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AGREEMENT AND PLAN OF MERGER
among
PLD TELEKOM INC.,
METROMEDIA INTERNATIONAL GROUP, INC.
and
MOSCOW COMMUNICATIONS, INC.
Dated as of May 18, 1999
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TABLE OF CONTENTS
Page
RECITALS.......................................................................1
ARTICLE 1 THE MERGER...............................................2
Section 1.1 The Merger...............................................2
Section 1.2 Closing..................................................2
Section 1.3 Effective Time...........................................2
Section 1.4 The Certificate of Incorporation.........................2
Section 1.5 The By-Laws..............................................2
Section 1.6 Directors of Surviving Corporation.......................2
Section 1.7 Officers of Surviving Corporation........................3
ARTICLE 2 EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES.................................3
Section 2.1 Effect on Capital Stock..................................3
Section 2.2 Exchange of Certificates for Shares......................6
Section 2.3 No Appraisal Rights.....................................10
Section 2.4 Adjustments to Prevent Dilution.........................10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.................................................10
Section 3.1 Organization and Qualification; Subsidiaries............10
Section 3.2 Certificate of Incorporation and By-Laws................11
Section 3.3 Capitalization..........................................11
Section 3.4 Authority...............................................13
Section 3.5 No Conflict.............................................13
Section 3.6 Governmental Required Filings and Consents..............14
Section 3.7 Permits; Compliance with Law............................14
Section 3.8 Securities and Exchange Commission ("SEC") Filings;
Financial Statements....................................15
Section 3.9 Absence of Certain Changes or Events....................16
Section 3.10 Employee Benefit Plans..................................17
Section 3.11 Accounting and Tax Matters..............................17
Section 3.12 Contracts; Debt Instruments.............................18
Section 3.13 Litigation..............................................18
Section 3.14 Environmental Matters...................................18
Section 3.15 Intellectual Property...................................20
Section 3.16 Taxes...................................................23
Section 3.17 Non-Competition Agreements..............................24
Section 3.18 Certain Agreements......................................24
Section 3.19 Investment Company Act..................................24
Section 3.20 Opinion of Financial Advisor............................24
Section 3.21 Brokers.................................................24
Section 3.22 Certain Statutes........................................25
Page
Section 3.23 Information.............................................25
Section 3.24 Vote Required...........................................25
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGER SUB............................26
Section 4.1 Organization and Qualification; Subsidiaries............26
Section 4.2 Certificate of Incorporation and By-Laws................26
Section 4.3 Capitalization..........................................27
Section 4.4 Authority...............................................28
Section 4.5 No Conflict.............................................28
Section 4.6 Governmental Required Filings and Consents..............29
Section 4.7 Permits; Compliance with Law............................29
Section 4.8 SEC Filings; Financial Statements.......................30
Section 4.9 Absence of Certain Changes or Events....................31
Section 4.10 Employee Benefit Plans..................................32
Section 4.11 Accounting and Tax Matters..............................32
Section 4.12 Contracts; Debt Instruments.............................32
Section 4.13 Litigation..............................................33
Section 4.14 Environmental Matters...................................33
Section 4.15 Intellectual Property...................................34
Section 4.16 Taxes...................................................35
Section 4.17 Non-Competition Agreements..............................36
Section 4.18 Investment Company Act..................................37
Section 4.19 Opinion of Financial Advisor............................37
Section 4.20 Brokers.................................................37
Section 4.21 Certain Statutes........................................37
Section 4.22 Information.............................................37
Section 4.23 Vote Required...........................................38
Section 4.24 Interim Operations of Merger Sub........................38
ARTICLE 5 COVENANTS...............................................38
Section 5.1 Conduct of Business of the Company......................38
Section 5.2 Conduct of Business of the Parent.......................40
Section 5.3 Other Actions...........................................42
Section 5.4 Updated Letters; Notification of Certain Matters........42
Section 5.6 Stockholders Meetings...................................45
Section 5.7 Access to Information; Confidentiality..................45
Section 5.8 No Solicitation.........................................46
Section 5.9 Affiliates..............................................48
Section 5.10 Directors' and Officers' Indemnification and Insurance..48
Section 5.11 Letters of Accountants..................................49
Section 5.12 Reasonable Best Efforts.................................49
Section 5.13 Consents; Filings; Further Action.......................50
Section 5.14 Plan of Reorganization..................................51
Section 5.15 Public Announcements....................................51
Page
Section 5.16 Obligations of Merger Sub...............................51
Section 5.17 Stock Exchange Listings and De-Listings.................52
Section 5.18 Expenses................................................52
Section 5.19 Takeover Statutes.......................................52
Section 5.20 Board of Directors......................................52
ARTICLE 6 CONDITIONS..............................................52
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger..................................................52
(a) Stockholder Approval....................................52
(b) Listing.................................................53
(c) Governmental Consents...................................53
(d) Litigation..............................................53
(e) Registration Statement..................................53
(f) Accountants' Letters....................................53
Section 6.2 Conditions to Obligations of the Parent and Merger Sub..53
(a) Representations and Warranties..........................54
(b) Performance of Obligations of the Company...............54
(c) Material Adverse Effect.................................54
(d) Consents Under Agreements...............................54
(e) Affiliate Letters.......................................54
(f) The Travelers Revolving Credit Note and
Warrant Agreement.......................................54
(g) Exchange Offer..........................................54
(h) Technocom Limited Put/Call Agreements...................55
(i) News Arrangements.......................................55
(j) Certain Payments........................................55
Section 6.3 Conditions to Obligation of the Company.................55
(a) Representations and Warranties..........................55
(b) Performance of Obligations of the Parent and
Merger Sub..............................................56
(c) Tax Opinion.............................................56
(d) Material Adverse Effect.................................56
ARTICLE 7 TERMINATION.............................................56
Section 7.1 Termination.............................................56
Section 7.2 Effect of Termination...................................57
Section 7.3 Amendment...............................................58
Section 7.4 Waiver..................................................58
Section 7.5 Expenses following Termination..........................58
ARTICLE 8 MISCELLANEOUS...........................................59
Section 8.1 Certain Definitions.....................................59
Section 8.2 Non-Survival of Representations, Warranties and
Agreements..............................................60
Section 8.3 Counterparts............................................61
Page
Section 8.4 GOVERNING LAW AND VENUE; WAIVER OF JURY
TRIAL...................................................61
Section 8.5 Notices.................................................62
Section 8.6 Entire Agreement........................................62
Section 8.7 No Third Party Beneficiaries............................63
Section 8.8 Obligations of the Parent and of the Company............63
Section 8.9 Severability............................................63
Section 8.10 Interpretation..........................................63
Section 8.11 Assignment..............................................63
Section 8.12 Specific Performance....................................64
EXHIBITS
Exhibit A Company Voting Agreements
Exhibit B Travelers Note and Warrant Modification Agreement
Exhibit C Agreement to Exchange and Consent
Exhibit D Technocom Put/Call Arrangement
Exhibit E News Letter Agreement
COMPANY DISCLOSURE LETTER
Section 3.1(b) Company Subsidiaries
Section 3.3(b) Other Stock Option Agreements
Section 3.3(c) Liens on Capital Stock; Material Obligations
Section 3.5(b) Conflicts
Section 3.6 Governmental Consents
Section 3.8(a) Filing Subsidiaries
Section 3.9(e) Certain Changes
Section 3.10(a) Benefit Plans
Section 3.12 Material Contracts
Section 3.14 Environmental Matters
Section 3.15(a)(i) Intellectual Property
Section 3.15(a)(ii) Licenses
Section 3.15(a)(iii) Proposed Intellectual Property Agreements
Section 3.16(a) Taxes
Section 3.16(b) Tax Extensions
Section 3.16(c) Tax Claims
Section 3.17 Non-Competition Agreements
Section 3.18 Certain Agreements
Section 5.1 Conduct of Business
Section 5.1(f) Asset Transactions
Section 6.2(j) Waivers
Page
PARENT DISCLOSURE LETTER
Section 4.1(a) Organization
Section 4.1(b) Parent Subsidiaries
Section 4.3(b) Other Stock Option Agreements
Section 4.3(c) Liens on Capital Stock; Material Obligations
Section 4.5(a)(i) Violations
Section 4.5(b) Conflicts
Section 4.6 Governmental Consents
Section 4.7 Permits
Section 4.10(a) Benefit Plans
Section 4.12 Material Contracts; Changes in Indebtedness
Section 4.14 Environmental Matters
Section 4.15(a)(i) Intellectual Property
Section 4.15(a)(ii) Licenses
Section 4.15(a)(iii) Proposed Intellectual Property Agreements
Section 4.16(a) Taxes
Section 4.16(c) Tax Extensions
Section 4.16(d) Tax Claims
Section 4.17 Non-Competition Agreements
Section 5.2 Conduct of Business
Section 5.2(d) Asset Transactions
Section 5.5 Terms of New Notes; Terms of Exchange Offer
INDEX OF DEFINED TERMS
Term Section
affiliate................................................... 8.1(a)
Affiliate Letters........................................... 5.9
Agreement................................................... Title
Average Parent Stock Price.................................. 2.1(a)(i)
Benefit Plans............................................... 3.10(a)
Blue Sky Laws............................................... 3.6
Bridge Loan Agreement....................................... 5.1(g)
business day................................................ 8.1(b)
Certificate................................................. 2.1(a)(i)
Certificate of Merger....................................... 1.3
Claims...................................................... 3.13
Closing..................................................... 1.2
Closing Date................................................ 1.2
Code........................................................ Recitals
Company..................................................... Title
Company Benefit Plans....................................... 3.10(a)
Company Charter Documents................................... 3.2
Company Common Stock........................................ 2.1(a)(i)
Company Disclosure Letter................................... 3.1(b)
Company Financial Advisor................................... 3.20
Company Governmental Consents............................... 3.6
Company Permits............................................. 3.7
Company Preferred Shares.................................... 2.1(a)(ii)
Company Preferred Stock..................................... 3.3(a)
Company Required Consents................................... 3.5(b)
Company SEC Reports......................................... 3.8(a)
Company Senior Notes........................................ 5.5(a)
Company Series II Preferred Stock........................... 2.1(a)(ii)
Company Series III Preferred Stock.......................... 2.1(a)(ii)
Company Share............................................... 2.1(a)
Company Shares.............................................. 2.1(a)
Company Stock Option........................................ 2.1(b)
Company Stockholders Meeting................................ 5.5(a)
Company Subsidiaries........................................ 3.1(a)
Company Voting Agreement.................................... Recitals
Company Warrant............................................. 2.1(b)
Company's Option Plan....................................... 3.3(b)
Confidentiality Agreement................................... 5.7(b)
Contracts................................................... 3.5(a)(iii)
control..................................................... 8.1(a)
controlled by............................................... 8.1(a)
controlling................................................. 8.1(a)
Term Section
Convertible Notes........................................... 2.1(b)
Effective Time.............................................. 1.3
Environment................................................. 3.14
Environmental Claims........................................ 3.14
ERISA....................................................... 3.10(a)
Excess Parent Shares........................................ 2.2(d)(i)
Exchange Act................................................ 3.6
Exchange Agent.............................................. 2.2(a)(i)
Exchange Offer.............................................. 5.5(a)
Exchange Offer Registration Statement....................... 5.5(a)
Exchange Ratio ............................................. 2.1(a)(i)
Exchange Trust.............................................. 2.2(d)(i)
Excluded Company Shares..................................... 2.1(a)(i)
Expenses.................................................... 7.5(a)
FCPA........................................................ 3.7
GAAP........................................................ 3.8(b)
GCL......................................................... Recitals
Governmental Entity......................................... 3.6
group....................................................... 8.1(d)
Hazardous Substance......................................... 3.14
HSR Act..................................................... 3.6
including................................................... 8.1(c)
Indemnified Parties......................................... 5.10(a)
Intellectual Property....................................... 3.15(a)(ii)
Investment Company Act...................................... 3.19
IP Licenses................................................. 3.15(a)(ii)
Law......................................................... 3.5(a)(ii)
Liens....................................................... 3.3(c)
Material Adverse Effect on the Company...................... 3.1(a)
Material Adverse Effect on the Parent....................... 4.1(a)
Merger...................................................... Recitals
Merger Consideration........................................ 2.1(a)(i)
Merger Sub.................................................. Title
Merging Parties............................................. 3.14
MIG Form 10K................................................ 4.2
New Parent Notes............................................ 5.5(a)
News........................................................ 6.2(i)
News Notes.................................................. 3.3(b)
PLD Form 10K................................................ 3.2
Parent...................................................... Title
Parent Benefit Plans........................................ 4.10(a)
Parent Charter Documents.................................... 4.2
Parent Common Stock......................................... 2.1(a)(i)
Parent Disclosure Letter.................................... 4.1(b)
Term Section
Parent Financial Advisor.................................... 4.18
Parent Governmental Consents................................ 4.6
Parent Material Contract.................................... 4.12
Parent Permits.............................................. 4.7
Parent Preferred Stock...................................... 4.3(a)
Parent SEC Reports.......................................... 4.8(a)
Parent Stock Options........................................ 4.3(b)
Parent Stockholders Meeting................................. 5.5(a)
Parent Subsidiaries......................................... 4.1(a)
Parent's Option Plan........................................ 4.3(b)
Permits..................................................... 3.14
person...................................................... 8.1(d)
Proposed Intellectual Property Agreements................... 3.15(a)(iii)
Proxy Materials............................................. 5.5(a)
Proxy Statement............................................. 5.5(a)
Qualified Transaction Proposal.............................. 5.8(a)
Redemption Payment.......................................... 2.1(a)(ii)
Registration Statement...................................... 5.5(a)
Registration Statement Effective Date....................... 5.5(a)
Release..................................................... 3.14
Representatives............................................. 5.7(a)
Requisite Company Vote...................................... 3.4(a)
Requisite Parent Vote....................................... 4.4
Safety and Environmental Laws............................... 3.14
SEC......................................................... 3.8
Securities Act.............................................. 3.6
7 1/4% Preferred Stock......................................... 4.3(a)
Shareholders................................................ Recitals
Software.................................................... 3.15(a)(ii)
Sub Common Stock............................................ 4.3(d)
subsidiary.................................................. 8.1(e)
subsidiaries................................................ 8.1(e)
Superior Acquisition Proposal............................... 5.8(b)
Surviving By-Laws........................................... 1.5
Surviving Charter........................................... 1.4
Surviving Corporation....................................... 1.1
Systems..................................................... 3.15(g)
Takeover Statute............................................ 3.22
Taxes....................................................... 3.16
Technology.................................................. 3.15(a)(ii)
Terminating Company Breach.................................. 7.1(f)
Terminating Parent Breach................................... 7.1(g)
Termination Amount.......................................... 7.5(b)
Termination Notice.......................................... 2.1(a)(i)(D)
Term Section
Topped-Up Exchange Ratio.................................... 2.1(a)(i)(D)
Top-Up Request Notice....................................... 2.1(a)(i)(D)
Transaction Proposals....................................... 5.8(a)
under common control with................................... 8.1(a)
Year 2000 Compliant......................................... 3.15(g)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of May 18,
1999, among PLD Telekom Inc., a Delaware corporation (the "COMPANY"), Metromedia
International Group, Inc., a Delaware corporation (the "PARENT"), and Moscow
Communications, Inc., a Delaware corporation and a wholly owned subsidiary of
the Parent ("MERGER SUB").
RECITALS
WHEREAS, the respective boards of directors of each of the Parent,
Merger Sub and the Company have determined that it is in the best interests of
their respective stockholders to combine the respective businesses of the Parent
and the Company, and consequently have approved the merger of Merger Sub with
and into the Company (the "MERGER") and approved and adopted the Merger, in
accordance with the General Corporation Law of the State of Delaware (the "GCL")
and upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, it is intended that, for federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "CODE"), and the rules and
regulations promulgated under the Code;
WHEREAS, concurrently with the execution of this Agreement, as a
condition to the willingness of the Parent to enter into this Agreement, (i)
certain holders (the "SHAREHOLDERS") of Company Shares (as defined below) are
entering into the Voting Agreement with the Parent, a copy of which is attached
to this Agreement as Exhibit A (the "COMPANY VOTING AGREEMENT"), providing for,
among other things, the agreement of the Shareholders to vote their respective
Company Shares in favor of approval and adoption of this Agreement and the
Merger at the Company Shareholders Meeting (as defined below);
WHEREAS, certain terms used in this Agreement which are not capitalized
have the meanings specified in Section 8.1; and
WHEREAS, the Company, the Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained in this
Agreement, the parties agree as follows:
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ARTICLE 1
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time, Merger Sub shall be merged
with and into the Company and the separate corporate existence of Merger Sub
shall cease. The Company shall be the surviving corporation in the Merger
(sometimes referred to as the "SURVIVING CORPORATION") and shall continue to be
governed by the laws of the State of Delaware, and the separate corporate
existence of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger. The Merger shall have the
effects set forth in Section 259 of the GCL.
SECTION 1.2 CLOSING. The closing of the Merger (the "CLOSING") shall
take place (a) at the offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, New
York, New York at 10:00 A.M. on the business day on which the last to be
fulfilled or waived of the conditions set forth in Article 6 (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions) shall be satisfied or waived
in accordance with this Agreement or (b) at such other place and time and/or on
such other date as the Company and the Parent may agree in writing (the "CLOSING
DATE").
SECTION 1.3 EFFECTIVE TIME. As soon as practicable following the
Closing, the Company and the Parent will cause a Certificate of Merger (the
"CERTIFICATE OF MERGER") to be signed, acknowledged and delivered for filing
with the Secretary of the State of Delaware as provided in Section 251 of the
GCL. The Merger shall become effective at the time when a Certificate of Merger
has been duly filed with the Secretary of State of the State of Delaware or such
other time as shall be agreed upon by the parties and set forth in the
Certificate of Merger and in accordance with the GCL (the "EFFECTIVE TIME").
SECTION 1.4 THE CERTIFICATE OF INCORPORATION. The certificate of
incorporation of Merger Sub in effect immediately prior to the Effective Time
shall, from and after the Effective Time, be the certificate of incorporation of
the Surviving Corporation (the "SURVIVING CHARTER"), until duly amended as
provided in the Surviving Charter or by applicable law.
SECTION 1.5 THE BY-LAWS. The by-laws of Merger Sub in effect at the
Effective Time shall, from and after the Effective time, be the by-laws of the
Surviving Corporation (the "SURVIVING BY-LAWS"), until duly amended as provided
in the Surviving By-Laws or by applicable law.
SECTION 1.6 DIRECTORS OF SURVIVING CORPORATION. The directors of Merger
Sub at the Effective Time shall, from and after the Effective Time, be the
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directors of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Charter and the Surviving By-Laws.
SECTION 1.7 OFFICERS OF SURVIVING CORPORATION. The officers of the
Company at the Effective Time shall, from and after the Effective Time, be the
officers of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Charter and the Surviving By-Laws.
ARTICLE 2
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
SECTION 2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, as a result
of the Merger and without any action on the part of the holder of any capital
stock of the Company:
(a) MERGER CONSIDERATION.
