EXECUTION COPY
SERIES B CONVERTIBLE PREFERRED STOCK
SUBSCRIPTION AGREEMENT
by and between
MOSCOW CABLECOM CORP.
and
COLUMBUS NOVA INVESTMENTS VIII LTD.
Dated August 26, 2004
TABLE OF CONTENTS
Section Page
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ARTICLE I DEFINITIONS
SECTION 1.01. Certain Defined Terms...........................................6
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SECTION 1.02. Other Definitions..............................................13
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ARTICLE II SALE AND PURCHASE
SECTION 2.01. Sale of the New Securities.....................................15
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SECTION 2.02. Purchase Price.................................................15
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SECTION 2.03. Closing........................................................15
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SECTION 2.04. Closing Deliveries by the Company..............................15
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SECTION 2.05. Closing Deliveries by the Purchaser............................16
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization, Authority and Qualification of the Company and
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the Company Subsidiaries.......................................17
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SECTION 3.02. Capital Stock of the Company and Company Subsidiaries; Ownership
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of the New Securities..........................................18
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SECTION 3.03. No Conflict....................................................19
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SECTION 3.04. Governmental Consents and Approvals............................19
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SECTION 3.05. SEC Filings; Financial Statements; Nasdaq Listing..............19
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SECTION 3.06. No Undisclosed Liabilities........................ ............21
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SECTION 3.07. Absence of Certain Changes or Events...........................22
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SECTION 3.08. Litigation.....................................................24
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SECTION 3.09. Compliance with Laws...........................................24
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SECTION 3.10. Environmental Matters..........................................24
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SECTION 3.11. Material Contracts.............................................25
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SECTION 3.12. Intellectual Property; Company Systems.........................26
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SECTION 3.13. Title to Properties; Absence of Encumbrances...................26
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SECTION 3.14. Employee Benefit Matters; Labor Matters........................27
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SECTION 3.15. Insurance......................................................28
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SECTION 3.16. Taxes..........................................................29
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SECTION 3.17. MFON; HFC......................................................30
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SECTION 3.18. Products Liability.............................................31
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SECTION 3.19. Brokers........................................................31
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01. Organization and Authority of the Purchaser....................32
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SECTION 4.02. No Conflict....................................................32
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SECTION 4.03. Governmental Consents and Approvals............................32
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SECTION 4.04. Investment Purpose.............................................32
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SECTION 4.05. Financing......................................................33
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SECTION 4.06. Status of New Securities; Limitations on Transfer and Other
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Restrictions...................................................33
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ARTICLE V ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business by the Company Pending the Closing.........33
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SECTION 5.02. Access to Information..........................................34
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SECTION 5.03. Public Announcements...........................................35
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SECTION 5.04. Company's Action...............................................35
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SECTION 5.05. Use of Proceeds................................................36
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SECTION 5.06. Certain Costs and Expenses.....................................36
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SECTION 5.07. No Shop........................................................36
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SECTION 5.08. Other Registration Rights......................................38
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SECTION 5.09. Takeover Statutes..............................................38
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SECTION 5.10. Termination of Voting Agreement................................38
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SECTION 5.11. Further Action; Consents; Filings..............................38
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SECTION 5.12. Agreements with Xxxxxx Xxxxxx, Xxxxxx Xxxxxx-Xxxxx, Xxxxxxx
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Xxxxxxx and Xx. Xxx Xxxxxxx Xxxxx..............................38
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SECTION 5.13. Reporting Status; Nasdaq Listing...............................39
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SECTION 5.14. Corporate Governance...........................................40
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SECTION 5.15. COMCOR-TV Corporate Governance.................................40
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SECTION 5.16. New Strategic Services Agreement...............................41
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SECTION 5.17. Relocation.....................................................41
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ARTICLE VI CONDITIONS
SECTION 6.01. Conditions to Each Party's Obligations to Effect the
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Transactions...................................................41
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SECTION 6.02. Conditions to the Obligations of the Company to Effect the
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Transactions...................................................42
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SECTION 6.03. Conditions to the Purchaser's Obligations to Effect the
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Transactions...................................................42
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ARTICLE VII INDEMNIFICATION
SECTION 7.01. Survival of Representations and Warranties.....................43
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3
SECTION 7.02. Indemnification................................................44
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SECTION 7.03. Limits on Indemnification......................................45
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ARTICLE VIII TERMINATION
SECTION 8.01. Termination....................................................46
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SECTION 8.02. Effect of Termination..........................................46
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ARTICLE IX GENERAL PROVISIONS
SECTION 9.01. Amendment and Waiver...........................................47
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SECTION 9.02. Expenses.......................................................47
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SECTION 9.03. Notices........................................................47
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SECTION 9.04. Headings.......................................................48
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SECTION 9.05. Severability...................................................48
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SECTION 9.06. Entire Agreement...............................................49
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SECTION 9.07. Assignment.....................................................49
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SECTION 9.08. No Third Party Beneficiaries...................................49
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SECTION 9.09. Governing Law..................................................49
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SECTION 9.10. Counterparts...................................................50
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SECTION 9.11. Specific Performance...........................................50
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SECTION 9.12. Interpretation.................................................50
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SECTION 9.13. Construction...................................................50
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ATTACHMENTS AND EXHIBITS
Attachment I Form of Certificate of Amendment to the Certificate of
Incorporation of Moscow CableCom Corp.
Attachment II Form of Amended and Restated By-laws of Moscow CableCom Corp.
Exhibit A Form of Warrant Agreement
Exhibit B Form of Registration Rights Agreement
Exhibit C Pro Forma Capitalization Table
Exhibit D-1 Form of Xxxxxx Xxxxxx Employment Agreement
Exhibit D-2 Form of Xxxxxx Xxxxxx-Xxxxx Employment Agreement
Exhibit E-1 Form of Xxxxxxx Xxxxxxx Consulting Agreement
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Exhibit E-2 Form of Xx. Xxx Xxxxxxx Xxxxx Consulting Agreement
Exhibit F Copy of the Strategic Services Agreement
Exhibit G Matters to be Opined on in Legal Opinion from the Company's US
Counsel
Exhibit H Matters to be Opined on in Legal Opinion from the Company's
Russian Counsel
5
SERIES B CONVERTIBLE PREFERRED STOCK SUBSCRIPTION AGREEMENT, dated
August 26, 2004, by and between Moscow CableCom Corp., a Delaware corporation
(the "Company"), and Columbus Nova Investments VIII Ltd., a Bahamas company
(the "Purchaser").
W I T N E S S E T H:
WHEREAS, for purposes of raising financing for the build-out of the
COMCOR-TV franchise, the Company wishes to issue and sell to the Purchaser, and
the Purchaser wishes to purchase from the Company, 4,500,000 shares of Series B
Convertible Preferred Stock, par value $.01 per share of the Company (the
"Series B Preferred Stock"), having the designations, rights and preferences set
forth in the Certificate of Amendment (as defined herein), upon the terms and
subject to the conditions set forth herein. All the shares of the Series B
Preferred Stock purchased pursuant to this Agreement are referred to as the "New
Securities"; and
WHEREAS, at the Closing (as defined herein) the Company and the
Purchaser will enter into a Warrant Agreement, substantially in the form
attached to this Agreement as Exhibit A (the "Warrant Agreement"), pursuant to
which the Purchaser will acquire warrants that will be initially exercisable for
8,283,000 shares of Series B Preferred Stock (the "Warrants");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
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proceeding or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any Person, any officer or director
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of such Person, or any other Person directly or indirectly controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of
such person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" or "this Agreement" means this Series B Convertible
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Preferred Stock Subscription Agreement, dated August 26, 2004, between the
Company and the Purchaser (including the Attachments and the Exhibits hereto and
the Disclosure Schedule) and all amendments hereto made in accordance with the
provisions of Section 9.01.
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"Amended and Restated By-laws" means the Amended and Restated By-laws
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of the Company in the form of Attachment II attached hereto.
"Beneficial Owner" (including the terms "beneficially own" or
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"beneficial ownership") has the meaning given to such terms in Rule 13d-3 of the
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Exchange Act.
"Benefit Plan" means each of the Company's and Company Subsidiaries'
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plan, program, policy, payroll practice, contract, agreement or other
arrangement providing for compensation, retirement benefits, severance,
termination pay, performance awards, stock or stock-related awards, fringe
benefits or other employee benefits of any kind, whether formal or informal,
funded or unfunded, written or oral and whether or not legally binding,
including, without limitation, each "employee benefit plan", within the meaning
of Section 3(3) of ERISA and each "multi-employer plan" within the meaning of
Section 3(37) of 4001(a)(3) of ERISA.
"Board" means the Board of Directors of the Company.
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"Bridge Facility" means the $4,000,000 Working Capital Bridge Facility
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Agreement dated as of the date hereof by and among the Company, COMCOR-TV, the
Lender and the other parties referred to therein.
"Business Combination Statute" means Section 203 of the Delaware
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General Corporation Law or any other Law prohibiting, restricting, or imposing
conditions with respect to, business combinations or limiting voting powers or
other rights, or imposing any obligations, on any party to a business
combination.
"Business Day" means any day that is not a Saturday, a Sunday or other
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day on which banks are required or authorized by law to be closed in New York
City, New York, Hartford, Connecticut, or Moscow, the Russian Federation.
"By-laws" means the by-laws of the Company as may be amended from time
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to time, provided that such amendment does not adversely affect the rights of
the Purchaser under this Agreement, the Warrant Agreement, the Registration
Rights Agreement or the Certificate of Amendment.
"CERCLA" means the U.S. Comprehensive Environmental Response,
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Compensation and Liability Act of 1980, as amended as of the date hereof.
"Certificate of Amendment" means the Certificate of Amendment of the
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Certificate of Incorporation of the Company providing for the authorization of
additional Common Stock and setting forth the designations, rights and
preferences of the Series B Preferred Stock, to be filed with the Secretary of
State of the State of Delaware, in the form of Attachment I attached hereto.
"Certificate of Incorporation" means the amended and restated
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certificate of incorporation of the Company, as shall be amended by the
Certificate of Amendment on the Closing Date and as may be amended from time to
time, provided that such amendment does not adversely affect the rights of the
Purchaser under this Agreement, the Warrant Agreement, the Registration Rights
Agreement or the Certificate of Amendment.
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"Code" means the United States Internal Revenue Code of 1986, as
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amended through the date of this Agreement.
"COMCOR" means Moskovskaya Telecommunikatsionnaya Corporatsiya, an
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open joint stock company organized under the laws of the Russian Federation.
"COMCOR Director" means a Person nominated by COMCOR to be a director
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on the Board.
"COMCOR-TV" means ZAO COMCOR TV, a closed joint stock company
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organized under the laws of the Russian Federation.
"Common Stock" means the Common Stock, par value $.01 per share, of
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the Company, as constituted on the date hereof, any shares of the Company's
capital stock into which such Common Stock shall be changed, and any shares of
the Company's capital stock resulting from any reclassification of such Common
Stock or any recapitalization of the Company.
"Company Subsidiary" or "Company Subsidiaries" means any Subsidiary or
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all of the Subsidiaries of the Company, respectively.
"Company Systems" means all computers, hardware, software, systems
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(including, without limitation, the Company's subscriber management system),
facilities and equipment (including, without limitation, cable, wireline,
wireless, microwave, satellite and any other telecommunications equipment and
facilities, and embedded microcontrollers in noncomputer equipment) owned,
leased or licensed by the Company or any Company Subsidiary and material to, or
necessary for, the Company or any Company Subsidiary to carry on its business as
currently conducted or intended to be conducted.
"Control" (including the terms "controlled by" and "under common
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control with"), with respect to the relationship between or among two or more
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Persons, means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Conversion Offering" means the offering of stock after the date
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hereof in mutual savings banks or equivalent financial institutions upon
de-mutualization of the same in which the Company or a Company Subsidiary has an
account as at the date hereof.
"Conversion Offering Stock" means the stock subscribed by the Company
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or a Company Subsidiary in a mutual savings bank or equivalent financial
institution upon the de-mutualization of the same to the extent such stock was
subscribed prior to the date hereof.
"Conversion Shares" means new shares of Common Stock issuable upon
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conversion of the shares of Senior B Preferred Stock and exercise of the
Warrants.
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"Convertible Debentures" means the 10 1/2% Convertible Subordinated
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Debentures due 2007 of the Company.
"Core Business Assets" means assets that are used in a business that
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operates directly or indirectly, or holds a License to operate (i) a cable
system or service, (ii) a fixed-line telephone or telecommunications system or
service, (iii) a broadcasting transmission system or service, (iv) fiber optic
network, (v) broadband services, (vi) cable television, (vii) high speed
internet or (viii) IP-based telephony.
"Diluted Shares" means, as of any applicable time, shares of Common
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Stock issued and outstanding as of such time plus shares of Common Stock
issuable upon conversion, redemption, exchange, exercise of or as a dividend
declared as of the time of measurement with respect to, any shares of preferred
stock, options, warrants, debentures and other securities or any subscription
rights.
"Director" means a member of the Board.
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"Disclosure Schedule" means the Disclosure Schedule delivered by the
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Company in connection with this Agreement dated as of the date hereof and
incorporated herein by reference.
"Employee Agreement" means each management, employment, severance,
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consulting, non-compete, confidentiality or similar agreement or contract
between the Company or any ERISA Affiliate and any Employee pursuant to which
the Company has or may have any material liability contingent or otherwise.
"Encumbrance" means any security interest, pledge, mortgage, lien
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(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership, but
excluding Permitted Encumbrances.
"Environmental Law" means any Law and any judicial or administrative
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interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to pollution or protection of the environment,
health, safety or natural resources, including, without limitation, those
relating to the use, handling, transportation, treatment, storage, disposal,
Release or discharge of Hazardous Materials.
"Environmental Permits" means any permit, approval, identification
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number, License and other authorization required under any applicable
Environmental Law.
"ERISA" means Employee Retirement Income Security Act of 1974, as
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amended.
"ERISA Affiliate" means each business or entity which is or was a
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member of a "controlled group of corporations", under "common control" or an
"affiliated service group" with the Company within the meaning of Section
414(b), (c) or (m) of the Code, or required to be aggregated with the Company
under Section 414(o) of the Code or is under "common control" with the Company,
within the meaning of Section 4001(a)(14) of ERISA.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
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or any successor statute thereto, and the rules and regulations of the SEC
promulgated from time to time thereunder, all as the same shall be in effect at
the time.
"Existing Agreements" means the following registration rights
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agreements: the Amended and Restated Registration Rights Agreement, dated as of
July 1, 2002, as amended July 14, 2003, among the Company and the former
stockholders of ABC Moscow Broadband Communication Limited, a limited liability
company organized under the laws of Cyprus, whose names are set forth in the
signature page to such agreement, and the Registration Rights Agreement, dated
as of February 23, 2004, between the Company and COMCOR.
