EXHIBIT 99.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of July 8, 2004,
by and between COMMUNICORP GROUP LIMITED, a company organized under the laws of
Ireland ("Buyer"), Metromedia International Telecommunications, Inc., a
corporation organized under the laws of Delaware, U.S.A. ("Seller") and
Metromedia International Group, Inc., a corporation organized under the laws of
Delaware, U.S.A. ("Parent").
RECITALS
WHEREAS, Seller owns all of the issued and outstanding shares of MII
(the "Shares");
WHEREAS, MII owns all or some portion of the shares of the Operating
Companies;
WHEREAS, the Operating Companies operate radio stations in various
parts of Europe;
WHEREAS, Seller desires to sell, and Buyer desires to purchase,
Seller's Shares in MII and (to the extent not owned by MII) any shares held
directly or indirectly by Seller or Parent in any of the Operating Companies;
and
WHEREAS, Seller is a wholly owned subsidiary of Parent, which has
agreed to enter into this Agreement for the purposes set out herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein, and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"AFFILIATED GROUP"--with respect to MII and each of the
Operating Companies, shall mean a group of corporations with
which any of the Operating Companies has filed (or was
required to file) consolidated, combined, group, unitary or
similar Tax Returns.
"AFFILIATED GROUP TAX RETURN"--shall mean the Tax Return of
the Parent for any Affiliated Period.
"AFFILIATED PERIOD"--any taxable period for which an
Affiliated Group Tax Return was or is required to have been or
be filed.
"BUSINESS DAYS"--a day (other than a Saturday or Sunday or any
other day on which commercial banks are authorized or required
to close in New York City);
"BUYER"--as defined in the first paragraph of this Agreement.
"BUYER'S GROUP"--the Buyer, any holding company of the Buyer
and any subsidiary of the Buyer or any such holding company.
"BROADCASTING LICENSES"--each of the broadcasting licenses
listed in Exhibit D:
"CLOSING"--as defined in Section 2.3.
"CLOSING DATE"--the date and time as of which the Closing
actually takes place.
"CODE"-- the Internal Revenue Code of 1986, as amended.
"CONSENT"--any approval, consent, ratification, waiver, or
other authorization (including any Governmental
Authorization).
"CONTEMPLATED TRANSACTIONS"--all of the transactions
contemplated by this Agreement, including but not limited to:
(a) the sale of the Shares by Seller to Buyer;
(b) the execution, delivery, and performance of the
Seller's Releases;
(c) the performance by Buyer and Seller of their
respective covenants and obligations under this
Agreement; and
(d) Buyer's acquisition and ownership of the Shares and
exercise of control over MII and the Operating
Companies.
"ENCUMBRANCE"--any right, interest or equity of any person
(including, without limitation, any right to acquire, right of
first refusal, option or right of pre-emption) or any
mortgage, charge, pledge, lien, restriction, assignment,
encumbrance or security or priority interest or arrangement of
whatsoever nature howsoever arising and any other type of
preferential arrangement (including, without limitation,
title, transfer and retention arrangements) having similar
effect.
"ENVIRONMENTAL LAW"--any law, regulation, order, decree,
permit, authorization, opinion, common law or agency
requirement of any jurisdiction relating to: (A) the
protection, investigation or restoration of the environment,
human health and safety, or natural resources, (B) the
handling, use, storage, treatment, presence, disposal, release
or threatened release of any hazardous substance or (C) noise,
odor, wetlands, pollution, contamination or any injury or
threat of injury to persons or property.
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"EXPERT"--an independent firm of accountants of international
repute nominated by the Seller which shall be reasonably
acceptable to the Buyer in the event of (i) Xxxxxxxxx Xxxxxx
being unable to prepare the analysis of Net Assets at Closing
within forty-five days after the Closing Date or (ii) a
dispute arising out of the determination of the Net Assets at
Closing by Xxxxxxxxx Xxxxxx.
"MATERIAL CONTRACT"--any arrangement, agreement, contract or
undertaking which is material in the context of the business
being carried on by MII or any of the Operating Companies or
to the business of MII and the Operating Companies taken as a
whole which involves a capital commitment in excess of US
$50,000 per annum, including but not limited to Broadcasting
Licenses, transmission contracts and arrangements with key
suppliers and customers, all as listed in Section 3.2.10(a) of
the Disclosure Schedule.
"MATERIAL ADVERSE EFFECT"--any material adverse change, event,
circumstance or, development with respect to, or material
adverse effect on (i) the business, assets, liabilities,
capitalization, financial condition, or results of operations
of MII or any of the Operating Companies, or (ii) the ability
of Seller to consummate the Contemplated Transactions; except
that any such change, event, circumstance or development in
respect of, or effect which results from (a) changes that are
the result of economic factors affecting the national,
regional or world economy; (b) changes that are the result of
factors generally affecting the specific industry or markets
in which the Operating Companies compete; (c) any adverse
change, effect or circumstance primarily arising out of or
resulting from the announcement of the Contemplated
Transactions; or (d) changes in law, rule or regulations or
generally accepted accounting principles or the interpretation
thereof shall not be deemed a Material Adverse Effect.
"MII"--Metromedia International Inc., a corporation organized
under the laws of Delaware.
"NET ASSETS"--as at any date shall mean an amount derived by
taking the total assets of MII and the Operating Companies,
excluding inter-company receivables to MII and the Operating
Companies, if any, and subtracting the total liabilities of
MII and the Operating Companies, excluding inter-company
payables to MII and the operating Companies, to be calculated
on the basis of and using the headings set out on Exhibit A,
being a calculation of the actual Net Assets of MII and the
Operating Companies as of March 31, 2004. For the avoidance of
doubt, the parties agree that with respect to the Analysis,
the preparation of the underlying financial results of MII and
the Operating Companies will follow United States generally
accepted accounting principles ("US GAAP") using estimates and
judgments, with respect to the accounting used for the
allowance for doubtful accounts, recognition of revenue, among
others, as consistently applied based on MII accounting
methods currently in effect.
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"NET ASSETS AT CLOSING"--the actual amount of the Net Assets
as at whichever of July 30, 2004 or August 31, 2004, is the
Closing Date, to be calculated in accordance with the
provisions of Clause 2.2(e).
"NET ASSETS BENCHMARK"--Seven Million, Four Hundred Sixty
Eight Thousand, One Hundred Thirty Nine United States Dollars
(US$ 7,468,139) being the projected amount of the Net Assets
as at July 30, 2004, if that date is the Closing Date, a
calculation of which is set out in Exhibit B; or Seven
Million, Two Hundred Fifty Three Thousand, Four Hundred Fifty
One United States Dollars (US$ 7,253,451) being the projected
amount of the Net Assets as at August 31, 2004, if that date
is the Closing Date, a calculation of which is set out in
Exhibit C.
"OPERATING COMPANIES"--shall mean those companies listed on
Exhibit E hereto (individually, an "Operating Company").
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person
will be deemed to have been taken in the "Ordinary Course of
Business" only if:
(a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of
the normal day-to-day operations of such Person;
(b) such action is not required to be authorized by the
board of directors of such Person (or by any Person
or group of Persons exercising similar authority);
and
(c) such action is similar in nature and magnitude to
actions customarily taken in the ordinary course of
the normal day-to-day operations of other Persons
that are in the same line of business as such Person.
"PERSON"--any individual, corporation (including any
non-profit corporation), general or limited partnership,
limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or
Governmental Body.
"RELATED PERSON"--With respect to a specified Person other
than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly
or indirectly under common control with such
specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
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(c) each Person that serves as a director, officer,
partner, executor, or trustee of such specified
Person (or in a similar capacity);
(d) any Person in which such specified Person holds a
Material Interest;
(e) any Person with respect to which such specified
Person serves as a general partner or a trustee (or
in a similar capacity); and
(f) any Related Person of any individual described in
clause (b) or (c).
For purposes of this definition, "Material Interest" means
direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended)
of voting securities or other voting interests representing
greater than 50% of the outstanding voting power of a Person
or equity securities or other equity interests representing
greater than 50% of the outstanding equity securities or
equity interests in a Person.
"RELEVANT BUSINESS"--the ownership and/or operation of radio
stations.
"RESTRICTED PERIOD"--the period commencing on the date of this
Agreement and ending two years from the Closing Date.
"REPRESENTATIVE"--with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or
other representative of such Person, including legal counsel,
accountants, and financial advisors.
"SECURITIES ACT"--the Securities Act of 1933 as amended, and
regulations and rules issued pursuant to that Act.
"SELLER"--as defined in the first paragraph of this Agreement.
"SELLER'S RELEASES"--as defined in Section 2.4.
"SHARES"--as defined in the Recitals of this Agreement.
"SUBSIDIARY"--with respect to a party, any company,
corporation, partnership, joint venture, limited liability
company or other business association or entity, whether
incorporated or unincorporated, of which (i) such party or any
other Subsidiary of such party is a general partner or a
managing member (excluding partnerships, the general
partnership interests of which held by such party and/or one
or more of its Subsidiaries do not have a majority of the
voting interest in such partnership) (ii) such party and/or
one or more of its Subsidiaries holds voting power to elect a
majority of the board of directors or other governing body
performing similar functions or (iii) such party and/or one or
more of its Subsidiaries, directly or indirectly, owns or
controls more than 50% of the equity, membership, partnership
or similar interests.