(i) Each share (each a "COMPANY SHARE" and together
the "COMPANY SHARES") of the common stock, par value $.01 per share, of the
Company (the "COMPANY COMMON STOCK") issued and outstanding immediately prior to
the Effective Time (other than Company Shares that are owned by the Parent,
Merger Sub or any other Parent Subsidiary or Company Shares that are owned by
the Company or any Company Subsidiary and in each case not held on behalf of
third parties (collectively, "EXCLUDED COMPANY SHARES")) shall be converted by
virtue of the Merger and without any action on the part of the holder thereof
into the right to receive and become exchangeable for a number of shares of
common stock, par value $1.00 per share, of the Parent ("PARENT COMMON STOCK"),
equal to the "EXCHANGE RATIO" determined in the manner set forth below:
(A) If the Average Parent Stock Price (as
defined below) is less than $6.25 and equal to or greater than $5.25,
then the "Exchange Ratio" shall be equal to the quotient (rounded to
four decimal points) obtained by dividing (I) $3.50 by (II) the Average
Parent Stock Price;
(B) If the Average Parent Stock Price is
equal to or greater than $6.25 and less than or equal to $8.00, then
the "Exchange Ratio" shall be .56;
(C) If the Average Parent Stock Price is
greater than $8.00, then the "Exchange Ratio" shall be equal to the
quotient
4
(rounded to four decimal points) obtained by dividing (x) $4.48 by (y)
the Average Parent Stock Price; or
(D) If the Average Parent Stock Price is
less than $5.25, then the "Exchange Ratio" shall be .6667; provided,
that the Company shall have the right to give written notice to Parent
(the "TOP-UP REQUEST NOTICE") requesting that the Exchange Ratio be
increased to equal the quotient (rounded to four decimal points)
obtained by dividing (x) $3.50 by (y) the Average Parent Stock Price
(the "TOPPED-UP EXCHANGE RATIO"); provided further that, if the Average
Parent Stock Price is less than $4.00, then the Company also has the
right to give a Termination Notice (as defined below) to Parent in the
manner provided below that states that the Company elects to terminate
this Agreement in accordance with Section 7.1(h). The Top-Up Request
Notice shall be delivered to and received by Parent no later than 2:00
p.m. on the second Business Day prior to the Company Stockholders
Meeting. Parent, may, in its sole discretion, agree or not agree to
increase the Exchange Ratio to the Topped-Up Exchange Ratio. Within 24
hours of receiving the Top-Up Request Notice, Parent shall provide the
Company written notice of its determination with respect thereto. If
Parent agrees to increase the Exchange Ratio to the Topped-Up Exchange
Ratio, the Exchange Ratio shall be equal to the Topped-Up Exchange
Ratio for purposes of this Agreement. If Parent does not agree in its
sole discretion that the Exchange Ratio shall be increased to be the
Topped-Up Exchange Ratio (which disagreement shall be deemed to have
occurred if Parent does not respond to the Top-Up Request Notice within
the 24 hour period specified above), the Company shall either (x) agree
that the Exchange Ratio shall be .6667 or (y) give written notice (the
"TERMINATION NOTICE") to the Parent that the Company elects to
terminate this Agreement. Any Termination Notice shall be delivered to
Parent no later than 5:00 p.m. on the Business Day prior to the Company
Stockholders Meeting; provided, that if the Termination Notice has not
been received by Parent by such time, the Company shall be deemed to
have accepted .6667 as the Exchange Ratio and the Company shall have no
further right to terminate this Agreement pursuant to this Section
2.1(a)(i)(D) or Section 7.1(h).
For purposes of this Agreement, the "AVERAGE PARENT STOCK PRICE" means
the average of the daily closing prices of the Parent Common Stock as reported
on the American Stock Exchange Composite Transactions Tape (as reported by The
Wall Street Journal (national edition)) for the twenty (20) consecutive trading
days ending on the third business day (including such third business day in the
determination) immediately prior to the Company Stockholders Meeting.
The number of shares of Parent Common Stock issuable pursuant to this
Section 2.1(a)(i) shall be subject to adjustment as provided in Section 2.4 and
such shares, together with cash in lieu of fractional shares of Parent Common
Stock,
5
if any, payable pursuant to Section 2.2(d) shall collectively be referred to as
the "MERGER CONSIDERATION." At the Effective Time, all Company Shares shall no
longer be outstanding, shall be canceled and retired and shall cease to exist,
and each certificate (a "CERTIFICATE") formerly representing any Company Shares
(other than Excluded Company Shares) shall thereafter represent only the right
to receive the Merger Consideration and any distribution or dividend under
Section 2.2(b).
(ii) Each share of the Series II preferred stock, par
value $.01 per share, of the Company (the "COMPANY SERIES II PREFERRED STOCK")
and each share of the Series III Preferred Stock, par value $.01 per share, of
the Company ("the COMPANY SERIES III PREFERRED STOCK" and collectively, with the
Company Series II Preferred Stock, the "COMPANY PREFERRED SHARES") issued and
outstanding immediately prior to the Effective Time shall at the Effective Time
be redeemed as provided in the Company Charter Documents (as defined below) at a
redemption price of Cdn $1.00 per share (the "REDEMPTION PAYMENT"). At the
Effective Time, all Company Preferred Shares shall no longer be outstanding,
shall be canceled and retired and shall cease to exist, and each certificate
formerly representing any Company Preferred Shares shall thereafter represent
only the right to receive the Redemption Payment.
(b) STOCK OPTIONS, WARRANTS, CONVERTIBLE NOTES, ETC. At the
Effective Time, each outstanding option to purchase shares of Company Common
Stock (a "COMPANY STOCK OPTION") issued pursuant to the Company's Option Plan
(as defined below) and each outstanding warrant to acquire shares of Company
Common Stock (a "COMPANY WARRANT") issued pursuant to a warrant agreement or
otherwise appearing on the Company's Schedule of Warrants, Options and
Conversions dated as of April 30, 1999, whether vested or unvested, shall be
assumed by Parent and any remaining outstanding 9% Convertible Subordinated
Notes due 2006 (the "CONVERTIBLE NOTES") that have not been tendered in the
Exchange Offer (as defined below) shall be assumed by the Parent. Each Company
Stock Option and Company Warrant shall be deemed, without further action on the
part of Parent or the holders of such Company Stock Options and Company
Warrants, to constitute an option or a warrant, as the case may be, to acquire,
on the same terms and conditions as were applicable under such Company Stock
Option or Company Warrant (except to the extent that such terms and conditions
may be altered in accordance with their terms as a result of the transactions
contemplated hereby), and the Convertible Notes after the Effective Time shall
be convertible for, shares of Parent Common Stock in such amount and at the
exercise price provided below:
(i) the number of shares of Parent Common Stock to be
subject to the option, warrant or Convertible Note (as adjusted) shall be equal
to the product of (x) the number of shares of Company Common Stock subject to
the original option, warrant or Convertible Note and (y) the Exchange Ratio
(rounded to four decimal points);
6
(ii) the exercise price per share of Parent Common
Stock under the option, warrant or Convertible Note (as adjusted) shall be equal
to (x) the exercise price per share of Company Common Stock under the original
option, warrant or Convertible Note divided by (y) the Exchange Ratio (rounded
to the nearest $0.01); and
(iii) fractional shares of any assumed Company Stock
Options or Company Warrants resulting from the adjustments set forth in this
Section 2.1(b) shall be eliminated.
In the case of any option to which section 421 of the Code
applies by reason of its qualification under any of sections 422-424 of the
Code, the exercise price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such option shall be effected
in a manner consistent with the requirements of section 424(a) of the Code.
(c) CANCELLATION OF SHARES. Each Excluded Company Share issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder of such Excluded Company
Share, no longer be outstanding, shall be canceled and retired without payment
of any consideration therefor and shall cease to exist.
(d) MERGER SUB. At the Effective Time, each share of common
stock, par value $.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one validly
issued, fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation, and the Surviving Corporation shall be a
wholly owned subsidiary of the Parent.
SECTION 2.2 EXCHANGE OF CERTIFICATES FOR SHARES.
(a) EXCHANGE PROCEDURES.
(i) LETTER OF TRANSMITTAL. Promptly after the
Effective Time, the Surviving Corporation shall cause an exchange agent selected
by the Parent and reasonably acceptable to the Company (the "EXCHANGE AGENT") to
mail to each holder of record of a Certificate (other than Certificates in
respect of Excluded Company Shares) (A) a letter of transmittal specifying that
delivery shall be effected, and that risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates (or affidavits of loss in
lieu of Certificates) to the Exchange Agent, in a form and with other provisions
reasonably acceptable to both the Parent and the Company, and (B) instructions
for exchanging the Certificates for (1) certificates representing shares of
Parent Common Stock, and (2) cash in lieu of fractional shares.
7
(ii) SURRENDER OF CERTIFICATES. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, the holder of that Certificate shall be entitled to
receive in exchange (A) a certificate representing that number of whole shares
of Parent Common Stock that the holder is entitled to receive under this Article
2, (B) a check in the amount (after giving effect to any required tax
withholding) of any cash in lieu of fractional shares that such holder has the
right to receive under the provisions of this Article 2, and the Certificate so
surrendered shall immediately be canceled. No interest will be paid or accrued
on any amount payable upon due surrender of the Certificates.
(iii) UNREGISTERED TRANSFEREES. In the event of a
transfer of ownership of Company Shares that is not registered in the transfer
records of the Company, a certificate representing the proper number of shares
of Parent Common Stock, together with a check for any cash to be paid upon the
surrender of the Certificate and any other dividends or distributions in respect
of those shares, may be issued or paid to such a transferee if the Certificate
formerly representing such Company Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect the transfer and to
evidence that any applicable stock transfer taxes have been paid. If any
certificate for shares of Parent Common Stock is to be issued in a name other
than that in which the surrendered Certificate is registered, it shall be a
condition of such exchange that the person requesting such exchange shall pay
any transfer or other taxes required by reason of the issuance of certificates
for shares of Parent Common Stock in a name other than that of the registered
holder of the surrendered Certificate, or shall establish to the satisfaction of
the Parent or the Exchange Agent that such tax has been paid or is not
applicable.
(iv) NO OTHER RIGHTS. Until surrendered as
contemplated by this Section 2.2(a), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive the
certificate representing shares of Parent Common Stock and cash in lieu of any
fractional shares of Parent Common Stock, as contemplated by this Section
2.2(a). All shares of Parent Common Stock, together with any cash paid under
Section 2.2(b) or Section 2.2(d) issued upon the surrender for or exchange of
Certificates in accordance with the terms of this Agreement, shall be deemed to
have been issued in full satisfaction of all rights pertaining to the Company
Shares formerly represented by such Certificates.
(b) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. Whenever
a dividend or other distribution is declared by the Parent in respect of Parent
Common Stock and the record date for that dividend or other distribution is at
or after the Effective Time, that declaration shall include dividends or other
distributions in respect of all shares issuable under this Agreement. No
dividends or other distributions in respect of the Parent Common Stock shall be
paid to any holder of any unsurrendered Certificate until that Certificate is
surrendered for exchange in accordance with this Article 2. Subject to the
effect of applicable laws, following
8
surrender of any such Certificate, there shall be issued or paid to the holder
of the certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
dividends or other distributions with a record date after the Effective Time and
a payment date on or prior to the date of issuance of such whole shares of
Parent Common Stock and not previously paid, and (ii) at the appropriate payment
date, the dividends or other distributions payable with respect to such whole
shares of Parent Common Stock with a record date after the Effective Time but
with a payment date subsequent to surrender. For purposes of dividends or other
distributions in respect of shares of Parent Common Stock, all shares of Parent
Common Stock to be issued pursuant to the Merger shall be deemed issued and
outstanding as of the Effective Time.
(c) NO FURTHER TRANSFERS. After the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers on the records of the Company of the Company Shares or
Company Preferred Shares that were outstanding immediately prior to the
Effective Time.
(d) FRACTIONAL SHARES.
(i) No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle its owner to
vote, to receive dividends or to any other rights of a stockholder of the
Parent. Notwithstanding any other provision of this Agreement, each holder of
Company Shares exchanged pursuant to the Merger who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock (after taking
into account all Certificates delivered by such holder) shall receive from the
Exchange Agent, in accordance with the provisions of this Article 2, a cash
payment in lieu of such fractional shares of Parent Common Stock, as applicable,
representing such holder's proportionate interest, if any, in the net proceeds
from the sale by the Exchange Agent in one or more transactions (which sale
transactions shall be made at such times, in such manner and on such terms as
the Exchange Agent shall determine in its reasonable discretion) on behalf of
all such holders of the aggregate of the fractional shares of Parent Common
Stock, as applicable, which would otherwise have been issued (the "EXCESS PARENT
SHARES"). The sale of the Excess Parent Shares by the Exchange Agent shall be
executed on the American Stock Exchange and shall be executed in round lots to
the extent practicable. Until the net proceeds of such sale or sales have been
distributed to the holders of Certificates, the Exchange Agent will hold such
proceeds in trust (the "EXCHANGE TRUST") for the holders of Certificates. All
commissions, transfer taxes and other out-of-pocket transaction costs, including
the expenses and compensation of the Exchange Agent, incurred in connection with
this sale of the Excess Parent Shares shall be paid out of the Exchange Trust
prior to the distribution of proceeds therefrom to holders of Certificates. As
soon as practicable after the determination of the amount of cash, if any, to be
paid to holders
9
of Certificates in lieu of any fractional shares of Parent Common Stock, the
Exchange Agent shall make available such amounts to such holders of Certificates
without interest. The Exchange Agent shall determine the portion of such net
proceeds to which each holder of Company Shares shall be entitled, if any, by
multiplying the amount of the aggregate net proceeds by a fraction the numerator
of which is the amount of the fractional share interest to which such holder of
Company Shares is entitled (after taking into account all Company Shares then
held by such holder) and the denominator of which is the aggregate amount of
fractional share interests to which all holders of Certificates representing
Company Shares are entitled.
(ii) Notwithstanding the provisions of subsection (i)
of this Section 2.2(d), the Parent may elect, at its option exercised prior to
the Effective Time and in lieu of the issuance and sale of Excess Shares and the
making of the payments contemplated in such subsection, to pay to the Exchange
Agent an amount in cash sufficient for the Exchange Agent to pay each holder of
Company Shares an amount in cash equal to the product obtained by multiplying
(A) the fractional share interest to which such holder would otherwise be
entitled (after taking into account all Company Shares held at the Effective
Time by such holder) by (B) the closing price for a share of Parent Common Stock
on the American Stock Exchange on the first business day immediately following
the Effective Time and, in such case, the Exchange Fund, all references in this
Agreement to the cash proceeds of the sale of the Excess Shares and similar
references shall be deemed to mean and refer to the payments calculated as set
forth in this Section 2.2(d)(ii).
(e) TERMINATION OF EXCHANGE PERIOD; UNCLAIMED STOCK. Any
shares of Parent Common Stock and any portion of the Exchange Fund or of
dividends or other distributions with respect to the Parent Common Stock
deposited by the Parent with the Exchange Agent (including the proceeds of any
investments of those funds) that remains unclaimed by the stockholders of the
Company 180 days after the Effective Time shall be paid to the Parent. Any
former stockholders of the Company who have not theretofore complied with this
Article 2 shall thereafter look only to the Parent for payment of their Merger
Consideration and any dividends and other distributions issuable or payable
pursuant to Section 2.1 and Section 2.2(b) upon due surrender of their
Certificates (or affidavits of loss in lieu of Certificates), in each case,
without any interest. Notwithstanding the foregoing, none of the Parent, the
Surviving Corporation, the Exchange Agent or any other person shall be liable to
any former holder of Company Shares for any amount properly delivered to a
public official under applicable abandoned property, escheat or similar laws. If
any Certificates shall not have been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity), any amounts payable in respect
of such Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interests
of any person previously entitled to those amounts.
10
(f) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and the posting by such person of a bond in the form
customarily required by the Parent as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the shares of Parent
Common Stock, any unpaid dividends or other distributions and any cash payment
in lieu of a fractional share in respect of that Certificate issuable or payable
under this Article 2 upon due surrender of and deliverable in respect of the
Company Shares represented by such Certificate under this Agreement, in each
case, without interest.
SECTION 2.3 NO APPRAISAL RIGHTS. In accordance with Section 262(b)(1)
of the GCL, no appraisal rights shall be available to holders of Company Shares
in connection with the Merger.
SECTION 2.4 ADJUSTMENTS TO PREVENT DILUTION. In the event that prior to
the Effective Time there is a change in the number of Company Shares or shares
of Parent Common Stock or securities convertible or exchangeable into or
exercisable for Company Shares or shares of Parent Common Stock issued and
outstanding as a result of a distribution, reclassification, stock split
(including a reverse stock split), stock dividend or distribution or other
similar transaction, the Exchange Ratio shall be equitably adjusted to eliminate
the effects of that event.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent and Merger Sub that:
SECTION 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of the Company and each subsidiary of the Company
other than dormant subsidiaries that are immaterial to the business and
operations of the Company (collectively, the "COMPANY SUBSIDIARIES") has been
duly organized and is validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization, as the case may be, and
has the requisite power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as it is
now being conducted. Each of the Company and each Company Subsidiary is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or
11
licensed and in good standing that, individually or in the aggregate, have not
resulted and could not reasonably be expected to result in a Material Adverse
Effect on the Company. For purposes of this Agreement, "MATERIAL ADVERSE EFFECT
ON THE COMPANY" means any change in or effect on the business, assets,
properties, results of operations or financial condition of the Company or any
Company Subsidiaries that is or could reasonably be expected to be materially
adverse to the Company and the Company Subsidiaries, taken as a whole, or that
could reasonably be expected to materially impair the ability of the Company to
perform its obligations under this Agreement or consummate the Merger and the
other transactions contemplated hereby.
(b) Section 3.1(b) of the Disclosure Letter delivered to the
Parent and Merger Sub by the Company prior to the execution of this Agreement
(the "COMPANY DISCLOSURE LETTER") sets forth a complete and correct list of all
of the Company Subsidiaries. Except as set forth in Section 3.1(b) of the
Company Disclosure Letter, neither the Company nor any Company Subsidiary holds
any interest in any person other than the Company Subsidiaries so listed.
SECTION 3.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. The copies of the
Company's certificate of incorporation and by-laws, each as amended through the
date of this Agreement (collectively, the "COMPANY CHARTER DOCUMENTS") that are
incorporated by reference in, as exhibits to, the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, as amended by its filing on Form
10K/A (the "PLD FORM 10K"), and all comparable corporate organizational
documents of the Company Subsidiaries made available to the Parent by the
Company are complete and correct copies of those documents. Except as set forth
in Section 3.2 of the Company Disclosure Letter, the Company Charter Documents
and all comparable corporate organizational documents of the Company
Subsidiaries are in full force and effect. The Company is not in violation of
any of the provisions of the Company Charter Documents.