"Governmental Authority" means any United States, Russian or other
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foreign federal, state, provincial, local, supranational government,
governmental, regulatory or administrative authority, agency or commission or
any court, tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction,
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decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Hazardous Materials" means (i) any petroleum, petroleum products,
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by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"Indebtedness" means any indebtedness, obligation and other liability
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of a Person (whether absolute, accrued, contingent, fixed or otherwise, or
whether due or to become due), including without limitation all obligations of
such Person (a) for borrowed money, (b) evidenced by bonds, notes, debentures or
other similar instruments or by letters of credit, including purchase money
obligations or other obligations relating to the deferred purchase price of
property, goods or services (other than trade payables incurred in the ordinary
course of business), (c) as lessee under leases which have been or should have
been, in accordance with US GAAP, recorded as capital leases, (d) under direct
or indirect guarantees in respect of Liabilities of others, including
indebtedness of others secured by an Encumbrance on any asset of such Person,
whether or not such indebtedness is assumed by such Person, (e) in respect of
outstanding or unpaid checks or drafts or overdraft obligations, (f) for Taxes
or (g) accrued interest, if any, on and all other amounts owed in respect of any
of the foregoing.
"Knowledge of the Company" means, with respect to any matter in
------------------------
question, the knowledge of the following officers and directors of the Company
and the Company Subsidiaries: Xxxxxxx X. Xxxxx, Xxxxxx Xxxxx, Jr., Xxxxxx X.
Xxxxxxx, Xxxxxx XxXxxxxxxx, Xxxxx X. Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxxx,
Xxxxxx Xxxxxxxx, Xxxxxxxxx Valdislavlev, Xxxxxx X'Xxxx, Xxxxxxx X. Xxxxx, Xxxxxx
Xxxxxxx and Xxxxxxxxx X. Xxxxxx.
"Law" means any supranational, United States, Russian or foreign
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federal, national, state, regional or local statute, law, ordinance, regulation,
rule, code, order, other requirement or rule of law.
"Lender" means Amatola Enterprises Limited, a Cypriot company.
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"Liabilities" means any and all debts, liabilities and obligations,
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whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law, Action or Governmental Order and those arising under any contract,
agreement, arrangement, commitment or undertaking.
"License" means any license(s), permit(s) or other authorization(s)
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necessary for a Person to lawfully own and operate its business, assets and
properties or enter into and perform the Person's obligations under this
Agreement; provided, that, Licenses of the Company and each Company Subsidiary
shall include, without limitation, (i) Licenses for delivery of cable TV
broadcasting services, telematic services and data transmission services, (ii)
Licenses for construction engineering and construction services, (iii) Licenses
for access to MFON and (iv) all other Licenses with the City of Moscow or any
other Governmental Authority.
"Material Adverse Effect" means (i) any circumstance, development,
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change in, or effect on the Company, any Company Subsidiary or their businesses
that, individually or in the aggregate with any other circumstances,
developments, changes in, or effects on, the Company, any Company Subsidiary or
their businesses is, or is reasonably expected to be, materially adverse to the
business of the Company and the Company Subsidiaries, taken as a whole, or the
financial condition, results of operations, assets or properties of the Company
and the Company Subsidiaries, taken as a whole, and (ii) any material adverse
change or any development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position, shareholders'
equity or results of operations of the Company and the Company Subsidiaries,
taken as a whole.
"MFON" means the Moscow Fiber Optic Network of COMCOR.
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"Nasdaq" means the Nasdaq Stock Market, Inc., the electronic
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securities market regulated by the National Association of Securities Dealers,
Inc.
"Nasdaq National Market" has the meaning set forth in Rule 4200(a)(23)
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of the rules of the National Association of Securities Dealers, Inc.
"Occurrence" means any accident, happening or event which occurs or
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has occurred at any time prior to the Closing Date that is caused or allegedly
caused by any hazard or defect in manufacture, assembly, design, materials or
workmanship including, without limitation, any failure or alleged failure to
warn or any breach or alleged breach of express or implied warranties or
representations with respect to a product designed, manufactured, assembled,
shipped, sold or delivered by or on behalf of the Company or any Company
Subsidiary that results or is alleged to have resulted in injury or death to any
Person or damage to or destruction of property (including damage to or
destruction of the product itself) or other consequential damages, at any time.
"Permitted Encumbrances" means such of the following as to which no
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enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced or is reasonably expected to commence: (a) liens for taxes,
assessments and governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, provided that any reserve or other
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appropriate provision as shall be required in conformity with US GAAP shall have
been made therefor; (b) Encumbrances imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's liens and other similar liens
arising in the ordinary course of business; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations or other obligations of a like nature incurred
in the ordinary course of business; (d) minor survey exceptions, reciprocal
easement agreements and other customary encumbrances on title to real property
that (i) were not incurred in connection with any indebtedness, (ii) do not
render title to the property encumbered thereby unmarketable and (iii) do not,
individually or in the aggregate, materially adversely affect the value or use
of such property for its current and anticipated purposes; (e) Encumbrances
permitted under any financing of the Company in place as of the date hereof; (f)
purchase money security interests in supplier equipment, (g) Encumbrances under
the (i) the Term Loan Facility and (ii) the Bridge Facility and (h) Encumbrances
in connection with Conversion Offering Stock, subject to the limitations set
forth in Section 5.1 hereof.
"Person" means any individual, partnership, association, joint
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venture, corporation, business, trust, joint stock company, limited liability
company, any unincorporated organization, any other entity, a "group" of such
persons, as that term is defined in Rule 13d-5(b) under the Exchange Act, or a
government or political subdivision thereof.
"Purchaser Directors" means Xxxxxx Xxxxxx, Xxxxx Xxx Xxxxxxxxxx, Xxxx
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Isakov, Xxxxxx Xxxxxxxx, and two additional Persons nominated by the Purchaser
to be directors on the Board with one such additional Person being an
Independent director.
"RAS" means accounting principles generally accepted in the Russian
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Federation and applied consistently throughout the periods involved.
"Registration Rights Agreement" means the Registration Rights
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Agreement between the Company and the Purchaser, substantially in the form
attached to this Agreement as Exhibit B.
"Release" means disposing, discharging, injecting, spilling, leaking,
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leaching, dumping, emitting, escaping, emptying, seeping, placing and the like
into or upon any land or water or air or otherwise entering into the
environment.
"SEC" means the United States Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended, or any
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successor statute thereto, and the rules and regulations of the SEC promulgated
from time to time thereunder, all as the same shall be in effect at the time.
"Senior Preferred Stock" means the Series A Preferred Stock and the
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Series B Preferred Stock.
"Series A Preferred Stock" means the Series A Cumulative Convertible
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Preferred Stock, par value $.01 per share, of the Company.
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"Strategic Services Agreement" means the Strategic Services Agreement
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on the provision of telecommunication services between COMOCOR and COMCOR-TV,
dated April 24, 2000, as amended.
"Subsidiaries" of any Person means any corporation, partnership, joint
------------
venture, limited liability company, trust, estate or other Person of which (or
in which), directly or indirectly, more than 50% of (a) the issued and
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall or might
have voting power upon the occurrence of any contingency), (b) the interest in
the capital or profits of such partnership, joint venture or limited liability
company or other Person or (c) the beneficial interest in such trust or estate
is at the time owned by such first Person, or by such first Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Tax" or "Taxes" means any federal, state, county, local, foreign and
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other taxes (including, without limitation, income, profits, premium, estimated,
excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance,
capital levy, production, transfer, withholding, employment, unemployment
compensation, payroll and property taxes, import duties and other governmental
charges and assessments), whether or not measured in whole or in part by net
income, and including deficiencies, interest, additions to tax or interest, and
penalties with respect thereto, whether disputed or not, imposed by any
Governmental Authority or other Tax authority or arising under any Tax law or
agreement, including, without limitation, any joint venture or partnership
agreement.
"Tax Claim" means any claim arising out of or otherwise in respect of
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any inaccuracy in or any breach of any representation, warranty, covenant or
agreement of the Company contained in this Agreement relating to Taxes.
"Tax Return" means any return, declaration, report, claim for refund,
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form, or information or return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendments thereof.
"Term Loan Facility" means the $28,500,000 Term Loan Facility dated as
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of the date hereof among the Company, COMCOR-TV, the Lender and the other
parties referred to therein.
"Transactions" means the transactions contemplated by this Agreement.
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"US GAAP" means United States generally accepted accounting principles
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and practices as in effect from time to time and applied consistently throughout
the periods involved.
SECTION 1.02. Other Definitions. The meanings of the following terms
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can be found in the Sections of this Agreement indicated below:
Term Section
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Audited Financial Statements........................ 3.05(d)
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Bankruptcy Proceeding............................... 3.07(b)
Blackout Period..................................... 5.01(d)
CCTV Licenses....................................... 6.03(c)
COMCOR-TV Board..................................... 5.15(a)
COMCOR-TV Shareholder Meeting....................... 5.15(a)
Closing............................................. 2.03
Closing Date........................................ 2.03
COMCOR-TV Board..................................... 5.15(a)
Company............................................. Preamble
Company Balance Sheet............................... 3.05(d)
Company Loss........................................ 7.02(b)
Company Permits..................................... 3.09(b)
Consulting Agreements............................... 5.12(b)
Employee............................................ 3.14(d)
Employment Agreements............................... 5.12(a)(i)
Exchange Act Reports................................ 3.05(a)
General Director.................................... 5.15
Improvements........................................ 3.13(d)
Indemnified Party................................... 7.02(c)
Indemnifying Party.................................. 7.02(c)
Intellectual Property............................... 3.12(a)
Interim Financial Statements........................ 3.05(d)
IRS................................................. 3.14(b)
Lease............................................... 3.13(c)
Leased Real Property................................ 3.13(a)
Loss................................................ 7.02(b)
Material Contracts.................................. 3.11(a)
New COMCOR-TV Board................................. 5.15(a)
New MFON Agreement.................................. 5.16
New Securities...................................... Recitals
Notice of Superior Proposal......................... 5.07(c)
Options Grant....................................... 5.12(c)
Owned Real Property................................. 3.13(a)
Proxy Statement..................................... 5.04(a)
Purchase Price...................................... 2.02
Purchaser........................................... Preamble
Purchaser Loss...................................... 7.02(a)
Real Property....................................... 3.13(a)
Representatives..................................... 5.02(a)
Russian Antimonopoly Authority...................... 3.04
Xxxxxxxx-Xxxxx Act.................................. 3.05(a)
Series B Preferred Stock............................ Recitals
Services............................................ 3.17(a)
Stockholders Meeting................................ 5.04(a)
Superior Proposal................................... 5.07(d)
Termination Fee..................................... 8.02(c)
14
Third Party Acquisition............................. 5.07(a)
Third Party Claims.................................. 7.02(c)
Voting Agreement.................................... 5.10
Warrant Agreement................................... Recitals
Warrants............................................ Recitals
ARTICLE II
SALE AND PURCHASE
SECTION 2.01. Sale of the New Securities. Upon the terms and subject
--------------------------
to the conditions set forth in this Agreement, the Company shall duly issue and
sell to the Purchaser, and the Purchaser shall purchase from the Company, the
New Securities.
SECTION 2.02. Purchase Price. The purchase price to be paid by the
--------------
Purchaser to the Company for the New Securities shall be $22,500,000 in cash
(the "Purchase Price").
--------------
SECTION 2.03. Closing. The New Securities to be purchased by the
-------
Purchaser will be represented by one or more stock certificates evidencing
shares of Series B Preferred Stock. The Company will deliver the certificates
evidencing the New Securities to the Purchaser against payment of the Purchase
Price as hereinafter provided. The delivery of and payment for the New
Securities contemplated by this Agreement shall take place at a closing (the
"Closing") to be held at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx
(UK) LLP at 00 Xxxx Xxxxxx, Xxxxxx Xxxxx, X00 0XX, at a time and on a date (the
"Closing Date") to be specified by the parties, which shall be not less than one
nor more than five (5) Business Days after satisfaction (or waiver) of the
latest to occur of the conditions set forth in Article VI hereof, unless another
time, date or place is agreed to in writing by the parties hereto.
SECTION 2.04. Closing Deliveries by the Company. At the Closing, the
---------------------------------
Company shall deliver or cause to be delivered to the Purchaser:
(a) newly issued certificate(s) for 4,500,000 shares of the Series B
Preferred Stock, issued to and registered in the name of the Purchaser and
evidencing the Series B Preferred Stock being purchased hereunder;
(b) a receipt for the Purchase Price;
(c) a true and complete copy, certified by the Secretary of the
Company, of the resolutions duly and validly adopted by the Board evidencing (i)
its authorization of the execution and delivery of this Agreement and the
consummation of the Transactions (including the entering into the Warrant
Agreement and the Registration Rights Agreement) and the filing of the
Certificate of Amendment with the Secretary of State of the State of Delaware
and the issuance of the New Securities, and (ii) the Amended and Restated
By-laws;
(d) a copy of (i) the Certificate of Incorporation, certified by the
Secretary of State of the State of Delaware, as of a date not earlier than five
Business Days prior to the Closing Date and accompanied by a certificate of the
15
Secretary or Assistant Secretary or other authorized officer of the Company,
dated as of the Closing Date, stating that no amendments, other than the filing
of the Certificate of Amendment, have been made to such Certificate of
Incorporation since such date, and (ii) the By-laws, certified by the Secretary
or Assistant Secretary of the Company;
(e) a good standing certificate for the Company from the Secretary of
State of the State of Delaware dated as of a date not earlier than five Business
Days prior to the Closing Date;
(f) a duly executed Warrant Agreement and a duly executed Warrant
Certificate (as such term is defined in the Warrant Agreement), representing the
Warrants and issued to the Purchaser;
(g) a duly executed Registration Rights Agreement;
(h) evidence of the termination of the Voting Agreement satisfactory
to the Purchaser;
(i) executed Employment Agreements and Consulting Agreements;
(j) a duly executed amendment to the 2003 Stock Option Plan of the
Company with respect to the Options Grant and evidence, satisfactory to the
Purchaser, that the Options Grant has been made;
(k) duly executed Stock Option Agreements between the Company and
Xxxxxx Xxxxxx, Xxxxxx Xxxxxx-Xxxxx, Xxxxxxx Xxxxxxx and Xx. Xxx Xxxxx Xxxxxxx;
(l) a legal opinion from the Company's U.S. counsel with respect to
such matters as set forth in Exhibit G attached to this Agreement;
(m) a legal opinion from the Company's Russian counsel with respect
to such matters as set forth in Exhibit H attached to this Agreement;
(n) duly executed resignations of Xxxxx Xxxxxxx, Xxxxxx XxXxxxxxxx,
Xxxxxx Xxxxxxxx, Xxxxxxxxx Vladislavlev and Xxxxxxx X. Xxxxx from the Board; and
(o) an officer's certificate of the Chief Executive Officer and Chief
Financial Officer of the Company certifying the satisfaction of the conditions
set forth in Sections 6.03(a) and (e) hereof.