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"TAX" OR "TAXES"--all taxes, charges, fees, levies, duties or
other similar assessments or liabilities, including without
limitation income, gross receipts, ad valorem, premium,
value-added, excise, real property, personal property, sales,
use, transfer, withholding, employment, unemployment
insurance, social security, business license, business
organization, environmental, workers compensation, payroll,
profits, license, lease, service, service use, severance,
stamp, capital issuance, occupation, windfall profits,
customs, duties, franchise and other taxes imposed by the
United States, Bulgaria, the Czech Republic, Estonia, Finland
or Hungary or any state, local, provincial or foreign
government, or any agency thereof, or other political
subdivision of the United States, Bulgaria, the Czech
Republic, Estonia, Finland or Hungary or any such state,
local, provincial or foreign government, and any interest,
fines, penalties, assessments or additions to tax resulting
from, attributable to or incurred in connection with any tax
or any contest or dispute thereof.
"TAX RETURNS"--all reports, returns, declarations, statements
or other information required to be supplied to a taxing
authority in connection with Taxes and any amendment thereof.
"TERRITORY"--Bulgaria, the Czech Republic, Estonia, Finland
and Hungary.
"WARRANTORS"--Seller and Parent and each a "Warrantor".
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES. Subject to the terms and conditions of this Agreement, at
the Closing, Seller will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Seller free from any Encumbrance and together with all
accrued benefits and rights thereon.
2.2 PURCHASE PRICE.
(a) The aggregate purchase price (the "Purchase Price") for the Shares
will be Fourteen Million, Two Hundred Fifty Thousand United States Dollars (US$
14,250,000) of which an amount of Five Hundred Thousand United States Dollars
(US$ 500,000) has been paid on the date hereof and the balance of which shall be
payable as set out in paragraphs (b) and (c) below.
(b) The Buyer shall make a further payment to the Seller of Thirteen
Million, Thirty Seven Thousand, Five Hundred United States Dollars (US$
13,037,500) on Closing.
(c) The Buyer shall pay the balance of the Purchase Price in the amount
of Seven Hundred Twelve Thousand, Five Hundred United States Dollars (US$
712,500) which represents 5% of total Purchase Price (the "Final Payment") to
the Seller (less any deduction required pursuant to paragraph (d) of this
Section 2.2 or any reduction required pursuant to paragraph (e) of this Section
2.2) on the date being six months after the Closing Date, subject to any
deduction required therefrom as set out below.
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(d) In the event the Buyer shall incur actual damages as a result of a
breach of any of the Warranties contained in Section 3.2.14 of this Agreement
made within six months of Closing ("Outstanding Claims") and such damages are
confirmed in a definitive written legal opinion of Buyer's counsel, the
aggregate amount claimed under the Outstanding Claims shall (subject to a
maximum amount of the Final Payment or any balance thereof remaining to be paid)
be placed on deposit in an escrow account of Seller's counsel. Within 15 days
after the funds have been placed on such deposit, the Seller shall confirm in
writing its acceptance of such determination of legal counsel after which the
amount of Outstanding Claims shall be paid to either Buyer or Seller, as
appropriate. In the event such determination of Outstanding Claims shall be
unacceptable to Seller, the amount of Outstanding Claims shall remain on the
escrow account until the dispute regarding this amount is resolved by the
parties using legal remedies available hereunder.
(e) It has also been agreed between the parties that there shall be an
adjustment to the Purchase Price (the "Adjustment") by reference to the level of
the Net Assets at Closing compared to the projected amount thereof as at the
date of this Agreement and in this regard the following provisions of this
paragraph (e) shall apply:
(i) Within forty-five days after the Closing Date, the
Parties shall procure that Xxxxxxxxx Xxxxxx will
perform an analysis of the Net Assets as at the
Closing Date (the "Analysis") for the purposes of
determining the Net Assets at Closing and the
delivery of the Analysis to each of the Seller and
the Buyer. The Analysis shall be performed in a
manner consistent with the presentation of the Net
Assets analysis for the period ended March 31, 2004,
as set out in Exhibit A to this Agreement. During
such period of time, Buyer shall allow Seller to
maintain regular contact with Xxxxxxxxx Xxxxxx and
with financial personnel in the Operating Companies
and to maintain access to books, records and other
financial information on the Operating Companies such
that the Seller may verify the accuracy of the
Analysis and the information and data used in its
preparation.
(ii) The Analysis shall determine the difference between
the "Net Assets Benchmark" and the "Net Assets at
Closing". Based upon the results of the Analysis, as
agreed upon by the parties or in default of agreement
determined in accordance with paragraph (iv) of this
Section 2.2, the Purchase Price shall be adjusted as
follows:
A if the Net Assets at Closing is, in the
event Closing occurs on July 30, 2004, less
than Seven Million, Three Hundred Eighteen
Thousand, Seven Hundred Seventy Six United
Stated Dollars (US$ 7,318,776), or, in the
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event Closing occurs on August 31, 2004,
less than Seven Million, One Hundred Eight
Thousand, Three Hundred Eighty Two United
Stated Dollars (US$ 7,108,382), being in
each case Ninety Eight percent (98%) of the
Net Assets Benchmark (the "Lower
Threshold"), then the Purchase Price shall
be decreased by the difference between the
actual Net Assets at Closing and the Lower
Threshold (the "Buyer Friendly Net Assets
Adjustment"). In such a case, the Buyer will
reduce the Final Payment (subject to any
deduction therefrom pursuant to paragraph
(d) of this Section 2.2) by the Buyer
Friendly Net Assets Adjustment amount and if
the amount of the Buyer Friendly Net Assets
Adjustment is greater than the Final Payment
(subject to any deduction therefrom pursuant
to paragraph (d) of this Section 2.2) the
Seller shall remit the balance of the Buyer
Friendly Net Assets Adjustment amount to the
Buyer by no later than 5 Business Days
following (as the case may be) agreement
between the Seller and the Buyer upon or
determination by the Expert of the Net
Assets at Closing; or
B if the Net Assets at Closing is, in the
event Closing occurs on July 30, 2004,
greater than Seven Million, Six Hundred
Seventeen Thousand, Five Hundred Two United
States Dollars (US$ 7,617,502), or, in the
event Closing occurs on August 31, 2004,
greater than Seven Million, Three Hundred
Ninety Eight Thousand, Five Hundred Twenty
United States Dollars (US$ 7,398,520), being
in each case One Hundred two percent (102%)
of the Net Assets Benchmark (the "Upper
Threshold"), then the Purchase Price shall
be increased by the amount by which the Net
Assets at Closing exceeds the Upper
Threshold (the "Seller Friendly Net Assets
Adjustment"). In such a case, the Buyer
shall remit payment of the Seller Friendly
Net Assets Adjustment amount to the Seller
by no later than 5 Business Days following
(as the case may be) agreement between the
Seller and the Buyer upon or determination
by the Expert of the Net Assets at Closing.
(iii) If Xx. Xxxxxx is unavailable to prepare the Analysis,
the Expert shall prepare the Analysis. The cost of
the Expert will be borne equally by both parties. The
opinion of the Expert shall be binding upon the
parties and the appropriate adjustments to the
Purchase Price, if any, shall be made and if funds
are due from one party to the other, they shall be
remitted within 5 Business Days of the parties'
receipt of the Analysis from the Expert.
(iv) Any dispute as to the method of preparation by Xx.
Xxxxxx of the Analysis or the amount of the Net
Assets at Closing as shown thereby shall be referred
to the Expert. Unless, within 20 Business Days of the
date of delivery of the Analysis to the Seller and
the Buyer, either of them gives notice in writing to
the other that it
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does not agree with the Analysis or the amount of the
Net Assets at Closing, specifying in reasonable
detail the reasons for its disagreement (a "Dispute
Notice") it shall be deemed to agree with the
correctness of and accept the Analysis and the amount
of the Net Assets at Closing for the purposes of this
Agreement and it shall be final and binding on the
parties. If either party serves a Dispute Notice, the
parties shall use their reasonable endeavors to reach
agreement as to the matter in dispute with 10
Business Days of the service of the Dispute Notice.
(v) If no such agreement is reached as to the matter or matters in
dispute within 10 Business Days of the service of the Dispute
Notice, such matter or matters shall be referred, on the
application of either the Seller or the Buyer, to the Expert
for determination. The Expert shall be instructed to notify
his determination to the Seller and the Buyer by means of a
written determination. The Expert shall have the right to call
for information from any party relevant to any determination
he may be required to make. The costs of the Expert shall be
borne equally by the Seller and the Buyer.
(vi) If any matter is referred to the Expert, the Seller and the
Buyer shall use their best endeavors to co-operate with the
Expert in resolving such matter and for that purpose shall
provide to the Expert all such information and documentation
as it may reasonably require. Each of the Seller and the Buyer
shall be entitled to submit written representations to the
Expert in connection with the matter or matters of dispute.
(vii) Forthwith upon the determination of the matter or matters in
dispute by the Expert, the parties shall procure that such
adjustments (if any) as may be required by such determination
shall be made to the Analysis and a revised Analysis
incorporating such adjustments (if any) shall be issued and
delivered to the Buyer and the Seller within 10 Business Days
of the determination of the Expert and shall (in the absence
of manifest error) be deemed to be agreed by and be conclusive
and binding upon the parties.
(f) Each of Seller and Parent covenants with Buyer that a cash balance
of Five Million United States Dollars (US $5,000,000) shall be maintained by
Seller or any of its Subsidiaries for a period of eight (8) months from the
Closing Date.
