
unexercisable Company Stock Options outstanding as of the date hereof), other
than (A) issuances of Shares in respect - of any exercise of Company Stock
Options that are outstanding on the date hereof or may be granted after the date
hereof as permitted under this Section 4.1(b), (B) the grant of equity -
compensation awards in the ordinary course of business under the Company Stock
Plans, (C) the - acquisition of Shares from a holder of a Company Stock Option
or a holder of restricted Common Shares in satisfaction of withholding
obligations or, in the case of a Company Stock Option, in payment of the
exercise price and (D) issuance of Shares in respect of the conversion of -
Preferred Shares in accordance with Section 8 of the Certificate of Designation;
(ix) sell, pledge, dispose of or encumber, or authorize the sale, pledge,
disposition or encumbrance of, any securities or other equity interests, or any
rights, warrants or options to acquire or with respect to any securities or
other equity interests, or any securities convertible into or exchangeable for
any equity interests, in any of Telecom Georgia, Telenet and Ayety TV;
(x) incur, assume, guarantee (other than guarantees by the Company of
indebtedness of its wholly-owned Subsidiaries or guarantees by the Company's
wholly-owned Subsidiaries of indebtedness of the Company or another wholly-owned
Subsidiary of the Company, in each case, if such indebtedness is otherwise
permitted hereunder), prepay or otherwise become liable for any indebtedness for
borrowed money (directly, contingently or otherwise), other than in the ordinary
course of business consistent with past practice, except for (A) any
indebtedness for - borrowed money among the Company and its wholly owned
Subsidiaries or among the Company's Subsidiaries, (B) indebtedness for money
borrowed from Persons who are not affiliates of the - Company or any of its
Subsidiaries in a principal amount not, in the aggregate, in excess of
$3,000,000 for the Company and all of its Subsidiaries taken as a whole, (C)
indebtedness - incurred to refinance any existing indebtedness in an amount not
to exceed, and on terms no less favorable in the aggregate than, such existing
indebtedness and (D) capital lease - obligations set forth in the operating
budget of Magticom in place as of the date hereof;
33
(xi) except for transactions among the Company and its wholly owned
Subsidiaries or among the Company's Subsidiaries, sell, lease, license,
transfer, exchange or swap, mortgage or otherwise encumber (including
securitizations), or subject to any Lien (other than Permitted Liens) or
otherwise dispose of any material portion of its material properties or assets,
including the capital stock of any Subsidiaries, other than dispositions
occurring in the ordinary course of business consistent with past practice;
(xii) other than in the ordinary course of business consistent with past
practice, enter into any Company Material Contract or modify, amend, terminate
or waive in any material respect any rights under any existing Company Material
Contract; provided, however, it is understood that the "ordinary course of
business" shall include undertaking contracts in connection with new Subsidiary
service offerings consistent with the basic Subsidiary business strategy and for
which there has been no "past practice";
(xiii) make any capital expenditures not contemplated by the operating
budget of Magticom in place as of the date hereof or having an aggregate value
in excess of $4,000,000;
(xiv) make any investment or acquisition of another Person or business,
whether by purchase of stock or securities, contributions to capital, property
transfers, or entering into binding agreements with respect to any such
investment or acquisition;
(xv) waive, release, assign, settle or compromise any claim, action or
proceeding, other than waivers, releases, assignments, settlements or
compromises that involve only the payment of monetary damages not in excess of
$250,000 in the aggregate (excluding amounts to be paid under existing insurance
policies) or otherwise pay, discharge or satisfy any claims, liabilities or
obligations in excess of such amount, in each case, other than in the ordinary
course consistent with past practice;
(xvi) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization; or
(xvii) except as contemplated by Section 4.3 of this Agreement, agree to
take, make any commitment to take, or adopt any resolutions of its Board of
Directors in support of, any of the actions prohibited by this Section 4.1(b).
Section 4.2 Access to Information; Confidentiality.
(a) Subject to compliance with applicable Laws, from and after the date
hereof and until the earlier of (x) the date on which a majority of the
Company's directors are designees of Parent or Merger Sub and (y) the
Termination Date, the Company shall and shall cause its Subsidiaries to (i)
afford Parent and its officers, employees, accountants, consultants, legal
counsel, financial advisors and agents, lenders and other representatives
(collectively, "Parent Representatives") reasonable access during normal
business hours to the properties, assets, books and records and employees of the
Company and its Subsidiaries, (ii) furnish to Parent and Parent Representatives
such financial and operating data and other information as they may reasonably
request from time to time and (iii) instruct the employees, counsel, financial
advisors, auditors and other authorized representatives (other than directors
who are not employees) of the Company and its Subsidiaries to cooperate
reasonably with Parent in its investigation of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to afford such access
if it would (w) unreasonably disrupt the operations of the Company or any of its
Subsidiaries, (x) cause a violation of any agreement to which the Company or any
of its Subsidiaries is a party, (y) subject to Section 4.2(c), reasonably be
expected to jeopardize any attorney-client privilege relating thereto or (z)
cause a risk of a loss of privilege or trade secret protection to the Company or
any of its Subsidiaries.
34
(b) Parent hereby agrees that all information provided to Parent or Parent
Representatives in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be deemed to constitute "Information," as
such term is defined in the Confidentiality Agreement, dated as of April 10,
2007 (the "Confidentiality Agreement"), between the Company and Salford Georgia,
an affiliate of Parent and Merger Sub, and shall be treated in accordance with
the terms of the Confidentiality Agreement.
(c) To the extent that any Information may include materials subject to the
attorney-client privilege, the Company is not waiving and will not be deemed to
have waived or diminished its attorney work-product protections, attorney-client
privileges or similar protections and privileges as a result of disclosing any
Information (including Information related to pending or threatened litigation)
to Parent and Parent's Representatives, regardless of whether the Company has
asserted or is or may be entitled to assert such privileges and protections. The
parties (i) share a common legal and commercial interest in all such Information
that is subject to such privileges and protections; (ii) are or may become joint
defendants in proceedings to which such Information covered by such protections
and privileges relates; and (iii) intend that such privileges and protections
remain intact should either party become subject to any actual or threatened
proceeding to which such Information covered by such protections and privileges
relates. In furtherance of the foregoing, Parent and Parent's Representatives
shall not claim or contend, in proceedings involving either party, that the
Company waived its attorney work-product protections, attorney-client privileges
or similar protections and privileges with respect to any information, documents
or other material disclosed to Parent or Parent's Representatives due to the
Company disclosing Information (including Information related to pending or
threatened litigation) to Parent or Parent's Representatives in accordance with
this Section 4.2.
Section 4.3 No Solicitation.
(a) Subject to the provisions of this Section 4.3 set forth below, from and
after the date hereof and until the earlier of (x) the date on which a majority
of the Company's directors are designees of Parent or Merger Sub and (y) the
Termination Date, the Company agrees that neither the Company nor any of its
Subsidiaries shall, and that each of them shall direct their respective
officers, directors and representatives, including any investment bankers,
attorneys or accountants retained by any of them (each, a "Representative") not
to, directly or indirectly, (i) solicit, initiate, knowingly encourage
(including by providing non public information) or knowingly facilitate any
inquiries, proposals or offers that constitute, or would reasonably be expected
to lead to, any Alternative Proposal, (ii) engage or participate in any
negotiations regarding, or provide or cause to be provided any non-public
information or data relating to the Company or any of its Subsidiaries in
connection with, or have any discussions with any Person relating to, any actual
or proposed Alternative Proposal, or otherwise knowingly encourage or facilitate
any effort or attempt to propose publicly to approve, endorse or recommend any
Alternative Proposal, (iii) approve, endorse or recommend, or publicly propose
to approve, endorse or recommend, any Alternative Proposal, (iv) approve,
endorse or recommend, or enter into, any letter of intent, agreement in
principle, merger agreement, acquisition agreement, option agreement or other
similar agreement, arrangement or understanding with any Person relating to any
Alternative Proposal.
35
(b) The Company shall, shall cause each of its Subsidiaries to, and shall
direct each of its Representatives to, immediately cease any existing
solicitations, discussions or negotiations with any Person (other than the
parties hereto) that has made or indicated an intention to make an Alternative
Proposal on or prior to the date hereof.
(c) Notwithstanding anything to the contrary in Section 4.3(a) or (b), the
Company may, in response to an unsolicited written bona fide Alternative
Proposal that did not result from or arise in connection with a breach of this
Section 4.3 (a "Qualifying Alternative Proposal") and that the Board of
Directors determines, in good faith, after consultation with its outside counsel
and financial advisors, may reasonably be expected to lead to a Superior
Proposal, (i) furnish non-public information with respect to the Company and its
Subsidiaries to the Person making such Qualifying Alternative Proposal and its
representatives pursuant to a customary confidentiality agreement no less
restrictive in any material respect of and not more favorable in any material
respect to the other party than the confidentiality terms and conditions of the
Confidentiality Agreement (for the avoidance of doubt, such confidentiality
agreement need not include any "standstill" or prohibitions on the ability of
such third party to communicate with the Company's minority partners in an
effort to facilitate the consummation of the Qualifying Alternative Proposal),
and (ii) participate in discussions or negotiations with such Person and its
representatives regarding such Qualifying Alternative Proposal; provided,
however, that the Company shall promptly provide or make available to Parent any
material non-public information concerning the Company or any of its
Subsidiaries that is provided to the Person making such Qualifying Alternative
Proposal or its representatives that was not previously provided or made
available to Parent.