SECTION 3.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
(i) 100,000,000 shares of Company Common Stock and (ii) 100,000,000 shares of
Preferred Stock, par value $.01 per share (the "COMPANY PREFERRED STOCK"). As of
April 30, 1999, (i) 37,846,789 shares of Company Common Stock were issued and
outstanding, all of which were validly issued and are fully paid, nonassessable
and not subject to preemptive rights, (ii) 405,217 shares of Series II Preferred
Stock and 41,667 shares of Series III Preferred Stock were issued and
outstanding, all of which were validly issued and are fully paid, nonassessable
and not subject to preemptive rights, (iii) 4,550,333, 5,453,800 and 9,910,462
shares of Company Common Stock were reserved for issuance upon exercise of
outstanding Company Stock Options, Company Warrants or convertible debentures or
notes, respectively.
12
(b) Between April 30, 1999 and the date of this Agreement, no
Company Stock Options have been granted by the Company under the PLD Equity
Compensation Plan (the "COMPANY'S OPTION PLAN"). Except for (i) Company Stock
Options to purchase an aggregate of 4,550,333 shares of Company Common Stock
outstanding or available for grant under the Company's Option Plan, or under
agreements or arrangements set forth in Section 3.3(b) of the Company Disclosure
Letter, (ii) Company Warrants to purchase an aggregate of 5,453,800 shares of
Company Common Stock and (iii) $26,500,000 principal amount of the Convertible
Notes and $9,550,000 principal amount of outstanding obligations in respect of
guarantees or loans advanced by News America Incorporated ("NEWS NOTES")
convertible for 3,840,580 and 6,069,882 shares of Company Common Stock,
respectively, there are no options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights or other rights,
agreements, arrangements or commitments of any character to which the Company is
a party or by which the Company is bound relating to the issued or unissued
capital stock of the Company or any Company Subsidiary or obligating the Company
or any Company Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Company Subsidiary. Section 3.3(b)
of the Company Disclosure Letter sets forth, as of the date of this Agreement,
(w) the persons to whom Company Stock Options have been granted or Company
Warrants, Convertible Notes or News Notes have been issued, (x) the aggregate
principal amount of Convertible Notes and News Notes outstanding and the
applicable conversion prices thereof, (y) the exercise prices for the Company
Stock Options and Company Warrants held by each such person and (z) whether such
Company Stock Options are subject to vesting and, if subject to vesting, the
dates on which each of those Company Stock Options vest.
(c) All shares of Company Common Stock subject to issuance,
upon issuance prior to the Effective Time on the terms and conditions specified
in the instruments under which they are issuable, will be duly authorized,
validly issued, fully paid, nonassessable and will not be subject to preemptive
rights. Except as set forth in Section 3.3(c) of the Company Disclosure Letter,
there are no outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of Company
Common Stock or any capital stock of any Company Subsidiary. Except as set forth
in Section 3.3(c) of the Company Disclosure Letter, each outstanding share of
capital stock of each Company Subsidiary is duly authorized, validly issued,
fully paid, nonassessable and not subject to preemptive rights and each such
share owned by the Company or a Company Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever
(collectively, "LIENS"). Except as set forth in Section 3.3 of the Company
Disclosure Letter there are no outstanding material contractual obligations of
the Company or any Company Subsidiary to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
Company Subsidiary that is not wholly owned by the Company or in any other
person.
13
SECTION 3.4 AUTHORITY.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the Merger and the other transactions
contemplated by this Agreement to be consummated by the Company. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of such transactions have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate such
transactions, other than, with respect to the Merger, the adoption of this
Agreement by stockholders of the Company representing a majority of the Company
Common Stock entitled to vote hereon (the "REQUISITE COMPANY VOTE"). This
Agreement has been duly authorized and validly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(b) The Board of Directors of the Company (i) has unanimously
adopted the plan of merger set forth in this Agreement and approved this
Agreement and the other transactions contemplated by this Agreement and (ii) has
declared that the Merger and this Agreement and the other transactions
contemplated by this Agreement are advisable.
SECTION 3.5 NO CONFLICT.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not:
(i) conflict with or violate any provision of any
Company Charter Document or any equivalent organizational documents of
any Company Subsidiary;
(ii) assuming that all consents, approvals,
authorizations and other actions described in Section 3.5(b) of the
Company Disclosure Letter have been obtained and all filings and
obligations described in Section 3.5(b) of the Company Disclosure
Letter have been made, conflict with or violate any foreign or domestic
law, statute, ordinance, rule, regulation, order, judgment or decree
("LAW") applicable to the Company or any Company Subsidiary or by which
any property or asset of the Company or any Company Subsidiary is or
may be bound or affected; or
(iii) except as set forth in Section 3.5(b) of the
Company Disclosure Letter, result in any breach of or constitute a
default (or an event which with or without notice or lapse of time or
both would become a default) under, or give to others any right of
termination, amendment,
14
acceleration or cancellation of, or result in the creation of a Lien on
any property or asset of the Company or any Company Subsidiary under
any note, bond, mortgage, indenture, contract, agreement, commitment,
lease, license, permit, franchise or other instrument or obligation
(collectively, "CONTRACTS") to which the Company or any Company
Subsidiary is a party or by which any of them or their assets or
properties is or may be bound or affected, except for such breaches,
defaults or other occurrences which, individually or in the aggregate,
have not resulted and could not reasonably be expected to result in a
Material Adverse Effect on the Company.
(b) Section 3.5(b) of the Company Disclosure Letter sets forth
a correct and complete list of all Contracts to which the Company or any Company
Subsidiaries are a party or by which they or their assets or properties is or
may be bound or affected under which consents or waivers are or may be required
prior to consummation of the transactions contemplated by this Agreement
(collectively, the "COMPANY REQUIRED CONSENTS").
SECTION 3.6 GOVERNMENTAL REQUIRED FILINGS AND CONSENTS. The execution
and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any domestic or
foreign national, federal, state, provincial or local governmental, regulatory
or administrative authority, agency, commission, court, tribunal or arbitral
body or self- regulated entity (each, a "GOVERNMENTAL ENTITY"), except (i) for
those consents or approvals set forth in Section 3.6 of the Company Disclosure
Letter (the "COMPANY GOVERNMENTAL CONSENTS"), (ii) for applicable requirements
of the Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "EXCHANGE ACT"), and the Securities Act
of 1933, as amended (together with the rules and regulations promulgated
thereunder, the "SECURITIES ACT"), (iii) applicable requirements of state
securities or "blue sky" laws ("BLUE SKY LAWS"), (iv) the pre-merger
notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
ACT"), and (v) for the filing of the Certificate of Merger as required by the
GCL.
SECTION 3.7 PERMITS; COMPLIANCE WITH LAW. Each of the Company and the
Company Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
Company Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted (collectively, the "COMPANY PERMITS"),
except where the failure to have, or the suspension or cancellation of, any of
the Company Permits, individually or in the aggregate, has not resulted and
could not reasonably be expected to result in a Material Adverse Effect on the
Company, and, as of the date of this Agreement, no suspension or cancellation of
any of the Company Permits is pending or, to the knowledge of the Company,
threatened,
15
except where the failure to have, or the suspension or cancellation of, any of
the Company Permits, individually or in the aggregate, has not resulted and
could not reasonably be expected to result in a Material Adverse Effect on the
Company or except as otherwise set forth in Section 3.7 of the Company
Disclosure Letter. Neither the Company nor any Company Subsidiary is in conflict
with, or in default or violation of, (i) any Law applicable to the Company or
any Company Subsidiary or by which any property or asset of the Company or any
Company Subsidiary is or may be bound or affected or (ii) any Company Permits,
in either case, except where such conflict, default or violation could not
reasonably be expected to result in a Material Adverse Effect on the Company. To
the Company's knowledge, the business of the Company is not being conducted in
violation of any portion of the Foreign Corrupt Practices Act, Pub. L. No.
95-213, 91 Stat.1494 (December 19, 1977), as amended (the "FCPA"), or any
regulation promulgated thereunder, and there are not pending any investigations,
reviews or inquiries made by any Governmental Entity of the Company, any Company
Subsidiaries or any of their respective affiliates with respect to the FCPA, nor
to the knowledge of the Company has any Governmental Entity threatened to
conduct the same.
SECTION 3.8 SECURITIES AND EXCHANGE COMMISSION ("SEC") FILINGS;
FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports, statements and
other documents (including all exhibits, annexes, supplements and amendments to
such documents) required to be filed by it under the Exchange Act and the
Securities Act since January 1, 1996 (collectively, including any such documents
filed subsequent to the date of this Agreement, the "COMPANY SEC REPORTS") and
the Company has made available to the Parent each Company SEC Report filed with
the SEC. The Company SEC Reports, including any financial statements or
schedules included or incorporated by reference, (i) comply and will comply with
the requirements of the Exchange Act or the Securities Act or both, as the case
may be, applicable to those Company SEC Reports and (ii) did not and will not at
the time filed contain any untrue statement of a material fact or omit to state
a material fact required to be stated or necessary in order to make the
statements made in those Company SEC Reports, in the light of the circumstances
under which they were made, not misleading. Except as set forth in Section
3.8(a) of the Company Disclosure Letter, no Company Subsidiary is subject to the
periodic reporting requirements of the Exchange Act or is otherwise required to
file any documents with the SEC or any national securities exchange or quotation
service or comparable Governmental Entity.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Company SEC Reports (including the related
notes and schedules) fairly presented or will fairly present, in all material
respects, the consolidated financial position of the Company as of the dates set
forth in those consolidated balance sheets. Each of the consolidated statements
of income and of cash flows included in or incorporated by reference into the
Company SEC Reports
16
(including any related notes and schedules), fairly presented or will fairly
present, in all material respects, the consolidated results of operations and
cash flows, as the case may be, of the Company and the consolidated Company
Subsidiaries for the periods set forth in those consolidated statements of
income and of cash flows (subject, in the case of unaudited quarterly
statements, to notes and normal year-end audit adjustments that will not be
material in amount or effect), in each case in conformity with United States
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited quarterly statements, as permitted by Form 10-Q of the SEC)
consistently applied throughout the periods indicated.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Company Subsidiaries as of
December 31, 1998 including the related notes, neither the Company nor any
Company Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in the related notes prepared in accordance with
GAAP, except for liabilities or obligations incurred in the ordinary course of
business since December 31, 1998 that, individually or in the aggregate, have
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Company.
SECTION 3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1998, and except as otherwise disclosed in the PLD Form 10-K, the Company and
the Company Subsidiaries have conducted their businesses only in the ordinary
course and in a manner consistent with past practice and, since such date, there
has not been:
(a) any Material Adverse Effect on the Company;
(b) any damage, destruction or other casualty loss with
respect to any asset or property owned, leased or otherwise used by it or any
Company Subsidiaries, whether or not covered by insurance, which damage,
destruction or loss, individually or in the aggregate, has resulted or could
reasonably be expected to result in a Material Adverse Effect on the Company;
(c) any material change by the Company in its or any Company
Subsidiary's accounting methods, principles or practices;
(d) any declaration, setting aside or payment of any dividend
or distribution in respect of Company Shares or any redemption, purchase or
other acquisition of any of the Company's securities;
(e) Except as described in Section 3.9(e) of the Company
Disclosure Letter any increase in the compensation or benefits or establishment
of any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other
17
employee benefit plan, or any other increase in the compensation payable or to
become payable to any executive officers of the Company or any Company
Subsidiary except in the ordinary course of business consistent with past
practice or except as required by applicable Law.
SECTION 3.10 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in Section 3.10 of the Company
Disclosure Letter and except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company: (A)
each pension, retirement, savings, disability, medical, dental, health, life,
death benefit, group insurance, profit sharing, deferred compensation, stock
option, bonus, incentive, severance pay, or other employee benefit plan, trust,
arrangement, contract, commitment, agreement or policy (each a "BENEFIT PLAN")
of the Company or any Company Subsidiary (the "COMPANY BENEFIT PLANS") has been
administered and is in compliance with the terms of such plan and all applicable
laws, rules and regulations, (B) no "reportable event" (as such term is used in
section 4043 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (other than those events for which the 30 day notice has been waived
pursuant to the regulations), "prohibited transaction" (as such term is used in
section 406 of ERISA or sec tion 4975 of the Code) or "accumulated funding
deficiency" (as such term is used in section 412 or 4971 of the Code) has
heretofore occurred with respect to any Company Benefit Plan and (C) each
Company Benefit Plan intended to qualify under Section 401(a) of the Code has
received a favorable determination from the IRS regarding its qualified status
and no notice has been received from the IRS with respect to the revocation of
such qualification.
(b) There is no litigation or administrative or other
proceeding involving any Company Benefit Plan nor has the Company or any Company
Subsidiary received notice that any such proceeding is threatened, in each case
where an adverse determination could reasonably be expected to have a Material
Adverse Effect on the Company. Neither the Company nor any Company Subsidiary
has incurred, nor, to the Company's knowledge, is reasonably likely to incur any
withdrawal liability with respect to any "multiemployer plan" (within the
meaning of section 3(37) of ERISA) which remains unsatisfied in an amount which
could reasonably be expected to have a Material Adverse Effect on the Company.
The termination of, or withdrawal from, any Company Benefit Plan or
multiemployer plan to which the Company or any Company Subsidiaries contributes,
on or prior to the Closing Date, will not subject the Company or any Company
Subsidiary to any liability under Title IV of ERISA that could reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 3.11 ACCOUNTING AND TAX MATTERS. Neither the Company nor, to
the knowledge of the Company, any of its affiliates has taken or agreed to take
any action, nor is the Company aware of any agreement, plan or other
18
circumstance that would prevent the Merger from constituting a transaction
qualifying as a reorganization under Section 368(a) of the Code.
SECTION 3.12 CONTRACTS; DEBT INSTRUMENTS. Except as set forth in
Section 3.12 of the Company Disclosure Letter there is no Contract that is
material to the business, financial condition or results of operations of the
Company and the Company Subsidiaries taken as a whole. Neither the Company nor
any Company Subsidiary is in violation of or in default under (nor does there
exist any condition which with the passage of time or the giving of notice would
cause such a violation of or default under) any Contract to which it is a party
or by which it or any of its properties or assets is or may be bound or
affected, except for violations or defaults that, individually or in the
aggregate, have not resulted and could not reasonably be expected to result in a
Material Adverse Effect on the Company. Set forth in Section 3.12 of the Company
Disclosure Letter is a description of any material changes to the amount and
terms of the indebtedness of the Company and the consolidated Company
Subsidiaries as described in the notes to the financial statements set forth as
incorporated by reference in the PLD Form 10K.
SECTION 3.13 LITIGATION. There is no suit, claim, action, proceeding or
investigation (collectively, "CLAIMS") pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary before any
Governmental Entity that, if adversely determined, individually or in the
aggregate, has resulted or could reasonably be expected to result in a Material
Adverse Effect on the Company. Neither the Company nor any Company Subsidiary is
subject to any outstanding order, writ, injunction or decree which, individually
or in the aggregate, has resulted or could reasonably be expected to result in a
Material Adverse Effect on the Company.
SECTION 3.14 ENVIRONMENTAL MATTERS. Except as disclosed on Section 3.14
of the Company Disclosure Letter and except as could not reasonably be expected
to have a Material Adverse Effect on the Company:
(a) Neither the Company nor any Company Subsidiary is or has
been in violation in any material respect of any applicable Safety and
Environmental Law (as hereafter defined).
(b) The Company and each Company Subsidiary have all Permits
(as hereafter defined) required pursuant to Safety and Environmental Laws that
are material to the conduct of the business of the Company or any Company
Subsidiary, all such Permits are in full force and effect, no action or
proceeding to revoke, limit or modify any of such Permits is pending, and the
Company and each Company Subsidiary is in compliance in all material respects
with all terms and conditions thereof.
19
(c) Neither the Company nor any Company Subsidiary has
received, or expects to receive due to the consummation of the Agreement, any
material Environmental Claim (as hereafter defined).
(d) To the Company's knowledge, there is not now and has not
been at any time in the past a Release or threatened Release (as hereafter
defined) of Hazardous Substances into the Environment for which the Company or
any Company Subsidiary may be directly or indirectly responsible.
(e) To the Company's knowledge, there is not now and has not
been at any time in the past at, on or in any of the real properties owned,
leased or operated by the Company or any Company Subsidiary, and, to the
Company's knowledge, was not at, on or in any real property previously owned,
leased or operated by the Company or any Company Subsidiary or any predecessor:
(i) any generation, use, handling, Release, treatment, recycling, storage or
disposal of any Hazardous Substances, (ii) any underground storage tank, surface
impoundment, lagoon or other containment facility (past or present) for the
temporary or permanent storage, treatment or disposal of Hazardous Substances,
(iii) any asbestos-containing material in a condition requiring abatement, (iv)
any Release or threatened Release, or any visible signs of Releases or
threatened Releases, of a Hazardous Substance to the Environment in form or
quantity requiring remedial action under Safety and Environmental Laws, or (v)
any Hazardous Substances present at such property, excepting such quantities as
are handled in accordance with all applicable manufacturer's instructions and
Safety and Environmental Laws and in proper storage containers, and as are
necessary for the operations of the Company and the Company Subsidiaries.
For purposes of this Agreement, the following terms have the following
meanings:
(a) "ENVIRONMENT" means navigable waters, waters of the
contiguous zone, ocean waters, natural resources, surface waters, ground water,
drinking water supply, land surface, subsurface strata, ambient air, both inside
and outside of buildings and structures, man-made buildings and structures, and
plant and animal life on earth.
(b) "ENVIRONMENTAL CLAIMS" means any notification, whether
direct or indirect, formal or informal, written or oral, pursuant to Safety and
Environmental Laws or principles of common law relating to pollution, protection
of the Environment or health and safety, that any of the current or past
operations of any of the Parent, any Parent Subsidiary, or the Company, or any
Company Subsidiary (collectively, the "MERGING PARTIES"), as the case may be, or
any by-product thereof, or any of the property currently or formerly owned,
leased or operated by any of the Merging Parties, or the operations or property
of any predecessor of any of the Merging Parties is or may be implicated in or
subject to any proceeding, action,
20
investigation, claim, lawsuit, order, agreement or evaluation by any
Governmental Entity or any other person.
(c) "HAZARDOUS SUBSTANCE" means any toxic waste, pollutant,
hazardous substance, toxic substance, hazardous waste, special waste, industrial
substance or waste, petroleum or petroleum-derived substance or waste,
radioactive substance or waste, or any constituent of any such substance or
waste, or any other substance regulated under or defined by any Safety and
Environmental Law.
(d) "PERMITS" means all licenses, permits, orders or approvals
of, and all required registrations with, any Governmental Entity.
(e) "RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into or through the indoor or outdoor Environment or into, through or
out of any property, including the movement of Hazardous Substances through or
in the air, soil, surface water, ground water or property.
(f) "SAFETY AND ENVIRONMENTAL LAWS" means all federal, state
and local laws and orders relating to pollution, protection of the Environment,
public or worker health and safety, or the emission, discharge, release or
threatened release of pollutants, contaminants or industrial, toxic or hazardous
substances or wastes into the Environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or industrial, toxic or
hazardous substances or wastes, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq.,
the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 42 U.S.C.
ss. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. ss. 121 et seq., the Occupational Safety and Health Act, 29 U.S.C. ss.
651 et seq., the Asbestos Hazard Emergency Response Act, 15 U.S.C. ss. 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C. ss. 300f et seq., the Oil Pollution
Act of 1990 and analogous state acts.
