Exhibit 99
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
by and among
THE ACTAVA GROUP INC.,
ORION PICTURES CORPORATION,
MCEG STERLING INCORPORATED,
METROMEDIA INTERNATIONAL TELECOMMUNICATIONS, INC.,
OPC MERGER CORP.
and
MITI MERGER CORP.
______________________
September 27, 1995
______________________
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TABLE OF CONTENTS
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ARTICLE 1 THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Mergers . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.1 The Orion Merger . . . . . . . . . . . . . . . . . . . 2
1.1.2 The Sterling Merger . . . . . . . . . . . . . . . . . 2
1.1.3 The MITI Merger . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . 3
1.2.1 The Orion Merger . . . . . . . . . . . . . . . . . . . 3
1.2.2 The Sterling Merger . . . . . . . . . . . . . . . . . 3
1.2.3 The MITI Merger . . . . . . . . . . . . . . . . . . . 3
1.3 Certificates of Incorporation . . . . . . . . . . . . . . . . 4
1.3.1 The Orion Merger . . . . . . . . . . . . . . . . . . . 4
1.3.2 The Sterling Merger . . . . . . . . . . . . . . . . . 4
1.3.3 The MITI Merger . . . . . . . . . . . . . . . . . . . 5
1.4 By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4.1 The Orion Merger . . . . . . . . . . . . . . . . . . . 5
1.4.2 The Sterling Merger . . . . . . . . . . . . . . . . . 5
1.4.3 The MITI Merger . . . . . . . . . . . . . . . . . . . 5
1.5 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5.1 The Orion Merger . . . . . . . . . . . . . . . . . . . 5
1.5.2 The Sterling Merger . . . . . . . . . . . . . . . . . 5
1.5.3 The MITI Merger . . . . . . . . . . . . . . . . . . . 6
1.6 Meeting of Stockholders . . . . . . . . . . . . . . . . . . . 6
1.7 Proxy Statement; Form S-4 . . . . . . . . . . . . . . . . . . 7
1.8 Additional Actions . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 2 CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . 8
2.1 Actava Securities . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Conversion of Orion, Sterling and MITI Securities . . . . . . 8
2.2.1 Orion Securities . . . . . . . . . . . . . . . . . . . 8
2.2.2 Sterling Securities . . . . . . . . . . . . . . . . . 9
2.2.3 MITI Securities . . . . . . . . . . . . . . . . . . 10
2.3 Surrender and Exchange of Orion Common Stock,
Sterling Common Stock and MITI Common Stock . . . . . . . . 11
2.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
OF ACTAVA . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Organization and Good Standing . . . . . . . . . . . . . . 13
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Authorization; Binding Agreement . . . . . . . . . . . . . 14
3.5 Governmental Approvals . . . . . . . . . . . . . . . . . . 15
3.6 No Violations . . . . . . . . . . . . . . . . . . . . . . . 15
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3.7 Proxy Statement; Form S-4 . . . . . . . . . . . . . . . . . 16
3.8 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . 16
3.9 Financial Statements . . . . . . . . . . . . . . . . . . . 17
3.10 Absence of Certain Changes or Events . . . . . . . . . . . 18
3.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . 19
3.12 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.13 Finders and Investment Bankers . . . . . . . . . . . . . . 19
3.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 20
3.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.17 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 24
3.18 Environmental Matters . . . . . . . . . . . . . . . . . . . 24
3.19 Intellectual Property . . . . . . . . . . . . . . . . . . . 28
3.20 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . 29
3.21 Records . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.22 Title to and Condition of Personal Property . . . . . . . . 30
3.23 No Adverse Actions . . . . . . . . . . . . . . . . . . . . 30
3.24 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 31
3.25 Investment Company Act . . . . . . . . . . . . . . . . . . 32
3.26 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.27 Products . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 3A FURTHER REPRESENTATIONS AND
WARRANTIES OF ACTAVA . . . . . . . . . . . . . . . . . . . 33
ARTICLE 3B REPRESENTATIONS AND WARRANTIES
OF ACTAVA, OPC MERGERCO AND MITI MERGERCO . . . . . . . . . 33
3B.1 Organization and Good Standing . . . . . . . . . . . . . . 33
3B.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . 34
3B.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 34
3B.4 Authorization; Binding Agreement . . . . . . . . . . . . . 34
3B.5 Governmental Approvals . . . . . . . . . . . . . . . . . . 35
3B.6 No Violations . . . . . . . . . . . . . . . . . . . . . . . 35
3B.7 Conduct of Business . . . . . . . . . . . . . . . . . . . . 36
3B.8 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 36
3B.9 Records . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ORION . . . . . . . . . . 37
4.1 Organization and Good Standing . . . . . . . . . . . . . . 37
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . 37
4.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 38
4.4 Authorization; Binding Agreement . . . . . . . . . . . . . 38
4.5 Governmental Approvals . . . . . . . . . . . . . . . . . . 39
4.6 No Violations . . . . . . . . . . . . . . . . . . . . . . . 39
4.7 Proxy Statement; Form S-4 . . . . . . . . . . . . . . . . . 40
4.8 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . 40
4.9 Financial Statements . . . . . . . . . . . . . . . . . . . 40
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4.10 Absence of Certain Changes or Events . . . . . . . . . . . 41
4.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . 42
4.12 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.13 Finders and Investment Bankers . . . . . . . . . . . . . . 42
4.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 43
4.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.17 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 47
4.18 Environmental Protection . . . . . . . . . . . . . . . . . 48
4.19 Intellectual Property . . . . . . . . . . . . . . . . . . . 49
4.20 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . 50
4.21 Records . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.22 Title to and Condition of
Personal Property . . . . . . . . . . . . . . . . . . . . . 51
4.23 No Adverse Actions . . . . . . . . . . . . . . . . . . . . 51
4.24 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 52
4.25 Investment Company Act . . . . . . . . . . . . . . . . . . 53
4.26 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.27 Products . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.28 MetProductions Indebtedness . . . . . . . . . . . . . . . . 54
4.29 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 4A FURTHER REPRESENTATIONS
AND WARRANTIES OF ORION . . . . . . . . . . . . . . . . . . 54
ARTICLE 5 REPRESENTATIONS AND WARRANTIES
OF STERLING . . . . . . . . . . . . . . . . . . . . . . . . 54
5.1 Organization and Good Standing . . . . . . . . . . . . . . 55
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . 55
5.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 56
5.4 Authorization; Binding Agreement . . . . . . . . . . . . . 56
5.5 Governmental Approvals . . . . . . . . . . . . . . . . . . 57
5.6 No Violations . . . . . . . . . . . . . . . . . . . . . . . 57
5.7 Proxy Statement; Form S-4 . . . . . . . . . . . . . . . . . 58
5.8 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . 58
5.9 Financial Statements . . . . . . . . . . . . . . . . . . . 59
5.10 Absence of Certain Changes or Events . . . . . . . . . . . 59
5.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . 60
5.12 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5.13 Finders and Investment Bankers . . . . . . . . . . . . . . 61
5.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 61
5.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 61
5.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.17 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 65
5.18 Environmental Protection . . . . . . . . . . . . . . . . . 66
5.19 Intellectual Property . . . . . . . . . . . . . . . . . . . 68
5.20 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . 69
5.21 Records . . . . . . . . . . . . . . . . . . . . . . . . . . 69
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5.22 Title to and Condition of
Personal Property . . . . . . . . . . . . . . . . . . . . . 69
5.23 No Adverse Actions . . . . . . . . . . . . . . . . . . . . 70
5.24 Labor Matters . . . . . . . . . . . . . . . . . . . . . . 70
5.25 Investment Company Act . . . . . . . . . . . . . . . . . . 71
5.26 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 71
5.27 Products . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE 5A FURTHER REPRESENTATIONS AND
WARRANTIES OF STERLING . . . . . . . . . . . . . . . . . . 72
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF MITI . . . . . . . . . . 72
6.1 Organization and Good Standing . . . . . . . . . . . . . . 72
6.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . 73
6.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 74
6.4 Authorization; Binding Agreement . . . . . . . . . . . . . 74
6.5 No Violations . . . . . . . . . . . . . . . . . . . . . . . 75
