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EXECUTION COPY
EXHIBIT 99.8
Modification Agreement ("Plicom Option Modification
Agreement") dated as of May 18, 1999 by and among PLD Telekom, Inc., a Delaware
corporation (the "Company"), Metromedia International Group, Inc., a Delaware
corporation (the "Parent"), Technocom Limited, a company incorporated under the
Irish Companies Acts 1963 to 1990 with registered number 183622 ("Technocom"),
Plicom Limited, a company incorporated under the Irish Companies Acts 1963 to
1990 with registered number 214427 ("Plicom"), Elite International Limited, a
company incorporated under the Irish Companies Act of 1963 to 1990 with
registered number 178152 ("Elite"), Xxxx Xxxxxx and Xxxxx Xxxxxxxx.
WHEREAS, pursuant to the Agreement and Plan of Merger, dated
as the date hereof (the "Merger Agreement"), by and among the Company, the
Parent and Moscow Communications, Inc., a Delaware corporation and wholly owned
subsidiary of the Parent ("Merger Sub"), Merger Sub will merge with and into the
Company (the "Merger"), and following such Merger, the Company will become a
wholly-owned subsidiary of the Parent;
WHEREAS, the parties hereto desire to modify and then
terminate (i) the Put and Call Option Agreement, dated December 28, 1994, as
amended, between the Company and Plicom (the "Put Agreement"), (ii) the Share
Purchase Agreement, dated as of November 26, 1997, between Plicom, Technocom,
the Company and Xxxx Xxxxxx, (iii) the Consultancy Agreement, dated December 28,
1994, as amended, between Technocom, Plicom and Xxxx Xxxxxx, (iv) the Promissory
Note, dated November 26, 1997, executed by the Company in favor of Plicom (the
"Note"), (v) the Promissory Note, dated the date hereof, executed by the Company
in favor of Plicom (the "New Note"), (vi) the Subscription and Shareholders
Agreement, dated December 28, 1994, as amended, between the Company, Plicom,
Elite, Technocom, Xxxx Xxxxxx and Xxxxx Xxxxxxxx (the "Shareholders Agreement"),
and (vii) the Consultancy Agreement, dated December 28, 1994, between the
Company, Plicom and Xxxx Xxxxxx (collectively, the "Agreements");
WHEREAS, in connection with and as a condition precedent to
the obligations of the Parent and the Merger Sub to effect the Merger and
consummate the other transactions contemplated by the Merger Agreement, the
parties are entering into this Plicom Option Modification Agreement in order to
modify and then terminate the Agreements; and
WHEREAS, capitalized terms used but not defined herein shall
have the meanings set forth in the Merger Agreement.
NOW THEREFORE, the parties hereto hereby agree as follows:
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1. Purchase and Sale. Notwithstanding anything to the
contrary contained in any of the Agreements, on the Closing Date (as defined in
the Merger Agreement), in reliance on the representations and warranties and
subject to the terms and conditions set forth herein:
(a) the Company shall, and the Parent shall
procure that the Company shall, pay to Plicom the sum of US $8,750,000 by wire
transfer to an account designated in advance by Plicom and Plicom shall, with
the prior consent of the Company pursuant to clause 7.2(a) of the Shareholders
Agreement, which consent is hereby given, sell, transfer and assign to the
Company its remaining 29 Ordinary Shares of Technocom (the "Shares") free and
clear of all security interests, pledges, rights of first refusal, agreements,
claims, charges, liens, encumbrances, options or rights of pre-emption
("Liens");
(b) The Company and Technocom shall, and the
Parent shall procure that the Company shall, pay or procure payment of the
following sums due as at June 30, 1999 to Plicom for itself and/or as trustee
for Xxxx Xxxxxx to the extent not already paid:
(i) US $50,000.00 (representing US
$25,000.00 x 2 for the first two
quarters of 1999), together with an
additional US $25,000 for each
quarter (or part thereof) commencing
on July 1, 1999 until and including
the Closing Date in respect of the
PLD consultancy agreement;
(ii) US $49,999.98 (representing US
$16,666.66 x 3 for April, May and
June 1999), together with an
additional US $16,666.66 for each
month (or part thereof) commencing
with July 1999 and ending with the
month in which the Closing takes
place in respect of the Technocom
consultancy agreement;
(iii) US $35,196.12 (representing US
$10,500.00 x 3 for the last quarter
of 1998 and the first two quarters
of 1999 plus US $3,696.12 as
expenses), together with an
additional US $10,500 for each
quarter (or part thereof) commencing
on July 1, 1999 until and including
the Closing Date in respect of
office expenses;
(iv) US $360,000.00 in respect of the
repayment of a loan to cover a
settlement between Vimpelkom and
MTR, subject to receipt by the
Parent of a copy of a satisfactory
complete release from Vimpelkom; and
(v) any sums paid by Plicom under the
guarantees or undertakings referred
to in Section 1(c) below.