SECTION 2.05. Closing Deliveries by the Purchaser. At the Closing, the
-----------------------------------
Purchaser shall deliver to the Company the items specified below:
(a) a receipt acknowledging delivery by the Company of the stock
certificates specified in Section 2.04(a);
(b) a duly executed Warrant Agreement;
16
(c) a duly executed Registration Rights Agreement; and
(d) an officer's certificate of the Chief Executive Officer and Chief
Financial Officer of the Purchaser certifying the satisfaction of the condition
set forth in Section 6.02(a) hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to the Purchaser to enter into this Agreement, the
Company hereby represents, warrants and covenants to the Purchaser that the
representations and warranties contained in this Article III are true, complete
and correct as of the date of this Agreement and will be true, complete and
correct as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article
III).
SECTION 3.01. Organization, Authority and Qualification of the Company
--------------------------------------------------------
and the Company Subsidiaries. The Company and each Company Subsidiary is a
----------------------------
corporation duly incorporated or organized, validly existing as a legal entity
properly incorporated, organized, registered and existing, and in good standing
(in jurisdictions recognizing the concept) under the laws of the jurisdiction of
its incorporation, and the Company has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the Transactions (including entering into the Warrant
Agreement and Registration Rights Agreement). The Company and each Company
Subsidiary is duly qualified to do business (and is in good standing in each
jurisdiction that recognizes the concept) in which (x) it owns or leases
properties or conducts any business or (y) such qualification is necessary,
except where the failure to be so qualified or in good standing (with respect to
jurisdictions recognizing the concept) in any such jurisdiction does not or
would not subject the Company or the Company Subsidiary, as the case may be, to
any material liability or disability. The execution and delivery of this
Agreement by the Company, the performance by the Company of its obligations
hereunder and the consummation by the Company of the Transactions (including
entering into the Warrant Agreement and Registration Rights Agreement) have been
duly authorized by all requisite action on the part of the Company (other than,
with respect to the approval of this Agreement and the Transactions, by the
requisite action of the holders of voting securities of the Company in
accordance with Delaware General Corporation Law, the Certificate of
Incorporation, the By-laws and Nasdaq listing requirements). This Agreement has
been duly executed and delivered by the Company, and (assuming due
authorization, execution and delivery by the Purchaser) this Agreement
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that (A) such
enforcement may be subject to (i) any bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar law now or hereafter in
effect relating to creditors' rights generally, (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity) and (B) rights to indemnification and contribution may be
limited by public policy. Neither the Company nor any Company Subsidiary is in
violation of any of the provisions of their respective certificate of
incorporation, by-laws or equivalent organizational documents.
17
SECTION 3.02. Capital Stock of the Company and Company Subsidiaries;
------------------------------------------------------
Ownership of the New Securities.
--------------------------------
(a) As of the date hereof, the authorized capital stock of the
Company consists of (x) 15,000,000 shares of Common Stock, of which
(i) 8,575,962 shares are outstanding, (ii) 456,949 shares of Common Stock are
reserved for issuance on conversion of the Series A Preferred Stock,
(iii) 102,040 shares of Common Stock are reserved for issuance on conversion of
the Convertible Debentures, (iv) 151,000 shares are reserved for issuance upon
the exercise of stock options in the amounts and at the exercise prices set
forth in Section 3.02(a)(iv) of the Disclosure Schedule and (v) 220,879 shares
of Common Stock are reserved for issuance to COMCOR pursuant to the Stock
Subscription Agreement dated May 28, 2003, effective April 1, 2003, as amended,
between COMCOR and the Company; and (y) 800,000 shares of Series A Preferred
Stock, of which 150,229 shares are issued and outstanding and designated as
Series A Preferred Stock. All of the outstanding shares of the Company's
capital stock are duly and validly issued, fully paid and nonassessable. None
of the issued and outstanding shares of capital stock of the Company was
issued in violation of any preemptive rights. As of the date hereof, except as
described above or as set forth in Section 3.02(a) of the Disclosure Schedule,
there are no options, warrants, subscriptions, calls, convertible securities
or debentures or other rights, agreements, arrangements or commitments relating
to the capital stock of the Company or obligating the Company to issue or sell
any shares of capital stock of, or any other equity interest in, the Company.
There are no outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or make
any investment (in the form of a loan, capital contribution or otherwise) in
any other Person.
(b) The New Securities and the Warrants have been duly and validly
authorized by the Board and, upon consummation of the Closing, as contemplated
hereby the New Securities and the Warrants purchased by the Purchaser (i) will
be duly and validly issued, fully paid, nonassessable, and free from all Taxes
and Encumbrances, (ii) will be issued in compliance with United States federal
securities Laws and the securities Laws of other applicable jurisdictions and
(iii) the issuance of the New Securities and the Warrants will not be subject to
preemptive or other similar rights. The Conversion Shares, if and when issued,
(i) will be duly and validly issued, fully paid, nonassessable, and free from
all Taxes and Encumbrances, (ii) will be issued in compliance with United States
federal securities Laws and the securities Laws of other applicable
jurisdictions and (iii) the issuance of the Conversion Shares will not be
subject to preemptive or other similar rights.
(c) Exhibit C hereto contains a true and complete copy of the pro
forma capitalization table as of the date hereof (the "Pro Forma Capitalization
------------------------
Table") of the Company, giving effect to consummation of the Transactions,
-----
including the entering into the Warrant Agreement. Section 3.02(c) of the
Disclosure Schedule sets forth all of the securities or instruments issued by
the Company that contain anti-dilution or similar provisions that will be
triggered by, and all of the resulting adjustments that will be made, to such
securities and instruments as a result of the issuance of the New Securities and
Warrants to the Purchaser.
(d) Section 3.02(d) of the Disclosure Schedule sets forth (i) the
name and jurisdiction of incorporation of each Company Subsidiary, (ii) each
Company Subsidiary's authorized capital stock and the number of issued and
18
outstanding shares of its capital stock and (iii) the record owner(s) of such
shares. All of the outstanding shares of capital stock of each Company
Subsidiary that is a corporation are duly and validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock of, or other
ownership interest in, each Company Subsidiary are owned, directly or
indirectly, by the Company free and clear of any Encumbrances. Except as set
forth in Section 3.02(d) of the Disclosure Schedule, no Company Subsidiary has
outstanding options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating the Company Subsidiary
to issue, transfer or sell any securities of any Company Subsidiary.
(e) Except for the Existing Agreements and the registration rights
granted in the Stock Option Agreements, the Company has not granted and has not
agreed to grant any demand or incidental registration rights to any Person other
than rights to be granted to the Purchaser pursuant to the Registration Rights
Agreement.
SECTION 3.03. No Conflict. Assuming the making and obtaining of all
-----------
filings, notifications, consents, approvals, authorizations and other actions
referred to in Section 3.04, the execution, delivery and performance of this
Agreement by the Company do not and will not (a) violate, conflict with or
result in the breach of any provision of the certificate of incorporation or
by-laws (or similar organizational documents) of the Company or any Company
Subsidiary, (b) to the knowledge of the Company, conflict with or violate any
Law or Governmental Order applicable to the Company, any Company Subsidiary or
any of their respective assets, properties or businesses, (c) to the knowledge
of the Company, violate, conflict with or result in the breach of any provision
of any Company Permit, or (d) except as set forth in Section 3.03 of the
Disclosure Schedule, conflict with, result in any breach of, constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of the Company or any Company Subsidiary pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease, sublease,
License, franchise or other instrument, obligation or arrangement to which the
Company or any Company Subsidiary is a party or by which any of its assets or
properties is bound or affected.
SECTION 3.04. Governmental Consents and Approvals. The execution,
-----------------------------------
delivery and performance of this Agreement, or the consummation of the
Transactions, by the Company do not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to any
Governmental Authority, except (i) for the applicable requirements of the
Exchange Act (for filing with the SEC of (a) the Proxy Statement and (b) such
reports under the Exchange Act as may be required in connection with this
Agreement and the Transactions), the Securities Act (in connection with the
filing of a Form D with the SEC and the Registration Rights Agreement), state
securities or "blue sky" laws, (ii) for filing of a supplemental listing
application with Nasdaq, (iii) the filing of the Certificate of Amendment with
the Secretary of State of the State of Delaware, and (iv) the approval of the
Federal Antimonopoly Service of the Russian Federation ("Russian Antimonopoly
Authority").
SECTION 3.05. SEC Filings; Financial Statements; Nasdaq Listing.
-------------------------------------------------
(a) The Annual Report on Form 10-K of the Company for the fiscal year ended
February 29, 2004 has been made available to the Purchaser in connection with
the offering of the New Securities. All documents of the Company filed with the
19
SEC pursuant to the Exchange Act are referred to herein as the "Exchange Act
Reports". The Exchange Act Reports, when they were filed with the SEC, complied
in all material respects with the requirements of the Exchange Act and the
applicable rules and regulations of the SEC thereunder. The Exchange Act Reports
did not, as of their respective dates, contain any untrue statement of material
fact or omit to state a 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. The Company has timely filed all reports
and registration statements and made all filings required to be made with the
SEC under the Exchange Act, the Securities Act or the applicable rules and
regulations of the SEC thereunder, all of which complied when filed in all
material respects with all applicable requirements of the Securities Act and/or
the Xxxxxxxx-Xxxxx Act of 2002 (with respect to the provisions of such act
required to be complied with at the time such forms, reports and/or documents
were required to be filed) and the rules and regulations promulgated thereunder
(the "Xxxxxxxx-Xxxxx Act") and the statements contained in or accompanying the
Company Annual Report on Form 10-K and Quarterly Reports on Forms 10-Qs in
accordance with Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act are true and
correct.
(b) Without limiting the generality of Section 3.05(a), (i) ZAO
PricewaterhouseCoopers Audit has not resigned, or, to the knowledge of the
Company, threatened to resign or been dismissed as independent public accountant
of the Company as a result of or in connection with any disagreement with the
Company on a matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, (ii) no executive officer of the
Company has failed in any respect to make the certifications required of him or
her under Section 302 or 906 of the Xxxxxxxx-Xxxxx Act with respect to any form,
report or schedule filed by the Company with the SEC since the enactment of the
Xxxxxxxx-Xxxxx Act and (iii) no enforcement action has been initiated against
the Company by the SEC relating to disclosures contained in any Company SEC
Report.
(c) The Company has in place the "disclosure controls and procedures"
(as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) required in
order for the Chief Executive Officer and Chief Financial Officer of the Company
to engage in the review and evaluation process mandated by the Exchange Act. The
Company's "disclosure controls and procedures" are reasonably designed to ensure
that all information (both financial and non-financial) required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC, and that all such information is accumulated
and communicated to the Company's management as appropriate to allow timely
decisions regarding required disclosure and to make the certifications of the
Chief Executive Officer and Chief Financial Officer of the Company required
under the Exchange Act with respect to such reports.
(d) The audited consolidated balance sheets of the Company and its
subsidiaries for the fiscal years ended as of February 29, 2004, February 28,
2003 and February 28, 2002 and the related audited consolidated statements of
income, retained earnings, stockholders' equity and cash flow of the Company and
the Company Subsidiaries together with all related notes and schedules thereto
(the "Audited Financial Statements"), the unaudited consolidated balance sheet
----------------------------
of the Company and its subsidiaries as of May 31, 2004, and the related
unaudited consolidated statements of income, retained earnings, stockholders'
20
equity and cash flow of the Company and its subsidiaries together with all
related notes and schedules thereto (the "Interim Financial Statements"), all of
----------------------------
which Audited Financial Statements and Interim Financial Statements are
contained in the respective Exchange Act Reports, (i) were prepared in
accordance with the books of account and other financial records of the Company
and its subsidiaries, (ii) present fairly the consolidated financial condition
and results of operations of the Company and its subsidiaries as of the dates
thereof or for the periods covered thereby, (iii) have been prepared in
accordance with US GAAP applied on a basis consistent with the past practices of
the Company and (iv) in case of the Interim Financial Statements, include all
adjustments (consisting only of normal recurring accruals) that are necessary
for a fair presentation of the consolidated financial condition and the results
of the operations of the Company as of the dates thereof or for the periods
covered thereby. The balance sheet of the Company contained in its Annual Report
on Form 10-K for the fiscal year ended February 29, 2004 is hereinafter referred
to as the "Company Balance Sheet".
---------------------
(e) The Company is currently eligible to use Form S-3 under the
Securities Act for registration of the sale by the Purchaser of the Registrable
Securities (as such term is defined in the Registration Rights Agreement), and
the Company has filed in the preceding twelve (12) months all reports required
to be filed by the Company with the SEC in a timely manner so as to obtain and
maintain eligibility to use Form S-3 under the Securities Act for the resale of
the Registrable Securities.
(f) Set forth in Section 3.05(f) of the Disclosure Schedule is a
complete list of all material amendments or modifications, that have not yet
been filed with the SEC, to agreements, documents or other instruments that
previously had been filed by the Company with the SEC (except as may be required
with respect to the Transactions), pursuant to the Securities Act or the
Exchange Act. The Company has furnished to the Purchaser a complete and correct
copy of all such documents.
(g) The Common Stock is listed on the Nasdaq National Market. The
Company has no knowledge of any proceedings to revoke such listing. The sales of
New Securities and Warrants to the Purchaser in accordance with the terms of
this Agreement and the Warrant Agreement will not violate any rules of the
Nasdaq National Market or the National Association of Securities Dealers as in
effect on the date hereof.
SECTION 3.06. No Undisclosed Liabilities. Except as specifically set
--------------------------
forth in the financial statements of the Company included in the Exchange Act
Reports filed and publicly available prior to the date of this Agreement, and
except for liabilities and obligations incurred (x) in the ordinary course of
business since the date of the most recent consolidated balance sheet included
in the Exchange Act Reports filed and publicly available prior to the date of
this Agreement and (y) as a result of the performance by the Company of its
obligations pursuant to the Transactions, neither the Company nor any of the
Company Subsidiaries has any Liabilities required by US GAAP to be set forth on
a consolidated balance sheet of the Company or in the notes thereto. All
agreements related to Indebtedness (including, but not limited, to any loans,
credit agreements, notes and indentures) to which the Company or any Company
Subsidiary is a party have been filed with the Company's Exchange Act Reports or
registration statements filed with the SEC under the Securities Act.
