INVESTMENT AGREEMENT
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INVESTMENT AGREEMENT, dated as of May 2, 1997 (this "Agreement"), by
and among SEVEN NETWORK LIMITED, a corporation organized under the laws of
the Commonwealth of Australia ("Seven"); TRACINDA CORPORATION, a corporation
organized under the laws of the State of Nevada ("Tracinda"); and P&F
ACQUISITION CORP., a corporation organized under the laws of the State of
Delaware ("P&F").
A. P&F is a party to a Stock Purchase Agreement (the "Orion Stock
Purchase Agreement"), of even date herewith, among Metromedia International
Group, Inc., a corporation organized under the laws of the State of Delaware
("Metromedia"), Orion Pictures Corporation, a corporation organized under the
laws of the State of Delaware ("Orion"), and P&F, relating to the purchase by
P&F of all of the outstanding capital stock of Orion.
B. Seven and Tracinda are parties to a Stock Option Agreement (the
"Seven Option Agreement"), dated as of October 10, 1996, between Seven and
Tracinda, relating to 100,000 shares (the "Seven Option Shares") of the
Series A Convertible Preferred Stock of P&F (the "Preferred Stock").
C. Concurrently with the execution, and pursuant to the terms, of
the Orion Stock Purchase Agreement, and related documents and agreements, the
parties hereto have agreed to enter into an agreement embodying the terms
specified herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows;
ARTICLE I
DEFINITIONS
1.1. The following terms, as used herein, have the following meanings:
"Additional Shares" has the meaning given in Section 2.1.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Common Stock" means the common stock, par value $.01 per share, of P&F.
"Consent and Waiver" means a Consent and Waiver to have been entered
into by Xx. Xxxxxxx and each of the Other Executives relating to the
transactions contemplated herein.
"Investors Shareholder Agreement" means the Investors Shareholder
Agreement, dated as of October 10, 1996, by and among Seven, Tracinda, P&F,
MGM and Xx. Xxxxxxx.
"MGM" means Metro-Xxxxxxx-Xxxxx Inc., a corporation organized under the
laws of the State of Delaware.
"Metromedia" has the meaning given in the Preamble.
"Xx. Xxxxxxx" means Xxxxx X. Xxxxxxx.
"Option" means a Series A Option or a Series B Option issued under the
Plan, as applicable.
"Option Closing" has the meaning given in Section 3.1.
"Orion Closing" has the meaning given in Section 2.1.
"Orion Stock Purchase Agreement" has the meaning given in the Preamble.
"Orion Transaction" means the acquisition by P&F of the outstanding
capital stock of Orion on the terms and conditions set forth in the Orion
Stock Purchase Agreement and any related transactions contemplated by the
Orion Stock Purchase Agreement.
"Orion" has the meaning given in the Preamble.
"Other Executives" means the parties specified on the signature pages
to the Shareholders Agreement other than P&F, MGM, Seven, Tracinda and Xx.
Xxxxxxx.
"Plan" means the P&F Acquisition Corp. and Metro-Xxxxxxx-Xxxxx, Inc.
1996 Management Stock Option and Bonus Plan.
"Preferred Stock" has the meaning given in the Preamble.
"Seven Option Agreement" has the meaning given in the Preamble.
"Seven Option Shares" has the meaning given in the Preamble.
"Shareholders Agreement" means the Shareholders Agreement, dated as of
October 10, 1996, by and among Seven, Tracinda, P&F, MGM, Xx. Xxxxxxx, and
the Executives.
ARTICLE II
ACQUISITION OF ADDITIONAL SHARES OF COMMON STOCK
2.1. Simultaneously with the closing (the "Orion Closing") of the
Orion Transaction, Tracinda shall purchase from P&F, and P&F shall issue and
sell to Tracinda, 321,000 shares of Common Stock (the "Tracinda Additional
Shares") for a purchase price of $1,000 per share, or an aggregate purchase
price of $321 million (the "Tracinda Purchase Price"). Simultaneously with
the Orion Closing, Seven shall purchase from P&F, and P&F shall issue and
sell to Seven, 39,000 shares of Common Stock (the "Seven Additional Shares"
and, together with the Tracinda Additional Shares, the "Additional Shares"),
for a purchase price of $1,000 per share, or an aggregate purchase price of
$39 million (the "Seven Purchase Price").