SECTION 3.15 INTELLECTUAL PROPERTY.
(a) DISCLOSURE.
(i) Section 3.15(a)(i) of the Company Disclosure
Letter sets forth all material United States and foreign patents and patent
applications, trademark and service xxxx registrations and applications,
Internet domain name registrations and applications, and copyright registrations
and applications owned or licensed by the Company, specifying as to each item,
as applicable: (A) the nature of the item, including the title; (B) the owner of
the item; (C) the jurisdictions in which
21
the item is issued or registered or in which an application for issuance or
registration has been filed; and (D) the issuance, registration or application
numbers and dates.
(ii) Section 3.15(a)(ii) of the Company Disclosure
Letter sets forth all material licenses, sublicenses, and other agreements or
permissions ("IP LICENSES") under which the Company is a licensor or licensee or
otherwise is authorized to use or practice any Intellectual Property. For
purposes of this Agreement, "INTELLECTUAL PROPERTY" means all of the following
as they exist in all jurisdictions throughout the world, in each case, to the
extent owned by, licensed to, or otherwise used by the Company or the Parent:
(A) patents, patent applications, and other patent rights (including any
divisions, continuations, continuations-in-part, substitutions, or reissues
thereof, whether or not patents are issued on any such applications and whether
or not any such applications are modified, withdrawn, or resubmitted); (B)
trademarks, service marks, trade dress, trade names, brand names, Internet
domain names, designs, logos, or corporate names, whether registered or
unregistered, and all registrations and applications for registration thereof;
(C) copyrights, including all renewals and extensions, copyright registrations
and applications for registration, and non-registered copyrights; (D) trade
secrets, concepts, ideas, designs, research, processes, procedures, techniques,
methods, know-how, data, mask works, discoveries, inventions, modifications,
extensions, improvements, and other proprietary rights (whether or not
patentable or subject to copyright, mask work, or trade secret protection)
(collectively, "TECHNOLOGY"); and (E) computer software programs, including all
source code, object code, and documentation related thereto (the "SOFTWARE").
(iii) Section 3.15(a)(iii) of the Company Disclosure
Letter sets forth and describes the status of any material agreements involving
Intellectual Property currently in negotiation or proposed by the Company
("PROPOSED INTELLECTUAL PROPERTY AGREEMENTS").
(b) OWNERSHIP. The Company owns, free and clear of all Liens,
and has the unrestricted right to use, sell, or license, all Intellectual
Property set forth in Section 3.15(a)(i) and, as applicable, Section 3.15(a)(ii)
of the Company Disclosure Letter, except for failures that, individually or in
the aggregate, have not resulted and could not reasonably be expected to result
in a Material Adverse Effect on the Company.
(c) CLAIMS. The Company has not been, during the three years
preceding the date of this Agreement, a party to any Claim, nor, to the
knowledge of the Company, is any Claim threatened, that challenges the validity,
enforceability, ownership, or right to use, sell, or license any Intellectual
Property owned or licensed by the Company, except for Claims that, individually
or in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Company. To the knowledge of the
Company, no third party is infringing upon any Intellectual Property, except for
infringements that,
22
individually or in the aggregate, have not resulted and could not reasonably be
expected to result in a Material Adverse Effect on the Company.
(d) ADMINISTRATION AND ENFORCEMENT. The Company has taken all
necessary and desirable actions to maintain and protect each item of Intellec
tual Property owned by the Company, except for failures to take such actions
that, individually or in the aggregate, have not resulted and could not
reasonably be expected to result in a Material Adverse Effect on the Company.
(e) PROTECTION OF TRADE SECRETS AND TECHNOLOGY. The Company
has taken all reasonable precautions to protect the secrecy, confidentiality,
and value of its trade secrets and the proprietary nature and value of the
Technology, except for failures to take such precautions that, individually or
in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Company.
(f) SOFTWARE. All material Software is described in Section
3.15(a)(ii) of the Company Disclosure Letter. The Software performs in
conformance with its documentation and is fully and freely transferable to the
Parent without any third party consents, except for failures to perform or to be
fully and freely transferable that, individually or in the aggregate, have not
resulted and could not reasonably be expected to result in a Material Adverse
Effect on the Company.
(g) YEAR 2000 COMPLIANCE. All Software, hardware, databases,
and embedded control systems (collectively, the "SYSTEMS") used by the Company
are Year 2000 Compliant and to the Company's knowledge the Systems used by the
Company's material suppliers are Year 2000 Compliant, except in each case for
failures to be Year 2000 Compliant that, individually or in the aggregate, have
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Company and except as set forth in Section 3.15(g) of the
Company Disclosure Letter. For purposes of this Agreement, "YEAR 2000 COMPLIANT"
means that the Systems (i) accurately process date and time data (including
calculating, comparing, and sequencing) from, into, and between the twentieth
and twenty-first centuries, the years 1999 and 2000, and leap year calculations
and (ii) operate accurately with other software and hardware that use standard
date format (4 digits) for representation of the year.
(h) EFFECT OF TRANSACTION. The Company is not, nor, as a
result of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, will be, in violation of any agreement
relating to any Intellectual Property, except for violations that, individually
or in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Company. After the completion of the
transactions contemplated by this Agreement, the Parent will own directly or
indirectly all right, title, and interest in and to or have a license to use all
Intellectual Property on identical terms and conditions as the Company or a
Company Subsidiary enjoyed immediately prior to
23
such transactions, except for failures to own or have available for use that,
individually or in the aggregate, have not resulted and could not reasonably be
expected to result in a Material Adverse Effect on the Company.
SECTION 3.16 TAXES. (a) Except as set forth on Section 3.16(a) of the
Company Disclosure Letter, (i) the Company and each Company Subsidiary has
timely filed (after giving effect to any extensions of the time to file which
were obtained) prior to the date of this Agreement, and will file prior to the
Effective Time, all returns required to be filed prior to the date of this
Agreement and/or required to be filed prior to the Effective Time by any of them
with respect to, and has paid (or the Company has paid on its behalf), or has or
will set up an adequate reserve for the payment of, all federal, state, local,
foreign and other taxes, together with interest and penalties thereon ("TAXES"),
required to be paid prior to the date of the Agreement or the Effective Time, as
the case may be, and the most recent financial statements contained in the
Company SEC Reports reflect an adequate reserve for all Taxes payable by the
Company and the Company Subsidiaries accrued through the date of such financial
statements and (ii) no deficiencies for any Taxes have been proposed, asserted
or assessed against the Company or any Company Subsidiary other than those which
are being contested in good faith and by proper proceedings by the Company,
except in the case of clauses (i) and (ii) above, any of the foregoing which do
not and will not have a Material Adverse Effect on the Company.
(b) Except as set forth on Section 3.16(b) of the Company
Disclosure Letter, none of the Company, any Company Subsidiary, or to the
Company's knowledge, any group of which the Company or any Company Subsidiary is
now or ever was a member, has filed or entered into any election, consent or
extension agreement that extends any applicable statute of limitations or the
time within which a return must be filed which statute of limitations has not
expired or return has not been timely filed, except, in the case of Company
Subsidiaries organized under the laws of jurisdictions outside the United States
and Canada, as has not and could not reasonably be expected to have a Material
Adverse Effect on the Company.
(c) Except as set forth on Section 3.16(c) of the Company
Disclosure Letter, (i) none of the Company, any Company Subsidiary or, to the
Company's knowledge, any group of which the Company or any Company Subsidiary is
now or ever was a member, is a party to any action or proceeding pending or, to
the Company's knowledge, threatened by any governmental authority for assessment
or collection of Taxes, (ii) no unresolved claim for assessment or collection of
Taxes has, to the Company's knowledge, been asserted, (iii) no audit or
investigation of the Company or any Company Subsidiary by any governmental
authority is pending or, to the Company's knowledge, threatened and (iv) no such
matters are under discussion with any governmental authority which, in the case
of clauses (i-iv), could have a Material Adverse Effect on the Company.
24
SECTION 3.17 NON-COMPETITION AGREEMENTS. Except as set forth in Section
3.17 of the Company Disclosure Letter, neither the Company nor any Company
Subsidiary is a party to any agreement which purports to restrict or prohibit in
any material respect the Company and the Company Subsidiaries collectively from,
directly or indirectly, engaging in any business involving telecommunications
currently engaged in by the Company, any Company Subsidiary or any other persons
affiliated with the Company. None of the Company's officers, directors or key
employees is a party to any agreement which, by virtue of such person's
relationship with the Company, restricts in any material respect the Company or
any Company Subsidiary or affiliate of either of them from, directly or
indirectly, engaging in any of the businesses described above.
SECTION 3.18 CERTAIN AGREEMENTS. Except as set forth in Section 3.18 of
the Company Disclosure Letter, and except for this Agreement, as of the date of
this Agreement, neither the Company nor any of the Company Subsidiaries is a
party to any oral or written (i) agreement with any executive officer or other
key employee of the Company or Company Subsidiary the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving the Company of the nature contemplated by this
Agreement, or agreement with respect to any executive officer of the Company
providing any term of employment or compensation guarantee (x) extending for a
period longer than one year after the Effective Time or (y) for the payment of
in excess of $100,000 per annum or (ii) plan, including any stock option plan,
stock appreciation right plan, restricted stock plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
SECTION 3.19 INVESTMENT COMPANY ACT. Each of the Company and the
Company Subsidiaries either (i) is not an "investment company," or a company
"controlled" by, or an "affiliated company" with respect to, an "investment
company," within the meaning of the Investment Company Act of 1940, as amended
(the "INVESTMENT COMPANY ACT") or (ii) satisfies all conditions for an exemption
from the Investment Company Act, and, accordingly, neither the Company nor any
of the Company is required to be registered under the Investment Company Act.
SECTION 3.20 OPINION OF FINANCIAL ADVISOR. Xxxxxxx Xxxxx Xxxxxx Inc.
(the "COMPANY FINANCIAL ADVISOR") has delivered to the Board of Directors of the
Company its oral opinion to the effect that, as of the date of this Agreement,
the Exchange Ratio is fair to holders of Company Common Stock from a financial
point of view, a copy of the written opinion of which will be delivered to the
Parent after receipt thereof by the Company.
SECTION 3.21 BROKERS. No broker, finder or investment banker other than
the Company Financial Advisor is entitled to any brokerage, finder's or other
fee
25
or commission in connection with the Merger or the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. Prior to the date of this Agreement, the Company has made available
to the Parent a complete and correct copy of all agreements between the Company
and the Company Financial Advisor under which the Company Financial Advisor
would be entitled to any payment relating to the Merger or any other
transactions.
SECTION 3.22 CERTAIN STATUTES. The Board of Directors of the Company
has taken or will take all appropriate and necessary actions to ensure that the
restrictions on business combinations in Section 203 of the GCL will not have
any effect on the Merger or the other transactions contemplated by this
Agreement. No "fair price," "moratorium," "control share acquisition" or other
similar state or federal anti-takeover statute or regulation (each a "TAKEOVER
STATUTE") is, as of the date of this Agreement, applicable to the Merger or any
other transactions contemplated by this Agreement.
SECTION 3.23 INFORMATION. None of the information to be supplied by the
Company for inclusion or incorporation by reference in the Proxy Statement, the
Registration Statement or the Exchange Offer Registration Statement will, in the
case of the Registration Statement and the Exchange Offer Registration
Statement, at the time it becomes effective and at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated in the Registration Statement or necessary to make the
statements in that Registration Statement or the Exchange Offer Registration
Statement, as the case may be, not misleading, or, in the case of the Proxy
Statement or any amendments or supplements of the Proxy Statement, at the time
of the mailing of the Proxy Statement and any amendments or supplements of the
Proxy Statement and at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the Proxy Statement or necessary in order to make the statements
in the Proxy Statement, in light of the circumstances under which they are made,
not misleading. The Proxy Statement (except for those portions of the Proxy
Statement that relate only to Parent or subsidiaries or affiliates of the
Parent) will comply as to form in all material respects with the provisions of
the Exchange Act.
SECTION 3.24 VOTE REQUIRED. The Requisite Company Vote is the only vote
of the holders of any class or series of the Company's capital stock necessary
(under the Company Charter Documents, the GCL, other applicable Law or
otherwise) to approve this Agreement, the Merger or the other transactions
contemplated by this Agreement.
26
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGER SUB
Each of the Parent and Merger Sub represents and warrants to the
Company that:
SECTION 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Except as set forth in Section 4.1(a) of the Parent
Disclosure Letter, each of the Parent, Merger Sub, and each other subsidiary of
the Parent other than dormant subsidiaries that are immaterial to the business
and operations of the Parent (collectively, the "PARENT SUBSIDIARIES") has been
duly organized and is validly existing and in good standing under the laws of
its jurisdiction of its incorporation or organization, as the case may be, and
has the requisite power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as it is
now being conducted. Each of the Parent, Merger Sub and each other Parent
Subsidiary is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that, individually or in the aggregate, have not resulted
and could not reasonably be expected to result in a Material Adverse Effect on
the Parent. For purposes of this Agreement, "MATERIAL ADVERSE EFFECT ON THE
PARENT" means any change in or effect on the business, assets, properties,
results of operations or financial condition of the Parent or any Parent
Subsidiaries that is or could reasonably be expected to be materially adverse to
the Parent and the Parent Subsidiaries, taken as a whole, or that could
reasonably be expected to materially impair the ability of the Parent or Merger
Sub to perform its obligations under this Agreement or to consummate
transactions contemplated hereby.
(b) Section 4.1(b) of the Disclosure Letter delivered to the
Company by the Parent and Merger Sub prior to the execution of this agreement
(the "PARENT DISCLOSURE LETTER") sets forth a complete and correct list of all
of the Parent Subsidiaries. Except as set forth in Section 4.1(b) of the Parent
Disclosure Letter, neither the Parent nor any Parent Subsidiary holds any
interest in any other person other than the Parent Subsidiaries so listed.
SECTION 4.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. The copies of the
Parent's certificate of incorporation and by-laws, each as amended through the
date of this Agreement (collectively, the "PARENT CHARTER DOCUMENTS") that are
incorporated by reference in, as exhibits to, the Parent's Annual Report on Form
10-K for the year ended December 31, 1998, as amended by its filing on Form
10K/A (the "MIG FORM 10K"), and all comparable corporate organizational
documents of the Parent Subsidiaries made available to the Company by the Parent
27
are complete and correct copies of those documents. Except as set forth in
Section 4.2 of the Parent Disclosure Letter, the Parent Charter Documents and
all comparable corporate organizational documents of the Parent Subsidiaries are
in full force and effect. The Parent is not in violation of any of the
provisions of the Parent Charter Documents.
SECTION 4.3 CAPITALIZATION.
(a) The authorized capital stock of the Parent consists of (i)
400,000,000 shares of Parent Common Stock and (ii) 70,000,000 shares of
Preferred Stock, par value $1.00 per share ("PARENT PREFERRED STOCK"). As of
April 30, 1999, (A) 69,161,937 shares of Parent Common Stock were issued and
outstanding, all of which were validly issued and are fully paid, nonassessable
and not subject to preemptive rights, (B) 4,140,000 shares of 7 1/4% Cumulative
Convertible Preferred Stock (the "7 1/4% PREFERRED STOCK") were issued and
outstanding, all of which were validly issued and are fully paid, nonassessable
and not subject to preemptive rights, (C) no shares of Parent Common Stock were
held in the treasury of the Parent or by the Parent Subsidiaries, and (D)
22,785,658 shares of Parent Common Stock were reserved for issuance upon
exercise of outstanding Parent Stock Options or conversion of shares of 7 1/4%
Preferred Stock. The shares of Parent Common Stock included in the Merger
Consideration, when issued in accordance with this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable.
(b) Between April 30, 1999 and the date of this Agreement, no
options to purchase shares of Parent Common Stock ("PARENT STOCK OPTIONS") have
been granted by the Parent under the Metromedia International Group, Inc. 1996
Incentive Stock Option Plan (the "PARENT'S OPTION PLAN"). Except for (i) Parent
Stock Options to purchase an aggregate of 2,442,188 shares of Parent Common
Stock outstanding or available for grant under the Parent's Option Plan, (ii)
under agreements or arrangements set forth in Section 4.3(b) of the Parent
Disclosure Letter or (iii) 13,800,000 shares of Parent Common Stock issuable
upon conversion of shares of 7 1/4% Preferred Stock, there are no options,
warrants, conversion rights, stock appreciation rights, redemption rights,
repurchase rights or other rights, agreements, arrangements or commitments of
any character to which the Parent is a party or by which the Parent is bound
relating to the issued or unissued capital stock of the Parent or any Parent
Subsidiary or obligating the Parent or any Parent Subsidiary to issue or sell
any shares of capital stock of, or other equity interests in, the Parent or any
Parent Subsidiary.
(c) Except as set forth in Section 4.3(c) of the Parent
Disclosure Letter, there are no outstanding contractual obligations of the
Parent or any Parent Subsidiary to repurchase, redeem or otherwise acquire any
shares of Parent Common Stock or any capital stock of any Parent Subsidiary.
Except as set forth in Section 4.3(c) of the Parent Disclosure Letter, each
outstanding share of capital stock of each Parent Subsidiary is duly authorized,
validly issued, fully paid, nonassessable and not subject to preemptive rights
and each such share owned by the
28
Parent or a Parent Subsidiary is free and clear of all Liens. Except as set
forth in Section 4.3(c) of the Parent Disclosure Letter, there are no material
outstanding contractual obligations of the Parent or any Parent Subsidiary to
provide funds in excess of $1 million to, or make any investment in excess of $1
million (in the form of a loan, capital contribution or otherwise) in, any
Parent Subsidiary that is not wholly owned by the Parent or in any other person.
(d) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $.01 per share ("SUB COMMON STOCK"). All
of the issued and outstanding shares of Sub Common Stock are (A) owned by the
Parent or another Parent Subsidiary wholly owned by the Parent and (B) duly
authorized, validly issued, fully paid and nonassessable.
SECTION 4.4 AUTHORITY.
(a) Each of the Parent and Merger Sub has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated hereby
to be consummated by it. The execution and delivery of this Agreement by each of
the Parent and Merger Sub and the consummation by each of the Parent and Merger
Sub of such transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Parent or
Merger Sub are necessary to authorize this Agreement or to consummate such
transactions, other than, with respect to the approval of the issuance by the
Parent of the Parent Common Stock to be issued in the Merger, by a majority of
the outstanding shares of Parent Common Stock (the "REQUISITE PARENT VOTE").
This Agreement has been duly authorized and validly executed and delivered by
each of the Parent and Merger Sub and constitutes a legal, valid and binding
obligation of each of the Parent and Merger Sub, enforceable against each of the
Parent and Merger Sub in accordance with its terms.
(b) The Board of Directors of each of the Parent and Merger
Sub (i) has unanimously adopted the plan of merger set forth in this Agreement
and approved this Agreement and the other transactions contemplated by this
Agreement and (ii) has declared that the Merger and this Agreement and the other
transactions contemplated by this Agreement are advisable.