6.6 Proxy Statement; Form S-4 . . . . . . . . . . . . . . . . . 76
6.7 Governmental Approvals . . . . . . . . . . . . . . . . . . 76
6.8 Financial Statements . . . . . . . . . . . . . . . . . . . 76
6.9 Absence of Certain Changes or Events . . . . . . . . . . . 77
6.10 Compliance with Laws . . . . . . . . . . . . . . . . . . . 78
6.11 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 78
6.12 Finders and Investment Bankers . . . . . . . . . . . . . . 78
6.13 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 78
6.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
6.15 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 83
6.16 Environmental Protection . . . . . . . . . . . . . . . . . 83
6.17 Intellectual Property . . . . . . . . . . . . . . . . . . . 85
6.18 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . 86
6.19 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 86
6.20 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 87
6.21 Records . . . . . . . . . . . . . . . . . . . . . . . . . . 87
6.22 Title to and Condition of
Personal Property . . . . . . . . . . . . . . . . . . . . . 87
6.23 No Adverse Actions . . . . . . . . . . . . . . . . . . . . 87
6.24 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 88
6.25 Investment Company Act . . . . . . . . . . . . . . . . . . 89
6.26 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 89
6.27 Products . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE 6A FURTHER REPRESENTATIONS AND
WARRANTIES OF MITI . . . . . . . . . . . . . . . . . . . . 90
ARTICLE 7 COVENANTS OF ACTAVA . . . . . . . . . . . . . . . . . . . . 90
7.1 Conduct of Business of Actava . . . . . . . . . . . . . . . 90
7.2 Notification of Certain Matters . . . . . . . . . . . . . . 93
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7.3 Access and Information . . . . . . . . . . . . . . . . . . 94
7.4 Stockholder Approval . . . . . . . . . . . . . . . . . . . 95
7.5 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 96
7.6 No Inconsistent Activities . . . . . . . . . . . . . . . . 96
7.7 SEC and Stockholder Filings . . . . . . . . . . . . . . . . 96
7.8 Consents, Waivers, Authorizations, etc . . . . . . . . . . 96
7.9 Roadmaster Approval of the Mergers . . . . . . . . . . . . 97
7.10 Related Agreements . . . . . . . . . . . . . . . . . . . . 97
7.11 Indemnification . . . . . . . . . . . . . . . . . . . . . . 97
ARTICLE 8 COVENANTS OF ORION . . . . . . . . . . . . . . . . . . . . 98
8.1 Conduct of Business of Orion . . . . . . . . . . . . . . . 98
8.2 Notification of Certain Matters . . . . . . . . . . . . . . 100
8.3 Access and Information . . . . . . . . . . . . . . . . . . 101
8.4 Stockholder Approval . . . . . . . . . . . . . . . . . . . 102
8.5 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 102
8.6 No Inconsistent Activities . . . . . . . . . . . . . . . . 103
8.7 SEC and Stockholder Filings . . . . . . . . . . . . . . . . 103
8.8 Consents, Waivers, Authorizations, etc . . . . . . . . . . 103
ARTICLE 9 COVENANTS OF STERLING . . . . . . . . . . . . . . . . . . . 104
9.1 Conduct of Business of Sterling . . . . . . . . . . . . . . 104
9.2 Notification of Certain Matters . . . . . . . . . . . . . . 106
9.3 Access and Information . . . . . . . . . . . . . . . . . . 107
9.4 Stockholder Approval . . . . . . . . . . . . . . . . . . . 108
9.5 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 108
9.6 No Inconsistent Activities . . . . . . . . . . . . . . . . 109
9.7 SEC and Stockholder Filings . . . . . . . . . . . . . . . . 109
9.8 Consents, Waivers, Authorizations, etc . . . . . . . . . . 109
ARTICLE 10 COVENANTS OF MITI . . . . . . . . . . . . . . . . . . . . . 110
10.1 Conduct of Business of MITI . . . . . . . . . . . . . . . . 110
10.2 Notification of Certain Matters . . . . . . . . . . . . . . 113
10.3 Access and Information . . . . . . . . . . . . . . . . . . 114
10.4 Stockholder Approval . . . . . . . . . . . . . . . . . . . 115
10.5 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 115
10.6 No Inconsistent Activities . . . . . . . . . . . . . . . . 116
10.7 Stockholder Communications . . . . . . . . . . . . . . . . 116
10.8 Consents, Waivers, Authorizations, etc . . . . . . . . . . 116
ARTICLE 11 COVENANTS OF EACH OF ACTAVA, OPC MERGERCO,
MITI MERGERCO, ORION, STERLING AND MITI . . . . . . . . . . 117
11.1 Further Assurances. . . . . . . . . . . . . . . . . . . . . 117
11.2 Public Announcements. . . . . . . . . . . . . . . . . . . . 117
11.3 Exchange Act and Securities Act
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Compliance . . . . . . . . . . . . . . . . . . . . . . . . 118
11.4 Surviving Corporation Board of Directors . . . . . . . . . 118
11.5 Listing of the Common Stock . . . . . . . . . . . . . . . . 119
11.6 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 119
11.7 Refinancing of Indebtedness . . . . . . . . . . . . . . . . 119
ARTICLE 12 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . 119
12.1 Conditions to Each Merging Party's
Obligations . . . . . . . . . . . . . . . . . . . . . . . . 119
12.1.1 Stockholder Approval . . . . . . . . . . . . . . . 120
12.1.2 Consummation of the Mergers . . . . . . . . . . . 120
12.1.3 No Injunction . . . . . . . . . . . . . . . . . . 120
12.1.4 HSR Act . . . . . . . . . . . . . . . . . . . . . 120
12.1.5 Required Consents . . . . . . . . . . . . . . . . 120
12.1.6 Effective Form S-4 . . . . . . . . . . . . . . . . 121
12.1.7 Appraisal Rights . . . . . . . . . . . . . . . . . 121
12.2 Conditions to Obligations of Actava . . . . . . . . . . . . 121
12.2.1 Obligations Performed . . . . . . . . . . . . . . 121
12.2.2 Representations and Warranties . . . . . . . . . . 121
12.2.3 Certificates Delivered . . . . . . . . . . . . . . 122
12.2.4 No Material Adverse Change . . . . . . . . . . . . 122
12.2.5 Actava Stock Price . . . . . . . . . . . . . . . . 122
12.2.6 Opinions of Counsel . . . . . . . . . . . . . . . 122
12.2.7 Fairness Opinion . . . . . . . . . . . . . . . . . 123
12.2.8 Listing . . . . . . . . . . . . . . . . . . . . . 123
12.2.9 Refinancing of Orion Senior
Indebtedness . . . . . . . . . . . . . . . . . . . 123
12.2.10 Refinancing of Orion Subordinated Indebtedness . . 123
12.2.11 FIRPTA Certificate . . . . . . . . . . . . . . . . 123
12.3 Conditions to Obligations of Orion . . . . . . . . . . . . 123
12.3.1 Obligations Performed . . . . . . . . . . . . . . 124
12.3.2 Representations and Warranties . . . . . . . . . . 124
12.3.3 Certificate . . . . . . . . . . . . . . . . . . . 124
12.3.4 No Material Adverse Change . . . . . . . . . . . . 124
12.3.5 Opinions of Counsel . . . . . . . . . . . . . . . 125
12.3.6 Fairness Opinion . . . . . . . . . . . . . . . . . 125
12.3.7 Refinancing of Orion Senior Indebtedness . . . . . 125
12.3.8 Refinancing of Orion Subordinated Indebtedness . . 125
12.3.9 Refinancing of Other
Indebtedness . . . . . . . . . . . . . . . . . . . 125
12.3.10 Refinancing or Contribution of MetProductions
Indebtedness and MII Indebtedness . . . . . . . . 125
12.3.11 Ancillary Agreements; Shelf Registration Statement 125
12.4 Conditions to Obligations of Sterling . . . . . . . . . . . 126
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12.4.1 Obligations Performed . . . . . . . . . . . . . . 126
12.4.2 Representations and Warranties . . . . . . . . . . 126
12.4.3 Certificates Delivered . . . . . . . . . . . . . . 126
12.4.4 No Material Adverse Change . . . . . . . . . . . . 126
12.4.5 Opinions of Counsel . . . . . . . . . . . . . . . 127
12.4.6 Fairness Opinion . . . . . . . . . . . . . . . . . 127
12.5 Conditions to Obligations of MITI . . . . . . . . 127
12.5.1 Obligations Performed . . . . . . . . . . . . . . 127
12.5.2 Representations and Warranties . . . . . . . . . . 127
12.5.3 Certificates Delivered . . . . . . . . . . . . . . 127
12.5.4 No Material Adverse Change . . . . . . . . . . . . 128
12.5.5 Opinions of Counsel . . . . . . . . . . . . . . . 128
12.5.6 Fairness Opinion . . . . . . . . . . . . . . . . . 128
12.5.7 Listing . . . . . . . . . . . . . . . . . . . . . 128
ARTICLE 13 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 128
13.1 Time and Place . . . . . . . . . . . . . . . . . . . . . . 128
13.2 Filing of Certificates of Merger, Etc . . . . . . . . . . . 129
ARTICLE 14 TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . 129
14.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 129
14.2 Procedure and Effect of Termination . . . . . . . . . . . . 130
ARTICLE 15 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 131
15.1 Amendment and Modification . . . . . . . . . . . . . . . . 131
15.2 Waiver of Compliance; Consents . . . . . . . . . . . . . . 131
15.3 Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . 131
15.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 131
15.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 133
15.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 133
15.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 133
15.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 134
15.9 Interpretation; Definitions . . . . . . . . . . . . . . . . 134
15.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 136
vii
SCHEDULES
Schedule 1.5.2(a) Directors
Schedule 1.5.2(b) Directors
Schedule 3.2(a) Options, Warrants, etc.