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(c) At the Closing, the Parent and the Company
shall procure that Plicom is released from any guarantees or undertakings that
Plicom has issued or entered into at the request, or with the written consent,
of the Parent, the Company or any of the Company's subsidiaries or affiliates in
respect of equipment ordered by any such subsidiaries or affiliates from Rosh
Telecom Limited or ECI Telecom Limited, and the Parent or the Company shall
issue or arrange to be issued such guarantees or other credit support as may be
required to replace any such Plicom guarantees or undertakings. Furthermore, the
Parent or the Company shall reimburse Plicom for any amounts paid under any such
guarantees or undertakings prior to the Closing.
(d) Plicom shall deliver to the Company a
transfer in respect of the Shares duly executed by it in favor of the Company
and a certificate for the Shares and any other documents which may be required
to give good title to the Shares and to enable the Company to procure
registration of the same in its name or as it may direct; and
(e) All of the Agreements shall terminate, be
void and of no further force and effect.
2. Registration. The Company shall, following the
Closing Date, promptly deliver to the Revenue Commissioners of Ireland the share
transfer referred to in Section 1(d) above for assessment of stamp duty and
shall promptly pay the duty thus assessed. Prior to the registration of such
duly stamped stock transfer form in the register of shareholders of Technocom,
Plicom shall, in respect of the Shares, cooperate in any manner required by the
Company for the convening, holding at short notice and conduct of general
meetings of Technocom, execute on a timely basis all proxy forms, appointments
of representatives, documents of consent to short notice and such others that
the Company may reasonably require and shall generally act in all respects as
the nominee and at the direction of the Company in respect of the Shares and all
rights and interests attached thereto.
3. Representations and Warranties. In order to induce
the Company to purchase the Shares, Plicom hereby represents and warrants to the
Company as follows:
(a) Organization. Plicom is a corporation duly
organized, validly existing and in good standing under the laws of Ireland.
(b) Due Authorization and Execution. Plicom has
all necessary corporate power and authority to enter into this agreement and to
consummate the transactions contemplated herein. No additional corporate
proceeding or action on the part of Plicom is necessary to authorize and approve
the execution and delivery of this agreement or the performance by Plicom of its
obligations under this agreement other than actions already taken. This
agreement has been duly executed and delivered by Plicom and, assuming due
execution and delivery by the Company, constitutes the legal, valid and binding
obligation of Plicom enforceable against Plicom in accordance with its terms.
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(c) Conflicts. Neither the execution and
delivery of, nor the consummation of the transactions contemplated in, this
agreement will result in any of the following: (a) a violation of the charter,
bylaws or other governing instruments of Plicom; (b) a default or an event that,
with notice or lapse of time, or both, would constitute a default, breach or
violation of any contract, agreement, license or instrument to which Plicom is a
party or by which it is bound; (c) an event that would permit any person or
entity to terminate any contract, agreement, license or instrument to which
Plicom is a party relating to the Shares or to accelerate the maturity of any
obligation of Plicom; (d) the creation or imposition of any Lien (as defined
below) upon the Shares of Plicom; (e) a violation or breach of any statute,
ordinance, rule or regulation applicable to Plicom or the Company or any writ,
injunction or decree of any court or governmental instrumentality to which
Plicom or the Company is a party or by which any of its properties is bound; or
(f) the necessity to obtain the consent or approval of, or give notice to or
register with any government or nongovernment third party.