(d) The Board of Directors shall not withdraw, qualify or modify the
Recommendation in a manner adverse to Parent or Merger Sub, or publicly propose
to do so, or approve or recommend or publicly propose to approve or recommend,
any Alternative Proposal; provided, however, that, notwithstanding the foregoing
or any other provision of this Agreement, the Board of Directors may (subject to
the Company's compliance with this Section 4.3) withdraw, qualify or modify its
Recommendation in a manner adverse to Parent or Merger Sub (a "Change of
Recommendation") if, prior to the Acceptance Date, in response to a Qualifying
Alternative Proposal, the Board of Directors determines in good faith, after
consultation with outside counsel and financial advisors, that (x) such
Qualifying Alternative Proposal constitutes a Superior Proposal and (y) failure
to so withdraw, qualify or modify its Recommendation would be inconsistent with
the Board of Directors' exercise of its fiduciary duties; and provided, further,
that no such Change of Recommendation may be effected unless, (i) prior to
effecting such Change of Recommendation, the Company provides written notice to
Parent, at least three (3) Business Days in advance of the proposed effective
date of such Change of Recommendation (the "Notice Period"), of its intention to
effect such Change of Recommendation, which notice shall specify all material
terms and conditions of the Qualifying Alternative Proposal giving rise to such
Change of Recommendation (including the identity of the Person making such
Qualifying Alternative Proposal and copies of any documents or correspondence
evidencing such Qualifying Alternative Proposal), and any material modifications
to any of the foregoing, (ii) during the Notice Period, if Parent shall so
request, the Company shall, and shall cause its financial advisors and outside
counsel to, negotiate with Parent in good faith to make such adjustments in the
terms and conditions of this Agreement so that such Qualifying Alternative
Proposal ceases to constitute (in the good faith judgment of the Board of
Directors) a Superior Proposal, and (iii) such Qualifying Alternative Proposal
continues to constitute (in the good faith judgment of the Board of Directors) a
Superior Proposal after taking into account any such amendments that Parent
shall have agreed to make prior to the end of the Notice Period. Notwithstanding
anything to the contrary herein, the Board of Directors may withdraw, modify or
amend the Recommendation at any time prior to the Acceptance Date if, in each
case, it determines, after consultation with its outside legal counsel, that the
failure to take such action is reasonably likely to result in a breach of its
fiduciary obligations to the stockholders of the Company under applicable Laws;
provided, however, that the Board of Directors may not take any such action in
response to or in connection with an Alternative Proposal except pursuant to the
first sentence of this Section 4.3(d).
36
(e) The Company promptly (and in any event within 24 hours) shall advise
Parent orally and in writing of (i) any Alternative Proposal or indication or
inquiry with respect to, or that would reasonably be expected to lead to, any
Alternative Proposal and (ii) any request for non-public information relating to
the Company or its Subsidiaries, other than requests for information not
reasonably expected to be related to an Alternative Proposal, including in each
case a description of the material terms of any such Alternative Proposal or
indication, inquiry or request. The Company shall keep Parent reasonably
informed on a reasonably current basis of any material change to the terms of
any such Alternative Proposal, indication, inquiry or request.
(f) Nothing contained in this Agreement shall prohibit the Company or its
Board of Directors from disclosing to its stockholders a position contemplated
by Rules 14d-9, Item 1012(a) of Regulation M-A and Rule 14e-2(a) promulgated
under the Exchange Act, or from issuing a "stop, look and listen" statement
pending disclosure of its position thereunder. In addition, it is understood and
agreed that, for purposes of this Agreement (including Article VI), (i) a
factually accurate public statement by the Company that describes the Company's
receipt of an Alternative Proposal and the operation of this Agreement with
respect thereto, shall not be deemed a withdrawal or modification, or proposal
by the Board of Directors of the Company to withdraw or modify the
Recommendation, or an approval or recommendation with respect to such
Alternative Proposal so long as such public statement includes a statement that
the Board of Directors continues to support the Recommendation, and (ii) any
"stop, look and listen" communication by the Board of Directors pursuant to Rule
14d-9(f) under the Exchange Act, or any similar communication to the
shareholders of the Company or otherwise, shall not constitute a Change of
Recommendation or a withdrawal or modification, or proposal by the Board of
Directors to withdraw or modify the Recommendation, or an approval or
recommendation with respect to any Alternative Proposal.
37
(g) As used in this Agreement, "Alternative Proposal" shall mean (i) any
proposal, inquiry, indication of interest or offer from any Person or group of
Persons (other than Parent or any of its Subsidiaries) for a merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, dissolution, liquidation or similar transaction involving the
Company (or any Subsidiary or Subsidiaries of the Company whose business
constitutes 20% or more of the net revenues, net income or assets of the Company
and its Subsidiaries, taken as a whole, other than in respect of any interest
not owned by the Company or any of its Subsidiaries), (ii) any proposal for the
issuance by the Company of over 20% of its equity securities or (iii) any
proposal or offer to acquire in any manner, directly or indirectly, over 20% of
the equity securities or consolidated total assets of the Company and its
Subsidiaries, in each case other than the Offer, the Merger or any other
transactions contemplated by this Agreement and other than in respect of any
interest not owned by the Company or any of its Subsidiaries. Notwithstanding
anything to the contrary herein, for the avoidance of doubt it is understood and
agreed that any action on the part of the Company's minority partners in
International Telcell Cellular, a Delaware corporation, including in respect to
the transfer, sale or other disposition of their ownership interests in such
Company Subsidiary, shall not be deemed to be a breach of any of the terms and
conditions of this Section 4.3.
(h) As used in this Agreement, "Superior Proposal" shall mean any
Alternative Proposal (i) on terms that the Board of Directors determines in good
faith, after consultation with the Company's outside legal counsel and financial
advisors, to be more favorable to the holders of Shares than the Offer and the
Merger, taking into account all of the respective terms and conditions of such
Alternative Proposal, and (ii) that the Board of Directors believes is
reasonably capable of being completed, taking into account all financial,
regulatory, legal and other aspects of such proposal; provided, however, that
for purposes of this definition of "Superior Proposal", the references to "20%"
in the definition of Alternative Proposal shall be replaced by "50%".
Section 4.4 Filings; Other Actions.
(a) If the Short Form Merger is not available in accordance with Section
1.12 of this Agreement and the Company Stockholder Approval is required under
the DGCL, as promptly as reasonably practicable following the consummation or
expiration of the Offer and the Company becoming current with respect to the
filing of all outstanding periodic reports required to be filed with the SEC or
having received a waiver from the SEC with respect thereto, the Company shall
prepare and file with the SEC the Proxy Statement, which shall, subject to
Section 4.3, include the Recommendation, and shall use its commercially
reasonable efforts to respond to any comments by the SEC staff in respect of the
Proxy Statement. Parent and Merger Sub shall, and Parent shall cause Merger Sub
to, provide to the Company such information as the Company may reasonably
request for inclusion in the Proxy Statement. The Company shall use its
commercially reasonable efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after the Proxy Statement is
cleared by the SEC. The Company shall as promptly as practicable notify Parent
of the receipt of any oral or written comments from the SEC relating to the
Proxy Statement. The Company shall cooperate and provide Parent with a
reasonable opportunity to review and comment on the draft of the Proxy Statement
(including each amendment or supplement thereto). The Company shall provide
Parent with copies of all filings made and correspondence with the SEC with
respect to the Proxy Statement. If, at any time prior to the Effective Time, any
information should be discovered by any party hereto which should be set forth
in an amendment or supplement to the Proxy Statement so that the Proxy Statement
would not include any misstatement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the party that discovers such information shall promptly notify the
other parties hereto and, to the extent required by applicable Law, an
appropriate amendment or supplement describing such information shall be
promptly filed by the Company with the SEC and disseminated by the Company to
the stockholders of the Company.
38
(b) Subject to the other provisions of this Agreement and the Company's
ability to timely file periodic reports with the SEC, the Company shall (i) take
all action necessary in accordance with the DGCL and its Certificate of
Incorporation and Bylaws to duly call, give notice of, convene and hold a
meeting of its stockholders, as promptly as reasonably practicable following the
mailing of the Proxy Statement, for the purpose of obtaining the Company
Stockholder Approval (such meeting or any adjournment or postponement thereof,
the "Company Meeting"), and (ii) subject to a Change of Recommendation in
accordance with Section 4.3(d), use commercially reasonable efforts to solicit
from its stockholders proxies in favor of the approval of this Agreement, the
Merger and the other transactions contemplated hereby.
Section 4.5 Employee Matters.
(a) From and after the Acceptance Date, the Company and, after the
Effective Time, the Surviving Corporation shall, and Parent shall cause the
Company and the Surviving Corporation, as applicable, to, honor all Company
Benefit Plans and compensation arrangements and agreements in accordance with
their terms as in effect immediately before the Acceptance Date; provided,
however, that nothing in this Agreement shall prohibit the amendment or
termination of any such Company Benefit Plans or compensation arrangements or
agreements in accordance with their terms and applicable Law at any time or from
time to time thereafter.
(b) As of the Acceptance Date, Parent, the Company and, after the Effective
Time, the Surviving Corporation, and each of their respective Subsidiaries shall
have all applicable obligations, liabilities and commitments in respect of
providing notices and making available health care continuation coverage
required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, for all present and former Employees (and their qualifying spouses or
dependents) who are eligible for such coverage at any time prior to or following
the Acceptance Date.
Section 4.6 Commercially Reasonable Efforts.