Schedule 3.2(b) Stock Issuances and Repurchases
Schedule 3.3 Holdings
Schedule 3.6 Consents, etc.
Schedule 3.12 Permits
Schedule 3.14 Contracts
Schedule 3.15(i) Employee Benefit Plans
Schedule 3.15(iii) Employee Benefit Plans
Schedule 3.15(iv) Employee Benefit Plans
Schedule 3.15(v) Employee Benefit Plans
Schedule 3.15(vi) Employee Benefit Plans
Schedule 3.15(vii) Severance and Acceleration
Schedule 3.16 Tax Matters
Schedule 3.17 Liabilities
Schedule 3.18 Environmental Protection
Schedule 3.18(ix) Hazardous Substances
Schedule 3.19 Intellectual Property
Schedule 3.20(a) Owned Real Estate
Schedule 3.20(b) Leased Real Estate
Schedule 3.22 Personal Property
Schedule 3.24(a) Labor Matters
Schedule 3.24(b) WARN ACT
Schedule 3.24(c) Employment Practices
viii
Schedule 3.26 Insurance
Schedule 3.27(a) Products Liability
Schedule 3.27(b) Products Liability
Schedule 4.2(a) Options, Warrants, etc.
Schedule 4.3 Holdings
Schedule 4.6 Consents, etc.
Schedule 4.10(i) Certain Changes
Schedule 4.10(v) Certain Changes
Schedule 4.10(vi) Certain Changes
Schedule 4.12 Permits
Schedule 4.14 Contracts
Schedule 4.15(i) Employee Benefit Plans
Schedule 4.15(iii) Employee Benefit Plans
Schedule 4.15(iv) Employee Benefit Plans
Schedule 4.15(v) Employee Benefit Plans
Schedule 4.15(vi) Employee Benefit Plans
Schedule 4.15(vii) Severance and Acceleration
Schedule 4.16 Tax Matters
Schedule 4.17 Liabilities
Schedule 4.18 Environmental Protection
Schedule 4.18(ix) Hazardous Substances
Schedule 4.19 Intellectual Property
Schedule 4.20(a) Owned Real Estate
Schedule 4.20(b) Leased Real Estate
Schedule 4.22 Personal Property
Schedule 4.24(a) Labor Matters
ix
Schedule 4.24(b) WARN ACT
Schedule 4.24(c) Employment Practices
Schedule 4.26 Insurance
Schedule 4.27(a) Products Liability
Schedule 4.27(b) Products Liability
Schedule 5.2(a) Options, Warrants, etc.
Schedule 5.2(b) Stock Issuances and Repurchases
Schedule 5.3 Holdings
Schedule 5.6 Consents, etc.
Schedule 5.10(v) Certain Changes
Schedule 5.12 Permits
Schedule 5.14 Contracts
Schedule 5.15(i) Employee Benefit Plans
Schedule 5.15(iii) Employee Benefit Plans
Schedule 5.15(iv) Employee Benefit Plans
Schedule 5.15(v) Employee Benefit Plans
Schedule 5.15(vi) Employee Benefit Plans
Schedule 5.15(vii) Severance and Acceleration
Schedule 5.16 Tax Matters
Schedule 5.17 Liabilities
Schedule 5.18 Environmental Protection
Schedule 5.18(ix) Hazardous Substances
Schedule 5.19 Intellectual Property
Schedule 5.20(b) Leased Real Estate
Schedule 5.24(a) Labor Matters
Schedule 5.24(b) WARN ACT
x
Schedule 5.24(c) Employment Practices
Schedule 5.26 Insurance
Schedule 5.27(a) Products Liability
Schedule 5.27(b) Products Liability
Schedule 6.1(a) Joint Ventures
Schedule 6.1(b) Joint Venture Organizational Documents
Schedule 6.2(a) Options, Warrants, etc.
Schedule 6.2(b) Stock Issuances and Repurchases
Schedule 6.3 Subsidiaries, Holdings
Schedule 6.5 Consents, etc.
Schedule 6.7 Governmental Approvals
Schedule 6.9 Absence of Certain Changes or Events
Schedule 6.10 Compliance with Laws
Schedule 6.11 Permits
Schedule 6.13(i) Employee Benefit Plans
Schedule 6.13(iii) Employee Benefit Plans
Schedule 6.13(iv) Employee Benefit Plans
Schedule 6.13(v) Employee Benefit Plans
Schedule 6.13(vi) Employee Benefit Plans
Schedule 6.13(vii) Severance and Acceleration
Schedule 6.14 Tax Matters
Schedule 6.15 Liabilities
Schedule 6.16 Environmental Protection
Schedule 6.16(ix) Hazardous Substances
Schedule 6.17 Intellectual Property
Schedule 6.18(b) Leased Real Estate
xi
Schedule 6.19 Contracts
Schedule 6.20 Litigation
Schedule 6.24(a) Labor Matters
Schedule 6.24(c) Employment Practices
Schedule 6.26 Insurance
Schedule 6.27(a) Products Liability
Schedule 6.27(b) Products Liability
Schedule 7.1 Actava Credit Facilities
Schedule 8.1 Orion Credit Facilities
Schedule 9.1 Sterling Credit Facilities
Schedule 10.1 MITI Credit Facilities
Schedule 10.1(ii) MITI Issuances
Schedule 12.2.9 Refinancing of Orion Senior Indebtedness
Schedule 12.2.10 Refinancing of Orion Subordinated
Indebtedness
Schedule 15.9(viii) Orion Exchange Ratio
Schedule 15.9(ix) MITI Exchange Ratio
Schedule 15.9(x)(a) Sterling Exchange Ratio
Schedule 15.9(x)(b) Sterling Exchange Ratio
EXHIBITS
Exhibit A-1 -- Orion Certificate of Merger
Exhibit A-2 -- Sterling Certificate of Merger
Exhibit A-3 -- MITI Certificate of Merger
Exhibit B -- By-laws of the Surviving Corporation
Exhibit C-1 -- Contribution Agreement
xii
Exhibit C-2 -- Registration Rights Agreement
Exhibit D -- Opinion of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
Exhibit E -- Opinion of Xxxxxxxx Brog Leinwand Xxxxxx Xxxxxxxx &
Xxxxx, P.C.
Exhibit F -- Opinion of Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
Exhibit G -- Opinion of Long, Xxxxxxxx & Xxxxxx
xiii
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
-------------------------------------------------
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of
September 27, 1995,(the "Agreement"), by and among THE ACTAVA GROUP INC., a
Delaware corporation ("Actava"), ORION PICTURES CORPORATION, a Delaware
corporation ("Orion"), MCEG STERLING INCORPORATED, a Delaware corporation
("Sterling"), METROMEDIA INTERNATIONAL TELECOMMUNICATIONS, INC., a Delaware
corporation ("MITI," and together with Actava, Orion and Sterling, sometimes
referred to herein as the "Merging Parties"), OPC MERGER CORP., a Delaware
corporation and a wholly owned subsidiary of Actava ("OPC Mergerco"), and MITI
MERGER CORP., a Delaware corporation and a wholly owned subsidiary of Actava
("MITI Mergerco").
WHEREAS, the Boards of Directors of Actava and OPC Mergerco have
approved the merger of Orion with and into OPC Mergerco (the "Orion Merger")
upon the terms and subject to the conditions of this Agreement;
WHEREAS, the Board of Directors of Actava has approved the merger of
Sterling with and into Actava (the "Sterling Merger") upon the terms and subject
to the conditions of this Agreement;
WHEREAS, the Boards of Directors of Actava and MITI Mergerco have
approved the merger of MITI with and into MITI Mergerco (the "MITI Merger";
together with the Orion Merger and the Sterling Merger, the "Mergers") upon the
terms and subject to the conditions of this Agreement;
WHEREAS, the Board of Directors of Orion has approved the Orion Merger
upon the terms and subject to the conditions of this Agreement;
WHEREAS, the Board of Directors of Sterling has approved the Sterling
Merger upon the terms and subject to the conditions of this Agreement;
WHEREAS, the Board of Directors of MITI has approved the MITI Merger
upon the terms and subject to the conditions of this Agreement;
2
WHEREAS, at the Effective Time (as defined below), pursuant to the
terms of a Contribution Agreement substantially in the form of Exhibit C-1
hereto (the "Contribution Agreement"), between Actava and the Metromedia Holders
listed on the signature pages thereto (the "Metromedia Holders"), the Metromedia
Holders will contribute, assign or convey to the Surviving Corporation (a) the
MetProductions Indebtedness (as defined below) and/or (b) the MII Indebtedness
(as defined below) in return for a number of shares of common stock, par value
$1.00 per share, of Actava (the "Common Stock") as specified in the Contribution
Agreement, if the MetProductions Indebtedness and/or the MII Indebtedness is not
refinanced or repaid in full in accordance with this Agreement; and
WHEREAS, it is the express intention of Actava, Orion, Sterling, MITI,
OPC Mergerco and MITI Mergerco that each of the Mergers constitutes a tax-free
reorganization for federal income tax purposes under the Internal Revenue Code
of 1986, as amended and the regulations thereunder (the "Code").