SECTION 4.5 NO CONFLICT. (a) The execution and delivery of this
Agreement by the Parent and Merger Sub do not, and the performance of this
Agreement by each of the Parent and Merger Sub will not:
(i) conflict with or violate any provision of any
Parent Charter Document or any equivalent organizational documents of any Parent
Subsidiary except as set forth in Section 4.5(a) of the Parent Disclosure
Letter;
29
(ii) assuming that all consents, approvals,
authorizations and other actions described in Section 4.5(b) of the Parent
Disclosure Letter have been obtained and all filings and obligations described
in Section 4.5(b) of the Parent Disclosure Letter have been made, conflict with
or violate any foreign or domestic Law applicable to the Parent, Merger Sub or
any other Parent Subsidiary or by which any property or asset of the Parent or
any Parent Subsidiary is or may be bound or affected; or
(iii) except as set forth in Section 4.5(b) of the
Parent Disclosure Letter, result in any breach of or constitute a default (or an
event which with or without notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Parent, Merger Sub, or any other
Parent Subsidiary under, any Contract to which the Parent, Merger Sub or any
other Parent Subsidiary is a party or by which any of them or their assets or
Properties is or may be bound or affected, except for any such breaches,
defaults or other occurrences which, individually or in the aggregate, have not
resulted and could not reasonably be expected to result in a Material Adverse
Effect on the Parent;
(b) Section 4.5(b) of the Parent Disclosure Letter sets forth
a correct and complete list of all Contracts to which Parent or any Parent
Subsidiaries are a party or by which they or their assets or properties is or
may be bound or affected under which consents or waivers are or may be required
prior to consummation of the transactions contemplated by this Agreement.
SECTION 4.6 GOVERNMENTAL REQUIRED FILINGS AND CONSENTS. The execution
and delivery of this Agreement by the Parent and Merger Sub do not, and the
performance of this Agreement by the Parent and Merger Sub will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Government Entity except for (i) those consents or approvals set forth
in Section 4.6 of the Parent Disclosure Letter (the "PARENT GOVERNMENTAL
CONSENTS"), (ii) applicable requirements of the Exchange Act and the Securities
Act, (iii) applicable requirements of Blue Sky Laws, (iv) the rules and
regulations of the American Stock Exchange, Inc., (v) the pre-merger
notification requirements of the HSR Act, and (vi) the filing of the Certificate
of Merger as required by the GCL.
SECTION 4.7 PERMITS; COMPLIANCE WITH LAW. Except as set forth in
Section 4.7 of the Parent Disclosure Letter, each of the Parent and the Parent
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Parent or any
Parent Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted (collectively, the "PARENT PERMITS"),
except where the failure to have, or the suspension or cancellation of, any of
the Parent Permits, individually or in the aggregate, has not resulted and could
not reasonably be expected to result in a
30
Material Adverse Effect on the Parent, and, as of the date of this Agreement, no
suspension or cancellation of any of the Parent Permits is pending or, to the
knowledge of the Parent, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Parent Permits, individually or in the
aggregate, has not resulted and could not reasonably be expected to result in a
Material Adverse Effect on the Parent. Neither the Parent nor any Parent
Subsidiary is in conflict with, or in default or violation of, (i) any Law
applicable to the Parent or any Parent Subsidiary or by which any property or
asset of the Parent or any Parent Subsidiary is or may be bound or affected or
(ii) any Parent Permits, in either case, except where such conflict, default or
violation could not reasonably be expected to result in a Material Adverse
Effect on the Parent. To the Parent's knowledge, the business of the Parent is
not being conducted in violation of any portion of the FCPA, or any regulation
promulgated thereunder, and there are not pending any investigations, reviews or
inquiries made by any Governmental Entity of the Parent, any Parent Subsidiaries
or any of their respective affiliates with respect to the FCPA, nor to the
knowledge of the Parent has any Governmental Entity threatened to conduct the
same.
SECTION 4.8 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Parent has filed all forms, reports, statements and
other documents (including all exhibits, annexes, supplements and amendments to
such documents) required to be filed by it under the Exchange Act and the
Securities Act since January 1, 1996 through the date of this Agreement
(collectively, including any such documents filed subsequent to the date of this
Agreement, the "PARENT SEC REPORTS") and the Parent has made available to the
Company each Parent SEC Report. The Parent SEC Reports, including any financial
statements or schedules included or incorporated by reference, (i) comply and
will comply with the requirements of the Exchange Act or the Securities Act or
both, as the case may be, applicable to those Parent SEC Reports and (ii) did
not and will not at the time filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated or necessary in
order to make the statements made in those Parent SEC reports, in the light of
the circumstances under which they were made, not misleading. No Parent
Subsidiary is subject to the periodic reporting requirements of the Exchange Act
or is otherwise required to file any documents with the SEC or any national
securities exchange or quotation service or comparable Governmental Entity.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Parent SEC Reports (including the related
notes and schedules) fairly presented or will fairly present, in all material
respects, the consolidated financial position of the Parent as of the dates set
forth in those consolidated balance sheets. Each of the consolidated statements
of income and of cash flows included in or incorporated by reference into the
Parent SEC Reports (including any related notes and schedules) fairly presented
or will fairly present, in all material respects, the consolidated results of
operations and cash flows, as the case may be, of the Parent and the
consolidated Parent Subsidiaries for the periods set
31
forth in those consolidated statements of income and of cash flows (subject, in
the case of unaudited quarterly statements, to notes and normal year-end audit
adjustments that will not be material in amount or effect), in each case in
conformity with GAAP (except, in the case of unaudited quarterly statements, as
permitted by Form 10-Q of the SEC) consistently applied throughout the periods
indicated.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Parent and the consolidated Parent Subsidiaries as of
December 31, 1998, including the related notes, neither the Parent nor any
Parent Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in the related notes prepared in accordance with
GAAP, except for liabilities or obligations incurred in the ordinary course of
business since December 31, 1998, that, individually or in the aggregate, have
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Parent.
SECTION 4.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1998 (or, with respect to Snapper, Inc., December 31, 1998), and except as
otherwise disclosed in the MIG Form 10K, the Parent and the Parent Subsidiaries
have conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been:
(a) any Material Adverse Effect on the Parent;
(b) any damage, destruction or other casualty loss with
respect to any asset or property owned, leased or otherwise used by it or any
Parent Subsidiaries, whether or not covered by insurance, which damage,
destruction or loss, individually or in the aggregate, has resulted or could
reasonably be expected to result in a Material Adverse Effect on the Parent;
(c) any material change by the Parent in its or any Parent
Subsidiary's accounting methods, principles or practices;
(d) any declaration, setting aside or payment of any dividend
or distribution in respect of Parent Shares or any redemption, purchase or other
acquisition of any of the Parent's securities; or
(e) any increase in the compensation or benefits or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, the granting of
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any executive officers of the
Parent or any Parent Subsidiary except in the ordinary course of business
consistent with past practice or except as required by applicable Law.
32
SECTION 4.10 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in Section 4.10 of the Parent
Disclosure Letter and except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Parent: (A) each
Benefit Plan of the Parent or any Parent Subsidiary (the "PARENT BENEFIT PLANS")
has been administered and is in compliance with the terms of such plan and all
applicable laws, rules and regulations, (B) no "reportable event" (as such term
is used in section 4043 of ERISA) (other than those events for which the 30 day
notice has been waived pursuant to the regulations), "prohibited transaction"
(as such term is used in sec tion 406 of ERISA or section 4975 of the Code) or
"accumulated funding deficiency" (as such term is used in section 412 or 4971 of
the Code) has heretofore occurred with respect to any Parent Benefit Plan and
(C) each Parent Benefit Plan intended to qualify under Section 401(a) of the
Code has received a favorable determination from the IRS regarding its qualified
status and no notice has been received from the IRS with respect to the
revocation of such qualification.
(b) There is no litigation or administrative or other
proceeding involving any Parent Benefit Plan nor has the Parent or any Parent
Subsidiary received notice that any such proceeding is threatened, in each case
where an adverse determination could reasonably be expected to have a Material
Adverse Effect on the Parent. Neither the Parent nor any Parent Subsidiary has
incurred, nor, to the Parent's knowledge, is reasonably likely to incur any
withdrawal liability with respect to any "multiemployer plan" (within the
meaning of section 3(37) of ERISA) which remains unsatisfied in an amount which
could reasonably be expected to have a Material Adverse Effect on the Parent.
The termination of, or withdrawal from, any Parent Benefit Plan or multiemployer
plan to which the Parent or any Parent Subsidiaries contributes, on or prior to
the Closing Date, will not subject the Parent or any Parent Subsidiary to any
liability under Title IV of ERISA that could reasonably be expected to have a
Material Adverse Effect on the Parent.
SECTION 4.11 ACCOUNTING AND TAX MATTERS. Neither the Parent nor Merger
Sub, nor to the knowledge of the Parent, any of Parent's affiliates has taken or
agreed to take any action, nor is the Parent aware of any agreement, plan or
other circumstance, that would prevent the Merger from constituting a
transaction qualifying as a reorganization under Section 368(a) of the Code.
SECTION 4.12 CONTRACTS; DEBT INSTRUMENTS. Except as set forth in
Section 4.12 of the Parent Disclosure Letter, there is no Contract that is
material to the business, financial condition or results of operations of the
Parent and the Parent Subsidiaries taken as a whole (each, a "PARENT MATERIAL
CONTRACT"). Neither the Parent nor any Parent Subsidiary is in violation of or
in default under (nor does there exist any condition which with the passage of
time or the giving of notice would cause such a violation of or default under)
any Contract to which it is a party or by which it or any of its properties or
assets is or may be bound or affected, except for violations or defaults that,
individually or in the aggregate, have not resulted and could not
33
reasonably be expected to result in a Material Adverse Effect on the Parent. Set
forth in Section 4.12 of the Parent Disclosure Letter is a description of any
material changes to the amount and terms of the indebtedness of the Parent and
the consolidated Parent Subsidiaries as described in the notes to the financial
statements set forth as incorporated by reference in the MIG Form 10K.
SECTION 4.13 LITIGATION. There is no Claim pending or, to the knowledge
of the Parent, threatened against the Parent or any Parent Subsidiary before any
Governmental Entity that, individually or in the aggregate, has resulted or
could reasonably be expected to result in a Material Adverse Effect on the
Parent. Neither the Parent nor any Parent Subsidiary is subject to any
outstanding order, writ, injunction or decree which, individually or in the
aggregate, has resulted or could reasonably be expected to result in a Material
Adverse Effect on the Parent.
SECTION 4.14 ENVIRONMENTAL MATTERS. Except as disclosed on Section 4.14
of the Parent Disclosure Letter or in the Parent SEC Reports and except as could
not reasonably be expected to have a Material Adverse Effect on the Parent:
(a) Neither the Parent nor any Parent Subsidiary is or has
been in violation in any material respect of any applicable Safety and
Environmental Law.
(b) The Parent and each Parent Subsidiary have all Permits
required pursuant to Safety and Environmental Laws that are material to the
conduct of the business of the Parent or any Parent Subsidiary, all such Permits
are in full force and effect, no action or proceeding to revoke, limit or modify
any of such Permits is pending, and the Parent and each Parent Subsidiary is in
compliance in all material respects with all terms and conditions thereof.
(c) Neither the Parent nor any Parent Subsidiary has received,
or expects to receive due to the consummation of the Agreement, any material
Environmental Claim.
(d) To the Parent's knowledge, there is not now and has not
been at any time in the past a Release or threatened Release of Hazardous
Substances into the Environment for which the Parent or any Parent Subsidiary
may be directly or indirectly responsible.
(e) To the Parent's knowledge, there is not now and has not
been at any time in the past at, on or in any of the real properties owned,
leased or operated by the Parent or any Parent Subsidiary, and, to the Parent's
knowledge, was not at, on or in any real property previously owned, leased or
operated by the Parent or any Parent Subsidiary or any predecessor: (i) any
generation, use, handling, Release, treatment, recycling, storage or disposal of
any Hazardous Substances, (ii) any underground storage tank, surface
impoundment, lagoon or other containment facility (past or present) for the
temporary or permanent storage, treatment or disposal
34
of Hazardous Substances, (iii) any asbestos-containing material in a condition
requiring abatement, (iv) any Release or threatened Release, or any visible
signs of Releases or threatened Releases, of a Hazardous Substance to the
Environment in form or quantity requiring remedial action under Safety and
Environmental Laws, or (v) any Hazardous Substances present at such property,
excepting such quantities as are handled in accordance with all applicable
manufacturer's instructions and Safety and Environmental Laws and in proper
storage containers, and as are necessary for the operations of the Parent and
the Parent Subsidiaries.
SECTION 4.15 INTELLECTUAL PROPERTY.
(a) DISCLOSURE.
(i) Section 4.15(a)(i) of the Parent Disclosure
Letter sets forth all material United States and foreign patents and patent
applications, trademark and service xxxx registrations and applications,
Internet domain name registrations and applications, and copyright registrations
and applications owned or licensed by the Parent, specifying as to each item, as
applicable: (A) the nature of the item, including the title; (B) the owner of
the item; (C) the jurisdictions in which the item is issued or registered or in
which an application for issuance or registration has been filed; and (D) the
issuance, registration, or application numbers and dates.
(ii) Section 4.15(a)(ii) of the Parent Disclosure
Letter sets forth all material IP Licenses under which the Parent is a licensor
or licensee or otherwise is authorized to use or practice any Intellectual
Property.
(iii) Section 4.15(a)(iii) of the Parent Disclosure
Letter sets forth and describes the status of any material Proposed Intellectual
Property Agreements.
(b) OWNERSHIP. The Parent owns, free and clear of all Liens,
and has the unrestricted right to use, sell, or license, all Intellectual
Property set forth in Section 4.15(a)(i) and, as applicable, Section 4.15(a)(ii)
of the Parent Disclosure Letter, except for failures that, individually or in
the aggregate, have not resulted and could not reasonably be expected to result
in a Material Adverse Effect on the Parent.
(c) CLAIMS. The Parent has not been, during the three years
preceding the date of this Agreement, a party to any Claim, nor, to the
knowledge of the Company, is any Claim threatened, that challenges the validity,
enforceability, ownership, or right to use, sell, or license any Intellectual
Property owned or licensed by the Parent, except for Claims that, individually
or in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Parent. To the knowledge of the
Parent, no third party is infringing upon any Intellectual Property, except for
infringements that, individually or in the aggregate,
35
have not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Parent.
(d) ADMINISTRATION AND ENFORCEMENT. The Parent has taken all
necessary and desirable actions to maintain and protect each item of Intellec
tual Property owned by the Parent, except for failures to take such actions
that, individually or in the aggregate, have not resulted and could not
reasonably be expected to result in a Material Adverse Effect on the Parent.
(e) PROTECTION OF TRADE SECRETS AND TECHNOLOGY. The Parent has
taken all reasonable precautions to protect the secrecy, confidentiality, and
value of its trade secrets and the proprietary nature and value of the
Technology, except for failures to take such precautions that, individually or
in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Parent.
(f) SOFTWARE. All material Software is described in Section
4.15(a)(ii) of the Parent Disclosure Letter. The Software performs in
conformance with its documentation, except for failures to perform that,
individually or in the aggregate, have not resulted and could not reasonably be
expected to result in a Material Adverse Effect on the Parent.
(g) YEAR 2000 COMPLIANCE. All Systems used by the Parent are
Year 2000 Compliant and to the Parent's knowledge the systems used by the
Parent's material suppliers are Year 2000 Compliant, except in each case for
failures to be Year 2000 Compliant that, individually or in the aggregate, have
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Parent and except as set forth in Section 4.15(g) of the
Parent Disclosure Letter.
(h) EFFECT OF TRANSACTION. The Parent is not, nor, as a result
of the execution and delivery of this Agreement or the performance of its
obligations under this agreement, will be, in violation of any agreement
relating to any Intellectual Property, except for violations that, individually
or in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Parent.
SECTION 4.16 TAXES. (a) Except as set forth on Section 4.16(a) of the
Parent Disclosure Letter, (i) the Parent and each Parent Subsidiary has timely
filed (after giving effect to any extensions of the time to file which were
obtained) prior to the date of this Agreement, and will file prior to the
Effective Time, all returns required to be filed prior to the date of this
Agreement and/or required to be filed prior to the Effective Time by any of them
with respect to, and has paid (or the Parent has paid on its behalf), or has or
will set up an adequate reserve for the payment of, all Taxes required to be
paid prior to the date of the Agreement or the Effective Time, as the case may
be, and the most recent financial statements contained in the Parent SEC Reports
reflect an adequate reserve for all Taxes payable
36
by the Parent and the Parent Subsidiaries accrued through the date of such
financial statements and (ii) no deficiencies for any Taxes have been proposed,
asserted or assessed against the Parent or any Parent Subsidiary other than
those which are being contested in good faith and by proper proceedings by the
Parent, except in the case of clauses (i) and (ii) above, any of the foregoing
which do not and will not have a Material Adverse Effect on the Parent.
(b) The Federal income tax returns of the Parent and each
Parent Subsidiary consolidated in such returns have been examined by and settled
with the IRS, or the statute of limitations with respect to such years has
expired, for all years through 1994.
(c) Except as set forth on Section 4.16(c) of the Parent
Disclosure Letter, none of the Parent, any Parent Subsidiary, or to the Parent's
knowledge, any group of which the Parent or any Parent Subsidiary is now or ever
was a member, has filed or entered into any election, consent or extension
agreement that extends any applicable statute of limitations or the time within
which a return must be filed which statute of limitations has not expired or
return has not been timely filed except, in the case of Parent Subsidiaries
organized under the laws of jurisdictions outside the United States, as has not
and could not reasonably be expected to result in a Material Adverse Effect on
the Parent.
(d) Except as set forth on Section 4.16(d) of the Parent
Disclosure Letter, (i) none of the Parent, any Parent Subsidiary or, to the
Parent's knowledge, any group of which the Parent or any Parent Subsidiary is
now or ever was a member, is a party to any action or proceeding pending or, to
the Parent's knowledge, threatened by any governmental authority for assessment
or collection of Taxes, (ii) no unresolved claim for assessment or collection of
Taxes has, to the Parent's knowledge, been asserted, (iii) no audit or
investigation of the Parent or any Parent Subsidiary by any governmental
authority is pending or, to the Parent's knowledge, threatened and (iv) no such
matters are under discussion with any governmental authority which, in the case
of clauses (i-iv), could have a Material Adverse Effect on the Parent.
SECTION 4.17 NON-COMPETITION AGREEMENTS. Except as set forth in Section
4.17 of the Parent Disclosure Letter, neither the Parent nor any Parent
Subsidiary is a party to any agreement which purports to restrict or prohibit in
any material respect the Parent and the Parent Subsidiaries collectively from,
directly or indirectly, engaging in any business involving telecommunications
currently engaged in by the Parent, any Parent Subsidiary, any other persons
affiliated with the Parent, or the Company or any Company Subsidiaries. None of
the Parent's officers, directors or key employees is a party to any agreement
which, by virtue of such person's relationship with the Parent, restricts in any
material respect the Parent or any Parent Subsidiary or affiliate of either of
them from, directly or indirectly, engaging in any of the businesses described
above.