2.3 CLOSING. The purchase and sale (the "Closing") provided for in this
Agreement will occur at a place and time agreed upon by the parties on Friday,
July 30, 2004, or, alternatively, on Tuesday, August 31, 2004. Subject to the
provisions of Section 10, failure to consummate the purchase and sale provided
for in this Agreement on the date and time and at the place determined pursuant
to this Section 2.3 will not result in the termination of this Agreement and
will not relieve any party of any obligation under this Agreement.
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2.4 CLOSING OBLIGATIONS. At the Closing:
(a) Seller and Parent will deliver, or cause to be delivered, to
Buyer:
(i) certificates representing the Shares, duly endorsed
(or accompanied by duly executed stock powers), for
transfer to Buyer;
(ii) a resignation and release agreement executed by each
employee and/or director of MII and the Operating
Companies listed on Schedule 2.4(a)(ii) hereof
(collectively, the "Seller's Releases");
(iii) all statutory and other corporate records of MII;
(iv) evidence satisfactory to the Buyer of the discharge
of any indebtedness referred to in Clause 2.4(c).
(b) Buyer will deliver to Seller that part of the Purchase Price
payable upon Closing, by wire transfer of immediately
available funds, to the account(s) specified by Seller on
Schedule 2.4(b) hereof.
(c) On Closing Seller shall (and Parent shall procure that Seller
shall) repay any indebtedness owed at Closing by it (or any
person who is a Related Person of Seller or Parent) to MII or
any of the Operating Companies and shall release MII and each
of the Operating Companies from all securities, guarantees and
indemnities (if any) given by or binding upon any of them in
relation to any debt or obligation of Seller or Parent (or any
person who is a Related Person of Seller or Parent). Pending
such release, Seller and Parent shall indemnify and keep
indemnified Buyer as trustee for itself and MII and each of
the Operating Companies from and against all costs, claims and
demands arising out of or in connection with such securities,
guarantees and indemnities. In addition, Seller and Parent
shall on Closing assign to the Buyer or such person as the
Buyer shall designate the benefit of any indebtedness owed at
Closing to it (or any person who is a Related Person of Seller
or Parent) by MII or any of the Operating Companies.
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3. REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
3.1 BASIS ON WHICH WARRANTIES AND REPRESENTATIONS ARE GIVEN
3.1.1 The Warrantors hereby jointly and severally warrant to the Buyer
in relation to themselves and MII and the Operating Companies in accordance with
the terms set out in this Section 3 subject only to any matters fully, fairly
and accurately disclosed by the Warrantors in the disclosure attached hereto as
Exhibit G (the "Disclosure Schedule"). The Disclosure Schedule shall be arranged
in paragraphs corresponding to the numbered and lettered paragraphs contained in
this Section 3 and the disclosure in any paragraph shall qualify (1) the
corresponding paragraph in this Section 3 and (2) the other paragraphs in
Section 3 only to the extent that it is reasonably apparent from a reading of
such disclosure that it also qualifies or applies to such other paragraph. The
Warrantors further acknowledge that the Buyer has entered into this Agreement in
reliance (inter alia) on the Warranties.
3.1.2 The Warrantors undertake to and with the Buyer and its successors
in title that:
(a) save as set out in Clause 3.1.1 all of the Warranties will be
true and correct on Closing in all respects as if they had
been entered into afresh at Closing with reference to the
state of affairs at that date;
(b) if after the execution hereof and prior to or at Closing any
event shall occur which results or may result in any of the
Warranties being unfulfilled, untrue, misleading or incorrect
on that date or at Closing they shall immediately notify the
Buyer thereof in writing setting out all details of the matter
in question as are available to the Warrantors or MII or any
of the Operating Companies.
3.1.3 The Warranties shall survive Closing for a period of eighteen
(18) months with the exception of the Warranties contained in Section 3.2.7,
which shall survive Closing for a period of twenty-four (24) months. The other
covenants and agreements of the parties hereto contained in this Agreement or in
any certificate or other writing delivered pursuant hereto or in connection
herewith shall survive the Closing indefinitely or for the shorter period
explicitly specified therein. Notwithstanding the preceding sentences, any
breach of representation, warranty, covenant or agreement in respect of which
indemnity may be sought under this Agreement shall survive the time at which it
would otherwise terminate pursuant to the preceding sentences, if notice of the
inaccuracy or breach thereof giving rise to such right of indemnity shall have
been given to the party against whom such indemnity may be sought prior to such
time.
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3.2 WARRANTIES AND REPRESENTATIONS
The Warrantors jointly and severally represent and warrant to Buyer as
follows:
3.2.1. ORGANIZATION, STANDING AND POWER; SUBSIDIARIES.
(a) MII and each of the Operating Companies is a corporation duly
organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation, with full corporate
power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it
purports to own or use. MII and each of the Operating
Companies is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of
the activities conducted by it, requires such qualification.
Except as provided in Section 3.2.1(a) of the Disclosure
Schedule, none of MII or the Operating Companies has delegated
any powers under a power of attorney which remains in effect.
(b) Section 3.2.1(b) of the Disclosure Schedule sets forth a list
of all of the Operating Companies and MII's direct or indirect
equity interest therein, which shall be complete and accurate
as of the Closing Date. Except as set forth in Section
3.2.1(b) of the Disclosure Schedule, as of the Closing date,
none of MII or the Operating Companies directly or indirectly
owns any equity, membership, partnership or similar interest
in, or any interest convertible into or exchangeable into or
exercisable for any equity, membership, partnership or similar
interest in, any company, corporation, partnership, joint
venture, limited liability company or other business
association or entity, whether incorporated or unincorporated,
and none of MII or the Operating Companies has, at any time,
been a general partner or managing member of any general
partnership, limited partnership, limited liability company or
other entity.
(c) Warrantors have delivered to Buyer complete and accurate
copies of the charter, by-laws and other organizational
documents of the Seller, MII and each of the Operating
Companies and all amendments thereto as in effect at the date
hereof ("Organizational Documents").
3.2.2 CAPITALIZATION
(a) The capital structure of MII and each of the Operating
Companies is as reflected in the charter, by-laws and other
organizational documents of MII and the Operating Companies.
All of the outstanding equity securities of MII and each of
the Operating Companies have been duly authorized and validly
issued and are fully paid and non-assessable.
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(b) None of the un-issued equity securities of MII or any of the
Operating Companies are reserved for future issuance pursuant
to warrants or other outstanding rights to purchase such
equity securities. Except as provided on Section 3.2.2(b) of
the Disclosure Schedule, there are (i) no equity securities of
any class of MII or any of the Operating Companies (other than
equity securities of any such company that are directly or
indirectly owned by Seller), or any security exchangeable into
or exercisable for such equity securities, issued, reserved
for issuance or outstanding or (ii) no options, warrants,
equity securities, calls, rights, commitments or agreements of
any character to which Seller or MII or any of the Operating
Companies is a party or by which Seller or MII or any of the
Operating Companies is bound obligating Seller or MII or any
of the Operating Companies to issue, exchange, transfer,
deliver or sell, or cause to be issued, exchanged,
transferred, delivered or sold, additional shares of capital
stock or other equity interests of MII or any of the Operating
Companies or any security or rights convertible into or
exchangeable or exercisable for any such shares or other
equity interests, or obligating Seller or MII or any of the
Operating Companies to grant, extend, accelerate the vesting
of, otherwise modify or amend or enter into any such option,
warrant, equity security, call, right, commitment or
agreement. None of MII or any of the Operating Companies has
outstanding any share appreciation rights, phantom shares,
performance-based rights or similar rights or obligations.
Neither Seller nor any of its Affiliates is a party to or is
bound by any, and there are no, agreements or understandings
with respect to the voting (including voting trusts and
proxies) or sale or transfer (including agreements imposing
transfer restrictions) of any share capital or other equity
interests of Seller in MII or any of the Operating Companies.
For purposes of this Agreement, the term "Affiliate" when used
with respect to any party shall mean any person who is an
"affiliate" of that party within the meaning of Rule 405
promulgated under the Securities Act.
(c) Except as set forth in Section 3.2.2(c) of the Disclosure
Schedule, none of the outstanding equity securities of MII or
of any of the Operating Companies are subject to or issued in
violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar
right under any provision of any applicable law, such
company's Organizational Documents or any agreement to which
Seller or MII or any of the Operating Companies is a party or
is otherwise bound. There are no obligations, contingent or
otherwise, of MII or any of the Operating Companies to
repurchase, redeem or otherwise acquire any of its equity
securities or to provide funds to or make any material
investment (in the form of a loan, capital contribution or
otherwise) in MII or any of the Operating Companies or any
other entity.
13
3.2.3 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Each of Warrantors has all requisite corporate power and
authority under applicable law to enter into this Agreement
and to consummate the Contemplated Transactions. The execution
and delivery of this Agreement and other Contemplated
Transactions have been duly and validly authorized by the each
of Warrantor's Board and no other corporate proceeding on the
part of each of Warrantors is necessary to authorize this
Agreement or to consummate the Contemplated Transactions. This
Agreement has been duly and validly executed and delivered by
each of Warrantors and (i) assuming the due authorization,
execution and delivery hereof by Buyer and (ii) the receipt by
Seller of the deposit described in Section 2.2(a) above,
constitutes a valid and binding agreement of each of
Warrantors, enforceable against each of Warrantors in
accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other laws
affecting the enforcement of creditors' rights generally or by
general equitable principles.