Accordingly, the parties hereto agree as follows:
ARTICLE 1
THE MERGERS
1.1 The Mergers.
-----------
1.1.1 The Orion Merger. At the Orion Effective Time (as defined
----------------
in Section 1.2.1), upon the terms and subject to the conditions of this
Agreement, Orion shall be merged with and into OPC Mergerco in accordance
with the Delaware General Corporation Law ("DGCL") and the separate
existence of Orion shall thereupon cease, and OPC Mergerco, as the
surviving corporation in the Orion Merger, shall continue its corporate
existence under the laws of the State of Delaware. The Orion Merger shall
have the effects set forth in Section 259 of the DGCL.
1.1.2 The Sterling Merger. At the Sterling Effective Time (as
-------------------
defined in Section 1.2.2), upon the terms and subject to the conditions of
this Agreement, Sterling shall be merged with and into Actava in accordance
with the DGCL and the separate existence of Sterling shall thereupon cease,
and Actava, as the surviving corporation in the Sterling Merger, shall
continue its corporate existence under the laws of the
3
State of Delaware. The Sterling Merger shall have the effects set forth in
Section 259 of the DGCL.
1.1.3 The MITI Merger. At the MITI Effective Time (as defined
---------------
in Section 1.2.3), upon the terms and subject to the conditions of this
Agreement, MITI shall be merged with and into MITI Mergerco in accordance
with the DGCL and the separate existence of MITI shall thereupon cease, and
MITI Mergerco, as the surviving corporation in the MITI Merger, shall
continue its corporate existence under the laws of the State of Delaware.
The MITI Merger shall have the effects set forth in Section 259 of the
DGCL.
1.2 Effective Time.
--------------
1.2.1 The Orion Merger. The Orion Merger shall become effective
----------------
at the date and time of the filing of the Certificate of Merger
substantially in the form of Exhibit A-1 to this Agreement (the "Orion
Certificate of Merger") with the Secretary of State of Delaware in accor-
dance with the provisions of the DGCL. The date and time when the Orion
Merger shall become effective is herein referred to as the "Orion Effective
Time." OPC Mergerco, as the surviving corporation of the Orion Merger,
shall be referred to herein as the "Orion Merger Surviving Corporation."
In accordance with the DGCL, all of the rights, privileges, powers, immuni-
ties, purposes and franchises of OPC Mergerco and Orion shall vest in the
Orion Merger Surviving Corporation and all debts, liabilities, obligations
and duties of OPC Mergerco and Orion shall become the debts, liabilities,
obligations and duties of the Orion Merger Surviving Corporation.
1.2.2 The Sterling Merger. The Sterling Merger shall become
-------------------
effective at the date and time of the filing of the Certificate of Merger
substantially in the form of Exhibit A-2 to this Agreement (the "Sterling
Certificate of Merger") with the Secretary of State of Delaware in accor-
dance with the provisions of the DGCL. The date and time when the Sterling
Merger shall become effective is herein referred to as the "Sterling
Effective Time." Actava, as the surviving corporation of the Sterling
Merger, shall be referred to herein as the "Surviving Corporation." In
accordance with the DGCL, all of the rights, privileges, powers,
immunities, purposes and franchises of Actava and Sterling shall vest in
the Surviving Corporation and all debts, liabilities, obligations and
duties of Actava and Sterling shall become the debts,
4
liabilities, obligations and duties of the Surviving Corporation.
1.2.3 The MITI Merger. The MITI Merger shall become effective
---------------
at the date and time of the filing of the Certificate of Merger
substantially in the form of Exhibit A-3 to this Agreement (the "MITI
Certificate of Merger") with the Secretary of State of Delaware in accor-
dance with the provisions of the DGCL. The date and time when the MITI
Merger shall become effective is herein referred to as the "MITI Effective
Time" and the date and time of the last to occur of (x) the Orion Effective
Time, (y) the Sterling Effective Time, and (z) the MITI Effective Time, is
herein referred to as the "Effective Time." MITI Mergerco, as the
surviving corporation of the MITI Merger, shall be referred to herein as
the "MITI Merger Surviving Corporation." In accordance with the DGCL, all
of the rights, privileges, powers, immunities, purposes and franchises of
MITI Mergerco and MITI shall vest in the MITI Merger Surviving Corporation
and all debts, liabilities, obligations and duties of MITI Mergerco and
MITI shall become the debts, liabilities, obligations and duties of the
MITI Merger Surviving Corporation.
1.3 Certificates of Incorporation.
-----------------------------
1.3.1 The Orion Merger. The Certificate of Incorporation of OPC
----------------
Mergerco as in effect immediately prior to the Orion Effective Time shall
be the Certificate of Incorporation of the Orion Merger Surviving
Corporation until thereafter amended as provided by law, except that at the
Orion Effective Time, Article FIRST of the Certificate of Incorporation of
the Orion Merger Surviving Corporation shall be amended to read as follows:
"The name of the Corporation is ORION PICTURES CORPORATION (the
"Corporation")."
1.3.2 The Sterling Merger. The Restated Certificate of
-------------------
Incorporation of Actava shall be further amended and restated by this
Agreement and the Sterling Certificate of Merger, and as so amended and
restated, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by law. The amendments
effectuated by this Agreement and the Sterling Certificate of Merger are
included in their entirety in the form of the Restated Certificate of
Incorporation attached as Exhibit A to Exhibit A-2 to this Agreement and
shall include (i) a
5
change of the name of the Surviving Corporation to "Metromedia
International Group, Inc." and (ii) an increase in the number of authorized
shares of Common Stock as specified therein.
1.3.3 The MITI Merger. The Certificate of Incorporation of MITI
---------------
Mergerco shall be the Certificate of Incorporation of the MITI Merger
Surviving Corporation until thereafter amended as provided by law except
that at the MITI Effective Time, Article FIRST of the Certificate of
Incorporation of the MITI Merger Surviving Corporation shall be amended to
read as follows: "The name of the corporation is METROMEDIA INTERNATIONAL
TELECOMMUNICATIONS, INC. (the "Corporation")."
1.4 By-laws.
-------
1.4.1 The Orion Merger. The By-laws of OPC Mergerco as in
----------------
effect immediately prior to the Orion Effective Time shall be the By-laws
of the Orion Merger Surviving Corporation until thereafter amended.
1.4.2 The Sterling Merger. The By-laws of Actava shall be
-------------------
amended and restated as of the Effective Time substantially in the form of
Exhibit B hereto and as so amended and restated shall be the By-laws of the
Surviving Corporation until thereafter amended.
1.4.3 The MITI Merger. The By-laws of MITI Mergerco as in
---------------
effect immediately prior to the MITI Effective Time shall be the By-laws of
the MITI Merger Surviving Corporation until thereafter amended.
1.5 Directors.
---------
1.5.1 The Orion Merger. The directors of the Orion Merger
----------------
Surviving Corporation at the Effective Time shall consist of three
individuals designated at the Effective Time by the Board of Directors of
the Surviving Corporation, each of whom shall hold office from the
Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation and By-laws of the Orion Merger Surviving Corporation.
1.5.2 The Sterling Merger. The directors of the Surviving
-------------------
Corporation at the Effective Time shall consist of the persons listed on
6
Schedule 1.5.2(a), each of whom shall hold office from the Effective Time
until their respective successors are duly elected or appointed and
qualified in the manner provided in the Certificate of Incorporation and
By-laws of the Surviving Corporation; provided, however, that if at the
-------- -------
Effective Time (i) Triton Group Ltd., a Delaware corporation ("Triton"), is
entitled to designate one director to the Surviving Corporation's Board of
Directors pursuant to an Amended and Restated Stockholder Agreement dated
as of June 25, 1993 between Triton and Actava (the "Triton Stockholder
Agreement"), and (ii) Triton has not waived its rights under the Triton
Stockholder Agreement to designate one director to the Surviving
Corporation's Board of Directors, then the directors of the Surviving
Corporation at the Effective Time shall consist of the persons listed on
Schedule 1.5.2(b), each of whom shall hold office from the Effective Time
until their respective successors are duly elected or appointed and
qualified in the manner provided in the Certificate of Incorporation and
By-laws of the Surviving Corporation.
1.5.3 The MITI Merger. The directors of the MITI Merger
---------------
Surviving Corporation at the Effective Time shall consist of three
individuals designated at the Effective Time by the Board of Directors of
the Surviving Corporation, each of whom shall hold office from the
Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation and By-laws of the MITI Merger Surviving Corporation.