(a) Subject to the terms and conditions set forth in this Agreement, each
of the parties hereto shall, and shall cause each of its Subsidiaries to, use
all commercially reasonable efforts to take promptly, or cause to be taken, all
actions, and to do promptly, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable under
applicable Laws to fulfill all conditions applicable to such party pursuant to
this Agreement and to consummate and make effective, as promptly as reasonably
practicable, the Offer, the Merger and the other transactions contemplated by
this Agreement, including (i) obtaining all necessary Consents, (ii) defending
any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Offer, the Merger and the
other transactions contemplated by this Agreement, (iii) consulting and
cooperating with, providing assistance to and furnishing information requested
by the other party in the preparation and filing with the SEC of the Schedule
TO, the Offer Documents, the Schedule 14D-9 and the Proxy Statement, as
applicable, and all necessary amendments and supplements thereto, and (iv)
executing and delivering any additional instruments reasonably necessary to
consummate the transactions contemplated by this Agreement.
39
(b) Subject to applicable legal limitations and the instructions of any
Governmental Entity, the Company and Parent shall keep each other apprised of
the status of matters relating to the completion of the transactions
contemplated hereby, including to the extent permitted by Law promptly
furnishing the other with copies of notices or other communications sent or
received by the Company or Parent, as the case may be, or any of their
respective Subsidiaries, to or from any third party or any Governmental Entity
with respect to such transactions. The Company and Parent shall permit the other
party to review in advance any proposed written communication to any supervisory
or Governmental Entity. Each of the Company and Parent agrees not to initiate
any substantive meeting or discussion, either in person or by telephone, with
any Governmental Entity in connection with the transactions contemplated by this
Agreement unless it consults with the other party in advance and, to the extent
not prohibited by such Governmental Entity, gives the other party the
opportunity to attend and participate in such meeting or discussion.
(c) In furtherance and not in limitation of the covenants of the parties
contained in this Section 4.6, if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement, each of the Company and Parent shall cooperate in all respects with
each other and shall use their respective commercially reasonable efforts to
contest and resist any such action or proceeding and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents or restricts consummation of the Offer, the Merger or any other
transactions contemplated by this Agreement. Notwithstanding the foregoing or
any other provision of this Agreement, nothing in this Section 4.6 shall limit a
party's right to terminate this Agreement pursuant to Section 6.1(c) so long as
such party has, prior to such termination, complied with its obligations under
this Section 4.6.
(d) In furtherance and not in limitation of the covenants of the parties
contained in this Section 4.6, and notwithstanding any provision to the contrary
in this Agreement, in the event that, prior to the commencement of the Offer,
the Common Shares or the Preferred Shares, as the case may be, are deregistered
under the Exchange Act, whether in connection with the Restatement and Related
Matters or otherwise, each of the parties hereto shall, and shall cause each of
its Subsidiaries to, use reasonable best efforts to take promptly, or cause to
be taken, all actions, and to do promptly, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable under all applicable Laws to consummate the transactions contemplated
by this Agreement.
40
Section 4.7 Takeover Statutes. If any Takeover Statute shall become
applicable to the Offer, the Merger or any other transactions contemplated
hereby, each of the Company and Parent and the members of their respective
Boards of Directors shall grant such approvals and take such actions as are
reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby, and
shall otherwise act to eliminate or minimize the effects of such Takeover
Statute on the transactions contemplated hereby.
Section 4.8 Public Announcements. So long as this Agreement is in effect,
none of the parties to this Agreement shall issue or cause the publication of
any press release or any other announcement or communication with respect to
this Agreement, the Offer or the Merger or any other transactions contemplated
hereby without the prior written consent of the other parties, except in any
case where such release, announcement or communication is required by applicable
Law, any requirement of any Governmental Entity, court process or by obligations
pursuant to any listing agreement with any national securities exchange, in
which case such party shall use its commercially reasonable efforts to consult
with the other parties prior to making any such disclosure.
Section 4.9 Indemnification and Insurance.
(a) From and after the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, cause the Certificate of Incorporation and Bylaws or
similar organizational documents of the Surviving Corporation and the Company's
Subsidiaries to contain provisions no less favorable with respect to
indemnification than are set forth in the Certificate of Incorporation and
Bylaws, respectively, or similar organizational documents of the Company and its
Subsidiaries as of the date hereof, which provisions shall not be amended,
repealed or otherwise modified for a period of six (6) years from the Effective
Time in any manner that would affect adversely the rights thereunder of
individuals who, at or prior to the Effective Time, were directors, officers,
employees, fiduciaries or agents of the Company or any of its Subsidiaries. From
and after the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, fulfill and honor in all respects, to the fullest extent
permitted under applicable Law, the obligations of the Company pursuant to any
indemnification, exculpation and advancement of expenses provisions in favor of
each present or former director or officer of the Company or any of its
Subsidiaries (collectively, the "Indemnified Parties") contained in the
Certificate of Incorporation or Bylaws of the Company or similar organizational
documents of its Subsidiaries, or in any agreement between an Indemnified Party
and the Company in effect as of the date of this Agreement, with respect to any
costs and expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and settlement amounts paid in connection
with any claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission, in his or
her capacity as a director or officer of the Company or any of its Subsidiaries,
occurring at or before the Effective Time. In the event of any such claim,
action, suit, proceeding or investigation, (i) the Surviving Corporation shall
pay the reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to the Surviving
Corporation, promptly after statements therefor are received (provided the
applicable Indemnified Party provides an undertaking, to the extent required by
applicable Law, the Certificate of Incorporation or Bylaws of the Company or
similar organizational documents of its Subsidiaries, or by the applicable
agreement between an Indemnified Party and the Company, to repay all advanced
expenses if it is finally judicially determined that such Indemnified Party is
not entitled to indemnification), and (ii) the Surviving Corporation shall
cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected without
the Surviving Corporation's prior written consent; and provided, further, that
the Surviving Corporation shall not be obligated pursuant to this Section 4.9(a)
to pay the fees and expenses of more than one counsel (selected by a plurality
of the applicable Indemnified Parties) for all Indemnified Parties in any
jurisdiction with respect to any single action, except to the extent that two or
more of such Indemnified Parties shall have conflicting interests in the outcome
of such action. In the event that any claim for indemnification is asserted or
made within such six-year period, all rights to indemnification in respect of
such claim shall continue until the disposition of such claim.
41
(b) At or prior to the Acceptance Date, the Company shall purchase, at the
Company's expense, an extended "tail" reporting period for the Company's
directors' and officers' liability insurance in effect as of the date hereof
(the "Current D&O Policy"), which extended "tail" reporting period shall (i) be
for an effective period of six (6) years after the Acceptance Date, (ii) be for
the benefit of those Persons who are covered by the Current D&O Policy, (iii) be
purchased at a premium not in excess of the amount set forth in Section 4.9(b)
of the Company Disclosure Letter, and (iv) shall contain terms with respect to
coverage and amount no less favorable than those contained in the Current D&O
Policy. Notwithstanding the foregoing, if such extended "tail" reporting period
cannot be obtained, or can only be obtained by the payment of a premium in
excess of the amount set forth in Section 4.9(b) of the Company Disclosure
Letter, then the Company shall only be required to purchase such extended
period, if any, as may be available for such length of time as can be obtained
by the payment of a premium not in excess of such amount. If such "tail" policy
has been obtained by the Company prior to the Acceptance Date, Parent and the
Company (and after the Effective Time, the Surviving Corporation) shall maintain
such "tail" policy in full force and effect for its full term and shall continue
to honor the Company's obligations thereunder.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers all or substantially all of its properties and assets
to any Person, then, in each such case, proper provisions shall be made so that
the successors and assigns of the Surviving Corporation shall succeed to the
obligations set forth in this Section 4.9.
(d) The provisions of this Section 4.9 are intended to be (i) for the
benefit of, and shall grant third party rights to and be enforceable by, each
Indemnified Party and his or her heirs and representatives and (ii) in addition
to, and not in substitution for, any other rights to indemnification or
contribution that any such Person may have, by contract or otherwise. If any
Indemnified Party makes any claim for indemnification or advancement of expenses
under this Section 4.9 that is denied by Parent or the Surviving Corporation,
and a court of competent jurisdiction determines that the Indemnified Party is
entitled to such indemnification, then Parent or the Surviving Corporation shall
pay such Indemnified Party's costs and expenses, including reasonable legal fees
and expenses, incurred in connection with pursuing such claim against Parent or
the Surviving Corporation.
42
Section 4.10 Control of Operations. Without in any way limiting any party's
rights or obligations under this Agreement, the parties understand and agree
that nothing contained in this Agreement shall give Parent or Merger Sub,
directly or indirectly, the right to control or direct the Company's operations
prior to the Acceptance Date. Prior to the Acceptance Date, the Company shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its operations.
Section 4.11 Stockholder Litigation. The Company shall give Parent the
opportunity to participate, subject to a customary joint defense agreement, at
Parent's own expense, in the defense or settlement of any stockholder litigation
against the Company and/or its directors relating to the transactions
contemplated hereby, and the Company shall not settle any such litigation, other
than pursuant to a settlement reimbursable from insurance or calling solely for
a cash payment in an aggregate amount of $2,000,000 or less (after giving effect
to any reimbursement from insurance), without the prior written consent of
Parent.