21
SECTION 3.07. Absence of Certain Changes or Events (a) Since the date
------------------------------------
of the Company Balance Sheet, except as contemplated by this Agreement, or
disclosed in any Exchange Act Report filed after the date of the Company Balance
Sheet and prior to the date hereof, the Company has conducted its business only
in the ordinary course and in a manner consistent with past practices and there
has not been any
(i) Material Adverse Effect;
(ii) change by the Company in its accounting methods, principles or
policies, except as may be required by US GAAP;
(iii) change in the capital stock of the Company or any Company
Subsidiary;
(iv) revaluation by the Company of any asset (including, without
limitation, any writing down of the value of inventory or writing-off of notes
or accounts receivable), other than in the ordinary course of business
consistent with past practices;
(v) except as set forth in Section 3.07(v) of the Disclosure Schedule,
declaration, setting aside or payment of any dividend or distribution in respect
of any capital stock of the Company or any optional redemption, purchase or
other acquisition of any of its securities;
(vi) except as set forth in Section 3.07(vi) of the Disclosure
Schedule, increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit-sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers or key
employees of the Company or any Company Subsidiary, except in the ordinary
course of business consistent with past practices;
(vii) amendment of any term of any outstanding security of the Company
or any Company Subsidiary;
(viii) damage, destruction or other casualty loss with respect to any
material asset or property owned, leased or otherwise used by the Company or any
Company Subsidiary;
(ix) incurrence, assumption or guarantee by the Company or any Company
Subsidiary of any Indebtedness other than in the ordinary course of business and
consistent with past practices;
(x) making of any loan, advance or capital contribution to or
investment in any Person by the Company or any Company Subsidiary other than (A)
loans, advances or capital contributions to or investments in any wholly owned
22
Company Subsidiary, or (B) loans or advances to the Company by any Company
Subsidiary;
(xi) (A) transactions, commitments, contracts or agreements entered
into by the Company or any Company Subsidiary relating to any material
disposition or acquisition of any assets or business or (B) modification,
amendment, assignment, termination or relinquishment by the Company or any
Company Subsidiary of any contract, License or other right, other than, in
either case, transactions, commitments, contracts or agreements in the ordinary
course of business consistent with past practices and those contemplated by this
Agreement;
(xii) amendment, alteration or repeal (by merger, consolidation or
otherwise) of any provision of the Certificate of Incorporation or the By-laws,
that would adversely affect the relative rights, preferences, qualifications,
limitations or restrictions of the Purchaser as the holder of the Series B
Preferred Stock, Warrants or Common Stock at the Closing or the rights of the
Purchaser under this Agreement, other than the amendment to the Certificate of
Incorporation by filing of the Certificate of Amendment and the Amended and
Restated By-laws as contemplated herein;
(xiii) creation of any new class of capital stock of the Company;
(xiv) reclassification of any of the Company's capital stock into
shares that would have a preference over or on parity with the Series B
Preferred Stock;
(xv) sale of (or an agreement to sell) Core Business Assets of the
Company or any Company Subsidiary, or any merger, consolidation or combination
of the Company or any Company Subsidiary with another entity;
(xvi) increase in the authorized number of shares of Common Stock or
shares of preferred stock of the Company;
(xvii) increase in the authorized number of shares of or issuance of
any additional Series A Preferred Stock;
(xviii) initiation of a voluntary liquidation, dissolution or winding
up of the Company or of any Company Subsidiary;
(xix) commencement of any tender or exchange offer or redemption
involving the Company's equity securities or any security convertible into,
exchangeable for, or otherwise giving the holder thereof the right to obtain,
equity securities of the Company; or
(xx) any amendment to a Material Contract or Company Permit.
(b) Neither the Company nor any Company Subsidiary has made a
general assignment for the benefit of creditors, and no proceeding
23
(a "Bankruptcy Proceeding") has been instituted by or against the Company or any
---------------------
Company Subsidiary seeking to adjudicate any of them a bankrupt or insolvent,
or seeking liquidation, winding up or reorganization, arrangement, adjustment
protection, relief or composition of its debts under any Law relating to
bankruptcy, insolvency or reorganization.
SECTION 3.08. Litigation. Except as set forth in Section 3.08 of the
----------
Disclosure Schedule, there are no material Actions by or against the Company or
any Company Subsidiary or affecting any of the assets of the Company or any of
the Company Subsidiaries, pending before any Governmental Authority or, to the
knowledge of the Company, threatened or contemplated to be brought by or before
any Governmental Authority. None of the Company, the Company Subsidiaries or any
of the assets of the Company or the Company Subsidiaries is subject to any
Governmental Order (or, to the knowledge of the Company, are there any such
Governmental Orders threatened or contemplated to be imposed by any Governmental
Authority) which has, has had or is reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect.
SECTION 3.09. Compliance with Laws.(a) Neither the Company nor any
--------------------
Company Subsidiary is in default or violation of any Law or Governmental Order.
(a) (i) Except as set forth in Section 3.09(b) of the Disclosure
Schedule, the Company and each Company Subsidiary are in possession of all
material franchises, grants, authorizations, Licenses, memoranda of
understanding, agreements, easements, variances, exceptions, consents,
certificates, approvals and orders of or with any Governmental Authority (the
"Company Permits") necessary or required for the Company or any Company
---------------
Subsidiary to own, lease and operate its properties or to carry on its business
as it is now being conducted, which are set forth in Section 3.09(b) of the
Disclosure Schedule, and the Company Permits are in full force and effect, are
not subject to any unusual or onerous conditions and have been complied with in
all material respects, (ii) no suspension or cancellation or revocation of any
of the Company Permits is pending or, to the knowledge of the Company,
threatened nor has any of the Company Permits expired and, with respect to any
such Company Permit which will expire prior to the Closing Date, the Company is
not aware of any circumstance which would reasonably be expected to cause such
Company Permit not to be renewed or extended upon expiration and (iii) neither
the Company nor any Company Subsidiary is in default under any Company Permit.
The Company has provided the Purchaser with complete and accurate copies of all
Company Permits, including any amendments, supplements and extensions thereto,
and with all written correspondence between the Company or any Company
Subsidiary and a Governmental Authority with respect to any Company Permit.
SECTION 3.10. Environmental Matters. Except as set forth in Section
---------------------
3.10 of the Disclosure Schedule:
(a) the Company and the Company Subsidiaries (i) are and have been in
compliance with all applicable Environmental Laws, (ii) hold all necessary
Environmental Permits and (iii) are and have been in compliance with their
respective Environmental Permits;
(b) neither the Company nor any Company Subsidiary has received any
notice of alleged violation of Environmental Law or written request for
24
information, or been notified in writing that it is a potentially responsible
party, under CERCLA, or any similar Law of any country, state, province,
municipality, locality or any other jurisdiction;
(c) neither the Company nor any Company Subsidiary has entered into
or agreed to any consent decree or order or is subject to any judgment, decree
or judicial order relating to compliance with Environmental Laws, Environmental
Permits or the investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials and, to the knowledge of Company, no
investigation, litigation or other proceeding is pending or threatened with
respect thereto, and, to the knowledge of Company, no condition, including,
without limitation, the Release of Hazardous Materials, exists on any property
currently or formerly owned or operated by the Company that is reasonably likely
to lead to such investigation, litigation or proceeding or to require
investigation or remediation pursuant to applicable Environmental Law;
(d) none of the real property currently or formerly owned or leased
by the Company or any Company Subsidiary is listed or, to the knowledge of the
Company, proposed for listing on the "National Priorities List" under CERCLA, as
updated through the date of this Agreement, or any similar list of sites in the
Russian or any other jurisdiction requiring investigation or cleanup; and
(e) the Purchaser has been provided access to all reports in the
Company's possession or control assessing the environmental condition of the
Company's and the Company Subsidiaries current and former properties.
SECTION 3.11. Material Contracts.
------------------
(a) Section 3.11(a) of the Disclosure Schedule sets forth a complete
list of all contracts, agreements, notes, bonds, mortgages, franchise
agreements, subcontractor agreements, purchase commitments for network
equipment, software technical development and support agreements, television
content agreements, guarantees, leases, security agreements and commitments,
including all amendments and modifications thereto, to which the Company or any
Company Subsidiary is a party that are material to the Company and the Company
Subsidiaries, taken as a whole (together, "Material Contracts"). The Company has
------------------
provided the Purchaser with complete and accurate copies of all Material
Contracts, including any amendments, supplements and extensions thereto, and
with all written correspondence between the Company or any Company Subsidiary
and any party to a Material Contract.
(b) Each Material Contract (i) is valid and binding on the Company or
the Company Subsidiary that is a party thereto, as the case may be, and is in
full force and effect and (ii) upon consummation of the Transactions shall
continue in full force and effect without penalty or other adverse consequence.
(c) (i) neither the Company nor any Company Subsidiary is in breach
of, or default under, any Material Contract and (ii) to the knowledge of the
Company, no other party to any Material Contract is in breach thereof or default
thereunder.
25
(d) Except as set forth in Section 3.11(d) of the Disclosure
Schedule, neither the Company nor any Company Subsidiary is a party to any
voting trust, proxy, agreement with respect to the voting of any capital stock
of Company or any Company Subsidiary.
SECTION 3.12. Intellectual Property; Company Systems.
--------------------------------------
(a) Neither the Company nor any Company Subsidiary owns any
trademark, trade name, patent, service xxxx, brand xxxx, brand name, industrial
design and copyright (collectively, the "Intellectual Property"). All of the
Intellectual Property used by the Company is used pursuant to a valid License by
the Company or the Company Subsidiaries free and clear of any and all
Encumbrances, and the Company or one of the Company Subsidiaries has good,
marketable and exclusive title to or license for, and the valid right to use all
of the Intellectual Property. Neither the Company nor any of the Company
Subsidiaries has received any complaint, assertion, threat or allegation or
otherwise has notice of any claim, lawsuit, demand, proceeding or investigation
involving any such matters or the Intellectual Property or otherwise knows that
any of the Intellectual Property is invalid or conflicts with the rights of any
third party.
(b) Each of the Company and each Company Subsidiary has a right to
use all Intellectual Property used in the operation of its business as presently
conducted.
(c) Each of the Company and each Company Subsidiary has a valid
License to use all Company Systems.
(d) The Company Systems have been maintained in accordance with good
business practice, are in good operating condition and repair and are suitable
for the purposes for which they are used and intended. Except as set forth in
Section 3.12(d) of the Disclosure Schedule, the Company has no commitments to
purchase any Company Systems.
SECTION 3.13. Title to Properties; Absence of Encumbrances. (a)
--------------------------------------------
Section 3.13(a) of the Disclosure Schedule lists the material real property
interestsowned by the Company and the Company Subsidiaries (the "Owned Real
----------
Property") and lists all leases relating to material real property to which the
--------
Company or any Company Subsidiary is a party as a lessee (the "Leased Real
-----------
Property," and together with the Owned Real Property, the "Real Property"). All
-------- -------------
leases forLeased Real Property are in full force and effect, are valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing default or event of default (or event which with
notice or lapse of time, or both, would constitute a default).
(b) Each of the Company and the Company Subsidiaries has good and
marketable fee title to, or, in the case of leased properties and assets, has
good and valid leasehold interests in, all of its tangible properties and
assets, real, personal and mixed, used or held for use in, or which are
necessary to conduct, the respective business of the Company and each Company
Subsidiary as currently conducted, free and clear of any Encumbrances.
(c) Section 3.13(c) of the Disclosure Schedule sets forth all
material leases, subleases and other agreements (each, a "Lease" and
-----
collectively, the "Leases") granting to any Person or entity other than the
------
26
Company or any Company Subsidiary any right to the possession, use, occupancy
or enjoyment of the Real Property or any portion thereof. Each such Lease is
valid, binding and in full force and effect, all rent and other sums and charges
payable by the tenant thereunder are current, no notice of default or
termination under any Lease is outstanding, no termination event or condition or
uncured default on the part of the Company or any Company Subsidiary or, to the
knowledge of the Company, the tenant, exists under any Lease, and no event has
occurred and no condition exists that, with the giving of notice or the lapse of
time, or both, would constitute such a default or termination event or
condition. Except as set forth in Section 3.13(c) of the Disclosure Schedule,
the Company or any Company Subsidiary may terminate any Lease without incurring
any penalty, charge, cost or expense in connection with such termination and
without being in default of any such Lease.
(d) To the knowledge of the Company, all components of all buildings,
structures, fixtures, facilities and other improvements in, on or within the
Real Property (the "Improvements") are in good operating condition and repair,
subject to continued repair and replacement in accordance with past practice.
(e) The Company and each Company Subsidiary has not received notice
of and, to the knowledge of the Company, there is no pending, threatened or
contemplated condemnation proceeding, action or Governmental Order affecting the
Real Property or any part thereof, nor any sale or other disposition of the Real
Property or any part thereof in lieu of condemnation. No portion of the Real
Property has suffered any material damage by fire, flood or other casualty that
has not heretofore been completely repaired and restored.
SECTION 3.14. Employee Benefit Matters; Labor Matters (a) Each Benefit
---------------------------------------
Plan has been operated in material compliance with its terms and the
requirements of all applicable Laws, including, without limitation, ERISA and
the Code. Each of the Company and the Company Subsidiaries has performed all
obligations required to be performed by it under, and is not in any respect in
default under or in violation of, any Benefit Plan. No action, claim or
proceeding is pending or, to the knowledge of the Company, threatened with
respect to any Benefit Plan (other than claims for benefits in the ordinary
course).
(b) Except as set forth in Section 3.14(b) of the Disclosure Schedule,
each Benefit Plan that is intended to be qualified under Section 401(a) of the
Code (or a similar provision under the applicable Law in a foreign jurisdiction)
has received a favorable determination letter from the Internal Revenue Service
(the "IRS") or other applicable Governmental Authority and each trust
established in connection with any Benefit Plan which is intended to be exempt
from federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS or other applicable Governmental Authority
that it is so exempt and, to the knowledge of the Company, nothing has occurred
since the date of such letter that has or is reasonably likely to adversely
affect such qualification or exemption.
(c) Neither the Company, any Company Subsidiary nor any ERISA
Affiliate has, within the last six years, sponsored or made contributions to or
had any obligations, whether absolute or contingent, direct or indirect, under
any Benefit Plan subject to Title IV of ERISA, and the Company has not incurred,
nor could it reasonably be expected to incur, any Liability under, arising out
of or by operation of Title IV of ERISA, including, without limitation, any
Liability in connection with (i) the termination or reorganization of any
27
employee benefit plan subject to Title IV of ERISA or (ii) the withdrawal from
any (A) "Multiemployer Plan" (within the meaning of Section 3(37) or 4001(a)(3)
of ERISA) or (B) single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) for which the Company or any Company Subsidiary could
incur liability under Section 4063 or 4064 of ERISA.