1.6 Meeting of Stockholders. Each of Actava, Orion, Sterling and
-----------------------
MITI hereby covenants and agrees that it shall, as promptly as practicable, take
all necessary action in accordance with applicable law to convene a meeting of
its stockholders and shall use its best efforts to hold such meeting as promptly
as practicable after the date hereof. The purpose of such meeting shall be,
among other things, to consider and vote upon this Agreement and the
transactions contemplated hereby (including, without limitation, the Mergers and
the amendment of Actava's Restated Certificate of Incorporation to be
effectuated by the filing of the Sterling Certificate of Merger). Notwith-
standing the foregoing, MITI shall be deemed to have fulfilled the foregoing
requirements if its stockholders act by written consent in lieu of such meeting
pursuant to the provisions of Section 228 of the DGCL. Subject to applicable
law and fiduciary duties, including the duties of loyalty and care, the Board of
Directors of each of Actava, Orion, Sterling
7
and MITI shall recommend that their stockholders vote in favor of the Mergers,
as applicable, and the adoption of this Agreement, as applicable, and the
approval of the transactions contemplated by such agreements.
1.7 Proxy Statement; Form S-4. As soon as practicable, Actava, Orion
-------------------------
and Sterling shall file with the Securities and Exchange Commission (the "SEC")
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
each shall use its respective best efforts to have cleared by the SEC, a joint
proxy statement (the "Proxy Statement"), with respect to the meeting of
Actava's, Orion's and Sterling's stockholders referred to in Section 1.6. In
connection therewith, as soon as practicable after the date hereof, Actava shall
file with the SEC a Registration Statement on Form S-4 (the "Form S-4") to
register under the Securities Act of 1933, as amended (the "Securities Act"),
the shares of the Common Stock to be issued in the Mergers which Form S-4 shall
incorporate the Proxy Statement. Each of the parties hereto shall use its best
efforts promptly to provide in writing all information related to it which is
required for inclusion in the Proxy Statement and Form S-4 in order to have the
Form S-4 declared effective by the SEC as promptly as practicable. Actava shall
use its best efforts to comply, prior to the Effective Time, with all applicable
requirements of "Blue Sky" and federal and state securities laws in connection
with the Mergers and the issuance of the Common Stock in connection therewith.
1.8 Additional Actions. If, at any time after the Effective Time,
------------------
the Surviving Corporation, the Orion Merger Surviving Corporation or the MITI
Merger Surviving Corporation shall consider or be advised that any deeds, bills
of sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation, the Orion Merger Surviving Corporation or the MITI Merger Surviving
Corporation, as the case may be, its right, title or interest in, to or under
any of the rights, properties or assets of Orion, Sterling or MITI or otherwise
to carry out this Agreement, the officers and directors of the Surviving
Corporation, the Orion Merger Surviving Corporation and the MITI Merger
Surviving Corporation, as appropriate, shall be authorized to execute and
deliver, in the name and on behalf of Orion, Sterling or MITI or otherwise, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of Orion, Sterling or MITI or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights,
8
properties or assets in the Surviving Corporation, the Orion Merger Surviving
Corporation or the MITI Merger Surviving Corporation, as the case may be, or
otherwise to carry out this Agreement.
ARTICLE 2
CONVERSION OF SECURITIES
2.1 Actava Securities.
-----------------
(i) All issued and outstanding securities of Actava outstanding
immediately prior to the Effective Time (including, without limitation, all
shares of Common Stock and all options and warrants exercisable for and
securities convertible into shares of Common Stock) shall remain outstanding
following the Mergers with the same terms and subject to the same conditions as
in effect prior to the Effective Time.
(ii) It will not be necessary for holders of Common Stock to
exchange their existing stock certificates for stock certificates bearing the
new name of the Surviving Corporation prior to or at the Effective Time, but
after the Effective Time, as presently outstanding certificates of Common Stock
are presented for transfer, new certificates bearing the new name of the
Surviving Corporation and representing the same number of shares of Common Stock
as is currently set forth on such presently outstanding certificates will be
issued, or such new certificates shall be issued upon request upon delivery of
the certificates evidencing such Common Stock to the Surviving Corporation's
transfer agent. From and after the Effective Time, and until such time as all
of the certificates representing the Common Stock bearing the previous name of
the Surviving Corporation are presented for transfer or exchange, such
certificates which have not been presented for transfer or exchange shall
represent the same number of shares of Common Stock as is currently set forth on
such certificates and holders thereof shall have the same per share right to
receive dividends and vote such shares as if such holders had transferred or
exchanged such certificates for new certificates bearing the new name of the
Surviving Corporation.
9
2.2 Conversion of Orion, Sterling and MITI Securities.
-------------------------------------------------
2.2.1 Orion Securities.
----------------
(i) At the Orion Effective Time, each share of common
stock, par value $.25 per share, of Orion (the "Orion Common Stock"), issued and
outstanding immediately prior to the Orion Effective Time, shall, by virtue of
the Orion Merger and without any action on the part of the holder thereof, be
converted into the right to receive a number of shares of Common Stock equal to
the Orion Exchange Ratio (as hereafter defined) (subject to appropriate
adjustment in the event of a stock split, stock dividend or recapitalization or
other similar event applicable to shares of Common Stock prior to the Orion
Effective Time) upon surrender of the certificate representing such share of
Orion Common Stock.
(ii) Each share of Orion Common Stock held in treasury by
Orion immediately prior to the Orion Effective Time shall, by virtue of the
Orion Merger, be canceled and retired and cease to exist, without any conversion
thereof.
2.2.2 Sterling Securities.
-------------------
(i) At the Sterling Effective Time, each share of common
stock, par value $.001 per share, of Sterling (the "Sterling Common Stock"),
issued and outstanding immediately prior to the Sterling Effective Time, shall,
by virtue of the Sterling Merger and without any action on the part of the
holder thereof, be converted into the right to receive a number of shares of
Common Stock equal to the Sterling Exchange Ratio (as hereafter defined)
(subject to appropriate adjustment in the event of a stock split, stock dividend
or recapitalization or other similar event applicable to shares of Common Stock
prior to the Sterling Effective Time) upon surrender of the certificate
representing such share of Sterling Common Stock.
(ii) Each share of Sterling Common Stock held in treasury
by Sterling immediately prior to the Sterling Effective Time shall, by virtue of
the Sterling Merger, be canceled and retired and cease to exist, without any
conversion thereof.
(iii) Notwithstanding anything in this Agreement to the
contrary, shares of Sterling Common Stock outstanding immediately prior to the
Sterling Effective Time held by a holder (if any) who is entitled to demand, and
who
10
properly demands, appraisal for such shares in accordance with Section 262 of
the DGCL ("Sterling Dissenting Shares") shall not be converted into a right to
receive the consideration specified in Section 2.2.2(i) hereof unless such
holder fails to perfect or otherwise loses such holder's right to appraisal, if
any. If, after the Sterling Effective Time, such holder fails to perfect or
otherwise loses any such right to appraisal, such shares shall be treated as if
they had been converted as of the Sterling Effective Time into a right to
receive the consideration specified in Section 2.2.2(i) hereof. Sterling shall
give prompt notice to Actava of any demands received by Sterling for appraisal
of shares of Sterling Common Stock and Actava shall have the right to
participate in and direct all negotiations and proceedings with respect to such
demands. Sterling shall not, except with the prior written consent of Actava,
which consent shall not be unreasonably withheld, make any payment with respect
to, or settle or offer to settle, any such demands.
2.2.3 MITI Securities.
---------------
(i) At the MITI Effective Time, each share of common
stock, par value $.001 per share, of MITI (the "MITI Common Stock"), issued and
outstanding immediately prior to the MITI Effective Time, shall, by virtue of
the MITI Merger and without any action on the part of the holder thereof, be
converted into the right to receive a number of shares of Common Stock equal to
the MITI Exchange Ratio (as hereafter defined) (subject to appropriate
adjustment in the event of a stock split, stock dividend or recapitalization or
other similar event applicable to shares of Common Stock prior to the MITI
Effective Time) upon surrender of the certificate representing such share of
MITI Common Stock.
(ii) At the MITI Effective Time, each holder of an option
or warrant or other right exercisable for or convertible into shares of MITI
Common Stock ("MITI Options and Warrants") will receive, by virtue of the MITI
Merger and without any action on the part of the holder thereof, options or
warrants or other rights exercisable for or convertible into shares of Common
Stock with the same terms and conditions as the MITI Options and Warrants except
that the exercise price and the number of shares issuable upon exercise shall be
divided and multiplied, respectively, by the MITI Exchange Ratio (subject to
appropriate adjustment in the event of a stock split, stock dividend or
recapitalization or other similar event applicable to shares of Common Stock
prior to the MITI Effective Time).
11
(iii) Each share of MITI Common Stock held in treasury by
MITI immediately prior to the MITI Effective Time shall, by virtue of the MITI
Merger, be canceled and retired and cease to exist, without any conversion
thereof.
(iv) Notwithstanding anything in this Agreement to the
contrary, shares of MITI Common Stock outstanding immediately prior to the MITI
Effective Time held by a holder (if any) who is entitled to demand, and who
properly demands, appraisal for such shares in accordance with Section 262 of
the DGCL ("MITI Dissenting Shares") shall not be converted into a right to
receive the consideration specified in Section 2.2.3(i) hereof unless such
holder fails to perfect or otherwise loses such holder's right to appraisal, if
any. If, after the MITI Effective Time, such holder fails to perfect or
otherwise loses any such right to appraisal, such shares shall be treated as if
they had been converted as of the MITI Effective Time into a right to receive
the consideration specified in Section 2.2.3(i) hereof. MITI shall give prompt
notice to Actava of any demands received by MITI for appraisal of shares of MITI
Common Stock and Actava shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. MITI shall not,
except with the prior written consent of Actava, which consent shall not be
unreasonably withheld, make any payment with respect to, or settle or offer to
settle, any such demands.