(b) Except as set forth in Section 3.2.3(b) of the Disclosure
Schedule, the execution and delivery of this Agreement by each
of Warrantors do not, and the consummation by each of
Warrantors of the Contemplated Transactions shall not, (i)
conflict with, or result in any violation or breach of, any
provision of the Organizational Documents of either of
Warrantors or of the charter, by-laws, or other organizational
document of either of Warrantors, (ii) conflict with, result
in any violation or breach of, constitute (with or without
notice or lapse of time, or both) a default (or give rise to a
right of termination, cancellation or acceleration of any
obligation or loss of any material benefit under, require a
consent or waiver under, constitute a change in control under,
require the payment of a penalty under or result in the
imposition of any Encumbrance on Seller's or MII's or any of
the Operating Companies' assets under, any of the terms,
conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract or other agreement,
instrument or obligation to which Seller or MII or any of the
Operating Companies is a party or by which any of them or any
of their properties or assets may be bound, (iii) conflict
with or violate any permit, concession, franchise, license,
judgment, injunction, order, decree, statute, law, ordinance,
rule or regulation applicable to either of Warrantors
(including any statute, law, ordinance, rule or regulation
regarding the solvency or otherwise of either of the
Warrantors) or MII or any of the Operating Companies or any of
its or their properties or assets. Section 3.2.3(b) of the
Disclosure Schedule lists all consents, waivers and approvals
under any of Seller's or MII's or any of the Operating
Companies' agreements, licenses or leases required to be
obtained in connection with the consummation of the
Contemplated Transactions, which, if individually or in the
aggregate were not obtained, would result in a material loss
of benefits to MII or any of the Operating Companies.
14
(c) Except as set forth in Section 3.2.3(c) of the Disclosure
Schedule, no filing or registration with or notification to
and no permit, authorization, consent or approval of any
court, commission, governmental body, regulatory authority,
agency or tribunal wherever located (a "Governmental Entity")
is required to be obtained, made or given by either of
Warrantors in connection with the execution and delivery of
this Agreement or the consummation by either of Warrantors of
the Contemplated Transactions except such consents, approvals,
orders, authorizations, registrations, declarations and
filings as may be required under applicable state and Federal
securities laws and the law of any country other than the
United States where the failure to obtain any consents,
approvals, authorizations or permits, or to make such filings
or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.2.4 FINANCIAL STATEMENTS; INFORMATION PROVIDED.
The Seller has provided to the Buyer information on the actual
financial performance of MII and the Operating Companies as
reflected within the financial statements as of March 31, 2004
(the "Financial Statements"), which were included with the
April 26, 2004 and July 1, 2004 (with respect to Metroradio
Finland OY only) financial projections of MII and the
Operating Companies contained in Exhibit F hereto. Such
information was prepared in accordance with US GAAP using
estimates and judgments with respect to the accounting used
for the allowance for doubtful accounts and recognition of
revenue, among others, as consistently applied based on
existing MII accounting methods and fairly presented the
consolidated financial position of MII and the Operating
Companies as of the dates indicated and the consolidated
results of its operations and cash flows for the periods
indicated, consistent with the books and records of the MII
and the Operating Companies.
3.2.5 NO UNDISCLOSED LIABILITIES.
(a) Except for normal and recurring liabilities incurred in the
Ordinary Course of Business since March 31, 2004, MII and the
Operating Companies do not have any liabilities, either
accrued, contingent or otherwise (whether or not required to
be reflected in financial statements in accordance with
generally accepted accounting principles), and whether due or
to become due, which individually or in the aggregate are
reasonably likely to have a Material Adverse Effect.
15
(b) Except as set forth in Section 3.2.5(b) of the Disclosure
Schedule, there are no amounts, whether of principal or
interest, owing by MII or any of the Operating Companies
(whether contingent or otherwise including any amounts owing
by third parties for which any of them is or may be
responsible) to any bank or financial institution.
3.2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since March 31, 2004, MII and the Operating Companies have
conducted their respective businesses only in the Ordinary
Course of Business and, since such date, there has not been
any change, event, circumstance, development or effect that
individually or in the aggregate has had, or is reasonably
likely to have, a Material Adverse Effect.
3.2.7 TAXES.
(a) Each of MII and of the Operating Companies are current with
all Tax Returns (including Affiliated Group Tax Returns) that
are required to have been filed with respect to any of them,
and all such Tax Returns were complete and accurate in all
material respects except where any such failure, individually
or in the aggregate to file Tax Returns on a timely basis is
not reasonably likely to have a Material Adverse Effect.
Except as set forth on Schedule 3.2.7(a), none of the
Operating Companies has joined or is required to have joined
in any Affiliated Group Tax Return with respect to any
Affiliated Group in which any corporation other than another
of the Operating Companies are or were members with respect to
any Affiliated Period. Except as set forth on Schedule 3.2.7
(a), MII and each of the Operating Companies have paid on a
timely basis all Taxes that were due and payable and each
member of an Affiliated Group has paid all Taxes that were due
and payable with respect to all Affiliated Periods except
where any such failure, individually or in the aggregate is
not reasonably likely to have a Material Adverse Effect. The
unpaid Taxes of MII and the Operating Companies for tax
periods through June 30, 2004 do not exceed the accruals and
reserves for Taxes (excluding accruals and reserves for
deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the Financial
Statements, except where any failure to accrue or reserve,
individually or in the aggregate, is not reasonably likely to
have a Material Adverse Effect. All Taxes that MII and any of
the Operating Companies is or was required by law to have
withheld or collected have been duly withheld or collected
and, to the extent required, have been paid or accrued as
payable to the proper Governmental Entity, except where such
failure, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect.
16
(b) Seller has delivered to Buyer complete and accurate copies of
the Affiliated Group Tax Return for the 2002 fiscal years. No
examination or audit of any Tax Return of MII or any of the
Operating Companies or Affiliated Group Tax Return by any
Governmental Entity is currently in progress or threatened or
contemplated. Neither MII nor any of the Operating Companies
has been informed by any jurisdiction that such jurisdiction
believes that any of the Operating Companies was required to
file any Tax Return that was not filed which was not
thereafter filed. Neither MII nor any of the Operating
Companies has waived any statute of limitations with respect
to Taxes or agreed to an extension of time with respect to a
Tax assessment or deficiency, which has continuing effect.
(c) Neither MII nor any of the Operating Companies is or has been
a party to any transaction or agreement that is in conflict
with the Tax rules on transfer pricing in any relevant
jurisdiction. Each of the Operating Companies has (to the
extent required) disclosed on their U.S. federal income Tax
returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code. There are no proposed or
actual assessments, audits, examinations or disputes as to any
material amount of Taxes of any nature relating to MII or any
of the Operating Companies that have not been finally resolved
with all amounts due with respect thereto fully paid.
(d) There are no liens or other encumbrances with respect to Taxes
upon any of the assets or properties of MII or any of the
Operating Companies, other than with respect to Taxes not yet
due and payable.
(e) None of the Operating Companies is a passive foreign
investment company within the meaning of Sections 1291-1297 of
the Code.
(f) Neither Seller nor any of its Subsidiaries has incurred (or
been allocated) an "overall foreign loss" as defined in
Section 904(f)(2) of the Code that has not been previously
recaptured in full as provided in Sections 904(f)(1) and/or
904(f)(3) of the Code.
3.2.8 OWNED AND LEASED REAL PROPERTIES AND ASSETS
(a) Section 3.2.8(a) of the Disclosure Schedule sets forth a
complete and accurate list of all real property owned by MII
or any of the Operating Companies and the location of the
premises.
(b) Section 3.2.8(b) of the Disclosure Schedule sets forth a
complete and accurate list of all real property leased,
subleased or licensed by MII or any
17
of the Operating Companies (collectively the "Leases") and the
location of the premises. None of MII or any of the Operating
Companies, to Warrantors' knowledge, any other party, is in
default under any of the Leases, except where the existence of
such defaults, individually or in the aggregate, has not had,
and is not reasonably likely to have, a Material Adverse
Effect. None of MII or any of the Operating Companies leases,
subleases or licenses any real property to any person other
than MII or one of the Operating Companies. Seller has
provided Buyer with complete and accurate copies of all
Leases.
(c) None of the assets of MII or any of the Operating Companies
are subject to Encumbrance.
3.2.9. INTELLECTUAL PROPERTY.
(a) Each of MII and the Operating Companies own, or license or
otherwise possess legally enforceable rights to use on an
exclusive basis, without any obligation to make any fixed or
contingent payments, including any royalty payments, all
Intellectual Property used or necessary to conduct the
business of MII and each of the Operating Companies as
currently conducted, or that would be used or necessary as
such business is planned to be conducted (in each case
excluding generally commercially available, "off-the-shelf"
software programs licensed pursuant to shrink-wrap or
"click-and-accept" licenses), except for such rights the
absence of which, individually or in the aggregate, would not
be reasonably likely to have a Material Adverse Effect. For
purposes of this Agreement, the term "Intellectual Property"
means (i) patents, trademarks, service marks, trade names,
domain names, copyrights, designs and trade secrets, (ii)
applications for and registrations of such patents,
trademarks, service marks, trade names, domain names,
copyrights and designs, (iii) processes, formulae, methods,
schematics, technology, know-how, computer software programs
and applications, and (iv) other tangible or intangible
proprietary or confidential information and materials.