37
SECTION 4.18 INVESTMENT COMPANY ACT. Each of Parent and each Parent
Subsidiary either (i) is not an "investment company," or a company "controlled"
by, or an "affiliated company" with respect to, an "investment company," within
the meaning of the Investment Company Act or (ii) satisfies all conditions for
an exemption from the Investment Company Act, and, accordingly, neither the
Parent nor any Parent Subsidiary is required to be registered under the
Investment Company Act.
SECTION 4.19 OPINION OF FINANCIAL ADVISOR. Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation (the "PARENT FINANCIAL ADVISOR") has delivered to the
Board of Directors of the Parent its oral opinion to the effect that, as of the
date of this Agreement, the Exchange Ratio is fair to the Parent from a
financial point of view, a copy of the written opinion of which will be
delivered to the Company after receipt thereof by the Parent.
SECTION 4.20 BROKERS. No broker, finder or investment banker other than
the Parent Financial Advisor is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or the other transactions
contemplated hereby based upon arrangements made by or on behalf of the Parent
or Merger Sub. The Parent has heretofore made available to the Company a
complete and correct copy of all agreements between the Parent and the Parent
Financial Advisor pursuant to which the Parent Financial Advisor would be
entitled to any payment relating to the Merger or such other transactions.
SECTION 4.21 CERTAIN STATUTES. The Board of Directors of the Parent has
taken or will take all appropriate and necessary actions such that the
restrictions on business combinations in Section 203 of the GCL will not have
any effect on the Merger or the other transactions contemplated hereby. No
Takeover Statute is, as of the date hereof, applicable to the Merger or such
other transactions.
SECTION 4.22 INFORMATION. None of the information to be supplied by the
Parent or Merger Sub for inclusion or incorporation by reference in the
Registration Statement, the Exchange Offer Registration Statement or the Proxy
Statement will, in the case of the Registration Statement and the Exchange Offer
Registration Statement, at the time it becomes effective and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated in that Registration Statement or the
Exchange Offer Registration Statement, as the case may be, or necessary to make
the statements in the Registration Statement or the Exchange Offer Registration
Statement, as the case may be, not misleading, or, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
mailing of the Proxy Statement and any amendments or supplements thereto and at
the time of the Parent Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated in that
Proxy Statement or necessary in order to make the statements in that Proxy
Statement, in light of the circumstances under which they are made, not
misleading. The Proxy Statement (except for such portions thereof that
38
relate only to the Company or the Company Subsidiaries or affiliates of the
Company) and the Registration Statement and the Exchange Offer Registration
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the Securities Act, respectively.
SECTION 4.23 VOTE REQUIRED. The Requisite Parent Vote is the only vote
of the holders of any class or series of the Parent's capital stock necessary
(under the rules and regulations of the American Stock Exchange, Inc., the
Parent Charter Documents, the GCL, other applicable Law or otherwise to approve
this Agreement, the issuance of Parent Common Stock in the Merger and the other
transactions contemplated by this Agreement.
SECTION 4.24 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated by this
Agreement.
ARTICLE 5
COVENANTS
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated
by this Agreement or with the prior written consent of the Parent, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will use its best efforts to cause each of the Company Subsidiaries to,
conduct its operations only in the ordinary course of business consistent with
past practice and will use its reasonable best efforts to, and to use its best
efforts to cause each Company Subsidiary to, preserve intact the business
organization of the Company and each of the Company Subsidiaries, to keep
available the services of the present officers and key employees of the Company
and the Company Subsidiaries, and to preserve the good will of customers,
suppliers and all other persons having business relationships with the Company
and the Company Subsidiaries. Without limiting the generality of the foregoing,
and except as otherwise contemplated by this Agreement or disclosed in Section
5.1 of the Company Disclosure Letter, prior to the Effective Time, the Company
will not, and will not permit any Company Subsidiary (or with respect to clauses
(e) and (h) below, use its best efforts not to permit any Company Subsidiary
that is not a wholly-owned Company Subsidiary) to, without the prior written
consent of the Parent:
(a) adopt any amendment to the Company Charter Documents or
the comparable organizational documents of any Company Subsidiary;
(b) except for issuances of capital stock of Company
Subsidiaries to the Company or a wholly owned Company Subsidiary, issue, reissue
or sell, or authorize the issuance, reissuance or sale of (i) additional shares
of capital
39
stock of any class, or securities convertible into capital stock of any class,
or any rights, warrants or options to acquire any convertible securities or
capital stock, other than the issue of Company Shares, in accordance with the
terms of the instruments governing such issuance on the date hereof, pursuant to
the exercise of Company Stock Options or Company Warrants or the conversion of
Convertible Notes outstanding on the date hereof, or (ii) any other securities
in respect of, in lieu of, or in substitution for, Company Shares outstanding on
the date hereof;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock other than
between the Company and any Company Subsidiary;
(d) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities, except for a
redemption of the Company Preferred Shares in accordance with the terms of this
Agreement;
(e) except for (i) increases in salary, wages and benefits of
officers or employees of the Company or the Company Subsidiaries in the ordinary
course of business and in accordance with past practice, (ii) increases in
salary, wages and benefits granted to officers and employees of the Company or
the Company Subsidiaries in conjunction with new hires, promotions or other
changes in job status in the ordinary course of business and consistent with
past practices, increase the compensation or fringe benefits payable or to
become payable to its directors, officers or employees (whether from the Company
or any Company Subsidiaries), or pay any benefit not required by any existing
plan or arrangement (including the granting of stock options, stock appreciation
rights, shares of restricted stock or performance units) or grant any severance
or termination pay to (except pursuant to existing agreements, plans or
policies), or enter into any employment or severance agreement with, any
director, officer or other employee of the Company or any Company Subsidiaries
or establish, adopt, enter into, or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, savings, welfare, deferred compensation, employment, termination,
severance or other employee benefit plan, agreement, trust, fund, policy or
arrangement for the benefit or welfare of any directors, officers or current or
former employees, except in each case to the extent required by applicable Law;
PROVIDED, HOWEVER, that nothing in this Agreement will be deemed to prohibit the
payment of benefits existing on the date hereof as they become payable;
(f) except as set forth in Section 5.1(f) of the Company
Disclosure Letter, acquire, sell, lease, license, transfer, pledge, encumber,
grant or dispose of (whether by merger, consolidation, purchase, sale or
otherwise) any assets, including capital stock of Company Subsidiaries (other
than the acquisition and sale of inventory or the disposition of used or excess
equipment and the purchase of raw materials, supplies and equipment, in either
case in the ordinary course of business
40
consistent with past practice), with a value in excess of $100,000 or enter into
any material commitment or transaction outside the ordinary course of business,
other than transactions between a wholly owned Company Subsidiary and the
Company or another wholly owned Company Subsidiary;
(g) (i) incur, assume or prepay any long-term indebtedness or
incur or assume any short-term indebtedness (including, in either case, by
issuance of debt securities), except that the Company and the Company
Subsidiaries may incur, assume or prepay indebtedness in the ordinary course of
business consistent with past practice and except for loans made by the Parent
to the Company pursuant to the Bridge Loan Agreement dated as of the date hereof
between the Company and the Parent (the "Bridge Loan Agreement"), (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except in the
ordinary course of business, or (iii) make any loans, advances or capital
contributions to, or investments in, any other person except in the ordinary
course of business and except for loans, advances, capital contributions or
investments between any wholly owned Company Subsidiary and the Company or
another wholly owned Company Subsidiary;
(h) terminate, cancel or request any material change in, or
agree to any material change in any Contract which is material to the Company
and the Company Subsidiaries taken as a whole, or enter into any Contract which
would be material to the Company and the Company Subsidiaries taken as a whole,
in either case other than in the ordinary course of business consistent with
past practice; or make or authorize any capital expenditure, other than capital
expenditures that are not, in the aggregate, for any fiscal year, in excess of
the capital expenditures provided for in the Company's budget for the Company
and the Company Subsidiaries taken as a whole for such fiscal year (a copy of
which budget has been provided to the Parent);
(i) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and consistent
with past practice or as required pursuant to applicable Law or GAAP;
(j) make any Tax election or settle or compromise any
material federal, state, local or foreign income Tax liability; or
(k) authorize or enter into any formal or informal written or
other agreement or otherwise make any commitment to do any of the foregoing.
SECTION 5.2 CONDUCT OF BUSINESS OF THE PARENT. Except as contemplated
by this Agreement or with the prior written consent of the Company, during the
period from the date of this Agreement to the Effective Time, the Parent will,
and will use its best efforts to cause each of the Parent Subsidiaries to,
conduct its operations only in the ordinary course of business consistent with
past practice and will use its reasonable best efforts to, and to use its best
efforts to cause each Parent
41
Subsidiary to, preserve intact the business organization of the Parent and each
of the Parent Subsidiaries, to keep available the services of the present
officers and key employees of the Parent and the Parent Subsidiaries, and to
preserve the good will of customers, suppliers and all other persons having
business relationships with the Parent and the Parent Subsidiaries. Without
limiting the generality of the foregoing, and except as otherwise contemplated
by this Agreement or disclosed in Section 5.2 of the Parent Disclosure Letter,
prior to the Effective Time, the Parent will not, and will not permit any Parent
Subsidiary to, without the prior written consent of the Company:
(a) adopt any amendment to the Parent Charter Documents;
(b) except for dividends on the 7 1/4% Preferred Stock and pro
rata dividends set aside or paid by any Parent Subsidiary to the holders of its
equity interests, declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock other than between the Parent and
any Parent Subsidiary;
(c) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities, except for a
redemption of shares of Parent Preferred Stock;
(d) except as set forth in Section 5.2 (d) of the Parent
Disclosure Letter, sell, lease, transfer or dispose of (whether by merger,
consolidation, purchase, sale or otherwise) all or substantially all the
Parent's and the Parent Subsidiaries' assets and properties;
(e) (i) incur, assume or prepay any long-term indebtedness or
incur or assume any short-term indebtedness (including, in either case, by
issuance of debt securities), except that the Parent and the Parent Subsidiaries
may incur, assume or prepay indebtedness in the ordinary course of business
consistent with past practice, (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person except in the ordinary course of business,
or (iii) make any loans, advances or capital contributions to, or investments
in, any other person except in the ordinary course of business and except for
loans, advances, capital contributions or investments between any Parent
Subsidiary and the Parent or another Parent Subsidiary; provided, however, that
this subsection shall not prohibit the Parent from providing interim financing
to the Company or any Company Subsidiary from the date hereof until the closing
date;
(f) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and consistent
with past practice or as required pursuant to applicable Law or GAAP; or
42
(g) authorize or enter into any formal or informal written or
other agreement or otherwise make any commitment to do any of the foregoing.
SECTION 5.3 OTHER ACTIONS. During the period from the date hereof to
the Effective Time, the Company and the Parent shall not, and shall not permit
any of their respective subsidiaries to, take any action that would, or that
could reasonably be expected to, result in any of the conditions to the Merger
set forth in Article 6 hereof not being satisfied.
SECTION 5.4 UPDATED LETTERS; NOTIFICATION OF CERTAIN MATTERS. The
Parent and the Company shall each deliver, on the Closing Date, updated copies
of the Parent Disclosure Letter and Company Disclosure Letter, respectively,
setting forth any changes to such letters from the date hereof through the
Business Day prior to the Closing Date (it being understood and agreed that such
updated letters are being provided for information purposes only and any matters
discussed on such updated letters shall not cure any breach or default of any
representation, warranty, covenant or condition in this Agreement). The Parent
and the Company shall promptly notify each other of (a) the occurrence or
non-occurrence of any fact or event which could reasonably be expected (i) to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time, (ii) to cause any material covenant, condition or agreement
hereunder not to be complied with or satisfied in all material respects or (iii)
to result in, in the case of Parent, a Material Adverse Effect on the Parent;
and, in the case of the Company, a Material Adverse Effect on the Company, (b)
any failure of the Company or the Parent, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder in any material respect; PROVIDED, HOWEVER, that no such
notification shall affect the representations or warranties of any party or the
conditions to the obligations of any party hereunder, (c) any notice or other
material communications from any Governmental Entity in connection with the
transactions contemplated by this Agreement and (d) the commencement of any
suit, action or proceeding that seeks to prevent or seek damages in respect of,
or otherwise relates to, the consummation of the transactions contemplated by
this Agreement.
SECTION 5.5 PROXY STATEMENT, REGISTRATION STATEMENTS.
(a) As promptly as practicable after the execution of this
Agreement, (i) the Parent and the Company shall jointly prepare and file with
the SEC a single document that will constitute (A) the proxy statement of the
Company relating to the special meeting of the Company's stockholders (the
"COMPANY STOCKHOLDERS MEETING") to be held to consider approval and adoption of
this Agreement and the Merger, (B) the proxy statement of the Parent relating to
the special meeting of the Parent's stockholders (the "PARENT STOCKHOLDERS
MEETING") to be held to consider approval of the issuance of the Parent Common
Stock to be issued in the Merger, (C) the registration statement on Form S-4 of
the Parent (together with all amendments thereto, the "REGISTRATION STATEMENT"),
in connection with the
43
registration under the Securities Act of the Parent Common Stock to be issued to
the stockholders of the Company in connection with the Merger and the prospectus
included in the Registration Statement (such single document, together with any
amendments thereof or supplements thereto, the "PROXY STATEMENT") and (ii) the
Parent shall prepare and file with the SEC the registration statement on Form
S-4 of the Parent or a shelf registration statement on Form S-3, as the case may
be (together with all amendments thereto, the "EXCHANGE OFFER REGISTRATION
STATEMENT"), providing for the offer to exchange and consent solicitation by
Parent and registration under the Securities Act of certain of its new 10 1/2%
Senior Notes due 2007 (the "NEW PARENT NOTES") to holders of each of the
Company's 14 1/2% Senior Discount Notes due 2004 (the "COMPANY SENIOR NOTES")
and Convertible Notes, which New Parent Notes will have the terms substantially
as specified in Section 5.5 of the Parent Disclosure Letter and which exchange
offer and consent solicitation will be commenced on the basis and with the terms
substantially as specified in Section 5.5 of the Parent Disclosure Letter (the
"EXCHANGE OFFER"). Substantially contemporaneously with the filing of the Proxy
Statement with the SEC, copies of the Proxy Statement shall be provided to
NASDAQ and the American Stock Exchange. The Parent and the Company each shall
use its reasonable best efforts to cause the Registration Statement and the
Exchange Offer Registration Statement to become effective as promptly as
practicable, and, prior to the effective date of the Registration Statement (the
"REGISTRATION STATEMENT EFFECTIVE DATE"), the Parent shall take all or any
action required under any applicable Law in connection with the issuance of
Parent Common Stock pursuant to the Merger. The Parent or the Company, as the
case may be, shall furnish all information concerning the Parent or the Company
as the other party may reasonably request in connection with such actions and
the preparation of the Proxy Statement, the Registration Statement and the
Exchange Offer Registration Statement. As promptly as practicable after the
Registration Statement Effective Date, the proxy statements and prospectus
included in the Proxy Statement (collectively, the "PROXY MATERIALS") will be
mailed to the stockholders of the Parent and the Company and the Exchange Offer
will be commenced. The Parent and the Company shall cause the Proxy Statement to
comply as to form and substance in all material respects with the applicable
requirements of (i) the Exchange Act, including Sections 14(a) and 14(d) thereof
and the respective regulations promulgated thereunder, (ii) the Securities Act,
(iii) the rules and regulations of the American Stock Exchange and NASDAQ and
(iv) the GCL.
(b) The Proxy Statement shall include the unanimous and
unconditional recommendation of the Board of Directors of the Company to the
stockholders of the Company that they vote in favor of the adoption of this
Agreement and the Merger; PROVIDED, HOWEVER, that the Board of Directors of the
Company may, at any time prior to the Effective Time, withdraw, modify or change
any such recommendation solely in accordance with the provisions of Section
5.8(b) hereof. In addition, the Proxy Statement and the Proxy Materials will
include a copy of the written opinions of the Company Financial Advisor and the
Parent Financial Adviser referred to in Sections 3.20 and 4.19 respectively.
44
(c) No amendment or supplement to the Proxy Statement will be
made without the approval of each of the Parent and the Company, which approval
shall not be unreasonably withheld or delayed.
(d) The information supplied by the Company for inclusion in
the Proxy Statement, the Registration Statement or the Exchange Offer
Registration Statement, as the case may be, shall not, at (i) the time the
Registration Statement or Exchange Offer Registration Statement is declared
effective, (ii) the time the Proxy Materials (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of each of the Parent
and the Company, (iii) the time of the Company Stockholders Meeting, (iv) the
time of the Parent Stockholders Meeting and (v) the Effective Time, contain any
untrue statement of a material fact or fail to state any material fact required
to be stated in the Proxy Statement, the Registration Statement or the Exchange
Offer Registration Statement, as the case may be, or necessary in order to make
the statements in the Proxy Statement, the Registration Statement or the
Exchange Offer Registration Statement, as the case may be, not misleading. If at
any time prior to the Effective Time any event or circumstance relating to the
Company or any Company Subsidiary, or their respective officers or directors,
should be discovered by the Company that should be set forth in an amendment or
a supplement to the Proxy Statement, the Registration Statement or the Exchange
Offer Registration Statement, the Company shall promptly inform the Parent. All
documents that the Company is responsible for filing with the SEC in connection
with the transactions contemplated hereby will comply as to form and substance
in all material respects with the applicable requirements of the GCL, the
Securities Act and the Exchange Act.
(e) The information supplied by the Parent for inclusion in
the Proxy Statement, the Registration Statement or the Exchange Offer
Registration Statement, as the case may be, shall not, at (i) the time the
Registration Statement or the Exchange Offer Registration Statement is declared
effective, (ii) the time the Proxy Materials (or any amendment of or supplement
to the Proxy Materials) are first mailed to the stockholders of each of the
Parent and the Company, (iii) the time of the Company Stockholders Meeting, (iv)
the time of the Parent Stockholders Meeting and (v) the Effective Time, contain
any untrue statement of a material fact or fail to state any material fact
required to be stated in the Proxy Statement, the Registration Statement or the
Exchange Offer Registration Statement, as the case may be, or necessary in order
to make the statements in the Proxy Statement, the Registration Statement or the
Exchange Offer Registration Statement, as the case may be, not misleading. If,
at any time prior to the Effective Time, any event or circumstance relating to
the Parent or any Parent Subsidiary, or their respective officers or directors,
should be discovered by the Parent that should be set forth in an amendment or a
supplement to the Proxy Statement, the Registration Statement or the Exchange
Offer Registration Statement, the Parent shall promptly inform the Company. All
documents that the Parent is responsible for filing in connection with the
transactions contemplated by this Agreement will comply as to form and substance
45
in all material aspects with the applicable requirements of the GCL, the
Securities Act and the Exchange Act.
SECTION 5.6 STOCKHOLDERS MEETINGS.