2.3 Surrender and Exchange of Orion Common Stock, Sterling Common
-------------------------------------------------------------
Stock and MITI Common Stock. After the Effective Time, each holder of an
---------------------------
outstanding certificate or certificates (the "Old Certificates") theretofore
representing shares of Orion Common Stock, Sterling Common Stock or MITI Common
Stock shall surrender such Old Certificates to such bank or trust company as may
be designated by the Surviving Corporation as the exchange agent (the "Exchange
Agent") and shall receive in exchange therefor, upon satisfaction of customary
delivery requirements, certificates representing the number of whole shares of
Common Stock into which shares of Orion Common Stock, Sterling Common Stock or
MITI Common Stock, as the case may be, have been converted (it being understood
that subject to the provisions of Section 2.4 hereof, in connection with the
Sterling Merger, the Surviving Corporation will instruct the Exchange Agent to
deliver the number of whole shares of Common Stock plus cash in lieu of
fractional shares which the Sterling Voting Trust (as defined herein) is
entitled to receive pursuant to the Sterling Merger in accordance with Section
2.2.2(i) hereof
12
to the beneficiaries of such trust in exchange for the Old Certificates
representing the shares of Sterling Common Stock owned by the voting trust (the
"Sterling Voting Trust") created by the Voting Trust Agreement). Until so
surrendered and exchanged, each outstanding Old Certificate after the Effective
Time shall be deemed for all purposes to evidence the number of whole shares of
Common Stock into which the shares of Orion Common Stock, Sterling Common Stock
or MITI Common Stock, as the case may be, represented by such certificate are to
be converted pursuant to Section 2.2 of this Agreement; provided, however, that
-------- -------
no dividends or other distributions, if any, in respect of such shares of Common
Stock, declared after the Effective Time and payable to holders of record after
the Effective Time, shall be paid to the holders of any unsurrendered Old
Certificates until such Old Certificates are surrendered. Subject to applicable
law, after the surrender and exchange of Old Certificates, the record holders
thereof will be entitled to receive any such dividends or other distributions
without interest thereon, which theretofore have become payable with respect to
the number of shares of Common Stock for which such Old Certificate was
exchangeable. Holders of any unsurrendered Old Certificates shall not be
entitled to vote until such unsurrendered Old Certificates are exchanged
pursuant to this Section 2.3.
2.4 Fractional Shares. No fractional shares of Common Stock shall be
-----------------
issued in connection with the conversion of shares of Orion Common Stock,
Sterling Common Stock or MITI Common Stock, as the case may be, in connection
with the Mergers nor will any outstanding fractional share interest entitle the
owner thereof to vote, to receive dividends or to exercise any other right of a
stockholder of the Surviving Corporation. In lieu of any such fractional
shares, any holder of Orion Common Stock, Sterling Common Stock or MITI Common
Stock, as the case may be, who would otherwise have been entitled to receive a
fractional share of Common Stock shall, upon surrender of certificates
representing such holders' shares of Orion Common Stock, Sterling Common Stock
or MITI Common Stock, as the case may be, be paid in cash the value of each such
fraction, which for this purpose shall be calculated by multiplying such
fraction by the "Average Closing Price." For purposes of this Agreement,
"Average Closing Price" means the average of the last sale prices for Common
Stock as reported on the New York Stock Exchange ("NYSE") for the last
20 consecutive trading days ending on the business day immediately preceding the
day which is five calendar days prior to the day on which the meetings of
Actava's, Orion's and Sterling's stockholders referred to in Section 1.6 hereof
are held, or if such day is not a business day, on
13
the business day immediately preceding such day (the "Determination Date"),
subject to appropriate adjustment in the event of a stock split, stock dividend
or recapitalization or other similar event applicable to shares of Common Stock
held of record on or before the Effective Time to the extent not reflected in
such sale prices.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF ACTAVA
Actava represents and warrants as of April 12, 1995 to each of Orion,
Sterling and MITI as follows (all references in this Article 3 to "as of the
date of this Agreement" or to "as of the date hereof" shall be deemed to refer
to April 12, 1995):
3.1 Organization and Good Standing. Actava and each of its material
------------------------------
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Actava and each of its
material subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the character of the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not have an Actava
Material Adverse Effect (as defined in Section 15.9). Actava has heretofore
delivered or made available to each of Orion, Sterling and MITI accurate and
complete copies of the Certificates of Incorporation and By-laws, or equivalent
governing instruments, as currently in effect, of Actava and each of its
subsidiaries.
3.2 Capitalization. The authorized capital stock of Actava consists
--------------
of 100,000,000 shares of Common Stock, 1,000,000 shares of Preference Stock,
without par value ("Actava Preference Stock"), and 5,000,000 shares of Preferred
Stock, par value $1.00 per share (the "Actava Preferred Stock"). As of
March 31, 1995, 17,327,158 shares of Common Stock, no shares of Actava
Preference Stock and no shares of Actava Preferred Stock were issued and
outstanding. No other capital stock of Actava is authorized or issued. All
issued and outstanding shares of capital
14
stock of Actava are validly issued, fully paid and non-assessable and were
issued free of preemptive rights and in compliance with applicable federal and
state securities laws and regulations. Except as set forth on Schedule 3.2(a),
at the date hereof there are not any outstanding rights, subscriptions,
warrants, calls, unsatisfied preemptive rights, options or other agreements of
any kind to purchase or otherwise receive from Actava any of the outstanding,
authorized but unissued, unauthorized or treasury shares of the capital stock or
any other security of Actava, and there is no authorized or outstanding security
of any kind convertible into or exchangeable for any such capital stock. Except
as set forth on Schedule 3.2(b), since March 31, 1995, Actava has not (i) issued
any shares of capital stock, except pursuant to the exercise of then outstanding
options or warrants in accordance with their terms or (ii) repurchased any
shares of Common Stock.
3.3 Subsidiaries. Exhibit 21 to Actava's filing on Form 10-K for the
------------
year ended December 31, 1994, as amended, sets forth the name, jurisdiction of
incorporation or organization and percentages of outstanding capital stock or
other equivalent equity ownership owned, directly or indirectly, by Actava, with
respect to each subsidiary of Actava. Except as set forth on Schedule 3.3,
Actava and its subsidiaries own no material direct or indirect equity interest
in any corporation (other than direct or indirect subsidiaries of Actava),
partnership, joint venture or other entity, domestic or foreign. All of the
outstanding shares of capital stock in each of Actava's subsidiaries have been
duly authorized and validly issued and are fully paid and non-assessable.
Except as set forth on Schedule 3.3, to Actava's knowledge, there are no
irrevocable proxies or similar obligations with respect to such capital stock
and no equity securities or other interests of any of the subsidiaries are or
may become required to be issued by reason of any options, warrants, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any capital
stock of any subsidiary, and there are no contracts, commitments, understandings
or arrangements by which any subsidiary is bound to issue additional shares of
its capital stock, or options, warrants or rights to purchase or acquire any
additional shares of its capital stock or securities convertible into or
exchangeable for such shares. All of such shares so owned by Actava are owned
by it free and clear of any claim, lien, encumbrance, security interest or
agreement with respect thereto.
15
3.4 Authorization; Binding Agreement. Actava has requisite corporate
--------------------------------
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject to the approval and adoption of this
Agreement by the stockholders of Actava in accordance with the DGCL and the
Certificate of Incorporation and By-laws of Actava. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
including but not limited to the Mergers, have been duly and validly authorized
by Actava's Board of Directors and no other corporate proceedings on the part of
Actava or any subsidiary of Actava are necessary to authorize the execution and
delivery of this Agreement or to consummate the transactions so contemplated
(other than the approval and adoption of this Agreement by the stockholders of
Actava in accordance with the DGCL and the Certificate of Incorporation and By-
laws of Actava). This Agreement has been duly and validly executed and
delivered by Actava, and, subject to the approval and adoption of this Agreement
by the stockholders of Actava in accordance with the DGCL and the Certificate of
Incorporation and By-laws of Actava, constitutes the legal, valid and binding
agreement of Actava, enforceable against Actava in accordance with its terms,
except to the extent that enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by principles of equity regarding
the availability of remedies.
3.5 Governmental Approvals. No consent, approval or authorization of
----------------------
or declaration or filing with any governmental agency or regulatory authority on
the part of Actava or any of its subsidiaries is required in connection with the
execution or delivery by Actava of this Agreement or the consummation by Actava
of the transactions contemplated hereby other than (i) the filing of this
Agreement (or the Certificate of Merger in lieu thereof) with the Secretary of
State of Delaware in accordance with the DGCL, (ii) filings with the SEC and any
applicable national securities exchange, (iii) filings under state securities or
"Blue Sky" laws, (iv) federal, state and local regulatory approvals and consents
and (v) filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder (the "HSR
Act").