(b) Except as provided on Section 3.2.9(b) of the Disclosure
Schedule, the execution and delivery of this Agreement will
not result in the breach of, or create on behalf of any third
party the right to terminate or modify any license, sublicense
and other agreement as to which MII or any of the Operating
Companies is a party and pursuant to which MII or any of the
Operating Companies is authorized to use any third-party
Intellectual Property that is material to the business of MII
or any of the Operating Companies. Section 3.2.9(b)(i) of the
Disclosure Schedule sets forth a complete and accurate list of
all Intellectual Property (other than unregistered copyrights,
trade secrets and confidential information) owned by MII or
any of the Operating Companies that is material to the
business of MII or any of the Operating Companies (the
"Company Intellectual Property")
18
(c) All patents and registrations and applications for trademarks,
service marks and copyrights which are held by MII or any of
the Operating Companies and which are material to the business
of MII or the Operating Companies, taken as a whole, are valid
and subsisting. MII and each of the Operating Companies have
taken reasonable measures to protect the proprietary nature of
its Intellectual Property. To the knowledge of Warrantors, no
other person or entity is infringing, violating or
misappropriating any of the Intellectual Property of MII or
any of the Operating Companies, except for infringements,
violations or misappropriations which are not, individually or
in the aggregate, reasonably likely to have a Material Adverse
Effect.
(d) None of the business or activities previously or currently
conducted by MII or any of the Operating Companies infringes,
violates or constitutes a misappropriation of, any
Intellectual Property of any third party, except for such
infringements, violations and misappropriations which are not,
individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. Except as provided on Section
3.2.9(b) of the Disclosure Schedule, none of MII or the
Operating Companies has received any complaint, claim or
notice alleging any such infringement, violation or
misappropriation.
3.2.10. AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) There are no contracts or agreements that are material in
respect of the business carried on by MII or any of the
Operating Companies ("Material Contracts") other than those
Material Contracts identified in Section 3.2.10(a) of the
Disclosure Schedule, which includes but is not limited to
details of all licenses granted by and contracts entered into
with the applicable regulators in each jurisdiction and all
local management agreements. Each Material Contract is in full
force and effect and is enforceable in accordance with its
terms and all payments required to be made pursuant thereto
have been made including but not limited to any amount which
has fallen due for payment under the agreement between
Juventus Radio RT and the Hungarian Broadcast and Media
Authority dated December 3, 2003. Except as provided in
Section 3.2.10(a) of the Disclosure Schedule, neither MII nor
any of the Operating Companies nor, to Warrantors' knowledge,
any other party to any Material Contract is in violation of or
in default under (nor does there exist any condition which,
upon the passage of time or the giving of notice or both,
would cause such a violation of or default under) any loan or
credit agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or other contract,
arrangement or understanding to which it is a party or by
which it or any of its properties or assets is bound, except
for violations or defaults which, individually or in the
aggregate, have not resulted in, and are not reasonably likely
to result in, a Material Adverse Effect.
19
(b) Section 3.2.10(b) of the Disclosure Schedule sets forth a
complete and accurate list of each material contract or
agreement to which MII or any of the Operating Companies is a
party or by which it is bound with any Affiliate of Seller or
Parent. Complete and accurate copies of all the agreements,
contracts and arrangements set forth in Section 3.2.10(b) of
the Disclosure Schedule have heretofore been furnished to
Buyer.
(c) There is no non-competition or other similar agreement,
commitment, judgment, injunction or order to which MII or any
of the Operating Companies is a party or to which MII or any
of the Operating Companies is subject that has or could
reasonably be expected to have the effect of prohibiting or
impairing the conduct of the business of any of the Operating
Companies as currently conducted and as proposed to be
conducted. None of MII or any of the Operating Companies has
entered into (or is otherwise bound by) any agreement under
which it is restricted in any material respect from selling or
otherwise distributing any of its products, or providing
services to, customers or potential customers or any class of
customers, in any geographic area, during any period of time
or any segment of the market or line of business.
3.2.11. LITIGATION.
Except as provided on Section 3.2.11 of the Disclosure
Schedule, there is no action, suit, proceeding, claim,
arbitration or investigation pending or, to the knowledge of
Warrantors, threatened against or affecting MII or any of the
Operating Companies which, individually or in the aggregate,
has had, or is reasonably likely to have, a Material Adverse
Effect. There are no material judgments, orders or decrees
outstanding against MII or any of the Operating Companies.
3.2.12. ENVIRONMENTAL MATTERS.
To the knowledge of the Seller, none of the Operating
Companies has committed a breach of, or is currently in breach
of any of the applicable guidelines formulated by the
International Commission on Non-Ionizing Radiation Protection,
except for breaches which are not, individually or in the
aggregate, reasonably likely to have a Material Adverse
Effect.
20
3.2.13 COMPLIANCE WITH LAWS.
MII and each of the Operating Companies has complied with, is
not in violation of, and has not received any notice alleging
any violation with respect to, any applicable provisions of
any statute, law or regulation with respect to the conduct of
its business, or the ownership or operation of its properties
or assets, except for failures to comply or violations which,
individually or in the aggregate, have not had, and are not
reasonably likely to have, a Material Adverse Effect.
3.2.14. PERMITS.
MII and each of the Operating Companies has all permits,
licenses (including in particular broadcasting licenses issued
by the relevant regulatory authority having jurisdiction over
radio broadcasting in the relevant jurisdiction) and
franchises from Governmental Entities required to conduct
their businesses as now being conducted or as presently
contemplated to be conducted (the "Permits"), except for such
permits, licenses and franchises the lack of which,
individually or in the aggregate, has not resulted in, and is
not reasonably likely to result in, a Material Adverse Effect
and a list of such Permits is set out in Section 3.2.14 of the
Disclosure Schedule. MII and the Operating Companies are in
compliance with the terms of the Permits, have made all
payments required to be made in connection with the Permits
and none of the Permits have been subject to any challenge,
citation or attack by a third party or competent authority,
except where the failure to so comply, individually or in the
aggregate, is not reasonably likely to have a Material Adverse
Effect. Subject to the Buyer complying with its obligations
pursuant to Section 6.1, no Permit shall cease to be effective
as a result of the consummation of the Contemplated
Transactions. There are no circumstances which indicate that
any Permit is likely to be revoked and Warrantors are not
aware of any circumstances that would result in any of the
Permits not being renewed by the applicable regulatory
authority.
The Warrantors have heretofore furnished the Buyer with copies
of written memoranda from counsel to Seller in each
jurisdiction in which any of the Operating Companies carries
on any broadcasting business requiring a broadcasting license,
with the exception of Finland and the Czech Republic,
confirming, subject to the Buyer complying with its
obligations pursuant to Section 6.1, that the sale and
purchase of the Shares shall not constitute a breach of the
terms of, or cause any suspension, cancellation or penalty or
other sanction to be imposed under any such broadcasting
license.
21
3.2.15 LABOR MATTERS.
(a) None of MII or any of the Operating Companies is a party to or
otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor
union or labor organization. To the knowledge of Warrantors,
none of MII or any of the Operating Companies is the subject
of any proceeding asserting that MII or any of the Operating
Companies has committed an unfair labor practice or is seeking
to compel it to bargain with any labor union or labor
organization which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect, nor is
there pending or, to the knowledge of Warrantors, threatened
any labor strike, dispute, walkout, work stoppage, slow-down
or lockout involving MII or any of the Operating Companies.
(b) The employees listed on Section 3.2.15(d) and (c) (the
"Employees") comprise all the persons employed full time or
part time by MII and the Operating Companies at the date
hereof.
(c) True and complete particulars of the total numbers of the
Employees as at the date of this Agreement, their dates of
commencement of employment or appointment to office, and a
summary of the principal terms and conditions of their
employment (including their remuneration, bonus, commission,
reimbursement of costs and expenses, or life, accident, health
and medical insurances and other benefits) are fully and
accurately set out in Section 3.2.15(c) of the Disclosure
(d) Section 3.2.15(d) of the Disclosure Schedule lists all
material retirement and pension plans, schemes, practices or
arrangements of any kind, whether written or oral, maintained
by MII or any of the Operating Companies or to which any MII
or any of the Operating Companies makes contributions (other
than as required solely by statute or regulation)
(collectively, the "Pension Schemes"). Other than the Pension
Schemes, there are no material arrangements (other than as
required solely by statute or regulation) to which MII or any
of the Operating Companies contributes, or has contributed, or
may become liable to contribute under which benefits of any
kind are payable to or in respect of the employees of MII or
any of the Operating Companies on retirement or death, or in
the event of disability or sickness, termination of
employment, or in other similar circumstances.
(e) Where applicable, except where any failure would not,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, (i) all contributions to each
Pension Scheme have at all times been made in accordance with
the recommendations of the actuary to that Pension Scheme,
(ii) a proper accrual has been made for those contributions
which are due to each Pension Scheme or employee benefit plan
on or before the Closing Date, (iii) each of the Pension
Schemes is fully funded on an accrued benefits basis, and (iv)
the contributions and expenses payable to the Pension Schemes
have been applied in accordance with the provisions thereof
and the trusts upon which they are to be held.
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3.2.16. BROKERS; SCHEDULE OF FEES AND EXPENSES.
With the exception of CEA Beratungs und
Beteiligungsgesellschaft mbH, which is a broker of the Parent
and for whose fees neither MII nor any of the Operating
Companies has any liability, no agent, broker, investment
banker, financial advisor or other firm or person is or shall
be entitled, as a result of any action, agreement or
commitment of Warrantors or any of its Affiliates, to any
broker's, finder's, financial advisor's or other similar fee
or commission in connection with any of the Contemplated
Transactions.