2.2. Tracinda and Seven shall pay the Tracinda Purchase Price and the
Seven Purchase Price, respectively, for the Additional Shares to be purchased
by it, simultaneously with the Orion Closing, by wire transfer of immediately
available funds to an account or accounts of P&F designated in writing by P&F
to each of Tracinda and Seven at least three Business Days before the Orion
Closing.
2.3. At the Orion Closing, P&F shall deliver to each of Tracinda and
Seven a certificate representing the shares of Common Stock being issued to
such purchaser, with such legends affixed to the reverse thereof as are
required by Section 4.1(b) of the Shareholders Agreement and Section 4.1(c)
of the Investors Shareholder Agreement. Each of the parties hereto
acknowledges and agrees that the Additional Shares are subject to the terms
of the Shareholders Agreement and the Investors Shareholder Agreement.
ARTICLE III
EXERCISE OF OPTION
3.1. Seven hereby irrevocably and unconditionally exercises its option
pursuant to Section 1(b) of the Seven Option Agreement to acquire the Seven
Option Shares from Tracinda. The closing of the sale of such shares of
Preferred Stock under such option exercise (the "Option Closing") shall take
place at the earlier of (i) June 30, 1997 or (ii) the Orion Closing. At the
Option Closing, Seven shall deliver to Tracinda the option exercise price of
$100.0 million plus the Option Payment Amount (as defined in Section 1(c) of
the Seven Option Agreement) for the Commitment Payment Period (as defined in
Section 1(c) of the Seven Option Agreement) then ending by wire transfer of
immediately available funds to an account or accounts designated in writing
by Tracinda to Seven at least three Business Days before the Option Closing,
and Tracinda shall deliver to Seven a certificate for the Seven Option Shares
in the name of Seven or accompanied by a duly executed stock power.
3.2. P&F hereby agrees to record the transfer of the Seven Option
Shares on the books of P&F, and to issue a certificate in the name of Seven
representing the Seven Option Shares upon the request of Tracinda or Seven,
upon receipt by P&F of the certificate representing the shares to be
transferred by Tracinda, together with a duly endorsed stock power, and any
representation P&F shall reasonably request with respect to Seven's
investment intent. Any certificate for the Seven Option Shares issued in the
name of Seven shall have such legends affixed to the reverse thereof as are
required by Section 4.1(b) of the Shareholders Agreement and Section 4.1(c)
of the Investors Shareholder Agreement.
3.3. This Agreement constitutes the notice required with respect to
such option exercise under Section 1(d) of the Seven Option Agreement. At
the Option Closing, Tracinda agrees to deliver shares of Preferred Stock that
comply with the title and absence of restrictions requirements of Section
2(b) of the Seven Option Agreement. To the extent any of the terms of this
Article III are inconsistent with the notice and closing provisions set forth
in Section 1 of the Seven Option Agreement, the Seven Option Agreement shall
be deemed to be amended to be consistent with this Article III.