(d) The execution of, and consummation of the Transactions will not
(either alone or upon the occurrence of any additional or subsequent events,
other than the Strategic Acquisition) (i) constitute an event under any Benefit
Plan, Employee Agreement, trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any current, former or retired employee, officer,
consultant, independent contractor, agent or director of the Company or a
Company Subsidiary (an "Employee"); or (ii) result in the triggering or
imposition of any restrictions or limitations on the right of the Company or the
Purchaser to amend or terminate any Benefit Plan. No payment or benefit which
will or may be made by the Company, the Purchaser or any of their respective
Affiliates with respect to any Employee will be characterized as an "excess
parachute payment", within the meaning of Section 280G(b)(1) of the Code.
(e) Except as set forth in Section 3.14(e) of the Disclosure
Schedule, neither the Company nor any Company Subsidiary has any obligation to
provide, or has any direct or indirect liability, whether contingent or
otherwise, with respect to the post-termination provision of health or death
benefits to any employee or former employee, except as may be required pursuant
to Section 4980B of the Code (or a similar provision under the applicable Law in
a foreign jurisdiction) and the costs of which are fully paid by such former
employees.
(f) Neither the Company nor any Company Subsidiary is a party to any
collective bargaining or other labor union contract applicable to persons
employed by the Company or any Company Subsidiary and no collective bargaining
agreement is being negotiated by the Company or any Company Subsidiary. To the
knowledge of the Company, there is no labor dispute, strike or work stoppage
against the Company or any Company Subsidiary pending or threatened in writing
which may interfere with the respective business activities of the Company or
any Company Subsidiary. To the knowledge of the Company, none of the Company,
any Company Subsidiary, or any of their respective representatives or employees
has violated any Law regarding the terms and conditions of employment of
employees, former employees or prospective employees or other labor-related
matters or committed any unfair labor practices in connection with the operation
of the respective businesses of the Company or any Company Subsidiary, and there
is no charge or complaint against the Company or any Company Subsidiary by the
United States National Labor Relations Board or a similar Governmental Authority
in a foreign jurisdiction or any comparable state agency pending or threatened
in writing.
(g) The Company is not aware that any officer or key employee, or
that any group of key employees, intends to terminate his or her employment with
the Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing.
SECTION 3.15. Insurance.
---------
Set forth in Section 3.15 of the Disclosure Schedule is a complete list of all
28
policies or binders of fire, liability, workmen's compensation, vehicular, life
or directors' and officers' insurance held by the Company or the Company
Subsidiaries or other types of policies customary for the industry in which the
businesses of the Company and the Company Subsidiaries are operated are in full
force and effect, except as set forth in Section 3.15 of the Disclosure
Schedule. Neither the Company nor any Company Subsidiary is in default with
respect to any provision contained in any such policy or binder and neither has
failed to give any notice or present any claim under such policy or binder in
due and timely fashion. There are no outstanding unpaid claims under any such
policy or binder. Neither the Company nor any Company Subsidiary has received a
notice of cancellation or non-renewal of any such policy or binder. The Company
has not received notice of any inaccuracy in any application for such policies
or binders, any failure to pay premiums when due or any similar state of facts
which might form the basis for termination of any such insurance.
SECTION 3.16. Taxes. (a) (i) The Company and each Company Subsidiary has timely
-----
filed or caused to be filed, or has properly filed extensions for, all income
and other Tax Returns that are required to be filed and has paid or caused to be
paid within the time and manner prescribed by Law all Taxes as shown on such
returns and on all assessments received by it to the extent that such Taxes have
become due, except any Tax the validity or amount of which is being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves, in accordance with US GAAP (or RAS as applicable to the Russian
Company Subsidiaries), have been set aside; (ii) such Tax Returns are true,
correct, adequate and complete in all material respects; (iii) the Company has
paid or caused to be paid, or has established reserves in accordance with US
GAAP, for all Tax liabilities applicable to the Company for all fiscal years
that have not been examined and reported on by the taxing authorities (or closed
by applicable statutes); and (iv) no additional Tax assessment against the
Company or any Company Subsidiary has been heretofore proposed by any
Governmental Authority or Tax authority for which provision deemed adequate by
the Company in accordance with US GAAP has not been made on such Company's or
Company Subsidiary's balance sheet.
(b) With respect to all income and other Tax Returns of the Company
and the Company Subsidiaries, (i) except as set forth in Section 3.16(b) of the
Disclosure Schedule, no audit is pending, threatened or in progress and no
extension of time is in force with respect to any date on which any Tax Return
was or is to be filed and no waiver or agreement is in force for the extension
of time for the assessment or payment of any Tax and (ii) there is no unassessed
deficiency proposed or threatened against the Company or any of the Company
Subsidiaries.
(c) The provision for Taxes of the Company as shown on the Company
Balance Sheet is adequate for Taxes due and accrued as of the Company Balance
Sheet date.
(d) The Company knows of no change in the rates or basis of
assessment of any Tax of the Company and the Company Subsidiaries.
(e) The Company is not a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code.
29
(f) Except as set forth in Section 3.16(f) of the Disclosure
Schedule, the Company does not conduct a trade or business, or otherwise
maintain a permanent establishment, in any jurisdiction outside the United
States. No Company Subsidiary that is a "controlled foreign corporation" as such
term is defined in Section 957 of the Code has an investment in "United States
property" as such term is defined in Section 956 of the Code.
(g) None of the Company or any Company Subsidiary has received notice
from any taxing authority in a jurisdiction in which it does not file Tax
Returns or pay Taxes, that such entity may be subject to Tax in such
jurisdiction.
(h) Each of the Company and the Company Subsidiaries has properly
withheld and paid over to the appropriate taxing authority all Taxes which they
are required to withhold from amounts paid or owing to any employee, independent
contractor, creditor or other third party.
(i) None of the Company or any Company Subsidiary is a party to any
Tax sharing, indemnification or allocation agreement. None of the Company or any
Company Subsidiary is liable for the Taxes of another party, as transferee or
successor, by contract or otherwise, including pursuant to Treasury Regulation
Section 1.1502-6 and any similar provision under state, local or foreign Tax
laws.
SECTION 3.17. MFON; HFC.
---------
(a) The MFON is suitable for the transmission of all signals,
including voice, video and data to CCTV, allowing CCTV to provide cable
television, high speed data and Internet access services, as well as IP
telephony (the "Services"), to all households and businesses connected to the
--------
COMCOR-TV network in the "Strategic Operating Area" and "Adjacent Area", as such
terms are defined in Strategic Services Agreement. A true, correct and complete
copy of the Strategic Services Agreement and all the amendments thereto as in
effect as of the date hereof is attached to this Agreement as Exhibit F.
(b) COMCOR-TV is licensed to provide the Services to at least
1,500,000 customers in Moscow, the Russian Federation. The MFON has sufficient
capacity to provide normal Services, as currently supplied, to COMCOR-TV's
existing network of 198,000 homes passed.
(c) COMCOR-TV is in compliance with all terms and conditions of the
Strategic Services Agreement and its records and billing statements related to
the management of the COMCOR-TV network in connection with the Strategic
Services Agreement are complete, correct and up to date.
(d) As of June 30, 2004 COMCOR-TV has contracts to provide the
Services to at least 60,953 terrestrial subscribers, at least 14,093 Internet
subscribers and at least 7,803 pay TV subscribers in at least 196,944 homes
passed network.
(e) As of June 30, 2004 de-activated subscribers as a percent of
total reported subscribers were 0.8% for terrestrial subscribers, 28.1% for
cable television subscribers and 25.3% for Internet subscribers. To the
30
knowledge of the Company, there is no material number of subscribers intending
to de-activate their Services as of a point in time in excess of the usual
annual termination rate of 10% for terrestrial subscribers, 40% for cable
television subscribers and 60% for Internet subscribers.
(f) COMCOR-TV's hybrid fiber coaxial (HFC) network has bandwidth
capacity of between 5-65 megahertz for return channel and of between 85-862
megahertz for forward channel and can accommodate (i) both digital and analog
transmission, (ii) interactive TV through the return path and (iii) high speed
data traffic up to 1,024 Mb/sec.
SECTION 3.18. Products Liability. (a) Except as set forth in Section
------------------
3.18(a) of the Disclosure Schedule, during the 5-year period preceding the date
of this Agreement there has been no Action against or involving the Company or
any Company Subsidiary or relating to any product designed, manufactured,
assembled, shipped, sold or delivered by or on behalf of the Company or any
Company Subsidiary relating to or resulting from an alleged defect in design,
manufacture, assembly, materials or workmanship of any product designed,
manufactured, assembled, shipped, sold or delivered by or on behalf of the
Company or any Company Subsidiary or any alleged failure to warn, or any alleged
breach of implied warranties or representations, and, to the knowledge of the
Company, none has been threatened nor is there any valid basis for such Action.
(b) Except as set forth in Section 3.18(b) of the Disclosure Schedule,
the Company has no knowledge of any Occurrences with respect to any product
designed, manufactured, assembled, shipped, sold or delivered by or on behalf of
the Company or any Company Subsidiary.
SECTION 3.19. Brokers. Except for Xxxxxxx X. Xxxxx, Xxxxxx Xxxxxxx and
-------
Aton LLC, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of the Company. The Company is solely
responsible for the fees and expenses of Xxxxxxx X. Xxxxx, Xxxxxx Xxxxxxx and
Xxxx LLC. The total fees and expenses paid or to be paid by the Company to
Xxxxxxx X. Xxxxx for any finder's or other fee or commission in connection with
the Transactions will not exceed $200,000 and receipt of stock appreciation
rights related to 25,000 shares of Common Stock at a base price of $6.67 per
share, in accordance with the terms and conditions set forth in the Consulting
Agreement dated May 11, 2004, between the Company and Xxxxxxx X. Xxxxx, as
amended. The total fees and expenses to be paid by the Company to Xxxxxx Xxxxxxx
for any finders' or other fee or commission in connection with the Transactions
will not exceed $25,000. The total fees and expenses paid or to be paid by the
Company to Aton LLC for delivery of its opinion and for any other fee or
commission in connection with the Transactions will not exceed $115,000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Company to enter into this Agreement, the
Purchaser hereby represents, warrants and covenants to the Company that the
31
representations and warranties contained in this Article IV are true, complete
and correct as of the date of this Agreement and will be true, complete and
correct as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article
IV).
SECTION 4.01. Organization and Authority of the Purchaser. The
-------------------------------------------
Purchaser is a company duly organized, validly existing and in good standing
under the laws of the Bahamas. The Purchaser has all necessary power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the Transactions (including entering into the Warrant
Agreement and the Registration Rights Agreement). The execution and delivery of
this Agreement by the Purchaser, the performance by the Purchaser of its
obligations hereunder and the consummation by the Purchaser of the Transactions
(including entering into the Warrant Agreement and the Registration Rights
Agreement) have been duly authorized by all requisite action on the part of the
Purchaser. This Agreement has been duly executed and delivered by the Purchaser,
and (assuming due authorization, execution and delivery by the Company) this
Agreement constitutes a legal, valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms.
SECTION 4.02. No Conflict. Assuming the making and obtaining of all
-----------
filings, notifications, consents, approvals, authorizations and other actions
referred to in Section 4.03 and except as may result from any facts or
circumstances relating solely to the Company, the execution, delivery and
performance of this Agreement by the Purchaser does not (a) conflict with or
violate any Law or Governmental Order applicable to the Purchaser or (b)
conflict with, or result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent or waiver under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
or result in the creation of any Encumbrance on any of the assets or properties
of the Purchaser pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, License, permit, franchise or other instrument or
arrangement to which the Purchaser is a party or by which any of such assets or
properties are bound or affected.
SECTION 4.03. Governmental Consents and Approvals. The execution,
-----------------------------------
delivery and performance of this Agreement by the Purchaser does not require any
consent, approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority, except for (i) the applicable
requirements of the Exchange Act (for filing with the SEC of (a) the Proxy
Statement and (b) such reports under the Exchange Act as may be required in
connection with this Agreement and the Transactions), and the Securities Act (in
connection with the filing of a Form D with the SEC and the Registration Rights
Agreement), (ii) the approval of the Russian Antimonopoly Authority and (iii)
for such other consents, waivers, approvals, authorizations, orders, actions,
filings or notifications, which if not obtained or made would not be reasonably
likely to affect performance by the Purchaser of its obligations hereunder or
the consummation of the Transactions.
SECTION 4.04. Investment Purpose. The Purchaser is an "accredited
------------------
investor" as such term is defined in Rule 501(a) of Regulation D promulgated
under the Securities Act, and is acquiring the New Securities for investment,
for its own account, and not with a view to, or for sale in connection with, any
distribution.
32
SECTION 4.05. Financing. The Purchaser has available (through cash on
---------
hand, credit arrangements or otherwise) all the funds necessary for the
performance of all of its obligations under this Agreement, the Bridge Facility
and the Term Loan Facility.
SECTION 4.06. Status of New Securities; Limitations on Transfer and
-----------------------------------------------------
Other Restrictions. The Purchaser hereby acknowledges and agrees with the
------------------
Company that the New Securities have not been registered under the Securities
Act and may not be offered or sold except pursuant to registration under, or to
an exemption from, the registration requirements of the Securities Act and that
the certificates evidencing the New Securities will bear a legend to that
effect. The Purchaser further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or delivery of
the New Securities or the Conversion Shares, other than (i) pursuant to a
Registration Rights Agreement, (ii) pursuant to Rule 144 under the Securities
Act, (iii) pursuant to any transaction that does not require registration under
the Securities Act, (iv) any such arrangements with an Affiliate of the
Purchaser or (v) with the prior written consent of the Company.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business by the Company Pending the Closing.