(a) The Company shall call and hold the Company Stockholders
Meeting as promptly as practicable after the Registration Statement Effective
Date for the purpose of voting upon the adoption of this Agreement and the
Parent and the Company will cooperate with each other to cause the Company
Stockholders Meeting to be held as soon as practicable following the mailing of
the Proxy Materials to the stockholders of the Company. The Company shall use
its reasonable best efforts (through its agents or otherwise) to solicit from
its stockholders proxies in favor of the adoption of this Agreement, and shall
take all other action necessary or advisable to secure Requisite Company Vote,
except to the extent that the Board of Directors of the Company determines in
good faith that doing so would cause the Board of Directors of the Company to
breach its fiduciary duties to the Company's stockholders under applicable Law
after receipt of advice to such effect from independent legal counsel (who may
be the Company's regularly engaged independent legal counsel). In addition, the
Company shall use its reasonable best efforts to solicit, as directed by the
Parent and at the Parent's expense, acceptance of the Exchange Offer by holders
of Company Senior Notes and Convertible Notes.
(b) The Parent shall call and hold the Parent Stockholders
Meeting as promptly as practicable after the Registration Statement Effective
Date for the purpose of voting upon the approval of the issuance of the Parent
Common Stock to be issued in the Merger and the Parent and the Company will
cooperate with each other to cause the Parent Stockholders Meeting to be held as
soon as practicable following the mailing of the Proxy Materials to the
stockholders of the Parent. The Parent shall use its reasonable best efforts
(through its agents or otherwise) to solicit from its stockholders proxies in
favor of the adoption of such issuance, and shall take all other action
necessary or advisable to secure the Requisite Parent Vote. In addition, the
Parent shall use its reasonable best efforts to solicit acceptance of the
Exchange Offer by holders of Company Senior Notes and Convertible Notes.
SECTION 5.7 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Except as required under any confidentiality agreement or
similar agreement or arrangement to which the Parent or the Company or any of
their respective subsidiaries is a party or under applicable Law or the
regulations or requirements of any securities exchange or quotation service or
other self regulatory organization with whose rules the parties are required to
comply, from the date of this Agreement to the Effective Time, the Parent and
the Company shall (and shall cause their respective subsidiaries to): (i)
provide to the other (and its officers, directors, employees, accountants,
consultants, legal counsel, financial advisors, investment bankers, agents and
other representatives (collectively, "REPRESENTATIVES")) access at reasonable
times upon prior notice to the officers, employees, agents, properties,
46
offices and other facilities of the other and its subsidiaries and to the books
and records thereof; and (ii) furnish promptly such information concerning the
business, properties, Contracts, assets, liabilities, personnel and other
aspects of the other party and its subsidiaries as the other party or its
Representatives may reasonably request. No investigation conducted under this
Section 5.7 shall affect or be deemed to modify any representation or warranty
made in this Agreement.
(b) The parties shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreement, dated October, 1998 (the "CONFIDENTIALITY
AGREEMENT"), between the Parent and the Company with respect to the information
disclosed under this Section 5.7.
SECTION 5.8 NO SOLICITATION.
(a) Neither the Company nor any of the Company Subsidiar ies
shall, nor shall it or any of Company Subsidiaries authorize or permit any of
their respective directors, officers, employees, investment bankers, attorneys
or other agents or representatives, directly or indirectly to, (i) solicit,
initiate, encourage (including by way of furnishing information or assistance)
or take any other action to facilitate, any inquiry or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
acquisition or purchase of a substantial amount of assets of, or any equity
interest in, the Company or any of its Subsidiaries or any tender offer
(including a self tender offer) or exchange offer, merger, consolidation,
business combination, sale of substantially all assets, sale of securities,
recap italization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries (other than the transactions contemplated by
this Agreement) or any other material corporate transaction the consummation of
which would or could reasonably be expected to impede, interfere with, prevent
or materially delay the Merger (collectively, "TRANSACTION PROPOSALS") or agree
to or endorse any Transac tion Proposal or (ii) propose, enter into or
participate in any discussions or negotiations regarding any of the foregoing,
or furnish to any other Person any information with respect to its business,
properties or assets or any of the foregoing, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek any of the forego ing; provided,
however, that the foregoing clauses (i) and (ii) shall not prohibit the Company
from, prior to the Company Stockholders Meeting (A) furnishing information
pursuant to an appropriate confidentiality letter concerning the Company and its
businesses, properties or assets to a third party which has made an unsolicited
Qualified Transaction Proposal (as defined below), (B) engaging in discussions
or negotiations with such a third party which has made an unsolicited Qualified
Transac tion Proposal or (C) following receipt of an unsolicited Qualified
Transaction Proposal, taking and disclosing to its shareholders a position with
respect to such Qualified Transaction Proposal, but in each case referred to in
the foregoing clauses (A) through (C) only after the Board of Directors of the
Company concludes in good faith, following receipt of a written opinion
addressed to the Company from outside
47
counsel, that such action is necessary for the Board of Directors of the Company
to comply with its fiduciary obligations to stockholders under applicable law.
If the Board of Directors of the Company receives a Transaction Proposal, then
the Company shall immediately (and in any event within 24 hours) inform Parent
of the material terms and conditions of such proposal and the identity of the
person making it and shall keep the Parent fully informed regarding any
significant details or developments with respect to any such Transaction
Proposal and of all significant steps it is taking in response to such
Transaction Proposal. For purposes of this Agreement, the term "QUALIFIED
TRANSACTION PROPOSAL" shall mean a Transaction Proposal for which financing is
then fully committed or which the Board of Directors of the Company determines
in good faith after consultation with its outside financial advisors, is
reasonably capable of being financed and is not subject to any material
contingencies relating to financing. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in this Section
5.8(a) by (or at the direction of) an officer, director of or any investment
banker, attorney, accountant, agent or other advisor or representative of the
Company or any Company Subsidiary, whether or not such person is purporting to
act on behalf of the Company, and the Company Subsidiary or otherwise, shall be
deemed to be a breach of this section by the Company. The Company immediately
shall cease and cause to be terminated all existing discussions or negotiations
with any persons conducted heretofore with respect to, or that could reasonably
be expected to lead to, any Qualified Transaction Proposal.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose publicly to withdraw
or modify, in a manner adverse to Parent, the recommendation or any approval or
recommendation by the Board of Directors of the Company or any committee thereof
of this Agreement or the Merger or (ii) approve or recommend, or propose to
approve or recommend, any Qualified Transaction Proposal. Notwithstanding the
foregoing, the Board of Directors of the Company, to the extent it concludes in
good faith, following receipt of a written opinion addressed to the Company from
outside counsel, that such action is necessary for the Board of Directors of the
Company to comply with its fiduciary obligations to stockholders under
applicable law, may recommend (and, in connection therewith, withdraw or modify
its recommendation or its approval of this Agreement or the Merger) a Superior
Acquisition Proposal (as defined below); provided, that, neither the Company nor
the Board of Directors of the Company may in such instance terminate this
Agreement but instead the Company, at the option of the Parent, shall,
notwithstanding such withdrawal or modification of the recommendation or
approval of this Agreement or the Merger by the Company's Board of Directors
and/or the recommendation by the Company's Board of Directors that the Company's
stockholders reject this Agreement or the Merger, submit approval of this
Agreement and the Merger to a vote of the holders of Company Common Stock at the
Company Stockholders Meeting, as contemplated by this Agreement, it being
understood and agreed that, Parent, Company and Merger Sub elect this Agreement
to be governed by the provisions of Section 251(c) of the GCL. For purposes of
this Agreement, "SUPERIOR ACQUISITION PROPOSAL" means a bona fide
48
written proposal made by a third party to acquire the Company pursuant to a
tender or exchange offer, a merger, a share exchange, a sale of all or
substantially all of its assets or otherwise, in any such case, on terms which a
majority of the members of the Board of Directors of the Company determines in
their good faith judgment (after consultation with independent financial
advisors) to be more favorable to the Company and its stockholders than the
Merger and for which financing, to the extent required, is then fully committed
or which, in the good faith judgment of a majority of such members (after
consultation with independent financial advisors), is reasonably capable of
being financed by such third party.
SECTION 5.9 AFFILIATES. Concurrently with the execution of this
Agreement, the Company is delivering to Parent (i) a letter identifying all
persons who, to the knowledge of the Company, may be deemed to be "affiliates"
of the Company under Rule 145 under the Securities Act, including, without
limitation, all directors and executive officers of the Company, and (ii) not
later than 30 days prior to the Company Stockholders Meeting copies of letter
agreements, each in the form prepared by Parent and reasonably acceptable to the
Company, executed by each such Person so identified as an "affiliate" of the
Company (the letters described in clauses (i) and (ii) being collectively
referred to as "AFFILIATE LETTERS").
SECTION 5.10 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) The Parent agrees that all rights to indemnification now
existing in favor of any employee, agent, director or officer of the Company and
the Company Subsidiaries (the "INDEMNIFIED PARTIES") as provided in their
respective charters or by-laws, in an agreement between an Indemnified Party and
the Company or one of the Company Subsidiaries, or otherwise in effect on the
date hereof shall survive the Merger and shall continue in full force and effect
for a period of not less than six years from the Effective Time; PROVIDED that
in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or claims
shall continue until final disposition of any and all such claims. The Parent
also agrees to indemnify all Indemnified Parties to the fullest extent permitted
by applicable law with respect to all acts and omissions arising out of such
individuals' services as officers, directors, employees or agents of the Company
or any of the Company Subsidiaries or as trustees or fiduciaries of any plan for
the benefit of employees, or otherwise on behalf of, the Company or any of the
Company Subsidiaries, occurring prior to the Effective Time including the
transactions contemplated by this Agreement. Without limiting of the foregoing,
in the event any such Indemnified Party is or becomes involved in any capacity
in any action, proceeding or investigation in connection with any matter,
including the transactions contemplated by this Agreement, occurring prior to,
and including, the Effective Time, the Parent will pay as incurred such
Indemnified Party's legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith.
49
(b) The Parent agrees that the Company and, from and after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
for not less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company; PROVIDED
that the Surviving Corporation may substitute therefor policies of at least the
same coverage containing terms and conditions which are no less advantageous and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time; and
PROVIDED, FURTHER, that the Surviving Corporation shall not be required to pay
an annual premium in excess of 100% of the last annual premium paid by the
Company prior to the date hereof and if the Surviving Corporation is unable to
obtain the insurance required by this Section 5.10(b) it shall obtain as much
comparable insurance as possible for an annual premium equal to such maximum
amount.
SECTION 5.11 LETTERS OF ACCOUNTANTS.
(a) The Company shall use its reasonable best efforts to cause
to be delivered to the Parent "comfort" letters of KPMG LLP ("KPMG"), the
Company's independent public accountants, dated and delivered on each applicable
Registration Statement Effective Date and as of the Effective Time, and
addressed to the Parent in form and substance reasonably satisfactory to the
Parent and reasonably customary in scope and substance for letters delivered by
independent public accountants in connection with transactions contemplated
hereby.
(b) The Parent shall use its reasonable best efforts to cause
to be delivered to the Company "comfort" letters of KPMG, the Parent's
independent public accountants, dated and delivered on each applicable
Registration Statement Effective Date and as of the Effective Time, and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and reasonably customary in scope and substance for letters delivered by
independent public accountants in connection with transactions contemplated
hereby.
SECTION 5.12 REASONABLE BEST EFFORTS. Subject to the terms and
conditions provided in this Agreement and to applicable legal requirements, each
of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, in the case of
the Company, consistent with the fiduciary duties of the Company's Board of
Directors, and to assist and cooperate with the other parties hereto in doing,
as promptly as practicable, all things necessary, proper or advisable under
applicable laws and regulations to ensure that the conditions set forth in
Article 6 are satisfied and to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
50
SECTION 5.13 CONSENTS; FILINGS; FURTHER ACTION.
(a) Upon the terms and subject to the conditions hereof, each
of the parties hereto shall use its reasonable best efforts to (i) take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger and the other transactions contemplated
hereby, (ii) obtain from Governmental Entities any Company Governmental Consents
and Parent Governmental Consents and any other consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or made by
the Parent or the Company or any of their subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the Merger and the other transactions contemplated hereby, and (iii) make all
necessary filings, and thereafter make any other submissions either required or
deemed appropriate by each of the parties, with respect to this Agreement and
the Merger and the other transactions contemplated hereby required under (A) the
Securities Act, the Exchange Act and any other applicable federal or Blue Sky
Laws, (B) the HSR Act and any applicable other foreign antitrust, anti-monopoly
or similar Laws, (C) the GCL, (D) any other applicable Law and (E) the rules and
regulations of NASDAQ, the American Stock Exchange and the Toronto Stock
Exchange. The parties hereto shall cooperate and consult with each other in
connection with the making of all such filings, including by providing copies of
all such documents to the nonfiling party and its advisors prior to filing, and
none of the parties will file any such document if any of the other parties
shall have reasonably objected to the filing of such document. No party to this
Agreement shall consent to any voluntary extension of any statutory deadline or
waiting period or to any voluntary delay of the consummation of the Merger and
the other transactions contemplated hereby at the behest of any Governmental
Entity without the consent and agreement of the other parties to this Agreement,
which consent shall not be unreasonably withheld or delayed.
(b) Without limiting the generality of Section 5.13(a), each
party hereto shall promptly inform the others of any material communication from
the Federal Trade Commission, the Department of Justice or any other domestic or
foreign government or governmental or multinational authority regarding any of
the transactions contemplated by this Agreement. If any party or any affiliate
thereof receives a request for additional information or documentary material
from any such government or authority with respect to the transactions
contemplated by this Agreement, then such party will endeavor in good faith to
make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request. The Parent will advise the Company promptly in respect of any
understandings, undertakings or agreements (oral or written) which the Parent
proposes to make or enter into with the Federal Trade Commission, the Department
of Justice or any other domestic or foreign government or governmental or
multinational authority in connection with the transactions contemplated by this
Agreement. In furtherance and not in limitation of the foregoing, the Parent
shall use its reasonable best efforts to resolve such objections, if
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any, as may be asserted with respect to the transactions contemplated by this
Agreement under any antitrust, competition or trade regulatory laws, rules or
regulations of any domestic or foreign government or governmental authority or
any multinational authority. Notwithstanding the foregoing, nothing in this
Section 5.13 shall require, or be construed to require, the Parent or the
Company, in connection with the receipt of any regulatory approval, to proffer
to, or agree to (A) sell or hold separate and agree to sell, divest or to
discontinue to or limit, before or after the Effective Time, any assets,
businesses, or interest in any assets or businesses of the Parent, the Company
or any of their respective affiliates (or to the consent to any sale, or
agreement to sell, or discontinuance or limitation by the Parent or the Company,
as the case may be, of any of its assets or businesses) or (B) agree to any
conditions relating to, or changes or restriction in, the operations of any such
asset or businesses which, in either case, could reasonably be expected to
result in a Material Adverse Effect on the Parent or a Material Adverse Effect
on the Company or to materially and adversely impact the economic or business
benefits to such party of the transactions contemplated by this Agreement.
SECTION 5.14 PLAN OF REORGANIZATION. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code. From and after the
date of this Agreement and until the Effective Time, each party hereto shall use
its reasonable best efforts to cause the Merger to qualify, and will not,
without the prior written consent of the parties hereto, knowingly take any
actions or cause any actions to be taken which could prevent the Merger from
qualifying, as a reorganization under the provisions of Section 368(a) of the
Code. Following the Effective Time, and consistent with any such consent, none
of the Surviving Corporation, the Parent or any of their affiliates shall
knowingly take any action or knowingly cause any action to be taken which would
cause the Merger to fail to so qualify as a reorganization under Section 368(a)
of the Code.
SECTION 5.15 PUBLIC ANNOUNCEMENTS. The initial press release concerning
the Merger shall be a joint press release and, thereafter, the Parent and Merger
Sub and the Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
or any of the transactions contemplated hereby and shall not issue any such
press release or make any such public statement prior to such consultation,
except to the extent required by applicable Law or the requirements of NASDAQ,
the American, Toronto, Berlin or Frankfurt Stock Exchanges, in which case the
issuing party shall use its reasonable best efforts to consult with the other
parties before issuing any such release or making any such public statement.
SECTION 5.16 OBLIGATIONS OF MERGER SUB. The Parent shall take all
actions necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement.
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SECTION 5.17 STOCK EXCHANGE LISTINGS AND DE-LISTINGS. The Parent shall
use its reasonable best efforts to cause the shares of Parent Common Stock to be
issued in the Merger to be approved for listing on the American Stock Exchange,
subject to official notice of issuance, prior to the Effective Time. The parties
shall use their reasonable best efforts to cause the Surviving Corporation to
cause the Company Common Stock to be de-listed from NASDAQ and the Toronto,
Berlin and Frankfurt Stock Exchanges and de-registered under the Exchange Act as
soon as practicable following the Effective Time.
SECTION 5.18 EXPENSES. Except as otherwise provided in Section 7.5(b),
whether or not the Merger is consummated, all Expenses incurred in connection
with this Agreement and the Merger and the other transactions contemplated
hereby shall be paid by the party incurring such Expense, except that Expenses
incurred in connection with the filing fee for the Proxy Statement and printing
and mailing the Proxy Materials and the filing fee under the HSR Act shall be
shared equally by the Parent and the Company.
SECTION 5.19 TAKEOVER STATUTES. If any Takeover Statute is or may
become applicable to the Merger or the other transactions contemplated hereby,
each of the Parent and the Company and its board of directors shall grant such
approvals and take such actions as are necessary so that such transactions may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise act to eliminate or minimize the effects of such statute
or regulation on such transactions.
SECTION 5.20 BOARD OF DIRECTORS. Parent shall take such action as is
required to expand the size of its Board of Directors to eleven (11) members and
to cause the designation of two persons specified by the Company (one of which
shall be designated by News America Incorporated) in writing prior to the
Effective Time to fill such vacancies.
ARTICLE 6
CONDITIONS
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger and consummate the
other transactions contemplated hereby to be consummated on the Closing Date is
subject to the satisfaction or waiver at or prior to the Effective Time of each
of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and consummation of
the Merger shall have been duly approved by holders of outstanding Company
Shares by the Requisite Company Vote and shall have been duly approved by the
Parent as sole stockholder of Merger Sub, and the issuance of Parent Common
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Stock in the Merger shall have been duly approved by the holders of outstanding
shares of Parent Common Stock by the Requisite Parent Vote.
(b) LISTING. The shares of Parent Common Stock issuable to the
Company's stockholders pursuant to this Agreement shall have been authorized for
listing on the American Stock Exchange upon official notice of issuance.
(c) GOVERNMENTAL CONSENTS. The waiting period applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated and other than the filing provided for in Section 1.3, all notices,
reports and other filings required to be made prior to the Effective Time by the
Company or the Parent or any of their respective subsidiaries with, and all
consents, registrations, approvals, permits and authorizations required to be
obtained prior to the Effective Time by, the Company or the Parent or any of
their respective subsidiaries from, any Governmental Entity in connection with
the execution and delivery of this Agreement and the consummation of the Merger
and the other transactions contemplated hereby (including, without limitation,
all Company Governmental Consents and Parent Governmental Consents) shall have
been made or obtained (as the case may be) upon terms and conditions that could
not reasonably be expected to result in Material Adverse Effect on the Parent or
a Material Adverse Effect on the Company.