3.4. Each of the parties hereto agrees that the sale hereunder of the
Seven Option Shares complies with the terms of the Shareholders Agreement and
Investor Shareholders Agreement relating to the transfer of interests in the
capital stock of P&F and consents to such sale. Each of the parties hereto
acknowledges and agrees that the Seven Option Shares are subject to the terms
of the Shareholders Agreement and the Investor Shareholder Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of P&F. P&F hereby represents and
warrants to the other parties hereto as follows: (i) P&F has all requisite
corporate power and authority to enter into this Agreement and to consummate
the transactions set forth in Articles II and III hereof; (ii) the execution
and delivery by P&F of this Agreement, and the consummation by P&F of the
transactions set forth in Articles II and III hereof, have been duly
authorized by all necessary corporate action on the part of P&F, including,
but not limited to, Unanimous Investor/Xxxxxxx Approval; (iii) all of the
transactions contemplated by the Orion Stock Purchase Agreement have received
Unanimous Investor/Xxxxxxx Approval; (iv) this Agreement has been duly
executed and delivered by P&F and constitutes a valid and binding obligation
of P&F enforceable against P&F in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally or general principles of
equity; (v) no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, is
required by, or with respect to, P&F in connection with the execution and
delivery of this Agreement by P&F or the consummation by P&F of the
transactions set forth in Articles II and III hereof; (vi) the execution and
delivery of this Agreement by P&F and the consummation of the transactions
set forth in Articles II and III hereof by P&F does not conflict with, or
result in a breach of, any law or regulation of any governmental authority
applicable to P&F or any material agreement to which P&F is a party; (vii)
when issued and paid for in accordance with the provisions of Article II
hereof, the shares of Common Stock sold to Tracinda and Seven pursuant to
Article II hereof shall be duly authorized, validly issued, fully paid,
nonassessable, and free of any claims or encumbrances, other than (a) any
claims or encumbrances resulting from actions taken by Tracinda or Seven with
respect to the shares to be received by it hereunder, or (b) pursuant to the
Investors Shareholder Agreement or the Shareholders Agreement; and (viii)(r)
P&F has received an executed Consent and Waiver from Xx. Xxxxxxx and at least
a majority of the Other Executives who, collectively with Xx. Xxxxxxx,
constitute holders of a majority of the outstanding Series A Options and
outstanding Series B Options, (s) each Consent and Waiver executed on or
prior to the date hereof is in full force and effect on the date hereof, each
Consent and Waiver will be in full force and effect as of the Closing Date,
and each Consent and Waiver is, and on the Closing Date will be, valid,
binding, and enforceable against the party who signed it, and (t) executed
Consents and Waivers received by P&F represent Options constituting at least
a Majority-in-Interest (as defined in the Plan).
4.2. Representations and Warranties of Seven. Seven hereby represents
and warrants to the other parties hereto as follows: (i) Seven has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions set forth in Articles II and III hereof; (ii) the
execution and delivery by Seven of this Agreement, and the consummation by
Seven of the transactions set forth in Articles II and III hereof, have been
duly authorized by all necessary corporate action on the part of Seven;
(iii) this Agreement has been duly executed and delivered by Seven and
constitutes a valid and binding obligation of Seven enforceable against Seven
in accordance with its terms, except as the enforceability hereof may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally or general principles of equity; (iv) no consent, approval,
order or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign is required by, or with respect to,
Seven in connection with the execution and delivery by Seven of this
Agreement or the consummation by Seven of the transactions set forth in
Articles II and III hereof; and (v) the execution and delivery by Seven of
this Agreement and the consummation by Seven of the transactions set forth in
Articles II and III hereof does not conflict with, or result in a breach of,
any law or regulation of any governmental authority applicable to Seven or
any material agreement to which Seven is a party.
4.3. Representations and Warranties of Tracinda. Tracinda hereby
represents and warrants to the other parties hereto as follows: (i) Tracinda
has all requisite corporate power and authority to enter into this Agreement
and to consummate the transactions set forth in Articles II and III hereof;
(ii) the execution and delivery by Tracinda of this Agreement, and the
consummation by Tracinda of the transactions set forth in Articles II and III
hereof, have been duly authorized by all necessary corporate action on the
part of Tracinda; (iii) this Agreement has been duly executed and delivered
by Tracinda and constitutes a valid and binding obligation of Tracinda
enforceable against Tracinda in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally or general principles of
equity; (iv) no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, is required by, or with respect to, Tracinda in connection with the
execution and delivery of this Agreement by Tracinda or the consummation by
Tracinda of the transactions set forth in Articles II and III hereof; (v) the
execution and delivery of this Agreement by Tracinda and the consummation by
Tracinda of the transactions set forth in Articles II and III hereof does not
conflict with, or result in a breach. of, any law or regulation of any
governmental authority applicable to Tracinda or any material agreement to
which Tracinda is a party, and (vi) the Seven Option Shares, upon exercise of
the option and payment therefor in accordance with Article III hereof and the
Seven Option Agreement, will be transferred to Seven or its permitted
assignee free and clear of all liens, claims, charges, encumbrances or other
similar restrictions, other than the restrictions specified in the
Shareholders Agreement and the Investors Shareholder Agreement.