3.2.17. DISCLOSURE.
(a) No representation or warranty of Warrantors in this
Agreement or in any writing delivered to the Buyer in
connection with the Contemplated Transactions omits to state a
material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were
made, not misleading.
(b) No notice given pursuant to Section 5.6 will contain any
untrue statement or omit to state a material fact necessary to
make the statements therein or in this Agreement, in light of
the circumstances in which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation.
4.2 AUTHORITY. Upon the execution and delivery by Buyer of this
Agreement, this Agreement will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with its terms.
Buyer has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
4.3 INVESTMENT INTENT. Buyer is acquiring the Shares for its own
account and not with a view to their distribution within the meaning of Section
2(11) of the Securities Act.
4.4 FINANCING. Buyer has obtained financing necessary for it to perform
its obligations hereunder to the full amount of the Purchase Price, as adjusted.
The financing arrangements of the Buyer are described in a commitment letter
attached hereto as Exhibit H
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5. COVENANTS OF SELLER AND PARENT PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and
the Closing Date, to the extent commercially reasonable, Seller and Parent will,
and will cause MII and each of the Operating Companies and each of their
Representatives to, (a) afford Buyer and its Representatives and prospective
lenders and their Representatives (collectively, "Buyer's Advisors") during
regular business hours, reasonable access to each such company's personnel,
properties (including subsurface testing), contracts, books and records, and
other documents and data as Buyer may reasonably request pursuant to a site
visit plan delivered by the Buyer prior to the signing of this Agreement, (b)
furnish Buyer and Buyer's Advisors with copies of all contracts which are
Material Contracts, books and records, and other existing material documents and
data as Buyer shall reasonably request, and (c) furnish Buyer and Buyer's
Advisors with such additional material financial, operating, and other data and
information as Buyer shall reasonably request. All requests made by the Buyer
for documentation, data and information pursuant to this Section 5.1 shall be
made in writing, addressed to Xxxxx Xxxx at xxxxx@xxxxxxx.xxx and Xxxxxxx
Xxxxxxxx at xxxxxxxxx@xxxxxxx.xxx, fax number x0 000 000 0000, with copies
addressed to Xxxxxxx Xxxxxx at xxxxxxx@xxxxxxx.xxx and Xxxxxxxxx Xxxxxx at
xxxxxxx@xxxxxxx.xxx and the Seller shall respond to any such request within five
days after it has been received by the Seller.
5.2 BUSINESS UNTIL CLOSING Seller and Parent shall procure that until
Closing the business of each of MII and the Operating Companies shall be carried
out in the Ordinary Course of Business and subject to Sections 5.3 and 5.4.
Without prejudice to the foregoing, the Buyer may appoint up to two
Representatives to consult with the Seller with regard to the progress of the
business of each of MII and of the Operating Companies. Subject to such
Representatives being reasonably available, the Seller will consult and will
cause each of MII and of the Operating Companies to consult with such
Representatives with respect to any action which may materially affect any of
MII or the Operating Companies. The Seller will furnish and will cause each of
MII and of the Operating Companies to provide such Representatives with such
information as they may reasonably request for this purpose.
5.3 PROHIBITED TRANSACTIONS With effect from the date hereof and until
Closing, but subject to Section 5.4 below or in circumstances necessary to avoid
breach of a Warranty occurring after the date hereof but prior to Closing,
Seller and Parent shall procure that unless otherwise provided herein none of
MII or of the Operating Companies shall without the prior written consent of
Buyer:
(a) create, extend, grant or issue any Encumbrance over any of its
assets or agree to do so;
(b) create or issue any capital stock, share or loan capital
(whether or not convertible to shares) or give or agree to
give any option in respect of any capital stock, share or loan
capital or enter into any commitment to borrow money or agree
to do any of the foregoing;
24
(c) enter into any long term or abnormal contract or any guarantee
or indemnity or, save in the Ordinary Course of Business, any
capital commitment in excess of US$50,000;
(d) declare or pay any dividend or bonus or make any other
distribution of profits or assets;
(e) knowingly do or permit anything whereby its financial position
would be rendered materially less favorable than at the date
hereof;
(e) pass any resolution by its members in general meeting or make
any alteration to any of the provisions of its constitutional
documents;
(g) in respect of any agreement binding upon it, make any material
default or fail to observe or perform any of the material
provisions thereof;
(h) acquire any assets on hire, lease hire, purchase, credit sale
or deferred terms or value exceeding US $30,000 in aggregate
and US $5,000 on any single item;
(i) co-opt any person to its board directors;
(j) dismiss any employees under such circumstances as would render
it liable to have proceedings of any kind brought against it;
(k) pay or agree to pay to its directors, agents, shareholders,
officers or employees any remuneration or other emoluments or
benefits whatsoever other than those and at those rates
subsisting at the date of execution of this Agreement as set
out in Section 3.2.15(c) of the Disclosure Schedule;
(l) dispose of or carry out any development upon any part of its
fixed assets;
(m) acquire or dispose of any shares in any other company (with
the exception of the sale of shares in the Operating Company
responsible for the radio station located in Szeged, and the
following other subsidiaries of MII: MII Services, Inc., MII
Services GMBH, PolRadio, RadioCorp OY, MILL, and Dotcomm
Communications, provided that the Seller shall have the right
to transfer all cash proceeds from any such sale prior to
Closing directly to Parent and in respect of the sale of the
Szeged station from Juventus Radio RT to Parent); or
(n) agree or commit to do any of the foregoing.
25
Buyer shall not unreasonably withhold its consent to any request made by or on
behalf of Seller to any of the matters referred to in this Section 5.3 PROVIDED
THAT the granting or withholding of such consent or Buyer's knowledge of any act
or omission of Seller or MII or any of the Operating Companies done or omitted
to be done in order to avoid a breach of any Warranty shall not in any way
prejudice Buyer's rights under this Agreement (including, without limitation,
under Section 3 or in respect of any Warranty Claim).
5.4 REQUIRED APPROVALS. As promptly as practicable after the date of
this Agreement, Seller and Parent will, and will cause MII and each of the
Operating Companies to, to the extent commercially reasonable, cooperate with
Buyer with respect to Buyer's obligations under Section 6.1 hereof and all
filings that are required by applicable law to be made with respect to the
Contemplated Transactions.
5.5 NOTIFICATION. Between the date of this Agreement and the Closing
Date, Seller or Parent (as the case may be) will, as soon as practicable, notify
Buyer in writing if Seller, Parent, MII or any of the Operating Companies
becomes aware of any fact or condition that causes or constitutes a material
breach of any of Seller's or Parent's representations and warranties as of the
date of this Agreement.
5.6 FURTHER ASSURANCES. Between the date of this Agreement and the
Closing Date, Seller and Parent will use their commercially reasonable efforts
to cause the conditions in Sections 7 and 8 to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 REQUIRED APPROVALS. As promptly as practicable after the date of
this Agreement, Buyer will, and will cause each of its Related Persons to, make
all filings required by applicable law to be made to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, to the
extent commercially reasonable, Seller and Parent will, and will cause each
Related Person to, co-operate with Buyer with respect to all filings that are
required by applicable law to be made with respect to the Contemplated
Transactions, provided that this Agreement will not require Buyer to dispose of
or make any change in any portion of its business (other than those changes
implicit in the consummation of the Contemplated Transactions).
6.2 FURTHER ASSURANCES. Except as set forth in the proviso to Section
6.1, between the date of this Agreement and the Closing Date, Buyer and Seller
will use commercially reasonable efforts to cause the conditions in Sections 7
and 8 respectively to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction in
all material respects, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Buyer, in whole or in part).
26
7.1 ACCURACY OF REPRESENTATIONS. All of Seller's and Parent's
representations and warranties in this Agreement must have been accurate as of
the date of this Agreement, and must be accurate as of the Closing Date as if
made on the Closing Date.
7.2 SELLER'S AND PARENT'S PERFORMANCE.
(a) All of the covenants and obligations that each of Seller
and Parent is required to perform or to comply with pursuant to this
Agreement at or prior to the Closing must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered pursuant to Section
2.4 must have been delivered, and each of the other covenants and
obligations in Sections 5.2 and 5.3 must have been performed and
complied with in all respects.
7.3 ADDITIONAL DOCUMENTS. Seller and Parent shall have delivered to
Buyer each of the documents required by Section 2.4 hereof, and such other
documents as Buyer may reasonably request for the purpose of (i) evidencing the
accuracy of any of Seller's or Parent's representations and warranties, (ii)
evidencing the performance by Seller and Parent of, or the compliance by Seller
and Parent with, any covenant or obligation required to be performed or complied
with by Seller or Parent, (iii) evidencing the satisfaction of any condition
referred to in this Section 7, or (iv) otherwise facilitating the consummation
or performance of any of the Contemplated Transactions.
7.4 LICENSES, TITLE.
(a) There shall have been no incurable material disruption on
or before the Closing Date to the existence or enforceability of any of
the Broadcasting Licenses (except for any such license in either the
Czech Republic or Finland) by virtue of the Contemplated Transactions.
(b) It becomes apparent on or before the Closing Date that
there is a material incurable defect in Seller's title to the Shares or
in MII's title to any of the Operating Companies.