(d) LITIGATION. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law, order injunction or decree (whether temporary, preliminary or permanent)
that is in effect and restrains, enjoins or otherwise prohibits consummation of
the Merger or the other transactions contemplated hereby or that, individually
or in the aggregate with all other such Laws, orders injunctions or decrees,
could reasonably be expected to result in a Material Adverse Effect on the
Parent or a Material Adverse Effect on the Company, and no Governmental Entity
shall have instituted any proceeding or threatened to institute any proceeding
seeking any such Law, order injunction or decree.
(e) REGISTRATION STATEMENTS. The Registration Statement and
the Exchange Offer Registration Statement shall have become effective under the
Securities Act. No stop order suspending the effectiveness of such registration
statements shall have been issued, and no proceedings for that purpose shall
have been initiated or be threatened by the SEC.
(f) ACCOUNTANTS' LETTERS. The Parent and the Company shall
have received the "comfort" letters described in Section 5.11.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF THE PARENT AND MERGER SUB. The
obligations of each of the Parent and Merger Sub to effect the Merger and
consummate the other transactions contemplated hereby to be consummated on the
Closing Date are also subject to the satisfaction or waiver by the Parent at or
prior to the Effective Time of the following conditions:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
the Company set forth in this Agreement that are not so qualified shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date, as though made on and as of the Closing
Date, except to the extent the representation or warranty is expressly limited
by its terms to another date, and the Parent shall have received a certificate
(which certificate may be qualified by knowledge to the same extent as the
representations and warranties of the Company contained in this Agreement are so
qualified) signed on behalf of the Company by an executive officer of the
Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and the
Parent shall have received a certificate signed on behalf of the Company by an
executive officer of the Company to such effect.
(c) MATERIAL ADVERSE EFFECT. Since the date of this Agreement,
there shall have been no Material Adverse Effect on the Company, and the Parent
shall have received a certificate of an executive officer of the Company to such
effect.
(d) CONSENTS UNDER AGREEMENTS. The Company shall have obtained
the Company Required Consents and the consent, approval or waiver of each person
whose consent, approval or waiver shall be required in order to consummate the
transactions contemplated by this Agreement, except those for which the failure
to obtain such consent, approval or waiver, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect on the
Company.
(e) AFFILIATE LETTERS. The Parent shall have received the
Affiliate Letters referred to in Section 5.9 hereof.
(f) THE TRAVELERS REVOLVING CREDIT NOTE AND WARRANT AGREEMENT.
The Parent and the Company shall have consummated the transactions contemplated
by the Note and Warrant Modification Agreement dated as of the date hereof, with
each of The Travelers Insurance Company and The Travelers Indemnity Company, a
copy of which is attached as Exhibit B hereto, in accordance with the terms of
such Agreement.
(g) EXCHANGE OFFER. At least 95% in aggregate principal amount
of each of the Senior Company Notes and the Convertible Notes shall have
properly and validly tendered and not withdrawn their Company Senior Notes and
Convertible Notes, respectively, and consented to the consent solicitation, in
each case in accordance with the terms of the Agreement to Exchange and Consent,
a copy of which is attached as Exhibit C hereto.
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(h) TECHNOCOM LIMITED PUT/CALL AGREEMENTS. The Parent and the
Company shall have consummated the purchase of the shares of Technocom Limited
in accordance with each of the Elite Option Modification Agreement and the
Plicom Option Modification Agreement, each dated the date hereof, with each of
Elite International Limited and Plicom Limited, copies of which are attached
hereto as Exhibits D-1 and D-2.
(i) NEWS ARRANGEMENTS. The Parent and News America
Incorporated ("News") shall have consummated the transactions contemplated by
the News Letter Agreement dated as of the date hereof with News, a copy of which
is attached as Exhibit E hereto, in accordance with the terms of such Letter
Agreement, and News shall have received (i) the full proceeds of the repayment
of the Loans (as defined in the News Letter Agreement) and interest thereon to
and including the date of repayment, as specified in the News Letter Agreement,
and (ii) written releases in form and substance satisfactory to News in respect
of the Guarantees (as defined in the News Letter Agreement) and all obligations
thereunder.
(j) CERTAIN PAYMENTS. Each of the officers and other employees
listed in Section 6.2 of the Company Disclosure Letter shall have agreed to (i)
waive the acceleration of any amounts due as a result of the Merger under the
relevant employment or other compensation agreement that such person is a party
to with the Company or a Company Subsidiary as specified in Section 6.2 of the
Company Disclosure Letter and (ii) waive the acceleration of any unvested
Company Stock Options at the Effective Time which would otherwise accelerate as
a result of the consummation of the Merger, in each case in a manner reasonably
satisfactory to the Parent.
SECTION 6.3 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of
the Company to effect the Merger and consummate the other transactions
contemplated hereby to be consummated on the Closing Date is also subject to the
satisfaction or waiver by the Company at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each of the Parent and Merger Sub set forth in this Agreement that
are qualified as to materiality shall be true and correct, and the
representations and warranties of the Parent and Merger Sub set forth in this
Agreement that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Closing
Date, as though made on and as of the Closing Date, except to the extent the
representation or warranty is expressly limited by its terms to another date,
and the Company shall have received a certificate (which certificate may be
qualified by knowledge to the same extent as the representations and warranties
of each of the Parent and Merger Sub contained in this Agreement are so
qualified) signed on behalf of each of the Parent and Merger Sub by an executive
officer of the Parent to such effect.
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(b) PERFORMANCE OF OBLIGATIONS OF THE PARENT AND MERGER SUB.
Each of the Parent and Merger Sub shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate signed on
behalf of the Parent and Merger Sub by an executive officer of the Parent to
such effect.
(c) TAX OPINION. The Company shall have received the opinion
of Xxxxxx, Xxxxx & Xxxxxxx, LLP, counsel to the Company, dated the Closing Date,
to the effect that the Merger will be treated for federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code.
(d) MATERIAL ADVERSE EFFECT. Since the date of this Agreement,
there shall have been no Material Adverse Effect on the Parent, and the Company
shall have received a certificate of an executive officer of the Parent to such
effect.
ARTICLE 7
TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite approval and adoption of this Agreement, as follows:
(a) by mutual written consent of the Parent and the Company
duly authorized by their respective boards of directors;
(b) by either the Parent or the Company, if the Effective Time
shall not have occurred on or before October 31, 1999; PROVIDED, HOWEVER, that
(i) the right to terminate this Agreement under this Section 7.1(b) shall not be
available to the party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date; and (ii) if the applicable
federal or foreign antitrust authority shall seek an order, injunction or decree
with respect to the legality of the Merger under applicable antitrust Laws, this
Agreement may be extended prior to the termination hereof by written notice of
either the Parent or the Company to the other to the date that is 30 days
following the date on which a ruling with respect to such an order injunction or
decree is entered by a trial court or administrative body;
(c) by either the Parent or the Company, if any order
injunction or decree preventing the consummation of the Merger shall have been
entered by any court of competent jurisdiction or Governmental Entity and shall
have become final and nonappealable;
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(d) by the Parent, if (i) the Board of Directors of the
Company withdraws, modifies or changes its approval or recommendation of this
Agreement in a manner adverse to the Parent or shall have resolved to do so,
(ii) the Board of Directors of the Company shall have recommended to the
stockholders of the Company a Transaction Proposal or shall have resolved to do
so or the Company shall have entered into an agreement with respect to a
Qualified Transaction Proposal, or (iii) a tender offer or exchange offer for
any outstanding shares of capital stock of the Company is commenced and the
Board of Directors of the Company fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders (including by taking no
position with respect to the acceptance of such tender offer or exchange offer
by its stockholders);
(e) by the Parent or the Company, if this Agreement shall fail
to receive the requisite vote for adoption at either the Company Stockholders
Meeting or the Parent Stockholders Meeting or any adjournment or postponement
thereof;
(f) by the Parent, upon a breach of any material
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement, or if any representation or warranty of the Company
shall have become untrue, in either case such that the conditions set forth in
either of Section 6.2(a) or 6.2(b) would not be satisfied (a "TERMINATING
COMPANY BREACH"); PROVIDED, HOWEVER, that, if such Terminating Company Breach is
curable by the Company through the exercise of its reasonable best efforts and
for so long as the Company continues to exercise such reasonable best efforts,
the Parent may not terminate this Agreement under this Section 7.1(f);
(g) by the Company, upon breach of any material
representation, warranty, covenant or agreement on the part of the Parent set
forth in this Agreement, or if any representation or warranty of the Parent
shall have become untrue, in either case such that the conditions set forth in
either of Section 6.3(a) or 6.3(b) would not be satisfied (a "TERMINATING PARENT
BREACH"); PROVIDED, HOWEVER, that, if such Terminating Parent Breach is curable
by the Parent through its reasonable best efforts and for so long as the Parent
continues to exercise such reasonable best efforts, the Company may not
terminate this Agreement under this Section 7.1(g); or
(h) by the Company in the manner specified in Section
2.1(a)(i)(D).
SECTION 7.2 EFFECT OF TERMINATION. Except as provided in Section 8.2,
in the event of termination of this Agreement pursuant to Section 7.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of the Parent, Merger Sub or the Company or any of their
respective Representatives, and all rights and obligations of each party hereto
shall cease, subject to the remedies of the parties set forth in Sections 7.5(b)
and (c);
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PROVIDED, HOWEVER, that nothing in this Agreement shall relieve any party from
liability for the wilful breach of any of its representations and warranties or
the breach of any of its covenants or agreements set forth in this Agreement
which shall survive any such termination.
SECTION 7.3 AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; PROVIDED that, after the approval of
this Agreement by the stockholders of the Company, no amendment may be made that
would reduce the amount or change the type of consideration into which each
Company Share shall be converted upon consummation of the Merger. This Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.
SECTION 7.4 WAIVER. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained in this Agreement or in any document delivered pursuant
hereto, and (c) waive compliance with any agreement or condition contained in
this Agreement. Any waiver of a condition set forth in Section 6.1, or any
determination that such a condition has been satisfied, will be effective only
if made in writing by each of the Company and the Parent and, unless otherwise
specified in such writing, shall thereafter operate as a waiver (or
satisfaction) of such conditions for any and all purposes of this Agreement. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 7.5 EXPENSES FOLLOWING TERMINATION.
(a) Except as set forth in this Section 7.5, all Expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid in accordance with the provisions of Section 5.18. For
purposes of this Agreement, "EXPENSES" consist of all out-of-pocket expenses
(including, all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Proxy Statement and/or the
Proxy Materials (as the case may be), the solicitation of stockholder approvals
and all other matters related to the closing of the transactions contemplated
hereby.
(b) The Company agrees that, if (i) the Parent shall terminate
this Agreement pursuant to Section 7.1(d), (ii) (A) Parent shall terminate this
Agreement pursuant to Section 7.1(e) due to the failure to obtain the approval
of the Company's stockholders at the Company Stockholders Meeting and (B) at the
time of such failure, any person shall have made a public announcement or
otherwise communicated to the Company and its stockholders with respect to a
Transaction
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Proposal with respect to the Company, or (iii) the Parent shall terminate this
Agreement pursuant to Section 7.1(f) and such termination is the result of a
material breach of any representation, warranty, covenant or agreement contained
herein and if at such time the agreement is solely terminable for any or all
such reasons, then in accordance with Section 7.5(c), after such termination, or
in the case of clause (ii) after the consummation of such Transaction Proposal,
the Company shall pay to Parent an amount equal to Parent's documented Expenses
in connection with this Agreement and the transactions contemplated hereby (not
to exceed $1 million) and a termination fee in the amount of $6,250,000
(collectively, such Expenses and such fee, the "TERMINATION AMOUNT"), which
Termination Amount shall be exclusive of any Expenses paid pursuant to Section
5.18. The Parent agrees that if the Company shall terminate this Agreement (i)
pursuant to Section 7.1(e) due to the failure to obtain the approval of the
Parent's Stockholders at the Parent Stockholders Meeting or (ii) pursuant to
Section 7.1(g) and such termination is the result of a material breach of any
representation, warranty, covenant or agreement contained herein, and if at such
time the Agreement is terminable solely for either or both such reasons, then
the Parent shall pay to the Company an amount equal to the Company's documented,
out-of-pocket expenses (not to exceed $500,000) incurred in connection with this
Agreement and the transactions contemplated hereby.
(c) Any payment required to be made pursuant to Section 7.5(b)
shall be made to the Parent by the Company, or by the Company to the Parent, as
applicable, not later than two Business Days after delivery to the Company by
the Parent of notice of demand for payment and shall be made by wire transfer of
immediately available funds to an account designated by the Parent.
(d) The Company acknowledges that the agreements contained in
this Section 7.5 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Parent would not enter into
this Agreement; accordingly, if the Company fails to pay promptly the
Termination Amount, and, in order to obtain such payment, the Parent commences a
suit which results in a judgment against the Company for the Termination Amount,
the Company shall pay the Parent's Expenses in connection with such suit,
together with interest on the amount of the Termination Amount at the prime rate
of The Chase Manhattan Bank in effect on the date such payment was required to
be made.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) The term "AFFILIATE," as applied to any person, means any
other person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "CONTROL"
(including,
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with correlative meanings, the terms "CONTROLLING," "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH"), as applied to any person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that person, whether through the ownership of voting securities,
by contract or otherwise.
(b) The term "BUSINESS DAY" means any day, other than
Saturday, Sunday or a federal holiday, and shall consist of the time period from
12:01 a.m. through 12:00 midnight Eastern time. In computing any time period
under this Agreement, the date of the event which begins the running of such
time period shall be included EXCEPT that if such event occurs on other than a
business day such period shall begin to run on and shall include the first
business day thereafter.
(c) The term "INCLUDING" means, unless the context clearly
requires otherwise, including but not limited to the things or matters named or
listed after that term.
(d) The term "PERSON" shall include individuals, corporations,
limited and general partnerships, trusts, limited liability companies,
associations, joint ventures, Governmental Entities and other entities and
groups (which term shall include a "GROUP" as such term is defined in Section
13(d)(3) of the Exchange Act).
(e) The term "SUBSIDIARY" or "SUBSIDIARIES" means, with
respect to the Parent, the Company or any other person, any entity of which the
Parent, the Company or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or indirectly,
stock or other equity interests the holders of which are generally entitled to
more than 50% of the vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
SECTION 8.2 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations, warranties and agreements in this Agreement and in any
certificate delivered under this Agreement shall terminate at the Effective Time
or upon the termination of this Agreement under Section 7.1, as the case may be,
except that the agreements set forth in Articles 1 and 2 and Sections 5.10, 5.18
and 5.20 and this Article 8 shall survive the Effective Time, those set forth in
Sec tions 5.7(b), 5.18, 7.2 and 7.5 and this Article 8 shall survive termination
of this Agreement. Each party agrees that, except for the representations and
warranties contained in this Agreement, the Company Disclosure Letter and the
Parent Disclosure Letter, no party to this Agreement has made any other
representations and warranties, and each party disclaims any other
representations and warranties, made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
Representatives with respect to the execution and delivery of this Agreement or
the transactions contemplated by this Agreement, notwithstanding the
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delivery of disclosure to any other party or any party's representatives of any
documentation or other information with respect to any one or more of the
foregoing.
SECTION 8.3 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
SECTION 8.4 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES, EXCEPT THAT DELAWARE LAW SHALL APPLY TO THE EXTENT REQUIRED IN
CONNECTION WITH THE EFFECTUATION OF THE MERGER. The parties irrevocably submit
to the jurisdiction of the federal courts of the United States of America
located in the State of New York solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred to
in this Agreement, and in respect of the transactions contemplated by this
Agreement and by those documents, and hereby waive, and agree not to assert, as
a defense in any action, suit or proceeding for the interpretation or
enforcement of this Agreement or of any such document, that it is not subject to
this Agreement or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a federal court.
The parties hereby consent to and grant any such court jurisdiction over the
person of such parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 8.5 or in such other manner as may
be permitted by law, shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDI
TIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARIS ING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE TRANSAC TIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
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SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 8.4.
SECTION 8.5 NOTICES. Any notice, request, instruction or other document
to be given hereunder by any party to the others shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile:
IF TO THE PARENT OR MERGER SUB:
Metromedia International Group, Inc.
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
WITH COPIES TO:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
IF TO THE COMPANY:
PLD Telekom, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
SECTION 8.6 ENTIRE AGREEMENT. This Agreement (including any exhibits
and annexes to this Agreement), the Company Disclosure Letter and the Parent
Disclosure Letter constitute the entire agreement and supersede all other prior
agreements, understandings, representations and warranties, both written and
oral, among the parties, with respect to the subject matter of this Agreement.
63
SECTION 8.7 NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended to confer upon any person other than the parties to this Agreement any
rights or remedies under this Agreement.
SECTION 8.8 OBLIGATIONS OF THE PARENT AND OF THE COMPANY. Whenever this
Agreement requires a Parent Subsidiary to take any action, that requirement
shall be deemed to include an undertaking on the part of the Parent to cause
that Parent Subsidiary to take that action if it is a wholly-owned Subsidiary or
use its best efforts to cause the Subsidiary to take that action if it is not a
wholly-owned Subsidiary. Whenever this Agreement requires a Company Subsidiary
to take any action, that requirement shall be deemed to include an undertaking
on the part of the Company to cause that Company Subsidiary to take that action
and, after the Effective Time, on the part of the Surviving Corporation to cause
that Company Subsidiary to take that action if it is a wholly-owned Subsidiary
or use its best efforts to cause the Subsidiary to take that action if it is not
a wholly-owned Subsidiary.
SECTION 8.9 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions of this
Agreement. If any provision of this Agreement, or the application of that
provision to any person or any circumstance, is invalid or unenforceable, (a) a
suitable and equitable provision shall be substituted for that provision in
order to carry out, so far as may be valid and enforceable, the intent and
purpose of the invalid or unenforceable provision and (b) the remainder of this
Agreement and the application of the provision to other persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of the
provision, or the application of that provision, in any other jurisdiction.
SECTION 8.10 INTERPRETATION. The table of contents and headings in this
Agreement are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions of this Agreement. Where a reference in this Agreement is made to a
section, exhibit or annex, that reference shall be to a section of or exhibit or
annex to this Agreement unless otherwise indicated. Wherever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
SECTION 8.11 ASSIGNMENT. This Agreement shall not be assignable by
operation of law or otherwise, except that the Parent may designate, by written
notice to the Company, another Parent Subsidiary that is wholly owned directly
or indirectly by the Parent to be merged with and into the Company in lieu of
Merger Sub, in which event all references in this Agreement to Merger Sub shall
be deemed references to such other Parent Subsidiary, and in that case, all
representations and warranties made in this Agreement with respect to Merger Sub
as of the date of this Agreement shall be deemed representations and warranties
made with respect to such other Parent Subsidiary as of the date of such
designation.
64
SECTION 8.12 SPECIFIC PERFORMANCE. The parties to this Agreement agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise reached. 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 of this Agreement in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
65
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties to this Agreement as of the date
first written above.
PLD TELEKOM, INC.
By: /s/ Xxxxx X.X. Xxxx
-------------------
Name: Xxxxx X.X. Xxxx
Title: Chairman, President and Chief
Executive Officer
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
MOSCOW COMMUNICATIONS, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Vice President, Treasurer