ARTICLE V
COVENANTS
5.1. Subject to the terms and conditions of this Agreement, each party
hereto will use its best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things reasonably necessary or reasonably
desirable to consummate the transactions contemplated by this Agreement.
5.2. P&F shall seek to obtain, prior to the Orion Closing, an executed
Consent and Waiver from each holder of Options who has not delivered a
Consent and Waiver prior to the execution of this Agreement. Following the
Closing, P&F shall seek to obtain, upon the execution by any Other Executive
of a Stock Option Agreement after the date of the Orion Closing which relates
to any Option granted prior to the Orion Closing, a Consent and Waiver from
such Other Executive.
ARTICLE VI
CONDITIONS TO CLOSING
The obligations of each of Seven, Tracinda and P&F to consummate its
obligations pursuant to Article II hereof are subject to the satisfaction on
or prior to the Orion Closing of each of the following conditions:
6.1. All of the conditions to the obligations of the parties to the
Orion Stock Purchase Agreement to be performed at or prior to the Orion
Closing shall have been satisfied or waived, and the Orion Closing shall
occur simultaneously with the consummation of the transactions set forth in
Article II hereof.
6.2. The New Orion Credit Facility (as defined in the Orion Stock
Purchase Agreement) shall be in full force and effect, with full funds
available thereunder, on substantially the terms and conditions set forth in
the Bank Commitment Letter (as defined in the Orion Stock Purchase Agreement).
6.3. (a) Each other party hereto shall have performed and satisfied
each of its obligations hereunder required to be performed or satisfied
hereunder at or prior to the Orion Closing, (b) each of the representations
and warranties of each other party hereto contained in this Agreement shall
be true and correct, at and as of the date of the Orion Closing, with the
same force and effect as if made on the date of the Orion Closing, (c) each
party hereto shall have received a certificate of an officer of each other
party hereto, that the foregoing is true and correct as to such party.
ARTICLE VII
GENERAL PROVISIONS
7.1. Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered
mail (return receipt requested and first-class postage prepaid), addressed as
follows:
If to P&F, to:
P&F Acquisition Corp.
0000 Xxxxxxxx
Xxxxx Xxxxxx, XX 00000-0000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Tracinda Corporation
0000 Xxxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Tracinda, to:
Tracinda Corporation
0000 Xxxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Secretary/Treasurer
Telecopy: (000) 000-0000
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, P.C.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Seven, to:
Seven Network Limited
c/o Culmen Group, L.P.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and:
XXX0
Xxxxx Xxxx
Xxxxxx XXX 0000, Xxxxxxxxx
Attention: Xxxx Xxxx, Managing Director
Telephone: (000) 000-0000
Telecopy: (000) 000-0000 or (000) 000-0000
with a copy to:
Xxxxx, Xxxx & Xxxxxxx
000 Xxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: F. Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address as any party shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of the date
so telecommunicated, personally delivered or mailed.
7.2. Expenses. Subject to the occurrence of the Orion Closing, P&F
shall pay all out-of-pocket expenses (including, but not limited to,
attorneys' fees and expenses) incurred by Tracinda and Seven, in connection
with the Orion Transaction and the transactions contemplated by this
Agreement, promptly upon the delivery to P&F of documentation thereof.
7.3. Assignment; Binding Effect; Benefit; Successors. (a) Except as
otherwise expressly provided in this Agreement, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise);
provided, however, that each of Tracinda and Seven may assign its rights
under this Agreement to any of their respective direct or indirect wholly
owned Subsidiaries so long as (i) such assignee agrees to be bound by the
terms of this Agreement to the same extent as the applicable assignor,
pursuant to a written agreement with P&F that is reasonably acceptable to it,
(ii) the applicable assignor continues to be bound by, and is not released
from, any of its obligations under this Agreement and (iii) the applicable
assignor will cause the applicable direct or indirect wholly owned subsidiary
to continue to be a direct or indirect wholly owned subsidiary of the
applicable assignor for so long as such assignee shall have any rights under
this Agreement. For the purpose of this Agreement, all capital stock of P&F
owned by any direct or indirect wholly owned Subsidiary of Tracinda or Seven,
as applicable, shall be deemed owned by Tracinda or Seven, as applicable.