Section 4.12 Notification of Certain Matters. The Company shall give
reasonably prompt notice to Parent, and Parent shall give reasonably prompt
notice to the Company, of (i) any notice or other communication received by such
party from any Governmental Entity in connection with the Offer, the Merger or
the other transactions contemplated hereby or from any Person alleging that the
consent of such Person is or may be required in connection with the Offer, the
Merger or the other transactions contemplated hereby, if the subject matter of
such communication or the failure of such party to obtain such consent could be
material to the Company, the Surviving Corporation or Parent, (ii) any actions,
suits, claims, investigations or proceedings commenced or, to such party's
Knowledge, threatened against, relating to or involving or otherwise affecting
such party or any of its Subsidiaries which relate to the Offer, the Merger or
the other transactions contemplated hereby, (iii) the discovery of any fact or
circumstance that, or the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which, would cause or result in any of the
Tender Offer Conditions or any of the conditions set forth in Article V not
being satisfied or satisfaction of those conditions being materially delayed in
violation of any provision of this Agreement; provided, however, that the
delivery of any notice pursuant to this Section 4.12 shall not (x) cure any
breach of, or non-compliance with, any other provision of this Agreement or (y)
limit the remedies available to the party receiving such notice.
Section 4.13 Metromedia Name, Trademark and Logo.
(a) Subject to the rights of Metromedia Company specified therein, Parent
and Merger Sub acknowledge and agree that the License Agreement, dated as of
November 1, 1995, by and between Metromedia Company, a Delaware general
partnership ("Metromedia Company"), and the Company, as amended (the "License
Agreement"), shall automatically terminate on the first anniversary of the
Acceptance Date and shall cease to be in force and effect as of such date.
Parent and Merger Sub, on behalf of themselves and each of their respective
affiliates, acknowledge and agree that (i) they have no (and shall not at any
time claim any) right, title or interest in or to, or license or right to use,
any of the Metromedia Master Marks or any Marks, names or Domain Names
incorporating the Metromedia Master Marks other than as set forth in the License
Agreement; (ii) they shall not at any time contest the validity of Metromedia
Company's (or any of its affiliates') title to, or any of Metromedia Company's
(or any of its affiliates') rights in or to, any of the Metromedia Master Marks;
(iii) they shall not at any time register or apply to register any Metromedia
Master Marks or any Marks, names or Domain Names incorporating the Metromedia
Master Marks anywhere in the world; and (iv) notwithstanding anything to the
contrary contained herein, no provision of this Agreement shall be interpreted
to grant Parent, Merger Sub or any of their respective affiliates (other than
the Company and its Subsidiaries following the Acceptance Date) any right, title
or interest in or to, or any license or right to use, the Metromedia Master
Marks or any Marks, names or Domain Names incorporating the Metromedia Master
Marks other than as set forth in the License Agreement.
43
(b) At or as soon as possible following the first anniversary of the
Acceptance Date, but in no event later than five (5) Business Days following the
first anniversary of the Acceptance Date, Parent and Merger Sub shall, and shall
cause each of their respective affiliates to, cease all uses whatsoever of the
Metromedia Master Marks, without benefit of any additional sell off or
transitional period, and shall not, and shall cause each of their respective
affiliates not to, at any time thereafter, use any Metromedia Master Xxxx in
connection with the business or operation of the Company or the Surviving
Corporation or otherwise use any Metromedia Master Xxxx as a trade name,
trademark, service xxxx, Domain Name or otherwise, without the express written
consent of Metromedia Company. Without limiting the generality of the foregoing,
at or as soon as possible following the first anniversary of the Acceptance
Date, but in no event later than five (5) Business Days following the first
anniversary of the Acceptance Date, Parent and Merger Sub shall, and shall cause
each of their respective affiliates to, cease use of all advertising,
promotional materials, letterhead, business cards, vehicles, websites, signage,
buildings, broadcasting, packaging, labeling, invoices, documents, and any other
materials whatsoever used in connection with the business or operation of the
Company or the Surviving Corporation or any of its affiliates and bearing any
Metromedia Master Xxxx or shall cause the Metromedia Master Marks to be removed
from all such materials prior to their use. In order to assist Parent in
preparation for its obligations under this Section 4.13, the Company shall use
commercially reasonable efforts to take all actions prior to the first
anniversary of the Acceptance Date reasonably requested by Parent.
Section 4.14 FIRPTA Certificate. Prior to the Expiration Date, the Company
shall furnish to Parent an affidavit, executed under penalties of perjury,
stating that the Company is not and has not been a "United States real property
holding corporation," within the meaning of Section 897(c)(2) of the Code, at
any time in the five-year period ending on the Expiration Date, dated as of the
Expiration Date and in form and substance satisfactory to Parent.
Section 4.15 Section 16 Matters. The Company and, after the Acceptance Date
and prior to the Effective Time, Parent shall take all such steps as may be
required and permitted to cause the transactions contemplated by this Agreement,
including any dispositions of Common Shares (and derivative securities with
respect to Common Shares) by each individual who is or will be subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect to the
Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.
44
Section 4.16 Back-End Merger. Subject to the terms and conditions set forth
in this Agreement, Parent shall, and shall cause Merger Sub to, use its
reasonable best efforts to take promptly, or cause to be taken, all actions, and
to do promptly, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable under applicable
Laws to consummate and make effective, as promptly as reasonable, the Merger.
Section 4.17 Preferred Stock.
(a) Parent and the Merger Sub hereby agree to cause the Company to comply
with all of the provisions of the Certificate of Designation (including Section
5 thereof) from and after the Acceptance Date.
(b) Following consummation of the Merger, in the event any holder of Common
Shares or Preferred Shares, as the case may be, demands and perfects such
holder's right to dissent from the Merger and seek an appraisal of such holder's
Shares, then for so long as there is any pending appraisal proceeding before a
court of competent jurisdiction pursuant to Section 262 of the DGCL, the
Surviving Corporation shall not, and Parent shall cause the Surviving
Corporation not to, directly or indirectly, sell, lease, pledge or exchange any
property, pay any dividend or make any loan or distribution to its shareholders
or any affiliate of its shareholders, unless in any such case the aggregate
value of the assets of the Company following such transaction is equal to or
exceeds the sum of (x) 200% of the product of the number of Common Shares in
respect of which there is a pending appraisal proceeding at the time of such
transaction multiplied by the Merger Consideration and (y) the number of
Preferred Shares in respect of which there is a pending appraisal proceeding at
the time of such transaction multiplied by the Liquidation Preference (as
defined in the Certificate of Designation) of the Preferred Shares, provided
that this provision will not prohibit any sale, lease, pledge or exchange of
property to any third party that is not an affiliate of the Company, Parent or
its shareholders (or any affiliate of Parent's shareholders) for fair market
value, provided, further, that in the event of a sale, lease, pledge or exchange
referenced in the preceding proviso, the Surviving Corporation shall not, and
Parent shall cause the Surviving Corporation not to, directly or indirectly, pay
any dividend or make any loan or distribution to its shareholders or any
affiliate of its shareholders unless the aggregate value of the assets of the
Company following such dividend, loan or distribution is equal to or exceeds the
amounts referenced in clauses (x) and (y) above. The parties hereto acknowledge
and agree that the protections provided in the preceding sentence are designed
to provide credit protection and security for any potential claim a dissenting
holder might have against the Company or the Surviving Corporation as a result
of the final resolution of such pending appraisal proceeding(s). Any holder of
Preferred Shares that has validly exercised (and not withdrawn) appraisal rights
shall have the right to enforce this Section 4.17(b) against Parent, Merger Sub
and their respective successors and assigns. The parties acknowledge and agree
that the foregoing protections are not intended, and shall not be construed, to
affect or have any relevance to the determination of the "fair value" of any
Shares in any appraisal proceeding, or to indicate or imply that such "fair
value" may exceed the Merger Consideration, in the case of an appraisal
proceeding with respect to any Common Shares, or may be determined based upon,
or be equal to, the Liquidation Preference, in the case of an appraisal
proceeding with respect to any Preferred Shares.
45
Section 4.18 Financial Information. In the event that, following
consummation of the transactions contemplated by this Agreement, the Company's
securities are deregistered pursuant to Section 12 of the Exchange Act and any
of the Company's securities are held by holders other than Parent, Merger Sub or
their respective affiliates, and notwithstanding that the Company may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall use reasonable commercial efforts to timely prepare and
make available to its stockholders (which may be done by posting such materials
on the Company's website), without cost to such stockholders, quarterly and
annual financial statements prepared in accordance with generally accepted
accounting principles in the United States, the United Kingdom or adopted by the
International Accounting Standards Board, as determined by the Company. This
provision is intended to be for the benefit of, and may be enforced by, the
holders of Preferred Shares.
ARTICLE V
CONDITIONS TO THE MERGER
Section 5.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger and the other
transactions contemplated herein (other than the Offer, which is only subject to
the conditions set forth on Annex I hereto) shall be subject to the fulfillment
(or waiver by Parent and the Company), at or prior to the Effective Time, of the
following conditions:
(a) Acceptance of Shares. Merger Sub shall have accepted for purchase the
Common Shares tendered pursuant to the Offer in accordance with the terms hereof
and thereof; provided, however, that the condition set forth in this Section
5.1(a) shall be deemed satisfied if Merger Sub shall have failed, in breach of
this Agreement, to accept for purchase any Shares tendered pursuant to the
Offer.
(b) Expiration of Subsequent Offering Period. Any subsequent offering
period made available by Merger Sub pursuant to Section 1.1(d) shall have
expired.
(c) Stockholder Approval. Unless a Short-Form Merger can be consummated
pursuant to Section 1.12, the Company Stockholder Approval shall have been
obtained.
