Modification Agreement ("Elite Option Modification Agreement") dated as
of May 18, 1999 by and among PLD Telekom, Inc., a Delaware corporation (the
"Company"), Metromedia International Group, Inc., a Delaware corporation
("Parent"), Technocom Limited, a company incorporated under the Irish Companies
Acts 1963 to 1990 with registered number 183622 ("Technocom"), Elite
International Limited, a company incorporated under the Irish Companies Acts
1963 to 1990 with registered number 178152 ("Elite") and Xxxxx Xxxxxxxx.
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as the
date hereof (the "Merger Agreement"), by and among the Company, Parent and
Moscow Communications, Inc., a Delaware corporation and wholly owned subsidiary
of the Parent ("Merger Sub"), Merger Sub will merge with and into the Company
(the "Merger"), and following such Merger, the Company will become a
wholly-owned subsidiary of the Parent;
WHEREAS, the parties hereto desire to modify and then terminate (i) the
Put and Call Option Agreement, dated December 28, 1994, as amended, between the
Company and Elite (the "Put Agreement"), and (ii) the Share Purchase Agreement,
dated as of November 26, 1997, between Elite, Technocom and the Company
(collectively, the "Agreements");
WHEREAS, in connection with and as a condition precedent to the
obligations of the Parent and the Merger Sub to effect the Merger and consummate
the other transactions contemplated by the Merger Agreement, the parties are
entering into this Elite Option Modification Agreement in order to modify and
then terminate the Agreements; and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Purchase and Sale. Notwithstanding anything to the contrary
contained in any of the Agreements, on the Closing Date (as defined in the
Merger Agreement), in reliance on the representations and warranties and subject
to the terms and conditions set forth herein:
(a) the Company shall, and the Parent shall procure that the
Company shall, pay to Elite the sum of US $3,844,500 by wire transfer to an
account designated in advance by Elite and Elite shall sell, transfer and assign
to the Company its remaining 10 Ordinary Shares of Technocom (the "Shares") free
and clear of all security interests, pledges, rights of first refusal,
agreements, claims, charges, liens, encumbrances, options or rights of
pre-emption ("Liens");
(b) Elite shall deliver to the Company a transfer in respect
of the Shares duly executed by it in favor of the Company and a certificate for
the
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Shares and any other documents which may be required to give good title to the
Shares and to enable the Company to procure registration of the same in its name
or as it may direct; and
(c) All of the Agreements shall terminate, be void and of no
further force and effect.
2. Registration. The Company shall, following the Closing Date,
promptly deliver to the Revenue Commissioners of Ireland the share transfer
referred to in Section 1(b) above for assessment of stamp duty and shall
promptly pay the duty thus assessed. Prior to the registration of such duly
stamped stock transfer form in the register of shareholders of Technocom, Elite
shall, in respect of the Shares, cooperate in any manner required by the Company
for the convening, holding at short notice and conduct of general meetings of
Technocom, execute on a timely basis all proxy forms, appointments of
representatives, documents of consent to short notice and such others that the
Company may reasonably require and shall generally act in all respects as the
nominee and at the direction of the Company in respect of the Shares and all
rights and interests attached thereto.
3. Representations and Warranties. In order to induce the Company to
purchase the Shares, Elite hereby represents and warrants to the Company as
follows:
(a) Organization. Elite is a corporation duly organized,
validly existing and in good standing under the laws of Ireland.
(b) Due Authorization and Execution. Elite has all necessary
corporate power and authority to enter into this agreement and to consummate the
transactions contemplated herein. No additional corporate proceeding or action
on the part of Elite is necessary to authorize and approve the execution and
delivery of this agreement or the performance by Elite of its obligations under
this agreement other than actions already taken. This agreement has been duly
executed and delivered by Elite and, assuming due execution and delivery by the
Company, constitutes the legal, valid and binding obligation of Elite
enforceable against Elite in accordance with its terms.