Subject to the first sentence of this Section 7.3(a), this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Except as expressly provided in this
Agreement, notwithstanding anything contained in this Agreement to the
contrary, nothing in this Agreement, express or implied, is intended to
confer on any person other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(b) In the event that P&F or MGM shall enter into a merger,
consolidation or other similar type transaction, all of the terms of this
Agreement relating to P&F and MGM, as applicable, shall apply to the
surviving corporation.
7.4. Entire Agreement. This Agreement, the exhibits and schedules
hereto and any certificate delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings (oral
and written) among the parties with respect thereto.
7.5. Certain Remedies. If either Seven or Tracinda shall not purchase
Additional Shares at the Orion Closing as required by Article II hereof, the
other Investor shall have the right, but not the obligation, to purchase such
other Investor's Additional Shares pursuant to Article II hereof. The
decision by an Investor to purchase shares of Common Stock which the other
Investor had been obligated to purchase pursuant to Article II hereof shall
not be deemed to affect or eliminate any other remedy available to any other
party hereto under applicable law or the terms of this Agreement. In
addition, if financing in addition to the sum of (a) the Tracinda Purchase
Price, (b) the Seven Purchase Price, and (c) any available bank financing, is
required for P&F to consummate the Orion Transaction, then Tracinda shall
have the right, but not the obligation, to provide such additional financing
by purchasing additional shares of Common Stock at the same purchase price
per share, and on the same terms and conditions, as provided in Article II
with respect to the Tracinda Additional Shares.
7.6. Termination. The obligations of the parties under Article II
hereof shall terminate without further action upon the termination of the
Orion Stock Purchase Agreement in accordance with the terms thereof. Except
as expressly provided in this Section 7.6, this Agreement shall only be
terminable upon the written agreement of all parties hereto.
7.7. Amendment. This Agreement may not be amended or modified except
by an instrument in writing signed by or on behalf of each of the parties
hereto.
7.8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware (without
regard to conflict of laws principles which would require the application of
the laws of any other State). Each party hereto hereby consents to process
being served in any action or proceeding in respect of this Agreement by the
mailing of a copy thereof to the address set forth in Section 7.1 hereof and
agrees that such service upon receipt shall constitute good and sufficient
service of process or notice thereof. Nothing in this Section 7.8 shall
affect or eliminate any right to serve process in any other matter permitted
by law.
7.9. Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
of this Agreement, each of which may be signed by less than all of the
parties hereto, but together all such copies are signed by all of the parties
hereto.
7.10. Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only and shall be given no substantive or
interpretive effect whatsoever.
7.11. Interpretation. In this Agreement unless the context otherwise
requires, words describing the singular number shall include the plural and
vice versa, "including" shall mean including, without limitation, and words
denoting any gender shall include all genders and words denoting natural
persons shall include corporations and partnerships and vice versa.
7.12. Incorporation of Exhibits and Schedules. All exhibits and
schedules hereto are hereby incorporated herein and made a part hereof for
all purposes as if fully set forth herein.
7.13. Severability. Any term or provisions of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or otherwise affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
7.14. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any Delaware
court, this being in addition to any other remedy to which they may be
entitled at law or in equity.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf as of the day and year first
written above.
SEVEN NETWORK LIMITED
By:
Xxxxx Xxxxxx
Chairman
TRACINDA CORPORATION
By:
Xxxxxxx Xxxxxxxx
Secretary/Treasurer
P&F ACQUISITION CORP.
By:
Xxxxx X. Xxxxxxx
Executive Vice President
The undersigned, an indirect wholly
owned subsidiary of Seven Network
Limited, hereby agrees to be bound by
the terms of this Agreement to the same
extent as Seven Network Limited.
MILTONSTAR PTY LIMITED
By:
Xxxxx Xxxxxx
Chairman