(d) No Injunction. No Governmental Entity of competent jurisdiction shall
have enacted, issued or entered any restraining order, preliminary or permanent
injunction or similar legal restraint or prohibition which remains in effect
that enjoins or otherwise prohibits consummation of the Merger.
ARTICLE VI
TERMINATION
Section 6.1 Termination or Abandonment. Anything contained in this
Agreement to the contrary notwithstanding, this Agreement may be terminated, and
the Offer or the Merger may be abandoned, at any time prior to the Acceptance
Date, as follows:
(a) Mutual Consent. By the mutual written consent of the Company and
Parent;
46
(b) End Date. By either the Company or Parent, if Merger Sub shall not have
accepted for payment and paid for Common Shares pursuant to the Offer on or
before December 31, 2007 (the "End Date");
(c) Injunction. By either the Company or Parent, if any Governmental Entity
shall have issued or entered an order, injunction or similar legal restraint
permanently enjoining or otherwise permanently prohibiting the consummation of
the Offer or the Merger, and such order, injunction or legal restraint shall
have become final and non-appealable;
(d) Breach by Parent or Merger Sub. By the Company, if (x) Parent or Merger
Sub shall have breached or failed to perform any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (i) would (A) reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect or (B) result
in a failure of any Tender Offer Condition or any condition set forth in Section
5.1 to be capable of being satisfied, or the Offer to be consummated, by the End
Date and (ii) is not curable or, if curable, is not cured by Parent or Merger
Sub within thirty (30) days after written notice thereof is given by the Company
to Parent or (y) all of the Tender Offer Conditions (excluding conditions that,
by their terms, cannot be satisfied until the Expiration Date, but which would
be reasonably capable of being satisfied at the expiration of the Offer) are
satisfied or waived and Parent and Merger Sub fail to accept for payment or pay
for any tendered Common Shares in accordance with their obligations under this
Agreement, including Section 1.1(e);
(e) Breach by Company. By Parent, if the Company shall have breached or
failed to perform any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform (i)
would result in a failure of the Tender Offer Condition set forth in paragraph
(c) or (d) of Annex I or any condition set forth in Section 5.1 to be capable of
being satisfied, or the Offer to be consummated, by the End Date, and (ii) such
breach or failure is not curable or, if curable, is not cured by the Company
within thirty (30) days after written notice thereof is given by Parent to the
Company;
(f) Superior Proposal. By the Company, if the Board of Directors shall have
approved, endorsed or recommended any Superior Proposal in accordance with the
first sentence of Section 4.3(d); provided, however, that any such purported
termination pursuant to this Section 6.1(f) shall be void and of no force and
effect unless, prior to or concurrently with, and in either case as a condition
to, the effectiveness of such termination, the Company pays the Termination Fee
and the Termination Expenses in accordance with Section 6.3;
(g) Change of Recommendation. By Parent, if the Board of Directors shall
have (i) effected, or publicly proposed to effect, a Change of Recommendation in
accordance with Section 4.3 or (ii) approved, endorsed or recommended, or
publicly proposed to approve, endorse or recommend, any Alternative Proposal;
and
(h) No Tender Offer Extension. By either the Company or Parent, if the
Tender Offer Conditions have not been satisfied or waived at any scheduled
Expiration Date and the Offer is not extended pursuant to Section 1.1(d) of this
Agreement; provided, that for the avoidance of doubt it is understood and agreed
that (after giving effect to any tolling thereof pursuant to the second to last
sentence of Section 1.1(d)) Parent may not terminate this Agreement pursuant to
this Section 6.1(h) if it is in breach of clause (i) of the third sentence of
Section 1.1(d).
47
Section 6.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 6.1, this Agreement shall forthwith become null
and void, and there shall be no liability or obligation on the part of the
Company, Parent, Merger Sub or their respective Subsidiaries or affiliates,
except that the Confidentiality Agreement and the provisions of Section 6.3 and
Article VII will survive the termination hereof; provided, however, that nothing
herein shall relieve any party from liability for willful breach of this
Agreement, in which case the aggrieved party shall, subject to the limitations
on liability set forth elsewhere herein, be entitled to all rights and remedies
available at law or in equity.
Section 6.3 Termination Fee.
(a) The Company agrees that, if this Agreement shall be terminated:
(i) by Parent or the Company pursuant to Section 6.1(b) or Section
6.1(h) and (A) at any time prior to such termination a bona fide Eligible
Alternative Proposal has been publicly announced or has otherwise been made
or submitted to the Company's stockholders and, in each case, has not been
withdrawn, (B) concurrently with such termination or within twelve (12)
months after the date of such termination, the Company or any of its
Subsidiaries (x) consummates any Eligible Alternative Proposal or (y)
enters into a definitive agreement with respect to any Eligible Alternative
Proposal and such Eligible Alternative Proposal is subsequently
consummated, and (C) such termination was not due to a material breach by
Parent or Merger Sub of their respective obligations hereunder, then the
Company shall pay Parent (1) an amount equal to $5,500,000 (the
"Termination Fee") and (2) an amount, not to exceed $2,000,000, equal to
the Expenses of Parent, Merger Sub and their respective affiliates (the
"Termination Expenses");
(ii) by Parent pursuant to Section 6.1(b) (due to a material breach by
the Company) or Section 6.1(e), then (A) the Company shall pay Parent the
Termination Expenses and (B) if, concurrently with such termination or
within twelve (12) months after the Termination Date the Company or any of
its Subsidiaries enters into a definitive agreement with respect to, or
consummates, any Eligible Alternative Proposal, then the Company shall also
pay Parent the Termination Fee;
(iii) by the Company pursuant to Section 6.1(f), then the Company
shall pay Parent the Termination Fee (which shall be payable prior to or
concurrently with, and as a condition to the effectiveness of, such
termination) and the Termination Expenses; or
(iv) by Parent pursuant to Section 6.1(g), then the Company shall pay
Parent the Termination Fee and the Termination Expenses.
(b) The Termination Fee shall be paid to Parent or its designee by the
Company in immediately available funds (i) prior to or concurrently with, and as
a condition to the effectiveness of a termination of, this Agreement by the
Company pursuant to Section 6.1(f) and (ii) otherwise, within two (2) Business
Days after the date of the event giving rise to the obligation to make such
payment. The Termination Expenses shall be paid to Parent or its designee by the
Company in immediately available funds within two (2) Business Days after
receipt by the Company of reasonable documentation with respect to such
Termination Expenses.
48
(c) Parent and Merger Sub agree that, if this Agreement shall be terminated
pursuant to Section 6.1(b) (due to a material breach by Parent or Merger Sub) or
Section 6.1(d), then Parent shall pay to the Company a fee of $10,000,000 (the
"Parent Termination Fee") in cash, payable in immediately available funds upon
termination of this Agreement, and in such case, neither Parent nor Merger Sub
shall have any further liability with respect to this Agreement or the
transactions contemplated hereby; it being understood that in no event shall
Parent or Merger Sub be required to pay the Parent Termination Fee on more than
one occasion. On or prior to the date hereof, Parent shall deliver to the
Company one or more letters of credit, in form reasonably satisfactory to the
Company, from one or more financial institutions selected by Parent and
reasonably acceptable to the Company, which letters of credit shall have an
aggregate face amount sufficient to satisfy and secure Parent's and Merger Sub's
obligation to pay the Parent Termination Fee under this Section 6.3(c). In the
event the conditions to the termination of such letters of credit set forth
therein are satisfied, the Company shall promptly execute and deliver to each of
the financial institutions that issued such letters of credit a written
certificate or statement, in the form attached to such letters of credit or
otherwise required by such financial institutions, certifying on behalf of the
Company that the conditions to the termination of such letters of credit have
been satisfied and that such letters of credit should as a result be terminated.
ARTICLE VII
MISCELLANEOUS
Section 7.1 No Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time, and only the
covenants or agreements that by their terms survive the Effective Time and this
Article VII shall survive the Effective Time.
Section 7.2 Expenses. Except as set forth in Section 6.3, whether or not
the Merger is consummated, all Expenses incurred in connection with the Merger,
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring or required to incur such Expenses.
Section 7.3 Counterparts; Effectiveness. This Agreement may be executed in
two or more consecutive counterparts (including by facsimile), each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument, and shall become effective when one or
more counterparts have been signed by each of the parties and delivered (by
telecopy or otherwise) to the other parties.
Section 7.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
49
Section 7.5 Jurisdiction. Each of the parties hereto irrevocably agrees
that any legal action or proceeding with respect to this Agreement and the
rights and obligations arising hereunder, or for recognition and enforcement of
any judgment in respect of this Agreement and the rights and obligations arising
hereunder brought by the other party hereto or its successors or assigns, shall
be brought and determined exclusively in the Delaware Court of Chancery and any
state appellate court therefrom within the State of Delaware (or, if the
Delaware Court of Chancery declines to accept jurisdiction over a particular
matter, any state or federal court within the State of Delaware). Each of the
parties hereto hereby irrevocably submits with regard to any such action or
proceeding for itself and in respect of its property, generally and
unconditionally, to the personal jurisdiction of the aforesaid courts and agrees
that it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than the
aforesaid courts. Each of the parties hereto hereby irrevocably waives, and
agrees not to assert as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (i) any claim that it is not
personally subject to the jurisdiction of the above named courts for any reason
other than the failure to serve in accordance with this Section 7.5, (ii) any
claim that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) and (iii) to the fullest extent
permitted by the applicable Law, any claim that (A) the suit, action or
proceeding in such court is brought in an inconvenient forum, (B) the venue of
such suit, action or proceeding is improper or (C) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts. The parties
hereby consent to and grant any of the aforesaid courts 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 7.7, or in such other manner as may
be permitted by applicable Laws, shall be valid and sufficient service thereof.