------------------------------------------------------
During the period from the date hereof to the Closing Date the Company will and
will cause each of its Subsidiaries (i) to conduct its operations in the
ordinary course of business consistent with past practice and (ii) to preserve
intact its current business organizations, keep available the service of its
current officers and employees and preserve its relationships with customers,
suppliers, distributors, lessors, creditors, vendors, contractors and others
having business dealings with it with the intention that its goodwill and
ongoing business shall be unimpaired at the Closing Date. The Company agrees
that it shall not, directly or indirectly, and it will cause each of its
Subsidiaries not to, between the date of this Agreement and the Closing Date,
except as specifically contemplated by any other provision of this Agreement,
unless the Purchaser shall otherwise consent in writing:
(a) take any action which would (i) be reasonably likely to result in
the circumstances described in clauses (i) through (xx) of Section 3.07(a) or
(ii) affect the rights of the Purchaser under the Certificate of Amendment,
assuming for purposes of this clause (ii) that the Closing had occurred, it
being understood that the actions permitted by, and in accordance with, Section
5.01(d) shall not be deemed to materially affect such rights of the Purchaser;
(b) take any action to cause the Company's representations and
warranties set forth in Article III to be untrue;
(c) agree to take any of the actions described in Sections 5.01(a)
and (b) above;
(d) except as set forth in Section 5.01(d) of the Disclosure
Schedule, from the date hereof and prior to the Closing Date (the "Blackout
--------
Period"), issue or sell any equity securities or securities exercisable or
------
convertible into equity securities of the Company or any Company Subsidiary,
33
other than (i) issuances of Common Stock upon the exercise of stock options
outstanding as of the date hereof, issuances of stock options in the ordinary
course of business consistent with past practice pursuant to stock option plans
and employee benefit schemes existing as of the date hereof and issuances of
Common Stock upon exercise of such stock options and (ii) issuances of Common
Stock on conversion of any Series A Preferred Stock or Convertible Debentures
outstanding as of the date hereof; or
(e) acquire or subscribe for shares or securities in any company or
acquire any business or invest in any joint venture, in each case other than
acquisitions or subscriptions for shares or securities in connection with a
Conversion Offering to the extent that the aggregate price of all such
acquisitions or subscriptions by the Company and any of its Subsidiaries does
not exceed $1,000,000 (without taking into account the price of any acquisition
or subscription of such further shares or securities within 30 days of the
relevant Conversion Offering purchased solely using the proceeds of sale of the
same class of shares or securities acquired or subscribed in such Conversion
Offering);
provided, however, that between the date of this Agreement and the Closing Date
-------- -------
the Company shall be permitted to sell, lease, transfer or otherwise dispose of
any sale of Conversion Offering Stock permitted under Section 5.01(e) to the
extent that the aggregate sale price of all such stock sold does not exceed
$1,000,000.
SECTION 5.02. Access to Information. (a) From the date of this
---------------------
Agreement to the Closing Date, the Company shall, and shall cause the Company
Subsidiaries to: (i) provide to the Purchaser (and its officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives (collectively, "Representatives")) access at reasonable times
---------------
upon prior notice to the officers, employees, agents of the Company and Company
Subsidiaries, to the properties, offices and other facilities of the Company and
Company Subsidiaries and to the books and records thereof, including, without
limitation, access to perform environmental assessments and sampling and (ii)
furnish promptly such information concerning the business, properties,
contracts, assets, liabilities, personnel and other aspects of the Company and
the Company Subsidiaries as the Purchaser or its Representatives may reasonably
request.
(b) At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act and prior to two years from the Closing Date, the
Company shall, for the benefit of the holders from time to time of the New
Securities, furnish at its expense, upon request, to the Purchaser information
satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the
Securities Act.
(c) The Company agrees to make available to the Purchaser as soon as
practicable after the end of each fiscal year, and in any event within the time
period within which the Company is or would be required to file its annual
report on Form 10-K with the SEC, an annual report (including a balance sheet
and statements of income, shareholders' equity and cash flows of the Company and
the Company Subsidiaries on a consolidated basis certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending
after the Closing Date), and in any event within the time period within which
the Company is or would be required to file its quarterly reports on Form 10-Q
with the SEC, consolidated summary financial information of the Company and its
34
subsidiaries for such quarter in reasonable detail in accordance with past
practice.
(d) So long as after the Closing the Purchaser or any Affiliate of
the Purchaser is a holder of at least 5% of Diluted Shares, the Company shall
make available to the Purchaser copies of all reports or other communications
(financial or other) furnished to shareholders and members of the Board, and to
make available to the Purchaser (i) as soon as they are generally available,
copies of any reports and financial statements furnished to or filed or required
to be filed with the SEC or any securities exchange on which any class of
securities of the Company is listed and (ii) such additional information
concerning the business and financial condition of the Company as the Purchaser
may from time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and the Company
Subsidiaries are consolidated in reports furnished to its shareholders generally
or to the SEC).
SECTION 5.03. Public Announcements. The initial press release relating
--------------------
to this Agreement shall be a joint press release the text of which has been
agreed to by the Purchaser and the Company. Thereafter, unless otherwise
required by applicable Law or the requirements of the Nasdaq or any stock
exchange, neither the Purchaser nor the Company shall make, or cause to be made,
any press release or public announcement in respect of this Agreement, the
Warrant Agreement, the Registration Rights Agreements or the transactions
contemplated hereby and thereby, without the prior consent of the other party
hereto, and the parties shall cooperate as to the timing and contents of any
such press release or public announcement.
SECTION 5.04. Company's Action. (a) To the extent required by any
----------------
applicable Law or requirements of Nasdaq or any stock exchange, as soon as
practicable after the date hereof, the Company shall prepare and file with the
SEC a proxy statement in connection with the Transactions (such proxy statement,
together with any amendments or supplements thereto, in the form mailed to the
Company stockholders, being a "Proxy Statement"). The Proxy Statement shall not,
---------------
at the date such Proxy Statement is first mailed to the Company's stockholders,
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 were made, not
misleading. All documents that the Company will file with the SEC in connection
with the Transactions will comply as to form and substance in all material
respects with the applicable requirements of the Exchange Act and the rules and
regulations thereunder. The Company shall promptly after the date hereof take
all action necessary in accordance with the Delaware General Corporation Law and
the Certificate of Incorporation and By-laws to convene a stockholders meetings
(the "Stockholders Meeting") to vote on the issuance of the New Securities to
--------------------
the Purchaser, the granting of the Warrants to the Purchaser, the Certificate of
Amendment, the amendment to the 2003 Stock Option Plan of the Company and other
matters related to the Transactions, which shall be held as promptly as
practicable after the date hereof. The Company shall use its best efforts to
solicit from stockholders of the Company proxies in favor of the matters
specified in the previous sentence to be voted on at the stockholders meeting.
The Company shall use its best efforts to ensure that the Proxy Statement
includes the unconditional recommendation of the Board in favor of the
transactions to be voted on at the stockholders meeting. The Company shall
provide to the Purchaser and its Representatives drafts of any materials to be
35
filed with the SEC or mailed to the Company's stockholders and, prior to
submitting or filing such materials with the SEC, shall accept reasonable
comments from the Purchaser and its Representatives.
(b) The Company shall file the Certificate of Amendment with the
Secretary of State of the State of Delaware prior to the Closing Date.
SECTION 5.05. Use of Proceeds. The Company shall use the Purchase
---------------
Price solely for purposes of general working capital, acquisitions and the
build-out of the COMCOR-TV franchise.
SECTION 5.06. Certain Costs and Expenses.
--------------------------
(a) The Company covenants and agrees with the Purchaser that the
Company will pay or cause to be paid the following: (i) the cost of producing
and filing with the SEC of this Agreement, the Warrant Agreement, the
Registration Rights Agreement, the Proxy Statement, closing documents (including
any compilations thereof) and any other documents in connection with the
purchase, sale and delivery of the New Securities; (ii) the cost of preparing
the stock certificates for the New Securities and the Warrant Certificate for
the Warrants, (iii) the cost of filing the Certificate of Amendment with the
Secretary of State of the State of Delaware, (iv) the costs and expenses related
to the Stockholders Meeting and (v) all other costs and expenses incident to the
performance of the Company's obligations hereunder which are not otherwise
specifically provided for in this Section 5.06.
(b) On the Closing Date, the Company will reimburse the Purchaser for
all of the reasonable costs and expenses (including legal fees) incurred by the
Purchaser in connection with the preparation and negotiation of this Agreement
and related agreements and the consummation of the Transactions, including,
without limitation, for the fees and expenses of employing Xxxxxx Xxxxxx, Xxxxxx
Xxxxxx-Xxxxx, Xxxxxxx Xxxxxxx and Xx. Xxx Xxxxxxx Xxxxx as consultants in
connection with the Transactions prior to the Closing Date.
SECTION 5.07. No Shop.
-------
(a) Except as otherwise contemplated herein, in consideration for the
Purchaser committing resources and incurring legal and other expenses in
connection with this Agreement, the Company shall not and shall procure that no
Company Subsidiary, nor shall any of the Company's or any Company Subsidiary's
directors, officers, advisers, employees or agents, directly or indirectly,
solicit, initiate, discuss or facilitate the consideration of any proposal,
offer or approach from any Person other than the Purchaser or provide any
information relating to the sale and purchase of or enter into any transaction
or a series of transactions in connection with (a) the issuance, sale or
transfer to any Person or grant to any Person of a right to acquire any shares
of capital stock or options, warrants or similar instrument or any other
security convertible or exchangeable for shares of capital stock of the Company
or any Company Subsidiary (other than (i) through exercise of any options
outstanding on the date hereof and other than issuance of options to the
employees or directors of the Company and the Company Subsidiaries pursuant to
Benefit Plans existing on the date hereof, or (ii) on conversion of Series A
Preferred Stock or the Convertible Debentures), (b) an acquisition (either in an
asset or stock purchase transaction) of Core Business Assets, (c) a sale or
transfer (either in an asset or stock purchase transaction) of any of the
Company's Core Business Assets or (d) sale of (or an agreement to sell) the
36
Company or any Company Subsidiary, or any merger, consolidation or combination
of the Company or any Company Subsidiary with another entity ("Third Party
Acquisition").
(b) The Company shall promptly (and in any event within one Business
Day after becoming aware thereof) (i) notify the Purchaser in the event the
Company or any Company Subsidiary or any of their respective Affiliates,
officers, directors, employees and agents receives any proposal or inquiry
concerning a Third Party Acquisition, including the terms and conditions thereof
and the identity of the party submitting such proposal, and any request for
confidential information in connection with a potential Third Party Acquisition,
(ii) provide a copy of any written agreements, proposals or other materials the
Company receives from any such Person or group (or its representatives) and
(iii) advise the Purchaser from time to time of the status, at any time upon the
Purchaser's request, and promptly following any developments concerning the
same.
(c) Except as set forth in this Section 5.07(c), the Company Board
shall not withdraw or modify its recommendation of the Transactions or approve
or recommend, or cause or permit the Company to enter into any agreement or
obligation with respect to, any Third Party Acquisition. Notwithstanding the
foregoing, if the Company Board by a majority vote determines in its good faith
judgment, after consultation with and based upon the advice of legal counsel,
that it is required to do so in order to comply with its fiduciary duties, the
Company Board may withdraw its recommendation of the Transactions or approve or
recommend a Superior Proposal, but in each case only (i) after receiving a
Superior Proposal and providing written notice thereof to the Purchaser ("Notice
------
of Superior Proposal"), specifying the material terms and conditions of such
--------------------
Superior Proposal and identifying the Person or group making such Superior
Proposal and (ii) if the Purchaser does not, within five (5) Business Days after
the Purchaser's receipt of the Notice of Superior Proposal, make an offer that
the Company Board by a majority vote determines in its good faith judgment
(following and based, as to the financial terms, on the written advice of the
financial advisor of nationally recognized reputation) to be at least as
favorable to the Company's stockholders as such Superior Proposal; provided,
--------
however, that the Company shall not be entitled to enter into any agreement with
-------
respect to a Superior Proposal unless and until this Agreement is terminated
pursuant to Section 8.01(d) and the Company has paid all amounts due to the
Purchaser pursuant to Section 8.02(b). Any disclosure that the Company Board may
be compelled to make with respect to the receipt of a proposal for a Third Party
Acquisition or otherwise in order to comply with its fiduciary duties will not
constitute a violation of this Agreement; provided, however, that such
-------- -------
disclosure does not state that any action will be taken by the Company Board in
violation of this Agreement.
(d) For purposes of this Agreement, a "Superior Proposal" means a
bona fide proposal for a Third Party Acquisition that is (i) fully-financed,
(ii) contains terms that the Company Board by a majority vote determines in its
good faith judgment (following and based, as to the financial terms, on the
written advice of a financial advisor of nationally recognized reputation) to be
more favorable to the Company's stockholders than the Transactions, (iii) that
the Company Board by a majority vote determines in its good faith judgment
(following and based, as to the financial terms, on the written advice of a
financial advisor of nationally recognized reputation) to be capable of being
completed (taking into account all legal, financial, regulatory and other
aspects of the proposal and the Person making the proposal), (iv) that does not
37
contain a "right of first refusal" or "right of first offer" with respect to any
counter proposal that the Purchaser might make and (v) that does not contain any
financing or "due diligence" condition.
SECTION 5.08. Other Registration Rights. Except for the Existing
-------------------------
Agreements and the registration rights granted in the Stock Option Agreements,
the Company will not grant or agree to grant any demand or incidental
registration rights to any Person other than rights to be granted to the
Purchaser pursuant to the Registration Rights Agreement.
SECTION 5.09. Takeover Statutes. The Board has taken appropriate
-----------------
action so that the provisions of the Business Combination Statute will not,
prior to the termination of this Agreement, apply to the Purchaser or any Person
who as of the date hereof is an Affiliate of the Purchaser.
SECTION 5.10. Termination of Voting Agreement. The Company shall
-------------------------------
terminate and shall use its best efforts to cause COMCOR, Xxxxxx Xxxxx, Jr. and
Xxxxxxx X. Xxxxx to terminate the Voting Agreement date February 23, 2004 among
the Company, COMCOR, Xxxxxx Xxxxx, Jr. and Xxxxxxx X. Xxxxx (the "Voting
------
Agreement"), effective as of the Closing Date.
---------
SECTION 5.11. Further Action; Consents; Filings.
---------------------------------
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its reasonable best efforts to (i) take, or cause to be
taken, all appropriate action and do, or cause to be done, all things necessary,
proper or advisable under applicable Law to consummate the Transactions, (ii)
obtain from Governmental Authorities and any third parties, as may be necessary,
any consents, Licenses, permits, waivers, approvals, authorizations, orders or
estoppel certificates required to be obtained or made by the Purchaser or the
Company or any of their Subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
Transactions and (iii) make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement and the Transactions that
are required under any applicable Law. The parties hereto shall cooperate with
each other in connection with the making of all such filings, including by
providing copies of all such documents to the nonfiling party and its advisors
prior to filing and, if requested, by accepting all reasonable additions,
deletions or changes suggested in connection therewith.
(b) The Company shall promptly deliver to the Purchaser or an
Affiliate thereof (as applicable), and in any event no later than three (3)
Business Days following receipt thereof, copies of all correspondence, filings
and any other submissions with any Governmental Authority, in connection with
the process of renewing the CCTV Licenses.