(c) Conflicts. Neither the execution and delivery of, nor the
consummation of the transactions contemplated in, this agreement will result in
any of the following: (a) a violation of the charter, bylaws or other governing
instruments of Elite; (b) a default or an event that, with notice or lapse of
time, or both, would constitute a default, breach or violation of any contract,
agreement, license or instrument to which Elite is a party or by which it is
bound; (c) an event that would permit any person or entity to terminate any
contract, agreement, license or instrument to which Elite is a party relating to
the Shares or to accelerate the maturity of any obligation of Elite; (d) the
creation or imposition of any Lien (as defined below) upon the Shares of Elite;
(e) a violation or breach of any statute, ordinance, rule or regulation
applicable to Elite or the Company or any writ, injunction or decree of any
court or governmental instrumentality to which Elite or the Company is a party
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or by which any of its properties is bound; or (f) the necessity to obtain the
consent or approval of, or give notice to or register with any government or
nongovernment third party.
(d) Ownership. Except for the Shares, Elite does not own or
have any right to acquire any Ordinary Shares of Technocom or any other shares
of capital stock or equity of Technocom.
(e) No Liens. Each of the Shares to be delivered by Elite to
the Company pursuant to this agreement is duly authorized, validly issued, fully
paid, nonassessable and not subject to preemptive rights and each such share is
owned by Elite free and clear of all Liens except for those rights held by the
Company under any of the Agreements.
(f) Good Title. The transfer of the Shares from Elite to the
Company pursuant to Section 1(a) of this Agreement will convey good and valid
title to the Company in and to the Shares, free and clear of all Liens, except
for those rights held by the Company under any of the Agreements.
4. Revenue Matters. Elite hereby declares for purposes of the Financial
Transfers Act of 1992 of the Republic of Ireland that it is not resident in any
jurisdiction to which financial transfers within the meaning of such Act are
restricted by order of the Minister of Finance in accordance with the provisions
of that Act and does not hold the Shares and will not receive any part of the
consideration hereunder as nominee for any persons that so reside, and the
Company declares for the purpose of such Act that it is not so resident, it is
not acquiring the Shares as nominee for any persons so resident and it is not to
its knowledge controlled directly or indirectly with a person so resident.
5. Covenants.
(a) Elite hereby covenants with and undertakes to the Company
that it shall not at any time prior to the Closing Date dispose or attempt to
dispose, transfer or assign any interest in the Shares or grant any option over
or mortgage, charge or otherwise encumber or dispose of the Shares; provided,
that, Elite may transfer the Shares to any entity owned and controlled by Elite
as long as prior to such transaction such entity agrees to be bound by the terms
and provisions of this agreement and enters into an assumption agreement with
Parent in a form reasonably satisfactory to Parent evidencing such agreement to
be so bound. The parties agree that if Elite transfers the Shares as aforesaid,
such transferee shall be deemed to have assumed all rights and obligations under
the Agreements. From the date hereof until the earlier of (x) the Closing Date
or (y) the termination of this agreement pursuant to Section 6, Elite agrees
that it will not take any action under the Put Agreement to require either the
Parent or the Company to purchase the Shares or make any other payments.
(b) Elite hereby covenants with and undertakes to the Company
that it will as soon as reasonably practicable notify to the Company in
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writing any matter or thing which may arise or become known to it after the date
hereof and prior to the Closing Date which constitutes (or would with the
passage of time constitute) a breach of the representations and warranties or
breach of any of the covenants or undertakings or obligations of Elite under
this agreement.
(c) Elite hereby undertakes with the Company at the request
and at the expense of the Company to do or to procure to be done all such
further acts of things and execute or procure to be executed all such further
deeds and documents as may be necessary or desirable to (i) fully and
effectively vest in the Company the legal and beneficial ownership of the Shares
and the benefits of this Agreement and pending such vesting, Elite shall hold
such Shares and benefits in trust for the Company and shall receive all monies
in connection therewith as trustee of the Company and shall account to the
Company forthwith upon receipt thereof and (ii) acknowledge that the Agreements
have been terminated.
6. Termination.
(a) This agreement shall be effective so long as the Merger
Agreement is effective and shall terminate in the event that the Merger
Agreement is terminated or expires. The obligations of the parties hereto under
Sections 1 and 2 of this agreement are expressly conditioned upon the completion
of the transactions contemplated by the Merger Agreement. This agreement shall
in any event terminate at the option of Elite if the transactions contemplated
in Sections 1 and 2 have not taken place by October 31, 1999.