(d) Ownership. Except for the Shares, Plicom
does not own or have any right to acquire any Ordinary Shares of Technocom or
any other shares of capital stock or equity of Technocom.
(e) No Liens. Each of the Shares to be
delivered by Plicom to the Company pursuant to this agreement is duly
authorized, validly issued, fully paid and not subject to preemptive rights and
each such share is owned by Plicom free and clear of all Liens except for those
rights held by the Company under any of the Agreements.
(f) Good Title. The transfer of the Shares from
Plicom to the Company pursuant to Section 1(a) of this Agreement will convey
good and valid title to the Company in and to the Shares, free and clear of all
Liens, except for those rights held by the Company under any of the Agreements.
4. Revenue Matters. Plicom hereby declares for purposes
of the Financial Transfers Act of 1992 of the Republic of Ireland that it is not
resident in any jurisdiction to which financial transfers within the meaning of
such Act are restricted by order of the Minister of Finance in accordance with
the provisions of that Act and does not hold the Shares and will not receive any
part of the consideration hereunder as nominee for any persons that so reside,
and the Company declares for the purpose of such Act that it is not so resident,
it is not acquiring the Shares as nominee for any persons so resident and it is
not to its knowledge controlled directly or indirectly with a person so
resident.
5. Covenants.
(a) Plicom hereby covenants with and undertakes
to the Company that it shall not at any time prior to the Closing Date dispose
or attempt to dispose, transfer or assign any interest in the Shares or grant
any option over or mortgage, charge or otherwise encumber or dispose of the
Shares; provided, that, Plicom may transfer the Shares to any entity owned and
controlled by either Plicom or Xxxx Xxxxxx (which does not need to be an Irish
Company) as long as prior to such transfer such entity agrees to be bound by the
terms and provisions of this
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agreement and enters into an assumption agreement with Parent in a form
reasonably satisfactory to Parent evidencing such agreement to be so bound. The
parties agree that if Plicom transfers the Shares as aforesaid, such transferee
shall be deemed to have assumed all rights and obligations under the Agreements.
From the date hereof until the earlier of (x) the Closing Date or (y) the
termination of this agreement pursuant to Section 6, Plicom agrees that it will
not take any action under either the Put Agreement, the Note or the New Note to
require either the Parent or the Company to purchase the Shares or make any
other payments on the Note or the New Note.
(b) Plicom hereby covenants with and undertakes
to the Company that it will as soon as reasonably practicable notify to the
Company in writing any matter or thing which may arise or become known to it
after the date hereof and prior to the Closing Date which constitutes (or would
with the passage of time constitute) a breach of the representations and
warranties or breach of any of the covenants or undertakings or obligations of
Plicom under this agreement.
(c) Plicom hereby undertakes with the Company at
the request and at the expense of the Company to do or to procure to be done all
such further acts of things and execute or procure to be executed all such
further deeds and documents as may be necessary or desirable on or after the
Closing Date to (i) fully and effectively vest in the Company the legal and
beneficial ownership of the Shares and the benefits of this Agreement and
pending such vesting, Plicom shall, from the Closing Date, hold such Shares and
benefits in trust for the Company and shall receive all monies in connection
therewith as trustee of the Company and shall account to the Company forthwith
upon receipt thereof and (ii) acknowledge that the Agreements have been
terminated.
6. Termination.
(a) This agreement shall be effective so long as
the Merger Agreement is effective and shall terminate in the event that the
Merger Agreement is terminated or expires. The obligations of the parties hereto
under Sections 1 and 2 of this agreement are expressly conditioned upon the
completion of the transactions contemplated by the Merger Agreement. This
Agreement shall in any event terminate at the option of Plicom if the
transactions contemplated under Sections 1 and 2 have not taken place by October
31, 1999.
(b) If any material breach of the
representations, warranties or covenants contained herein shall come to the
attention of either the Company or Plicom before the Closing Date or if any act
or event shall occur which, had it occurred on or before the date hereof, would
have constituted a material breach of the representations, warranties or
covenants set forth herein, then the Company shall at its own election terminate
this agreement and its obligations to purchase the Shares without any liability
to Elite.