The parties agree that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by applicable Law.
Section 7.6 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, LEGAL PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (A) 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, (B) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.6.
50
Section 7.7 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next Business Day when sent
by overnight courier or on the second succeeding Business Day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party or pursuant to such other instructions as shall be specified by like
notice):
To Parent or Merger Sub:
c/o Salford Georgia
x/x Xxxxxxx
0xx Xxxxx, Xxxxxxx House
00 Xx. Xxxxx' Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
Facsimile: x00 00 0000 0000
Attention: Irakli Rukhadze and Xxxxx Xxxxx
with a copy to:
Debevoise & Xxxxxxxx LLP 000 Xxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx
00000 Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
To the Company:
Metromedia International Group, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Facsimile: 000-000-0000
Attention: General Counsel
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 212-757-3990
Attention: Xxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
Section 7.8 Assignment; Binding Effect. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Merger Sub may assign, in its
sole discretion, any of or all of its rights, interest and obligations under
this agreement to Parent or to any direct or indirect wholly-owned subsidiary of
Parent; provided, however, that no such assignment shall relieve Merger Sub of
its obligations hereunder. Any purported assignment in violation of this Section
7.8 shall be void. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Parent shall cause Merger Sub, and any
assignee thereof, to perform its obligations under this Agreement.
51
Section 7.9 Severability. Any term or provision of this Agreement which is
declared by a court of competent jurisdiction to be invalid or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective to the sole
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remainder of such term or provision or the remaining terms and
provisions of this Agreement in any jurisdiction. The parties hereto further
agree to replace any such void or unenforceable provision of this Agreement with
a valid and enforceable provision that will achieve, to the greatest extent
possible, the economic, business and other purposes of such void or
unenforceable provision.
Section 7.10 Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the annexes, exhibits and schedules hereto) and the documents and
instruments and other agreements between the parties hereto as contemplated by
or referred to herein and the Confidentiality Agreement constitute the entire
agreement, and supersede all other prior agreements and understandings, both
written and oral, between the parties, or any of them, with respect to the
subject matter hereof and thereof. Nothing contained in this Agreement or in any
instrument or document executed by any party in connection with the transactions
contemplated hereby shall create any rights in, or be deemed to have been
executed for the benefit of, any Person or entity that is not a party hereto or
thereto or a successor or permitted assign of such a party, except for and to
the extent of (i) the rights of Indemnified Parties specifically set forth in
Section 4.9, (ii) the rights of holders of Preferred Shares that have validly
exercised (and not withdrawn) appraisal rights specifically set forth in Section
4.17(b) and (iii) the rights of holders of Preferred Shares specifically set
forth in Section 4.18. In addition, the provisions of Section 4.13 are intended
to be for the benefit of, and shall be enforceable by, Metromedia Company and
shall be binding on Parent and Merger Sub and their respective successors and
assigns. In the event Parent or Merger Sub or one of their successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each case, proper provision shall be made so that the
successors or assigns of Parent or Merger Sub, as the case may be, honor the
obligations set forth in Sections 4.9, 4.13, 4.17(b) and 4.18.
Section 7.11 Amendments; Waivers. At any time prior to the Effective Time,
any provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company, Parent and Merger Sub, or in the case of a waiver, by the party
against whom the waiver is to be effective; provided, however, that after
receipt of the Company Stockholder Approval, if applicable, if any such
amendment or waiver shall by applicable Law require further approval of the
stockholders of the Company, the effectiveness of such amendment or waiver shall
be subject to the approval of the stockholders of the Company. Notwithstanding
the foregoing, no failure or delay by the Company or Parent in exercising any
right hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise of any other
right hereunder.
52
Section 7.12 Headings; Exhibits; Disclosure Letters. Headings of the
Articles and Sections of this Agreement are for convenience of the parties only
and shall be given no substantive or interpretive effect whatsoever. The table
of contents to this Agreement is for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. The Company
Disclosure Letter and the Parent Disclosure Letter, and all exhibits or
attachments thereto and hereto, are intended to be and hereby are specifically
made a part of this Agreement. Any matter set forth in any section or subsection
of the Company Disclosure Letter shall be deemed to be a disclosure for all
other sections or subsections of the Company Disclosure Letter (notwithstanding
the absence of a specific cross-reference) to the extent that the applicability
of such matter to such other section or subsection is reasonably apparent, but
shall expressly not be deemed to constitute an admission by the Company or any
of its Subsidiaries, or otherwise imply, that any such matter rises to the level
of a Company Material Adverse Effect, constitutes a Company Material Contract,
or is otherwise material for any purposes of this Agreement or the Company
Disclosure Letter.
Section 7.13 Interpretation. When a reference is made in this Agreement to
an Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. Each
of the parties has participated in the drafting and negotiation of this
Agreement. If an ambiguity or question of intent or interpretation arises, this
Agreement must be construed as if it is drafted by all the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of authorship of any of the provisions of this Agreement. References to a
Person also refer to its predecessors and permitted successors and assigns.
Section 7.14 Specific Performance. The parties hereto 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 breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches or
threatened breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, without the need to post bond or other security, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
53
Section 7.15 No Recourse. Except in respect of the letter of credit
referenced under Section 6.3(c), this Agreement may only be enforced against,
and any claims or causes of action that may be based upon, arise out of or
relate to this Agreement, or the negotiation, execution or performance of this
Agreement may only be made against the entities that are expressly identified as
parties hereto, and no past, present or future affiliate, director, officer,
employee, incorporator, member, manager, partner, stockholder, agent, attorney
or representative of any party hereto shall have any liability for any
obligations or liabilities of the parties to this Agreement or for any claim
based on, in respect of, or by reason of, the transactions contemplated hereby.
Section 7.16 Definitions. References in this Agreement to specific laws or
to specific provisions of laws shall include all rules and regulations
promulgated thereunder. Any statute defined or referred to herein or in any
agreement or instrument referred to herein shall mean such statute as from time
to time amended, modified or supplemented, including by succession of comparable
successor statutes. For purposes of this Agreement, the following terms will
have the following meanings when used herein:
"2004 10-K" means the Annual Report of the Company on Form 10-K for the
year ended December 31, 2004.
"2005 10-K" means the Annual Report of the Company on Form 10-K for the
year ended December 31, 2005.
"2006 10-K" means the Annual Report of the Company on Form 10-K for the
year ended December 31, 2006.
"Acceptance Date" has the meaning set forth in Section 1.1(e).
"affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, controls, or is controlled by, or is under common
control with, such first Person. As used in this definition, "control"
(including, with its correlative meanings, the terms "controlling", "controlled
by" and "under common control with"), as applied to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a Person, whether through the ownership
of securities or partnership or other ownership interests, by contract or
otherwise. For all purposes of this Agreement, Salford Capital Partners, Salford
Georgia and Sun Capital Partners Ltd. and their respective affiliates shall all
be deemed to be affiliates of Parent.
"Affiliate Transaction" has the meaning set forth in Section 2.16.
"Agreement" has the meaning set forth in the Preamble.
"Alternative Proposal" has the meaning set forth in Section 4.3(g).
54
"Balance Sheet Date" means December 31, 2004.
"Board of Directors" has the meaning set forth in the Recitals.
"Book-Entry Shares" has the meaning set forth in Section 1.14(b).
"Business Day" has the meaning set forth in Rule 14d-1 under the Exchange
Act.
"Canceled Shares" has the meaning set forth in Section 1.13(b).
"Certificate of Designation" means the Certificate of Designation of 7.25%
Cumulative Convertible Preferred Stock of Metromedia International Group, Inc.,
dated as of September 16, 1997, as it may be amended from time to time.
"Certificate of Merger" has the meaning set forth in Section 1.7.
"Certificates" has the meaning set forth in Section 1.14(b).
"Change of Recommendation" has the meaning set forth in Section 4.3(d).
"Closing" has the meaning set forth in Section 1.6.
"Closing Date" has the meaning set forth in Section 1.6.
"Code" means the Internal Revenue Code of 1986.
"Common Per Share Amount" has the meaning set forth in the Recitals.
"Common Shares" has the meaning set forth in the Recitals.
"Company" has the meaning set forth in the Preamble.
"Company Balance Sheet" means the consolidated balance sheet of the Company
contained in the 2004 10-K.
"Company Benefit Plans" means all material employee or director
compensation or benefit plans, programs, policies, agreements or other
arrangements, including any employee welfare plan within the meaning of Section
3(1) of ERISA, any employee pension benefit plan within the meaning of Section
3(2) of ERISA (whether or not such plan is subject to ERISA), any bonus,
compensation, incentive, pension, profit sharing, savings, retirement, deferred
compensation, vacation, stock purchase, stock option, severance, employment, key
employee retention, change of control or fringe benefit plan, program, agreement
or arrangement (other than any Multiemployer Plan and any other plan, program or
arrangement maintained by an entity other than the Company or any of its
Subsidiaries pursuant to any collective bargaining agreements), and any other
employee benefit plan, whether or not an employee benefit plan within the
meaning of Section 3(3) of ERISA, in each case, that are sponsored, maintained,
administered or contributed to by the Company or any of its Subsidiaries for the
benefit of current or former employees, directors or consultants of the Company
or its Subsidiaries other than all plans, programs, policies, agreements or
other arrangements maintained outside of the United States primarily for the
benefit of employees, consultants or directors working outside of the United
States.