(c) Upon request by the Purchaser, the Company shall deliver to the
Purchaser or an Affiliate thereof (as applicable) within 30 days after such
request a valid statement described in Treasury Regulation section
1.897-2(g)(1)(ii) and comply with the notice requirements in Treasury Regulation
section 1.897-2(h).
SECTION 5.12. Agreements with Xxxxxx Xxxxxx, Xxxxxx Xxxxxx-Xxxxx,
--------------------------------------------------
Xxxxxxx Xxxxxxx and Xx. Xxx Xxxxxxx Xxxxx.
-----------------------------------------
38
(a) Effective as of the Closing:
(i) The Company shall enter into employment agreements (the
"Employment Agreements") with the following individuals effective as of
---------------------
the Closing: (x) Xxxxxx Xxxxxx, as Chief Executive Officer of the Company;
and (y) Xxxxxx Xxxxxx-Xxxxx, as Chief Financial Officer of the Company.
The form of each such Employment Agreement shall be attached as Exhibit
D-1 and Exhibit D-2, respectively, to this Agreement.
(ii) The Company shall provide coverage for Messrs. Xxxxxx and
Xxxxxx-Xxxxx under the Company's directors' and officers' insurance (or if
the Company does not have any directors' and officers' insurance it shall
obtain and maintain such insurance) and shall indemnify, defend and hold
harmless to the fullest extent permitted under Law, to the extent not
covered by insurance, Messrs. Xxxxxx and Xxxxxx-Xxxxx against all losses,
claims, damages, costs, expenses (including counsel fees and expenses),
settlement, payments or liabilities arising out of or in connection with
any claim, demand, action, suit, proceeding or investigation based in
whole or in part on or arising out of the fact that any such Person is or
was an officer of director of the Company or any Company Subsidiary.
(b) Effective as of the Closing, the Company shall enter into
consulting agreements (the "Consulting Agreements") with the following
---------------------
individuals: (i) Xxxxxxx Xxxxxxx, with respect to network operations consulting
services, and (ii) Xx. Xxx Xxxxxxx Xxxxx, with respect to network technology
consulting services. The form of each such Consulting Agreement shall be
attached as Exhibit E-1 and Exhibit E-2, respectively, to this Agreement.
(c) Effective as of the Closing, the Company shall award 1,161,050
options under the 2003 Stock Option Plan of the Company, representing
approximately 5% of the Company's Diluted Shares (the "Options Grant") as
-------------
follows: 406,368 options to Xxxxxx Xxxxxx, 406,367 options to Xxxxxx
Xxxxxx-Xxxxx, 232,210 options to Xxxxxxx Xxxxxxx and 116,105 options to Xx. Xxx
Xxxxxxx Xxxxx.
SECTION 5.13. Reporting Status; Nasdaq Listing.
--------------------------------
(a) So long as the Purchaser owns any shares of Common Stock, Series B
Preferred Stock or Warrants, which collectively account for at least 5% of the
Diluted Shares, the Company shall timely file, or seek permissible extensions
for filing, all reports required to be filed with the SEC pursuant to the
Exchange Act and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination.
(b) So long as the Purchaser owns any shares of Common Stock, Series B
Preferred Stock or Warrants, which collectively account for at least 5% of the
Diluted Shares, the Company shall use reasonable efforts such that the Common
Stock will be continue to be quoted on Nasdaq, or on any other principal
securities exchanges and markets, if any, on which shares of Common Stock are
then listed, and shall comply in all respects with the reporting, filing and
39
other obligations of the bylaws or rules of the National Association of
Securities Dealers or such other principal securities exchange or market on
which shares of Common Stock are then listed. Upon conversion in whole or in
part of the Series B Preferred Stock by the Purchaser, the Company shall use its
best efforts to cause the shares of Common Stock into which such shares of
Series B Preferred Stock shall be converted to be approved for listing on
Nasdaq.
SECTION 5.14. Corporate Governance.
--------------------
(a) The Company shall use its best efforts to cause the Board to
appoint the Purchaser Directors and the COMCOR Director to the Board, effective
as of the Closing Date. Following such appointment, the Company shall use its
best efforts to support the election of the Purchaser Directors and the COMCOR
Director to the Board at the next annual general meeting of stockholders of the
Company. The Company shall obtain the resignations of Xxxxxxx X. Xxxxx, Xxxxx X.
Xxxxxxx, Xxxxxx XxXxxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxxxxx Vladislavlev from the
Board, effective as of the Closing Date; provided, however, that the Company
shall or shall use its best efforts to cause the Board to appoint Xxxxxxx X.
Xxxxx as an observer to the Board for a two-year period or as otherwise mutually
agreed by the Parties and shall reimburse Xxxxxxx X. Xxxxx for the reasonable,
documented travel-related costs and expenses that he incurs in connection with
his attendance at Board meetings, subject to the discretion of the Board
exercising its fiduciary and other duties and rights under applicable Law.
(b) The Company shall use its best efforts to cause the Board to
appoint Xxxxxx Xxxxxxxx as the Chairman of the Board, effective as of the
Closing Date.
(c) For so long as the Purchaser holds at least 10% of the
outstanding shares of Common Stock, the Board shall use its best efforts (i) to
appoint as Chairman of the Board a Person nominated by the Purchaser for such
position and (ii) to appoint to each committee of the Board at least one
Director who has been nominated to the Board by the Purchaser.
SECTION 5.15. COMCOR-TV Corporate Governance.
------------------------------
(a) The Company shall take all necessary action to call an
extraordinary meeting of the shareholders of COMCOR-TV on the Closing Date (the
"COMCOR-TV Shareholder Meeting"). At the COMCOR-TV Shareholder Meeting, the
-----------------------------
Company shall take the following actions, as the direct and indirect shareholder
of COMCOR-TV, all of which shall be effective as of the Closing Date, (i) to
dissolve the entire Board of Directors of COMCOR-TV (the "COMCOR-TV Board"),
---------------
(ii) to elect the following individuals as members of the COMCOR-TV Board:
Xxxxxx Xxxxxx, Xxxxxx Xxxxxx-Xxxxx, Xxxx Xxxxxx, Xxxxxxxx Xxxxxxx and Xxxxxxx
Xxxxx (the "New COMCOR-TV Board"), (iii) to appoint or to use its best efforts
-------------------
to cause the COMCOR-TV Board to appoint Xxxxxx Xxxxxx as Chairman of the COMCOR-
TV Board and (iv) to adopt an amended and restated charter of COMCOR-TV that
shall provide, among other things, that (A) the General Director of COMCOR-TV
(the "General Director") shall report to the New COMCOR-TV Board on a regular
----------------
basis, (B) all line managers who report to the General Director of COMCOR-TV
provide dotted line reports to the Chairman of the New COMCOR-TV Board on a
regular basis, (C) all COMCOR-TV Board actions shall be taken by a simple
majority vote, and (D) the New COMCOR-TV Board shall have a veto right over all
significant operational decisions of COMCOR-TV.
40
(b) During the six month period commencing on the Closing Date, the
Company shall not take any action to dissolve or otherwise remove any of the
members of the New COMCOR-TV Board.
(c) The Company shall use its best efforts to integrate Xxxxxx Xxxxxx,
Xxxxxx Xxxxxx-Xxxxx, Xxxxxxx Xxxxxxx and Xx. Xxx Xxxxx Xxxxxxx with the existing
management team of COMCOR-TV and to maintain the functional portfolios of
COMCOR-TV's existing managers.
SECTION 5.16. New Strategic Services Agreement. The Purchaser shall
--------------------------------
assist the Company in negotiating and the Company shall use its best efforts to
negotiate on behalf of COMCOR-TV a new Strategic Services Agreement, replacing
the Strategic Services Agreement that is in effect on the date hereof, with
COMCOR that is in form and substance reasonably satisfactory to the Purchaser
(the "New MFON Agreement").
------------------
SECTION 5.17. Relocation.
----------
Promptly following the Closing, the Company shall relocate its entire
operations to the premises of COMCOR-TV's headquarters in Moscow and shall
minimize its presence in the United States.
ARTICLE VI
CONDITIONS
SECTION 6.01. Conditions to Each Party's Obligations to Effect the
----------------------------------------------------
Transactions. The respective obligations of each party hereto to effect the
------------
Transactions are subject to the following conditions having been satisfied (or
waived by the parties) on or prior to the Closing Date:
(a) Proxy Statement. The Proxy Statement shall have been cleared by
---------------
the SEC and shall not be the subject of any stop order.
(b) Company Stockholder Approval. The issuance of the New Securities
----------------------------
to the Purchaser, the granting of the Warrants to the Purchaser, the amendment
of the Certificate of Incorporation in accordance with the Certificate of
Amendment and any other matters related to the Transactions required to be
approved by stockholders of the Company shall have been approved and adopted by
the requisite vote of the stockholders of the Company;
(c) No Order. No Governmental Authority shall have enacted,
--------
threatened, issued, promulgated, enforced or entered any Governmental Order that
is then in effect, pending or threatened and has, or would have, the effect of
prohibiting, restraining, enjoining or restricting the consummation of the
Transactions;
(d) Governmental Approvals. All clearances required from the Russian
----------------------
Antimonopoly Authority or any other merger control, competition or antitrust
authority, which has jurisdiction over the Transactions shall have been
obtained; neither the Russian Antimonopoly Authority nor any other relevant
authority shall have intervened, or indicated that it is contemplating
41
intervening, in a way that would or might reasonably be expected to make the
Transactions or their implementation void, unenforceable and/or illegal or
directly or indirectly restrain, restrict, prohibit, delay or otherwise
interfere with the implementation thereof, or impose additional conditions or
obligations with respect thereto, or otherwise challenge or hinder the
transactions or their implementation;
(e) Other Regulatory Approvals. All other necessary notifications
--------------------------
and filings in respect of the Transactions shall have been made and any
governmental or regulatory notices, approvals, filings or other requirements
necessary to consummate the Transactions shall have been given, made, obtained
or complied with, as applicable, and all consents, approvals or other
authorizations required with respect to the Transactions shall have been
obtained whether in the Russian Federation or elsewhere; and
(f) Term Loan Facility. The Company shall have delivered a
------------------
Utilization Request (as defined in the Term Loan Facility), duly completed
other than with respect to the satisfaction of paragraph 4(d) of Part I of
Schedule 2 to the Term Loan Facility.
SECTION 6.02. Conditions to the Obligations of the Company to Effect
------------------------------------------------------
the Transactions. The obligations of the Company to effect the Transactions are
----------------
subject to the following conditions having been satisfied (or waived by the
Company) on or prior to the Closing Date:
(a) Representations, Warranties and Covenants. The representations
-----------------------------------------
and warranties of the Purchaser contained in this Agreement shall have been
true and correct when made and true and correct in all material respects as of
the Closing Date, with the same force and effect as if made as of the Closing
Date, other than such representations and warranties as are made as of another
date, which shall be true and correct as of such date, if earlier than the
Closing Date (provided, however, that if any portion of any representation or
-------- -------
warranty is already qualified by materiality, for purposes of determining
whether this Section 6.02(a) has been satisfied with respect to such portion
of such representation or warranty, such portion of such representation or
warranty as so qualified must be true and correct in all respects), and the
covenants and agreements contained in this Agreement to be complied with by the
Purchaser on or before the Closing Date shall have been complied with in all
material respects; and
(b) Deliveries. The Purchaser shall have delivered to the Company
----------
all the items listed in Section 2.05 (b) through (d).
SECTION 6.03. Conditions to the Purchaser's Obligations to Effect the
-------------------------------------------------------
Transactions. The obligations of the Purchaser to effect the Transactions are
------------
subject to the following conditions having been satisfied (or waived by the
Purchaser) on or prior to the Closing Date:
(a) Representations, Warranties and Covenants. The representations
-----------------------------------------
and warranties of the Company contained in this Agreement shall have been true
and correct when made and true and correct in all material respects as of the
Closing Date, with the same force and effect as if made as of the Closing Date,
other than such representations and warranties as are made as of another date,
which shall be true and correct as of such date, if earlier than the Closing
42
Date (provided, however, that if any portion of any representation or warranty
is already qualified by materiality, for purposes of determining whether this
Section 6.03(a) has been satisfied with respect to such portion of such
representation or warranty, such portion of such representation or warranty as
so qualified must be true and correct in all respects), and the covenants and
agreements contained in this Agreement to be complied with by the Company on or
before the Closing Date shall have been complied with in all material respects;
(b) Material Adverse Effect. Since the date hereof, there shall have
-----------------------
been no events, changes or effects, individually or in the aggregate, with
respect to the Company that constitutes a Material Adverse Effect on the
Company;
(c) COMCOR-TV Licenses. COMCOR-TV shall have obtained from the
------------------
appropriate Governmental Authority (i) renewal for its License for the
provision of TV and sound programs transmission services through cable TV
network (license number 12939), (ii) renewal for its License for the provision
of telematic services (license number 12675), (iii) renewal its License for
the provision of data transmission services (license number 12651) and (iv) a
license for broadcasting over the MFON (collectively, the "CCTV Licenses").
-------------
(d) Cancellation of COMCOR-TV Preferred Shares. COMCOR-TV shall have
------------------------------------------
exchanged all of the 2,121 shares of convertible preferred stock, par value
RUR 10 per share, of COMCOR-TV issued to COMCOR in exchange for 220,879 shares
of Common Stock of the Company.
(e) New MFON Agreement. COMCOR-TV and COMCOR shall have entered into
------------------
the New MFON Agreement.
(f) Deliveries. The Company shall have delivered to the Purchaser
----------
all the items listed in Section 2.04 (c) through (o).
(g) Directors' & Officers' Insurance. The Company shall obtain and
--------------------------------
maintain in full force and effect policies of directors' and officers'
insurance in form, substance and amount reasonably satisfactory to the
Purchaser.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the Company and the Purchaser contained in
this Agreement shall survive until the second anniversary of the Closing Date,
except that (i) all representations and warranties contained in Section 3.02
shall survive indefinitely, (ii) all representations and warranties contained
in Sections 3.10 and 3.18 shall survive until the fifth anniversary of the
Closing Date and (iii) all representations and warranties of the Company as to
any Tax Claim shall survive until one year after assessment of the liability
to which any such Tax Claim may relate is barred by all applicable statutes of
limitation (taking into account any applicable waivers or extensions). If
written notice of a claim has been given prior to the expiration of the
applicable representations and warranties by the Company or the Purchaser,
43
then the relevant representations and warranties of the other party shall
survive as to such claim, until such claim has been finally resolved.
SECTION 7.02. Indemnification.