7. Consent. Each of Plicom, Elite, Technocom, Xxxx
Xxxxxx and Xxxxx Xxxxxxxx hereby consent, pursuant to the Shareholders
Agreement, to (i) the pledge, pursuant to the Pledge Agreement dated as of the
date hereof (the "Pledge Agreement"), made by the Company in favor of the
Parent, by the Company of 115
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Ordinary Shares of Technocom to the Parent to secure certain loans being made by
the Parent to the Company pursuant to a Bridge Loan Agreement dated the date
hereof, (ii) the transfer of such 115 Ordinary Shares to the Parent in the event
the Parent forecloses on such shares in accordance with the terms of the Pledge
Agreement and (iii) hold a meeting of shareholders of Technocom and vote to
amend Technocom's Articles of Association as promptly as practicable to permit
the pledge of shares of Technocom and the transfer of such shares as
contemplated by the Pledge Agreement. The Parent acknowledges and agrees that
prior to the occurrence of an Event of Default (as defined in the Bridge Loan
Agreement, dated as of the date hereof between the Company and Parent) it shall
have no rights to control the management and operations of Technocom by virtue
of the Pledge Agreement. Parent further agrees that, in the event it forecloses
on the shares of Technocom and takes possession of such shares (i) neither
Parent nor any of Parent's subsidiaries or affiliates will enter into any
transaction with Technocom (including, without limitation, the issuance or
subscription for additional shares of Technocom) that is not consummated on an
arm's length basis, (ii) Parent will not cause Technocom to cease or propose to
cease to carry on its business or be wound up unless Technocom is insolvent, and
(iii) to use its best commercial efforts to ensure that any assignee or
transferee of the Technocom shares foreclosed upon by Parent is bound by the
restrictions set forth in clauses (i) and (ii) of this sentence.
8. Survival; Indemnification.
(a) The representations, warranties and
covenants set forth in this Plicom Option Modification Agreement shall survive
the consummation of the purchase of the Shares hereunder. Plicom hereby
indemnifies and holds harmless the Parent and the Company and their respective
affiliates from any claims, losses, damages, costs, expenses (including
attorney's fees and expenses) arising in connection with the transfer by Plicom
of the Shares pursuant to this agreement that they suffer or incur as a result
of any breach or default of any representation, warranty or covenant set forth
herein.
(b) The total aggregate liability of Plicom and
Xxxx Xxxxxx to all other parties hereto arising out of or in connection with
this agreement shall be limited to the amount of consideration received by
Plicom from the Company pursuant to Section 1(a).
9. Expenses. Each of the parties hereto shall pay its
own fees, expenses and other costs incurred in connection with the negotiation,
execution and delivery of this Agreement.
10. Governing Law. This agreement shall be governed in
all respects by the laws of the State of New York without reference to the
choice of laws principles thereof.
11. Counterparts. This agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one and the same instrument.
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12. No Amendment. No amendment, modification, termination or
waiver or any provision of this agreement shall be effective unless it shall be
in writing and signed by each of the parties to this agreement.
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IN WITNESS WHEREOF, this Plicom Option Modification Agreement
has been duly executed and delivered by the parties hereto as of the date first
written above.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ XXXXXX XXXXXX
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Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
PLD TELEKOM INC.
By: /s/ XXXXX X. X. XXXX
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Name: Xxxxx X. X. Xxxx
Title: Chairman, President and
Chief Executive Officer
PLICOM LIMITED
By: /s/ XXXX XXXXXX
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Name: Xxxx Xxxxxx
Title: Director
TECHNOCOM LIMITED
By: /s/ XXXXX X. X. XXXX
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Name: Xxxxx X. X. Xxxx
Title: Director
/s/ XXXX XXXXXX
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XXXX XXXXXX
ELITE INTERNATIONAL LIMITED
By: /s/ XXXXX XXXXXXXX
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Name: Xxxxx Xxxxxxxx
Title: Director
/s/ XXXXX XXXXXXXX
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XXXXX XXXXXXXX