55
"Company Disclosure Letter" has the meaning set forth in Article II.
"Company Material Adverse Effect" any fact, circumstance, event, change,
effect, condition or occurrence (any such item, an "Effect") that, either
individually or in the aggregate with all other Effects, is materially adverse
to the business, properties, assets, liabilities, results of operation or
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole, or the ability of the Company to consummate the transactions
contemplated by this Agreement; provided, however, that no Effect resulting
from, arising out of or relating to any of the following shall constitute, or be
taken into account in determining whether there is or has been, a Company
Material Adverse Effect: (i) any Effect resulting from a change in interest
rates or general economic conditions in the industries or markets in which the
Company or any of its Subsidiaries operates, unless such changes have a
materially disproportionate affect on the business and operations of the Company
or any of its Subsidiaries, (ii) any Effect resulting from an adverse change in
the stock price of the Company in and of itself, (iii) any Effect resulting from
a change in or interpretations of GAAP or applicable Law, (iv) any Effect
resulting from a natural disaster or act of God, (v) any Effect resulting from
compliance with the terms and conditions of this Agreement or from the
announcement or pendency of the transactions contemplated hereby; (vi) any
Effect resulting from an outbreak or escalation of hostilities, acts of
terrorism, political instability or other national or international calamity,
crisis or emergency, or any governmental or other response to any of the
foregoing, in each case whether or not involving the United States, the country
of Georgia, or any country constituting a part of the Commonwealth of
Independent States; (vii) any Effect arising from any pending or threatened
claim, action or proceeding arising out of or relating to the existence of this
Agreement or the transactions contemplated hereby; (viii) any Effect resulting
from the failure of the Company to file its periodic reports with the United
States Securities and Exchange Commission for the fiscal quarter ended March 31,
2005 and any subsequent period; (ix) any Effect resulting from the inability of
the Company or any of its Subsidiaries to receive an opinion relating to their
financial statements from their respective independent outside accountants for
the fiscal period ended December 31, 2005 and any prior or subsequent period; or
(x) any Effect resulting from any disclosure in the Company Disclosure Letter;
and provided, further, that notwithstanding anything herein to the contrary, any
action or proceeding initiated by any Governmental Entity to cancel, revoke,
terminate or suspend, or to materially change in a manner adverse to the Company
or any of its Subsidiaries the terms of, any of the 900 MHz, 1800 MHz or 2.1 GHz
Magticom Licenses shall constitute, in and of itself, a Company Material Adverse
Effect.
"Company Material Contracts" has the meaning set forth in Section 2.15(a).
"Company Meeting" has the meaning set forth in Section 4.4(b).
"Company Permits" means any and all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, exemptions, consents,
certificates, registrations, approvals and orders of any Governmental Entity
(including Georgian Governmental Entities that regulate the telecommunications
industry) ("Permits") that are required or necessary for the Company and its
Subsidiaries to own, lease and operate their properties and assets as presently
owned, leased and operated or to carry on their businesses as they are now being
conducted.
56
"Company SEC Documents" has the meaning set forth in Section 2.5(a).
"Company Stock Options" has the meaning set forth in Section 1.15(b).
"Company Stock Plans" means, collectively, (i) the 1996 Incentive Stock
Option Plan of the Company, as amended, and (ii) the 2007 Stock Incentive Plan
of the Company.
"Company Stockholder Approval" has the meaning set forth in Section 2.19.
"Confidentiality Agreement" has the meaning set forth in Section 4.2(b).
"Consents" means any and all consents, approvals, authorizations, permits
or expirations or terminations of any waiting periods of, actions by,
registrations, declarations or filings with or notifications to any Governmental
Entities or any other Persons.
"Current D&O Policy" has the meaning set forth in Section 4.9(b).
"DGCL" means the General Corporation Law of the State of Delaware.
"Dissenting Shares" has the meaning set forth in Section 1.13(d).
"Domain Name" means a combined alphanumeric second-level domain and
alphanumeric top-level domain separated by a period, used to identify and locate
a computer site on the Internet, and applications and reservations therefor.
"Effective Time" has the meaning set forth in Section 1.7.
"Eligible Alternative Proposal" means (i) any proposal, inquiry, indication
of interest or offer from any Person or group of Persons (other than Parent or
any of its Subsidiaries) for a merger, consolidation, business combination,
sale, transfer or similar transaction involving at least 50% of the Company's
assets (or any Subsidiary or Subsidiaries of the Company whose business
constitutes 50% or more of the net revenues, net income or assets of the Company
and its Subsidiaries, taken as a whole, not including any interest not owned by
the Company or any of its Subsidiaries) or (ii) any proposal or offer to acquire
in any manner, directly or indirectly, over 50% of the equity securities or
consolidated total assets of the Company and its Subsidiaries (or any Subsidiary
or Subsidiaries of the Company whose business constitutes 50% or more of the net
revenues, net income or assets of the Company and its Subsidiaries, taken as a
whole, not including any interest not owned by the Company or any of its
Subsidiaries), in each case other than the Offer, the Merger or any other
transactions contemplated by this Agreement and other than in respect of any
interest not owned by the Company or any of its Subsidiaries.
"Employees" means any employee of the Company or any of its Subsidiaries.
"End Date" has the meaning set forth in Section 6.1(b).
57
"Environmental Law" means any Law relating to (i) the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, groundwater, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource) or (ii) the exposure
to, or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Substances.
"Equity Funding Letters" has the meaning set forth in Section 3.6.
"Equity Funding Parties" has the meaning set forth in Section 3.6.
"ERISA" has the meaning set forth in Section 2.9(a).
"ERISA Affiliate" has the meaning set forth in Section 2.9(c).
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Fund" has the meaning set forth in Section 1.14(a).
"Expenses" means all actual and reasonable documented out-of-pocket
expenses (including all fees and expenses of counsel, accountants, investment
bankers, financing sources, experts and consultants to a party hereto and its
affiliates) incurred by a party or any of its affiliates or on its or any of
their behalf in connection with or related to the authorization, preparation,
negotiation, execution or performance of this Agreement and the transactions
contemplated hereby, the preparation, printing, filing or mailing of the
Schedule TO, the Offer Documents, the Schedule 14D-9 or the Proxy Statement, if
any, the solicitation of stockholder approvals, all "due diligence" activities
of Parent and its affiliates relating to the Company and its Subsidiaries, and
all other matters related to the consummation of the Offer, the Merger and the
other transactions contemplated hereby.
"Expiration Date" has the meaning set forth in Section 1.1(d).
"Financing" has the meaning set forth in Section 3.6.
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" means any United States or foreign government, any
state or other political subdivision thereof, any entity, authority or body
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, any
governmental or regulatory authority, agency, department, board, commission,
administration or instrumentality, any court, tribunal or arbitrator or any
self-regulatory organization.
"Hazardous Substance" means any substance (i) listed, defined, designated
or classified as hazardous, toxic, radioactive or dangerous under any
Environmental Law or (ii) to which exposure is regulated by any Governmental
Entity or any Environmental Law, including, without, limitation, any toxic
waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous
waste, special waste, industrial substance or petroleum or any derivative or
byproduct thereof, radon, radioactive material, asbestos or asbestos containing
material, urea formaldehyde, foam insulation or polychlorinated biphenyls.
58
"Indemnified Parties" has the meaning set forth in Section 4.9(a).
"Independent Directors" has the meaning set forth in Section 1.3.
"Intellectual Property" has the meaning set forth in Section 2.13.
"Interest Rate" means, with respect to any period, the rate of interest
publicly announced by Citibank, in the City of New York from time to time during
such period, as such bank's Prime Lending Rate.
"Knowledge" means with respect to any matter in question, that any of the
(i) executive officers of Parent has actual knowledge (after due inquiry and
such inquiry having been conducted by such individuals given their office and
responsibilities and the information that such individuals knew at the time) of
such matter with respect to Parent and (ii) Chief Executive Officer, Chief
Financial Officer or General Counsel of the Company has actual knowledge (after
due inquiry and such inquiry having been conducted by such individuals given
their office and responsibilities and the information that such individuals knew
at the time) of such matter with respect to the Company or any of its
Subsidiaries.
"KPMG Reports" has the meaning set forth in Section 2.12(c).
"Law" or "Laws" means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, judgment, order, injunction, decree or requirement
of any Governmental Entity.
"License Agreement" has the meaning set forth in Section 4.13(a).
"Lien" means any liens, claims, preemptive rights, mortgages, options,
encumbrances, pledges, security interests, equities or charges of any kind.
"Lowered Minimum Condition" has the meaning set forth in Section 1.1(b).
"Magticom" means Magticom Limited, a limited liability company organized
under the Laws of the country of Georgia.
"Magticom Balance Sheet" means the balance sheet of Magticom contained in
the 2004 10-K.
"Magticom Licenses" means, collectively, (i) the Group Special Mobile (GSM)
license, (ii) the 3rd Generation (3G) license, (iii) the Code Division Multiple
Access (CDMA) license and (iv) any other Company Permits held by Magticom that
are necessary for Magticom to provide mobile telecommunication services in the
country of Georgia as they are now being provided.
"Marks" means trademarks, service marks, trade names, brand names, assumed
names, trade dress, designs, logos, corporate names and other indicia of origin,
whether registered or unregistered, and all registrations and applications
therefor and the goodwill associated exclusively therewith.