---------------
(a) The Purchaser, its Affiliates and its successors and assigns and
the officers, directors, employees and agents of the Purchaser, its Affiliates
and its successors and assigns shall be indemnified and held harmless by the
Company for any and all Liabilities, losses, damages, claims, costs and
expenses, interest, awards, judgments and penalties (including, without
limitation, reasonable attorneys' fees and expenses) suffered or incurred by
them (including, without limitation, any Action brought or otherwise initiated
by any of them) (hereinafter, a "Purchaser Loss") arising out of or resulting
--------------
from:
(i) the breach of any representation or warranty made by the Company
contained in this Agreement; or
(ii) the breach of any covenant or agreement by the Company
contained in this Agreement.
The amounts of any indemnification pursuant to this Section
7.02(a) shall be increased by an additional amount to reflect an appropriate
gross-up to compensate the Purchaser for its indirect participation as a holder
of capital stock of the Company in any indemnification payment made pursuant to
this Section 7.02(a).
(b) The Company, its Affiliates and its successors and assigns and
the officers, directors, employees and agents of the Company, its Affiliates
and its successors and assigns shall be indemnified and held harmless by the
Purchaser for any and all Liabilities, losses, damages, claims, costs and
expenses, interest, awards, judgments and penalties (including, without
limitation, reasonable attorneys' fees and expenses) suffered or incurred by
them (including, without limitation, any Action brought or otherwise initiated
by any of them) (hereinafter, a "Company Loss", and each of a Company Loss and
------------
a Purchaser Loss is hereinafter referred to as a "Loss" with respect to such
----
party) arising out of or resulting from:
(i) the breach of any representation or warranty made by the
Purchaser contained in this Agreement; or
(ii) the breach of any covenant or agreement by the Purchaser
contained in this Agreement.
(c) Whenever a claim shall arise for indemnification under this
Article VII, the party entitled to indemnification (the "Indemnified Party")
-----------------
shall promptly give notice to the other party (the "Indemnifying Party") of
------------------
any matter that the Indemnified Party has determined has given or could give
rise to a right of indemnification under this Agreement, but in no event later
than 30 days after the Indemnified Party first learns of such claim, stating
the amount of the Loss, if known, and method of computation thereof, and
containing a reference to the provisions of this Agreement in respect of which
such right of indemnification is claimed or arises. The obligations and
Liabilities of the Indemnifying Party under this Article VII with respect to
Losses arising from claims of any third party which are subject to the
indemnification provided for in this Article VII ("Third Party Claims") shall
------------------
44
be governed by and contingent upon the following additional terms and
conditions: if an Indemnified Party shall receive notice of any Third Party
Claim, the Indemnified Party shall give the Indemnifying Party notice of such
Third Party Claim following receipt by the Indemnified Party of such notice in
the time frame provided above; provided, however, that in the absence of actual
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and material prejudice to the Indemnifying Party, the failure to provide such
notice shall not release the Indemnifying Party from any of its obligations
under this Article VII and shall not relieve the Indemnifying Party from any
other obligation or Liability that it may have to any Indemnified Party
otherwise than under this Article VII. The Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention
to do so to the Indemnified Party within ten days of the receipt of such notice
from the Indemnified Party; provided, however, that, if there exists or is
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reasonably likely to exist a conflict of interest that would prevent the same
counsel from representing both the Indemnified Party and the Indemnifying
Party, then the Indemnified Party shall be entitled to retain its own counsel
at the expense of the Indemnifying Party. In the event the Indemnifying Party
exercises the right to undertake any such defense against any such Third Party
Claim as provided above, the Indemnified Party shall cooperate with the
Indemnifying Party in such defense and make available to the Indemnifying
Party, at the Indemnifying Party's expense, all witnesses, pertinent records,
materials and information in the Indemnified Party's possession or under the
Indemnified Party's control relating thereto as is reasonably required by the
Indemnifying Party. Similarly, in the event the Indemnified Party is, directly
or indirectly, conducting the defense against any such Third Party Claim, the
Indemnifying Party shall cooperate with the Indemnified Party in such defense
and make available to the Indemnified Party, at the Indemnifying Party's
expense, all such witnesses, records, materials and information in the
Indemnifying Party's possession or under the Indemnifying Party's control
relating thereto as is reasonably required by the Indemnified Party. No such
Third Party Claim may be settled by the Indemnifying Party without the prior
written consent of the Indemnified Party. No party shall be entitled to
indemnification under this Section 7.02 if such party receives reasonable
express written notice of a breach of any representation, warranty, covenant
or agreement and such party would be entitled to terminate this Agreement
pursuant to the terms hereof in respect of such breach and fails to do so.
SECTION 7.03. Limits on Indemnification. Notwithstanding anything to
-------------------------
the contrary contained in this Agreement, (i) the maximum amount of
indemnifiable Purchaser Losses that may be recovered by the Purchaser from the
Company arising out of or resulting from the causes enumerated in Section 7.02
shall be an amount equal to (x) the Purchase Price plus (y) an amount equal to
the aggregate Exercise Price (as such term is defined in the Warrant Agreement)
paid by the Purchaser to the Company in connection with the exercise of
Warrants, (ii) no claim may be made against the Company for indemnification
pursuant to Section 7.02 with respect to any individual item of a Purchaser
Loss, unless such item of Purchaser Loss exceeds $25,000 and (iii) no claim
may be made against the Company pursuant to Section 7.02 unless the aggregate
of all such Purchaser Losses shall exceed $200,000, in which case the Company
shall then be required to pay or be liable for the full amount of Purchaser
Losses.
ARTICLE VIII
TERMINATION
45
SECTION 8.01. Termination. This Agreement may be terminated and the
-----------
other transactions contemplated by this Agreement may be abandoned at any
time, notwithstanding any requisite approval and adoption of this Agreement and
the Transactions, as follows:
(a) by mutual written consent of the Purchaser and the Company;
(b) by the Purchaser if a Material Adverse Effect shall have
occurred prior to the Closing;
(c) by either the Purchaser or the Company if Closing shall not have
occurred on or prior to March 31, 2005;
(d) by the Purchaser if the Company Board shall have recommended to
the Company's stockholders a Superior Proposal or the Company Board shall have
withdrawn or adversely modified its approval or recommendation of the
Transactions;
(e) by the Purchaser or the Company, if all the conditions set forth
in Article VI have been satisfied or waived by the appropriate Party, and the
Purchaser does not fund the Purchase Price within ten (10) Business Days of
such satisfaction or waiver;
(f) by the Purchaser in the event that the condition set forth in
Section 6.03(e) has not been satisfied or waived by the Purchaser;
(g) by the Company on March 31, 2005, if a New MFON Agreement has
not been approved by at least a majority of three-fourths (3/4) of the members
of the Board (rounded to the nearest whole number if three-fourths (3/4) of the
members of the Board results in a whole number plus a fraction); and
(h) by either the Purchaser or the Company in the event that any
Governmental Authority shall have issued an order, decree or ruling or taken
any other action restraining, enjoining or otherwise prohibiting the
consummation of the Transactions and such order, decree, ruling or other action
shall have become final and nonappealable.
SECTION 8.02. Effect of Termination.
---------------------
(a) In the event of termination of this Agreement pursuant to
Section 8.01, this Agreement shall forthwith become void, there shall be no
liability under this Agreement on the part of the Purchaser or the Company or
any of their respective officers or directors, and all rights and obligations
of each party hereto shall cease; provided, however, that nothing herein shall
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relieve any party from liability for the breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement; provided,
--------
further, that Sections 5.03, 5.06, 8.02, 9.02, 9.09 and 9.10 shall survive the
-------
termination of this Agreement.
(b) The Purchaser and the Company agree that if this Agreement is
terminated by the Purchaser pursuant to Section 8.01(d), the Purchaser would
suffer direct and substantial damages, which damages cannot be determined with
reasonable certainty. To compensate the Purchaser for such damages, the Company
shall pay to the Purchaser the amount of $1.5 million immediately upon the
46
termination of this Agreement by the Purchaser pursuant to Section 8.01(d). The
Company hereby waives any right to set-off or counterclaim against such amount.
(c) If the Purchaser terminates this Agreement pursuant to Section
8.01(e), the Purchaser shall pay to the Company (i) up to $200,000 for
documented out-of-pocket costs and expenses, including, without limitation,
fees and disbursements of counsel, financial advisors and accountants, incurred
by the Company in connection with this Agreement and the Transactions, upon
delivery by the Company to the Purchaser of receipts and/or invoices for such
actual costs and expenses and (ii) $550,000, immediately upon the termination
of this Agreement by the Purchaser pursuant to Section 8.01(e) (collectively
(i) and (ii), the "Termination Fee"). If the Purchaser does not pay the
---------------
relevant portion of the Termination Fee within ten (10) Business Days from the
date that such portion of the fee becomes due and payable, the Company may
set-off the Termination Fee against any amount due and payable by the Company
to the Lender under the Bridge Facility.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Amendment and Waiver. No amendment of any provision of
--------------------
this Agreement shall be valid unless the same shall be in writing and signed
by the parties. Either party to this Agreement may (i) extend the time for the
performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered by the other party pursuant
hereto or (iii) waive compliance with any of the agreements or conditions of
the other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver
of any of such rights.
SECTION 9.02. Expenses. Except as otherwise specified in this
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Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the Transactions shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred.
SECTION 9.03. Notices. All notices and other communications hereunder
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shall be in writing and shall be deemed duly given (i) on the date of delivery
if delivered personally, (ii) on the date of confirmation of receipt (or, the
first business day following such receipt if the date is not a business day or
the receipt is after 5 p.m.) of transmission by facsimile, or (iii) on the date
of confirmation of receipt (or, the first business day following such receipt
if the date is not a business day or the receipt is after 5 p.m.) if delivered
by courier. Subject to the foregoing, all notices hereunder shall be delivered
as set forth below, or pursuant to such other instructions as may be designated
in writing by the party to receive such notice:
47
(a) If to the Company:
Moscow CableCom Corp.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Facsimile: x0-000-000-0000
Attention: Xxxxxx Xxxxx, Jr.
with a courtesy copy (which shall not constitute notice
to the Company) to:
Xxxxxx X. Xxxxx, Xx.
00 Xxxxxxxxxx Xxxx
Xxxx Xxxx, XX 00000
Facsimile: x0-000-000-0000
(b) If to the Purchaser:
Columbus Nova Investments VIII Ltd.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxx
Attention: Xxxx Xxxxxx
Facsimile: x0-000-000-0000
with a courtesy copy (which shall not constitute notice
to the Purchaser) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xx xxx Xxxxx 0
00000 Xxxxxxxxx xx Xxxx
Xxxxxxx
Facsimile: x00-00-00000000
Attention: Xxxxxx Xxxxxxx
SECTION 9.04. Headings. The descriptive headings contained in this
--------
Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 9.05. Severability. If any provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any Law or public policy,
all other provisions of this Agreement shall nevertheless remain in full force
and effect and the application of such provision to other Persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto so long as the economic or legal substance of the Transactions
is not affected in any manner materially adverse to any party. Upon such
48
determination that any provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the Transactions are consummated
as originally contemplated to the greatest extent possible.
SECTION 9.06. Entire Agreement. This Agreement, the Warrant Agreement
----------------
and the Registration Rights Agreement constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and thereof and
supersede all prior agreements and undertakings, both written and oral, among
the Company and the Purchaser with respect to the subject matter hereof and
thereof.
SECTION 9.07. Assignment. This Agreement may not be assigned by the
----------
Purchaser without the express written consent of the Company, except that the
Purchaser may assign this Agreement to an Affiliate of the Purchaser without
the consent of the Company. This Agreement may not be assigned by the Company.
SECTION 9.08. No Third Party Beneficiaries. Except for the provisions
----------------------------
of Article VII relating to Indemnified Parties and Section 5.12 with respect
to the Employment Agreements, Consulting Agreements and the Option Grant, this
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their respective successors and assigns, and nothing herein, express
or implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement. No purchaser of any of the New Securities from the Purchaser
shall be deemed a successor or assign with respect to this Agreement by reason
merely of such purchase.
SECTION 9.09. Governing Law.
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(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to any choice
or conflict of Law provision or rule (whether of the State of New York or any
other jurisdiction) that would cause the application of the Laws of any
jurisdiction other than the State of New York.
(b) Each of the parties hereby irrevocably and unconditionally
submits, for itself and its property, to the jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court for the Southern District of New York, and any appellate court
from any thereof, in respect of actions brought against it as a defendant, in
any action, suit or proceeding arising out of or relating to this Agreement or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action, suit or proceeding may be heard and determined in such courts.
Each of the parties hereto agrees that a final judgment in any such action,
suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.
(c) Each of the parties irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any action, suit or
proceeding arising out of or relating to this Agreement in any court referred
49
to in Section 9.09(b). Each of the parties hereby irrevocably waives, to the
fullest extent permitted by Law, the defense of an inconvenient forum to the
maintenance of such action, suit proceeding in any such court.
SECTION 9.10. Counterparts. This Agreement may be executed and
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delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
SECTION 9.11. Specific Performance. The parties agree that
--------------------
irreparable harm would occur in the event that any of the agreements and
provisions of this Agreement were not performed fully by the parties in
accordance with their specific terms or conditions or were otherwise breached,
and that money damages are an inadequate remedy for breach of this Agreement
because of the difficulty of ascertaining and quantifying the amount of damage
that would be suffered by the parties in the event that this Agreement were not
performed in accordance with its terms or conditions or were otherwise
breached. It is accordingly hereby agreed that the parties shall be entitled to
an injunction or injunctions to restrain, enjoin and prevent breaches of this
Agreement by the other party and to enforce specifically such terms and
conditions of this Agreement, such remedy being in addition to and not in lieu
of any other rights and remedies to which the other party is entitled to at
law or in equity.
SECTION 9.12. Interpretation. References in this Agreement to
--------------
articles, sections, paragraphs, clauses, schedules, annexes and exhibits are to
articles, sections, paragraphs, clauses, schedules, annexes and exhibits in or
to this Agreement unless otherwise indicated. Whenever the context may require,
any pronoun includes the corresponding masculine, feminine and neuter forms.
Any term defined by reference to any agreement, instrument or document has the
meaning assigned to it whether or not such agreement, instrument or document is
in effect. Any reference to any federal, state, local or foreign statute or Law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The words "include",
"includes" and "including" are deemed to be followed by the phrase "without
limitation". Unless the context otherwise requires, any agreement, instrument
or other document defined or referred to herein refers to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified from time to time. Unless the context otherwise requires,
references herein to any Person include its successors and assigns.
SECTION 9.13. Construction. The parties have participated jointly in
------------
the negotiation and drafting of this Agreement. In the event that an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
MOSCOW CABLECOM CORP.
By: /s/ Xxxxxx X. Xxxxx, Xx.
-----------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chief Executive Officer
COLUMBUS NOVA INVESTMENTS VIII LTD.
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxxx
Title: Managing Partner
51