7.5 DUE DILIGENCE INVESTIGATION. The results of the due diligence
investigation of the Buyer into matters covered by Section 3 hereof to be
carried out by the Buyer into each of MII and the Operating Companies prior to
Closing do not disclose matters, events or circumstances that, if the Buyer were
to complete the purchase of the Shares, would entitle Buyer (and each of the
other parties that could be an Indemnified Party under Paragraphs (a) and (b) of
Section 9.3), to make claims pursuant to Section 9.3 for amounts exceeding, in
aggregate, Three Million United States Dollars (US $3,000,000).
27
7.6 CONSEQUENCES OF NON-COMPLIANCE. If any of the conditions precedent
referred to in Clause 7 shall not have been fulfilled on or before September 1,
2004, this Agreement shall thereupon lapse and in such event no party shall have
any claim against the other in relation to such termination save to the extent
that any breach by any party causes the non-fulfillment of any such condition
precedent. Any of the conditions set out in Clause 7 may be waived in whole or
in part by Buyer without prejudice to its rights of rescission or other rights
in the event of non-compliance with any other conditions. Any such waiver shall
be binding on the Seller only if it is in writing.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations and
warranties in this Agreement must have been accurate in all material respects as
of the date of this Agreement, and must be accurate as of the Closing Date as if
made on the Closing Date.
8.2 BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing, must have been performed and complied with in all
material respects.
(b) Buyer must have delivered each of the documents required
to be delivered by Buyer pursuant to Section 2.4.
8.3 ADDITIONAL DOCUMENTS. Buyer shall have delivered to Seller each of
the documents required by Section 2.4, and such other documents as Seller may
reasonably request for the purpose of (i) evidencing the accuracy of any
representation or warranty of Buyer, (ii) evidencing the performance by Buyer
of, or the compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer, (iii) evidencing the satisfaction of any
condition referred to in this Section 8, or (iv) otherwise facilitating the
consummation of the Contemplated Transactions.
9. FURTHER COVENANTS
9.1 NON-COMPETITION
(a) As a further consideration for the Buyer entering into
this Agreement each of Seller and Parent hereby covenants with Buyer
that it will not either as principal, partner, agent, employee,
director or otherwise howsoever, either directly or indirectly:
(i) during the Restricted Period carry on or assist in
carrying on, within the Territory, the Relevant
Business (other than as a holder of no more than 1%
of shares or debentures of a company listed on a
recognised stock exchange).
(ii) during the Restricted Period directly or indirectly
solicit or endeavour to solicit or obtain the custom
of any person, firm or company that is now or at
Closing a customer of MII or any of the Operating
Companies or which is in negotiation with MII or any
of the Operating Companies, or use its knowledge or
influence over any such customer or person, firm or
company to or for its own benefit or that of any
other person firm or company in competition with MII
or any of the Operating Companies;
(iii) during the Restricted Period either directly or
indirectly solicit or engage the services of any
person employed by MII or any of the Operating
Companies under a contract of services or engaged by
MII or any of the Operating Companies under a
contract for services as at the date hereof or at
Closing;
(iv) during the Restricted Period in competition with MII
or any of the Operating Companies, contract or seek
to contract with any supplier of goods or services to
MII or any of the Operating Companies so as to have
the effect of adversely affecting the supply or terms
thereof to MII or any of the Operating Companies, or
otherwise do or seek to do anything in relation to
such supplier calculated or likely to affect the
contracts, relationships or terms of dealing with MII
or any of the Operating Companies; or
(v) at any time hereafter make use of or disclose for his
own benefit or to or on behalf of any person firm or
company, any confidential information which it may
now or hereafter possess appertaining to the business
or affairs of MII or any of the Operating Companies
or of any clients, customers or suppliers of MII or
any of the Operating Companies or to persons having
dealings with MII or any of the Operating Companies
unless required by law or judicial process in which
case the disclosing party will limit such disclosure
to that which is reasonably necessary.
(b) The benefit of each of the covenants set out from sub-paragraphs
9.1(a)(i) to 9.1(a)(v) (inclusive) shall be deemed to be separate and severable
and enforceable by Buyer accordingly. In the event of any covenant contained in
this Clause being held to be unreasonable or invalid by reason of the area,
duration, type or scope of restriction contained therein and if by deleting part
of the wording or substituting a different geographical limit or a shorter
period of time or a more restricted range of activities it would not be
unreasonable or invalid Seller and Parent agree that said covenant shall be
amended by the substitution of such next less extensive limit or period or
activity or by such deletions as are required to render it valid and
enforceable.
28
9.2 WAIVER BY SELLER AND PARENT. Each of Seller and Parent hereby
irrevocably waive all claims against MII and each of the Operating Companies and
its/their directors and employees which it may have outstanding prior to the
date of this Agreement. Without prejudice to the generality of the foregoing
none of the information supplied by any of the Operating Companies or its
professional advisers prior to the date of this Agreement to Seller or Parent or
either of their agents, representatives or advisers in connection with the
Warranties or the contents of the Disclosure Schedule or otherwise in relation
to the business or affairs of any of the Operating Companies shall be deemed a
representation, warranty or guarantee of its accuracy by any of the Operating
Companies or its directors, employees or professional advisers to Seller or
Parent and each of Seller and Parent waives any claim against each of the
Operating Companies or its directors, employees or professional advisers which
they might otherwise have in respect of it.
9.3 INDEMNIFICATION
(a) Effective at and after the Closing, Seller and Parent
hereby jointly and severally indemnify Buyer and its
Related Persons and, effective at the Closing,
without duplication, MII and the Operating Companies
and each subsidiary of MII and the Operating
Companies (together, the "MII GROUP") against and
agrees to hold each of them harmless from any and all
damage, loss, liability and expense (including
reasonable expenses of investigation and reasonable
attorneys' fees and expenses) in connection with any
action, suit or proceeding whether involving a third
party claim or a claim solely between the parties
hereto and any incidental, indirect or consequential
damages, losses, liabilities or expenses, and any
lost profits or diminution in value ("DAMAGES"),
incurred or suffered by Buyer, any of Buyer's Related
Persons or any member of the MII Group arising out of
any misrepresentation or breach of warranty (after
giving effect to any materiality or Material Adverse
Effect qualification contained therein, provided
that, solely for the purposes of this Section 9.3,
the terms "material and "Material Adverse Effect"
shall be limited to any event, action or circumstance
that results in a total liability to the Buyer in
excess of US $40,000) (each such misrepresentation
and breach of warranty a "WARRANTY BREACH") or breach
of covenant or agreement made or to be performed by
Parent or Seller pursuant to this Agreement (after
giving effect to any materiality or Material Adverse
Effect qualification contained therein), regardless
of whether such Damages arise as a result of the
negligence, strict liability or any other liability
under any theory of law or equity of, or violation of
any law by, Buyer or any of Buyer's Related Persons.
29
(b) Notwithstanding anything to the contrary in this
Agreement, Seller and Parent hereby jointly and
severally indemnify Buyer and its Related Persons
and, effective at the Closing, without duplication,
each member of the MII Group against and agree to
hold each of them harmless from all Damages
(including all reasonable costs and expenses of
investigation by engineers, environmental consultants
and similar technical personnel), whether accrued,
contingent, absolute, determined, determinable or
otherwise, incurred or suffered by Buyer or any of
such Affiliates which relate to the MII Group and
which arise out of or relate to ERROR! BOOKMARK NOT
DEFINED. any claims made by Gramex or any other
copyright agency or other similar organization
against Metromedia Finland Oy or any subsidiary
thereof in respect of copyright, royalty or other
similar payments, and ERROR! BOOKMARK NOT DEFINED.
any Tax of any member of the MII Group with respect
to any pre-Closing Tax period (whether or not
disclosed or required to be disclosed in Disclosure
Schedule) and (iii) any Damages (including, without
limitation, reasonable expenses of investigation and
attorneys' fees and expenses) incurred or suffered by
Buyer, any of Buyer's Related Persons or any member
of the MII Group arising out of or incident to the
imposition, assessment or assertion of any such Tax
described, including those incurred in the contest in
good faith in appropriate proceedings relating to the
imposition, assessment or assertion of any Tax (the
sum of such amounts being referred to herein as a
"TAX LOSS"). For purposes of clause (ii) of the
preceding sentence, in the case of any Taxes that are
imposed on a periodic basis and are payable for a
Taxable period that includes (but does not end on)
the Closing Date, the portion of such Tax related to
the portion of such Taxable period ending on the
Closing Date shall (x) in the case of any Taxes other
than Taxes based upon or related to income, be deemed
to be the amount of such Tax for the entire Taxable
period multiplied by a fraction the numerator of
which is the number of days in the Taxable period
ending on the Closing Date and the denominator of
which is the number of days in the entire Taxable
period and (y) in the case of any Tax based upon or
related to income be deemed equal to the amount which
would be payable if the relevant Taxable period ended
on the Closing Date. Any credits relating to a
Taxable period that begins before and ends after the
Closing Date shall be taken into account as though
the relevant Taxable period ended on the Closing
Date. All determinations necessary to give effect to
the foregoing allocations shall be made in a manner
consistent with prior practice of MII and the
Acquired Companies.
(c) Effective at and after the Closing, Buyer indemnifies
Seller and Parent and their Related Persons against
and agrees to hold each of them harmless from any and
all Damages incurred or suffered by Seller, Parent or
any of their Related Persons arising out of any
Warranty Breach or material breach of covenant or
agreement made or to be performed by Buyer pursuant
to this Agreement regardless of whether such Damages
arise as a result of the negligence, strict liability
or any other liability under any theory of law or
equity of, or violation of any law by, Buyer or any
of Buyer's Related Persons.