(b) If any material breach of the representations, warranties
or covenants contained herein shall come to the attention of either the Company
or Elite before the Closing Date or if any act or event shall occur which, had
it occurred on or before the date hereof, would have constituted a material
breach of the representations, warranties or covenants set forth herein, then
the Company shall at its own election terminate this agreement and its
obligations to purchase the Shares without any liability to Elite.
7. Consent. Each of Elite, Technocom and Xxxxx Xxxxxxxx hereby consent,
pursuant to the Shareholder Agreement (as defined in the Put Agreement), to (i)
the pledge, pursuant to the Pledge Agreement dated as of the date hereof (the
"Pledge Agreement"), made by the Company in favor of the Parent, by the Company
of 115 Ordinary Shares of Technocom to the Parent to secure certain loans being
made by the Parent to the Company pursuant to a Bridge Loan Agreement dated the
date hereof, (ii) the transfer of such 115 Ordinary Shares to the Parent in the
event the Parent forecloses on such shares in accordance with the terms of the
Pledge Agreement and (iii) hold a meeting of shareholders of Technocom and vote
to amend Technocom's Articles of Association as promptly as practicable to
permit the pledge of shares of Technocom and the transfer of such shares as
contemplated by the Pledge Agreement. The Parent acknowledges and agrees that
prior to the occurrence of an Event of Default (as defined in the Bridge Loan
Agreement, dated as of the date hereof between the Company and Parent) it shall
have no rights to control the management and operations of Technocom by virtue
of the Pledge Agreement. Parent
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further agrees that, in the event it forecloses on the shares of Technocom and
takes possession of such shares (i) neither Parent nor any of Parent's
subsidiaries or affiliates will enter into any transaction with Technocom
(including, without limitation, the issuance or subscription for additional
shares of Technocom) that is not consummated on an arm's length basis, (ii)
Parent will not cause Technocom to cease or propose to cease to carry on its
business or be wound up unless Technocom is insolvent, and (iii) to use its best
commercial efforts to ensure that any assignee or transferee of the Technocom
shares foreclosed upon by Parent is bound by the restrictions set forth in
clauses (i) and (ii) of this sentence.
8. Survival; Indemnification. (a) The representations, warranties and
covenants set forth in this Elite Option Modification Agreement shall survive
the consummation of the purchase of the Shares hereunder. Elite hereby
indemnifies and holds harmless, the Parent, the Company and their respective
officers, directors and affiliates from any claims, losses, damages, costs,
expenses (including attorney's fees and expenses) arising in connection with the
transfer by Elite of the Shares pursuant to this agreement that they suffer or
incur as a result of any breach or default of any representation, warranty or
covenant set forth herein.
(b) The total aggregate liability of Elite and Xxxxx Xxxxxxxx
to all other parties hereto arising out of or in connection with this agreement
shall be limited to the amount of consideration received by Elite from the
Company pursuant to Section 1(a).
9. Expenses. Each of the parties hereto shall pay its own fees,
expenses and other costs incurred in connection with the negotiation, execution
and delivery of this Agreement.
10. Governing Law. This agreement shall be governed in all respects by
the laws of the State of New York without reference to the choice of laws
principles thereof.
11. Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
12. No Amendment. No amendment, modification, termination or waiver or
any provision of this agreement shall be effective unless it shall be in writing
and signed by each of the parties to this agreement.
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IN WITNESS WHEREOF, this Elite Option Modification Agreement has been
duly executed and delivered by the parties hereto as of the date first written
above.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
PLD TELEKOM INC.
By: /s/ Xxxxx X.X. Xxxx
-------------------
Name: Xxxxx X.X. Xxxx
Title: Chairman, President and Chief
Executive Officer
ELITE INTERNATIONAL LIMITED
By: /s/ Xxxxx Xxxxxxxx
------------------
Name: Xxxxx Xxxxxxxx
Title: Director
TECHNOCOM LIMITED
By: /s/ Xxxxx X.X. Xxxx
-------------------
Name: Xxxxx X.X. Xxxx
Title: Director
/s/ Xxxxx Xxxxxxxx
------------------
XXXXX XXXXXXXX