3.6 No Violations. The execution and delivery by Actava of this
-------------
Agreement, the consummation of the transactions contemplated hereby and
compliance by Actava with any of the provisions hereof will not (i) conflict
with or result in any breach of any provision of the Articles or
16
Certificates of Incorporation or By-laws or other governing instruments of
Actava or any of its subsidiaries, (ii) except as set forth on Schedule 3.6 and
except for any of the following which does not and will not have an Actava
Material Adverse Effect, require any consent, approval or notice under or result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or augment the performance required) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, agreement or other instrument or obligation to which Actava or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, (iii) result in the creation or imposition of
any lien, charge or other encumbrance of any kind upon any of the assets of
Actava or any of its subsidiaries other than any such lien, charge or other
encumbrance which does not and will not have an Actava Material Adverse Effect
or (iv) subject to obtaining the governmental and other consents referred to in
Section 3.5, contravene any material law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or any
material order, writ, injunction, determination or award currently in effect to
which Actava or any of its subsidiaries or any of their respective assets or
properties are subject.
3.7 Proxy Statement; Form S-4. None of the information relating to
-------------------------
Actava and its subsidiaries included in the Proxy Statement or Form S-4 will be
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except for information supplied or to be supplied by Orion,
Sterling or MITI in writing for inclusion therein, as to which no representation
is made, the Proxy Statement, and any supplements or amendments thereto, will
comply in all material respects with the Exchange Act and the rules and
regulations thereunder.
3.8 SEC Filings. Actava has made available to each of Orion,
-----------
Sterling and MITI true and complete copies of (i) its Annual Reports on Form 10-
K, as amended, for the years ended December 31, 1992, 1993 and 1994, as filed
with the SEC, (ii) its proxy statements relating to all of Actava's meetings of
stockholders (whether annual or special) since January 1, 1993, as filed with
the SEC, and (iii) all other reports, statements and registration statements
(including Quarterly Reports on Form 10-Q and
17
Current Reports on Form 8-K, as amended) filed by Actava with the SEC since
January 1, 1993 (the reports and statements set forth in clauses (i), (ii) and
(iii) are referred to collectively as the "Actava SEC Filings"). With respect
to Roadmaster Industries, Inc., a Delaware corporation ("Roadmaster"), Actava
has made available to each of Orion, Sterling and MITI true and complete copies
of (i) Roadmaster's Annual Reports on Form 10-K for the years ended December 31,
1992, 1993 and 1994, as filed with the SEC, (ii) Roadmaster's proxy statements
relating to all of Roadmaster's meetings of stockholders (whether annual or
special) since January 1, 1993, as filed with the SEC, and (iii) all other
reports, statements and registration statements (including Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as amended) filed by Roadmaster with
the SEC since January 1, 1992 (the reports and statements set forth in clauses
(i), (ii) and (iii) are referred to collectively as the "Roadmaster SEC
Filings"). As of their respective dates, none of the Actava SEC Filings or, to
Actava's actual knowledge, without investigation, Roadmaster SEC Filings
(including all exhibits and schedules thereto and documents incorporated by
reference therein), contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the Actava SEC Filings and, to Actava's actual
knowledge, without investigation, Roadmaster SEC Filings at the time of filing
complied in all material respects with the Exchange Act or the Securities Act,
as the case may be, and the rules and regulations thereunder. As of the date
hereof, there are no claims, actions, or proceedings (and to Actava's knowledge
no investigations) pending by or against or to Actava's knowledge threatened
against Actava or any of its subsidiaries, or to Actava's actual knowledge,
without investigation, Roadmaster or any of its subsidiaries, or any properties
or rights of Actava or any of its subsidiaries, or any properties or rights of,
to Actava's actual knowledge, without investigation, Roadmaster or any of its
subsidiaries, before any court or any administrative, governmental or regulatory
authority or body which is required to be described in any Actava SEC Filing or,
to Actava's actual knowledge, without investigation, Roadmaster SEC Filing that
is not so described which have or will have an Actava Material Adverse Effect.
3.9 Financial Statements. The consolidated balance sheets of Actava
--------------------
as of December 31, 1992, 1993 and 1994 and the related consolidated statements
of operations, stockholders' equity and cash flows for the years then ended,
including the footnotes thereto, certified by Ernst &
18
Young LLP, Actava's independent certified public accountants, as set forth in
Actava's Annual Reports on Form 10-K, as amended, for the years ended
December 31, 1992, 1993 and 1994, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved and fairly present the financial position of Actava and its
consolidated subsidiaries as of the dates thereof and the results of their
operations for the periods then ended.
3.10 Absence of Certain Changes or Events. Except as set forth in
------------------------------------
the Actava SEC Filings, since December 31, 1994 there has not been: (i) any
material adverse change in the business, assets, prospects, condition (financial
or other) or the results of operations of Actava and its subsidiaries taken as a
whole other than any such change caused by general economic conditions,
political or governmental instability or uncertainty, civil disturbances or
unrest, war or other similar acts of force majeure; (ii) any notification from
Xxxxxxx Kodak Company ("Kodak") that it intends to set off any amounts or
otherwise dispute any amounts payable under that certain $100 million promissory
note dated August 12, 1994 made by Kodak in favor of Actava; (iii) any
declaration, payment or setting aside for payment of any dividend or any
redemption, purchase or other acquisition of any shares of capital stock or
securities of Actava; (iv) any return of any capital or other distribution of
assets to stockholders of Actava; (v) any material investment of a capital
nature by Actava or any of its subsidiaries either by the purchase of any
property or assets or by any acquisition (by merger, consolidation or
acquisition of stock or assets) of any corporation, partnership or other
business organization or division thereof; (vi) any sale, disposition or other
transfer of assets or properties of Actava and its subsidiaries in excess of
$100,000 individually or $1,000,000 in the aggregate; (vii) any employment or
consulting agreement entered into by Actava and its subsidiaries with any
officer or consultant of Actava and its subsidiaries providing for annual salary
or other annual payments in excess of $100,000 or any amendment or modification
to, or termination of, any current employment or consulting agreement to which
Actava or any of its subsidiaries is a party which provides for annual salary or
other annual payments in excess of $100,000; (viii) any agreement to take,
whether in writing or otherwise, any action which, if taken prior to the date
hereof, would have made any representation or warranty in this Article 3 untrue,
incomplete or incorrect in any material respect; (ix) any change in accounting
methods or practices or any change in depreciation or amortization policies or
rates; or (x) any failure by Actava or its
19
subsidiaries to conduct their respective businesses only in the ordinary course
consistent with past practice. Except as set forth in the Roadmaster SEC
Filings, since December 31, 1994, to Actava's actual knowledge, without
investigation, there has not occurred any material adverse change in the
business, assets, prospects, conditions (financial or otherwise) or the results
of operations of Roadmaster and its subsidiaries taken as a whole.
3.11 Compliance with Laws. The business of Actava and its
--------------------
subsidiaries has been operated in compliance with all laws, ordinances,
regulations and orders of all governmental entities, domestic or foreign, except
for any instances of non-compliance which do not and will not have an Actava
Material Adverse Effect.
3.12 Permits. Except as set forth on Schedule 3.12, (i) Actava and
-------
its subsidiaries have all permits, certificates, licenses, approvals and other
authorizations (collectively, "Actava Permits") required in connection with the
operation of their businesses, (ii) neither Actava nor any of its subsidiaries
are in violation of any Actava Permit applicable to any of them or to the
operation of their businesses, and (iii) no proceedings are pending or, to
Actava's knowledge, threatened, to revoke or terminate any Actava Permit,
except, in the case of clause (i) or (ii) above, those the absence or violation
of which do not and will not have an Actava Material Adverse Effect.
3.13 Finders and Investment Bankers. Neither Actava nor any of its
------------------------------
officers or directors has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby except a fee payable to CS First
Boston Corporation ("First Boston") pursuant to that certain engagement letter
dated February 15, 1995 between First Boston and Actava.
3.14 Contracts. There is no material contract or other material
---------
agreement ("Contract") required to be described in or filed as an exhibit to any
Actava SEC Filing that is not described in or filed as required by the
Securities Act or the Exchange Act, as the case may be. All such Contracts are
valid and binding and are in full force and effect and enforceable in accordance
with their respective terms other than such Contracts which by their terms are
no longer in force or effect. Except as set forth in Schedule 3.6 or 3.14,
(i) no approval or consent of, or notice to, any person is needed in order to
ensure that such Contracts shall continue in full force and effect in accordance
with their respective terms without penalty,
20
acceleration or rights of early termination following the consummation of the
transactions contemplated by this Agreement, and (ii) Actava or its subsidiaries
is not in violation or breach of or default under any such Contract; nor to
Actava's knowledge is any other party to any such Contract in violation or
breach of or default under any such Contract, except in the case of clauses (i)
and (ii) above, any of the foregoing which do not and will not have an Actava
Material Adverse Effect.