30
(d) The party seeking indemnification under Section
9.4(a), (b) or (c) above (the "INDEMNIFIED PARTY")
agrees to give prompt notice to the party against
whom indemnity is sought (the "INDEMNIFYING PARTY")
of the assertion of any claim, or the commencement of
any suit, action or proceeding in respect of which
indemnity may be sought under such Section. The
Indemnifying Party may at the request of the
Indemnified Party participate in and control the
defense of any such suit, action or proceeding at its
own expense. The Indemnifying Party shall not be
liable under Section 9.4(a), (b) or (c) above for any
settlement effected without its consent of any claim,
litigation or proceeding in respect of which
indemnity may be sought hereunder.
Notwithstanding anything to the contrary contained in this Agreement,
the Parent's and the Seller's obligation to indemnify the Buyer under this
Section 9.3 shall be limited (in respect of any claims for indemnification made
within a period of eighteen (18) months after Closing) in the aggregate to an
amount equal to Fifteen (15%) Percent of the Purchase Price as adjusted pursuant
to Section 2.2(d) and (e) and (in respect of any claims for indemnification made
after the date being eighteen (18) months after Closing up to and including the
date being twenty-four (24) months after Closing, provided that any such claims
shall be capable of being made only in respect of Tax) in the aggregate to an
amount equal to Seven (7%) Percent of the Purchase Price as adjusted pursuant to
Section 2.2(d) and (e).
9.4 CHANGE OF NAME
(a) Buyer hereby agrees and acknowledges to Seller and Parent that
Buyer, MII and the Operating Companies shall not be entitled
to use, adopt or purport to use the name "Metromedia" in any
manner. Seller and Parent hereby agree and undertake with the
Buyer that Seller shall at Closing change the name of MII to a
name chosen by the Buyer which does not include the word
"Metromedia" or anything confusingly similar thereto.
(b) Furthermore Seller and Parent hereby covenant with and
undertake to Buyer that neither of them shall at any time
after Closing use or adopt or purport to use or adopt the name
of any of the Operating Companies or any name similar thereto
for any purpose or do or say anything which is harmful to the
reputation of Operating any of the Operating Companies or use
of procure the use, in connection with any business, of any
name or any trade name used or owned by any of the Operating
Companies on Closing or any part or combination or
abbreviations thereof likely to be confused therewith or any
Intellectual Property owned or exclusively entitled to be used
by any of the Operating Companies.
31
9.5 OTHER TAX MATTERS
All transfer, documentary, sales, use, stamp, registration, value added
and other such Taxes and fees (including any penalties and interest)
incurred in connection with the transfer of the Shares shall be borne
and paid 50% by Buyer and 50% by Seller. Seller and Parent will file
all necessary Tax returns and other documentation with respect to all
such Taxes and fees, and, if required by applicable law, Buyer will,
and will cause its Related Persons to, as applicable, join in the
execution of any such Tax return and other documentation.
9.6 CO-OPERATION ON TAX MATTERS
(a) Buyer, on the one hand, and Seller and Parent, on the other
hand, shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the
preparation and filing of any Tax return, statement, report or
form and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include prompt
notification of the other party in the event of receipt of
notice of any pending or threatened audits or the commencement
of any litigation or other proceeding that reasonably could be
expected to affect the Tax liabilities of MII or any of the
Operating Companies for any pre-Closing Tax period, the
retention and (upon the other party's request) the provision
of records and information that are reasonably relevant to any
such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material
provided hereunder. Buyer and each of the Seller and Parent
agree to retain so long as reasonable all books and records
with respect to Tax matters pertinent to MII and the Operating
Companies relating to any pre-Closing Tax period, and to abide
by all record retention agreements entered into with any
Taxing authority;
(b) Buyer and Seller and Parent further agree, upon request, to
use all reasonable efforts to obtain any certificate or other
document from any governmental authority or customer of MII
and the Operating Companies or any other person as may be
necessary to mitigate, reduce or eliminate any Tax that could
be imposed (including, but not limited to, with respect to the
transactions contemplated hereby);
(c) If so requested by Buyer, Seller shall deliver to Buyer an
effective, irrevocable election, executed by Seller, under
Section 338(h)(10) of the Internal Revenue Code of 1986, as
amended, in form and substance satisfactory to Buyer, and
Seller and Parent shall have delivered all documents in
connection therewith as the Buyer may reasonably request.
32
10. TERMINATION
10.1 TERMINATION EVENTS. This Agreement may, by notice given prior to
or at the Closing, be terminated:
(a) by either Buyer or Seller if a material breach of any
provision of this Agreement has been committed by the other party and
such breach has not been cured within a period of ten (10) business
days after a written notice of such breach has been delivered by the
non-breaching party to the breaching party or waived by such date,
provided, however, that in the event that the Seller has not received
the deposit referred to in Section 2.2 (a) above one (1) day after the
Buyer has delivered its signature to this Agreement, the Seller may
terminate this Agreement with immediate effect.
(b) (i) by Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Buyer to comply with its obligations under this Agreement) and Buyer
has not waived such condition on or before the Closing Date; or (ii) by
Seller, if any of the conditions in Section 8 has not been satisfied as
of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Seller to comply
with its obligations under this Agreement) and Seller has not waived
such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Seller; or
(d) by either Seller or Buyer if the Closing has not occurred
(other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on
or before September 1, 2004, or such later date as the parties may
agree upon.
10.2 EFFECT OF TERMINATION. Each party's right of termination under
Section 10.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 10.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 11.1 and 11.3 will survive; provided, however,
that if this Agreement is terminated by a party because of the breach of the
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired; provided further that in the event of
termination of this Agreement for any reason other than (i) material breach by
Seller or Parent of their respective obligations hereunder or (ii) because one
or more of the conditions precedent to Buyer's obligations set out in Section
7.4 or Section 7.5 is not satisfied (in either of which cases such payment shall
be immediately refunded) Seller shall be entitled to keep indefinitely the
payment made by Buyer under Section 2.2(a) above.
33
11. GENERAL PROVISIONS
11.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants. In the event of termination
of this Agreement, the obligation of each party to pay its own expenses will be
subject to any rights of such party arising from a breach of this Agreement by
another party.
11.2 PUBLIC ANNOUNCEMENTS. Seller and Buyer shall consult together as
to terms of, timetable for and manner of publication of any public announcement
or similar publicity with respect to this Agreement or the Contemplated
Transactions, if at all, subject as aforesaid and as may required by law,
neither Seller nor Buyer shall make or authorize any announcement concerning the
subject matter of this Agreement
11.3 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, Buyer, Seller and Parent will maintain in confidence, and will
cause the directors, officers, employees, agents, and advisors of Buyer and the
Operating Companies to maintain in confidence, and not use to the detriment of
another party or an Acquired Company any written, oral, or other information
obtained in confidence from another party or an Acquired Company in connection
with this Agreement or the Contemplated Transactions, unless (a) such
information is already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available through no fault
of such party, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions, or (c) the furnishing or use of
such information is required by law or legal proceeding to be disclosed, in
which case the disclosing party shall limit such disclosure to that which is
absolutely necessary. If the Contemplated Transactions are not consummated, each
party will return or destroy as much of such written information as the other
party may reasonably request.
11.4 NOTICES. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Seller: Metromedia International Telecommunications, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: President and General Counsel
Facsimile No.: x0-000-000-0000
34
Parent: Metromedia International Group, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: President and General Counsel
Facsimile No.: x0-000-000-0000
Buyer: Communicorp Group Limited
0 Xxxxx Xxxxx Xxxx
Xxxxxx 0
Attention: Chief Executive
Facsimile No.: x000-0-0000000
with a copy to: XX Xxxxxxx Solicitors
00/00 Xxxxx Xxxxx Xxxxxx, Xxxxxx 0
Attention: Xxxxx Xxxxxxxx
Facsimile No.: + 353-1-661-0883
11.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of New York, County of New York, or, if it has or can acquire jurisdiction, in
the United States District Court for the Southern District of New York, and each
of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the world
pursuant to the provisions of Section 11.4 hereof.
11.6 FURTHER ASSURANCES. The parties agree, to the extent commercially
reasonable, (a) to furnish upon request to each other such further information,
(b) to execute and deliver to each other such other documents, and (c) to do
such other acts and things, all as the other party may reasonably request for
the purpose of carrying out the intent of this Agreement and the documents
referred to in this Agreement.
11.7 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
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11.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the parties.
11.9 ASSIGNMENT, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other party, which consent will not be unreasonably withheld, provided that
Buyer may assign any of its rights under this Agreement to any affiliate of
Buyer. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
11.10 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.11 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
11.12 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
11.13 GOVERNING LAW. This Agreement will be governed by the laws of the
State of New York without regard to conflicts of laws principles.
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11.14 COUNTERPARTS. This Agreement may be executed via facsimile and in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER:
By: /S/ XXXXX XXXXXXXX
-------------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
SELLER:
By: /S/ XXXXXX X. XXXX, III
-------------------------------------------------
Name: Xxxxxx X. Xxxx, III
Title: Vice President and Chief Financial
Officer
PARENT
By: /S/ XXXXXX X. XXXX, III
------------------------------------------------
Name: Xxxxxx X. Xxxx, III
Title: Executive Vice President and Chief Financial
Officer
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