59
"Merger" has the meaning set forth in the Recitals.
"Merger Consideration" has the meaning set forth in Section 1.13(a).
"Merger Sub" has the meaning set forth in the Preamble.
"Metromedia Company" has the meaning set forth in Section 4.13(a).
"Metromedia Master Marks" means (i) the Metromedia logo set forth in
Section 4.13 of the Company Disclosure Letter, (ii) the trade name, trademark
and corporate name "Metromedia", (iii) any Domain Names or other Marks owned by
Metromedia Company and (iv) any variations or derivations of, or any Xxxx or
name resembling or similar to, any of the foregoing.
"Minimum Condition" means the Original Minimum Condition or the Lowered
Minimum Condition, as applicable.
"Multiemployer Plan" has the meaning set forth in Section 2.9(a).
"Notice Period" has the meaning set forth in Section 4.3(d).
"Offer" has the meaning set forth in the Recitals.
"Offer Documents" has the meaning set forth in Section 1.1(c).
"Option Consideration" has the meaning set forth in Section 1.15(b).
"Original Minimum Condition" has the meaning set forth in Section 1.1(b).
"Parent" has the meaning set forth in the Preamble.
"Parent Disclosure Letter" has the meaning set forth in Article III.
"Parent Material Adverse Effect" has the meaning set forth in Section 3.1.
"Parent Representatives" has the meaning set forth in Section 4.2(a).
"Parent Termination Fee" has the meaning set forth in Section 6.3(c).
"Paying Agent" has the meaning set forth in Section 1.14(a).
"Permitted Lien" means a Lien (i) for Taxes or governmental assessments,
charges or claims of payment not yet due or being contested in good faith and,
in each case, for which adequate accruals or reserves have been established in
accordance with GAAP, (ii) which is a carriers', landlords', workmen's,
warehousemen's, mechanics', materialmen's, repairmen's or other similar lien
arising or incurred in the ordinary course of business, (iii) which is a zoning,
entitlement or other land use or environmental regulation by any Governmental
Entity, (iv) which is disclosed on the most recent consolidated balance sheet of
the Company or notes thereto (or securing liabilities reflected on such balance
sheet) or (v) which was incurred in the ordinary course of business since the
date of the most recent consolidated balance sheet of the Company.
60
"Person" means an individual, a corporation (including any non-profit
corporation), a partnership (including a general partnership, limited
partnership or limited liability partnership), a company (including any limited
liability company or joint stock company), an association, a firm, a joint
venture, an estate, a trust or any other enterprise, entity, group (as such term
is used in Section 13 of the Exchange Act), association or organization,
including, without limitation, a Governmental Entity, and any permitted
successors and assigns of such person.
"Preferred Shares" has the meaning set forth in the Recitals.
"Proxy Statement" has the meaning set forth in Section 2.20(b).
"Qualifying Alternative Proposal" has the meaning set forth in Section
4.3(c).
"Recommendation" has the meaning set forth in Section 2.4(a).
"Restatement and Related Matters" means (i) the restatement of the
Company's historical financial statements described in the 2004 10-K and other
Company SEC Documents, (ii) the delay in filing the Company's annual reports on
Form 10-K and quarterly reports on Form 10-Q with respect to periods ending on
and after December 31, 2004 and (iii) that certain possible administrative
enforcement action under Section 12(j) of the Exchange Act threatened by the SEC
against the Company in connection with the foregoing matters.
"Representatives" has the meaning set forth in Section 4.3(a).
"Xxxxxxxx-Xxxxx Act" means the Xxxxxxxx-Xxxxx Act of 2002.
"Schedule 14D-9" has the meaning set forth in Section 1.2(b).
"Schedule TO" has the meaning set forth in Section 1.1(c).
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Shares" has the meaning set forth in the Recitals.
"Short-Form Merger" has the meaning set forth in Section 1.12.
"Significant Subsidiary" has the meaning set forth in Section 2.3.
61
"Subsidiaries" means, with respect to any Person, any corporation,
partnership, association, trust or other form of legal entity of which (i) more
than 50% of the outstanding voting securities are on the date hereof directly or
indirectly owned by such Person, or (ii) such Person or any Subsidiary of such
Person is a general partner (excluding partnerships in which such Person or any
Subsidiary of such Person does not have a majority of the voting interests in
such partnership); provided, however, that none of Telecom Georgia, Telenet and
Ayety TV shall be deemed to be a Subsidiary of the Company for purposes of this
Agreement.
"Superior Proposal" has the meaning set forth in Section 4.3(h).
"Surviving Corporation" has the meaning set forth in Section 1.5.
"Surviving Corporation Preferred Share" has the meaning set forth in
Section 1.15(a).
"Takeover Laws" means, collectively, any "moratorium," "control share
acquisition," "business combination," "fair price" or other form of
anti-takeover Laws of any jurisdiction.
"Tax Attributes" means the amount and expiration dates of net operating
loss carryovers (for both regular tax and alternative minimum tax purposes) and
capital loss carryovers, in each case for United States federal income tax
purposes.
"Tax Return" means any return, report or similar filing (including any
schedules, supplements or additional or supporting material thereto) required to
be filed with respect to any Taxes, including any information return, claim for
refund, amended return or declaration of estimated Taxes (and including any
amendments with respect thereto).
"Taxes" means any and all domestic or foreign, federal, state, provincial,
local or other taxes, charges, fees, imposts, duties, levies or other
assessments of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any Governmental Entity, including taxes on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, unemployment, social security, workers'
compensation or net worth, and taxes in the nature of excise, withholding, ad
valorem or value added.
"Tender Offer Conditions" has the meaning set forth in Section 1.1(a).
"Termination Date" has the meaning set forth in Section 4.1(a).
"Termination Fee" has the meaning set forth in Section 6.3(a).
"Top-Up Option" has the meaning set forth in Section 1.4(a).
"Top-Up Option Exercise Date" has the meaning set forth in Section 1.4(a).
"Top-Up Option Shares" has the meaning set forth in Section 1.4(a).
"Warrants" has the meaning set forth in Section 2.2(a).
62
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
CAUCUSCOM VENTURES L.P.
By: Caucus Carry Management L.P.,
its General Partner
By: Caucus Telecom Management Ltd.,
its General Partner
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: Director
CAUCUSCOM MERGERCO CORP.
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: President
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Xxxx X. Xxxx
--------------------------------
Name: Xxxx X. Xxxx
Title: Chairman and Chief
Executive Officer
Annex I
Tender Offer Conditions
-----------------------
Notwithstanding any other provision of the Offer or this Agreement, Merger
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to Parent's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and
(subject to any such rules and regulations) may, to the extent expressly
permitted by this Agreement, delay the acceptance for payment of any tendered
Common Shares if (i) the number of Common Shares validly tendered and not
withdrawn prior to the expiration of the Offer, as it may be extended in
accordance with Section 1.1, is less than the sum of (x) 63,300,000 Common
Shares plus (y) the total number of Common Shares, if any, issued or issuable
(solely in the case of Common Shares issuable, such Common Shares issuable but
not yet issued in response to any notice, duly and validly given (and not
subsequently withdrawn) by a holder to the Company on or prior to the Expiration
Date, of election to exercise a Company Stock Option or Warrant or to convert
Preferred Shares) after the date of this Agreement and prior to the Expiration
Date (such number, the "Minimum Condition") or (ii) if any of the following
events or conditions shall occur and be continuing as of any scheduled
expiration date of the Offer:
(a) a Governmental Entity of competent jurisdiction shall have enacted
issued or entered any restraining order, preliminary or permanent
injunction or similar order or legal restraint or prohibition which remains
in effect that enjoins or otherwise prohibits consummation of the Offer,
the Top-Up Option or the Merger;
(b) this Agreement shall have been terminated by the Company, Merger
Sub or Parent in accordance with its terms;
(c) (i) any of the representations and warranties of the Company set
forth in Section 2.2(a) and (b) and 2.19 shall not be true and correct in
all respects (except, in the case of Sections 2.2(a) and (b), for such
inaccuracies as are de minimis in the aggregate), in each case at and as of
the date of this Agreement and at and as of the Expiration Date as though
made at and as of the Expiration Date (except to the extent expressly made
as of an earlier date, in which case as of such date), or (ii) any of the
other representations and warranties of the Company set forth herein shall
not be true and correct, in each case at and as of the date of this
Agreement and at and as of the Expiration Date as though made at and as of
the Expiration Date (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of such
representations and warranties to be so true and correct would not have,
individually or in the aggregate, a Company Material Adverse Effect;
(d) the Company shall not have performed in all material respects all
obligations and complied with all covenants required by this Agreement to
be performed or complied with by it prior to the Expiration Date and such
failure to perform shall not have been cured prior to the Expiration Date;
or
(e) Since the execution of this Agreement, there shall have occurred a
Company Material Adverse Effect.
Subject to the terms of this Agreement, the foregoing conditions are for
the sole benefit of Merger Sub and may be asserted by Merger Sub regardless of
the circumstances giving rise to any such conditions (other than any such
circumstances caused by or substantially contributed to by any breach by Parent
or Merger Sub of any of their representations, warranties, covenants agreements
or obligations under this Agreement) and may be waived by Merger Sub in whole or
in part at any time and from time to time, in each case except for the Minimum
Condition, in the exercise of the reasonable good faith judgment of Merger Sub
and subject to the terms of this Agreement, including, without limitation,
Section 1.1(b). The failure by Merger Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time, in each case prior to the acceptance for payment of, and
payment for, tendered Common Shares.
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