3.15 Employee Benefit Plans.
----------------------
(i) Except as set forth on Schedule 3.15(i), there are no
employee benefit plans or arrangements of any type, including (i) plans
described in section 3(3) of the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder ("ERISA") and any other
material plans, programs, practices or policies, including, but not limited to,
any pension, profit sharing, retirement, thrift, stock purchase or stock option
plan, or any other compensation, welfare, fringe benefit or retirement plan,
program, policy, understanding or arrangement of any kind whatsoever, whether
formal or informal, providing for benefits for or the welfare of any or all of
the current or former employees or agents of Actava and their beneficiaries or
dependents, or (ii) multiemployer plans as defined in section 3(37) of ERISA, or
(iii) multiple employer plans as defined in Section 413 of the Code, under which
Actava has or in the future could have, directly or indirectly through an entity
which is considered a "single employer" within the meaning of sections 414(b),
(c), (m) and (o) of the Code (a "Commonly Controlled Entity"), any liability
with respect to any current or former employee of Actava or any Commonly
Controlled Entity (collectively, "Actava Benefit Plans").
(ii) With respect to each Actava Benefit Plan (where applicable),
Actava has delivered to each of Orion, Sterling and MITI complete and accurate
copies or summaries of (a) all plan texts and material agreements, (b) all
material employee communications, (c) the most recent annual report, (d) the
most recent annual and periodic accounting of plan assets, (e) the most recent
determination letter received from the Internal Revenue Service and (f) the most
recent actuarial valuation.
(iii) With respect to each Actava Benefit Plan, except as set
forth on Schedule 3.15(iii), (a) if intended to qualify under Code
sections 401(a) or 403(a), (i) such Actava Benefit Plan has received a favorable
determination letter from the Internal Revenue Service (the "Service")
indicating that such Plan meets such require-
21
ments, and such determination by the Service includes any new or modified
requirements under the Tax Reform Act of 1986 and subsequent legislation enacted
thereafter through and including the Omnibus Budget Reconciliation Act of 1993,
or (ii) an application for a favorable determination letter including such
legislation was filed with the Service prior to the expiration of the remedial
amendment period (as defined in Code section 401(b) and regulations thereunder,
and as extended pursuant to notices and revenue rulings of the Service) for
filing such an application and such Plan has been substantially amended to
comply with the Tax Reform Act of 1986 and subsequent legislation enacted
through and including the Omnibus Budget Reconciliation Act of 1993, or
(iii) the remedial amendment period (as defined in (ii) above) with respect to
such Plan has not yet expired, and an application for a favorable determination
letter including such legislation will be timely filed with the Service prior to
the expiration of such period and the Plan will be amended to comply with the
Tax Reform Act of 1986 and subsequent legislation enacted thereafter through and
including the Omnibus Budget Reconciliation Act of 1993 prior to the expiration
of such period, (b) if intended to qualify under Code sections 401(a) or 403(a)
and if originally effective prior to January 1, 1986, such Actava Benefit Plan
has previously received a favorable determination letter from the Service
indicating that such Plan meets the requirements of Code sections 401(a) or
403(a) as in effect on the date of the letter, including without limitation, the
Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA"), the Deficit
Reduction Act of 1984 ("DEFRA"), and the Retirement Equity Act of 1984
("REACT"), (c) such Actava Benefit Plan has been administered in material
compliance with its terms and applicable law, (d) no event has occurred and
there exists no circumstance under which Actava could, directly or indirectly
through a Commonly Controlled Entity, incur material liability under ERISA, the
Code or otherwise (other than routine claims for benefits), (e) there are no
actions, suits or claims pending (other than routine claims for benefits) or, to
Actava's knowledge, threatened, with respect to any Actava Benefit Plan or
against the assets of any Actava Benefit Plan, (f) no "accumulated funding
deficiency" (as defined in ERISA section 302) has occurred, (g) no "prohibited
transaction" (as defined in ERISA section 406 or in Code section 4975) has
occurred, (h) no "reportable event" (as defined in ERISA section 4043) has
occurred, (i) all contributions and PBGC premiums or premiums due under an
insurance contract that insures benefits payable under an Actava Benefit Plan,
as applicable, have been made on a timely basis and (j) all contributions made
or required to be made under any Actava Benefit Plan which have been treated as
deductible for
22
purposes of one or more federal income tax returns of Actava meet the
requirements for deductibility under the Code and all contributions that have
not been made have been properly recorded on the books of Actava or a Commonly
Controlled Entity in accordance with generally accepted accounting principles.
(iv) With respect to each Actava Benefit Plan that is subject to
Title IV of ERISA, except as set forth on Schedule 3.15(iv), (a) as of the date
hereof and at the Effective Time, the market value of assets (exclusive of any
contribution due to such Actava Benefit Plan) equals or exceeds the present
value of benefit liabilities as of the latest actuarial valuation date shown for
such plan (but not prior to 12 months prior to the date hereof), determined on
the basis of a shutdown of Actava and termination of such Actava Benefit Plan in
accordance with actuarial assumptions used by the Pension Benefit Guaranty
Corporation in single-employer plan terminations and since its last valuation
date, there have been no amendments to such Actava Benefit Plan that materially
increased the present value of benefit liabilities (determined as provided
above) nor any other material adverse changes in the funding status of such
Actava Benefit Plan, and (b) Actava has not incurred, directly or indirectly
through a Commonly Controlled Entity, any liability arising from a plan
termination or plan withdrawal from a multiemployer plan.
(v) With respect to each Actava Benefit Plan that is a "welfare
plan" (as defined in ERISA section 3(1)), except as set forth on
Schedule 3.15(v), (a) no such plan provides medical or death benefits (whether
or not insured) with respect to current or former employees beyond their
termination of employment or the end of the month of their termination of
employment (other than coverage mandated by law), (b) there are no reserves,
assets, surplus or prepaid premiums under any such plan and (c) Actava and any
Commonly Controlled Entity have materially complied with the requirements of
Code section 4980B.
(vi) With respect to each Actava Benefit Plan that is a
multiemployer plan, (a) Schedule 3.15(vi) indicates the number of employees with
respect to whom Actava or any Commonly Controlled Entity makes contributions to
each such plan and the most recent information available to Actava or any
Commonly Controlled Entity with respect to the withdrawal liability of Actava or
such Commonly Controlled Entity under each such plan, (b) each such plan is not,
as of the date hereof, insolvent or in reorganization, nor does it have an
accumulated funding deficiency, and Actava does not know of any reason why such
23
plan would become insolvent or in reorganization or have an accumulated funding
deficiency in the foreseeable future, (c) Actava or any Commonly Controlled
Entity has made all contributions to each such plan due or accrued as of the
date hereof and will have made all such contributions as of the Effective Time
and (d) the withdrawal liability with respect to each such Plan if any Commonly
Controlled Entity were to withdraw from the plan at the Effective Time is less
than or equal to $0.
(vii) Except as set forth on Schedule 3.15(vii), the consummation
of the transactions contemplated by this Agreement will not (a) entitle any
individual to severance pay, or (b) accelerate the time of payment, vesting of
benefits (including stock options and restricted stock) or increase the amount
of compensation due to any individual.
3.16 Taxes.
-----
(a) Except as set forth on Schedule 3.16, (i) Actava and each of
its subsidiaries timely has 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 Actava has paid on its behalf),
or has or will set up an adequate reserve for the payment of, all 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 SEC Filings reflect an
adequate reserve for all Taxes payable by Actava and its subsidiaries accrued
through the date of such financial statements and (ii) no deficiencies for any
Taxes have been proposed, asserted or assessed against Actava or any of its
subsidiaries other than those which are being contested in good faith and by
proper proceedings by Actava, except in the case of clauses (i) and (ii) above,
any of the foregoing which do not and will not have an Actava Material Adverse
Effect.
(b) The Federal income tax returns of Actava and each of its
subsidiaries 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 1987.
24
(c) Except as set forth on Schedule 3.16, none of Actava, any
subsidiary of Actava, or to Actava's knowledge, any group of which Actava or any
subsidiary of Actava 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.
(d) Except as set forth on Schedule 3.16, (i) none of Actava,
any subsidiary of Actava or, to Actava's knowledge, any group of which Actava or
any subsidiary of Actava is now or ever was a member, is a party to any action
or proceeding pending or, to Actava'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 Actava's knowledge, been asserted,
(iii) no audit or investigation of Actava or any subsidiary of Actava by any
governmental authority is pending or, to Actava'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 an Actava Material Adverse Effect.
3.17 Liabilities. Except (i) as expressly disclosed in the Actava
-----------
SEC Filings or (ii) as set forth on Schedule 3.17, and in the case of (i) and
(ii) above, as does not and will not have an Actava Material Adverse Effect,
Actava and its subsidiaries do not have any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise ("Liabilities"), whether
or not of a kind required by generally accepted accounting principles to be set
forth in a financial statement, other than Liabilities incurred since
December 31, 1994 in the ordinary course of business. Except as set forth on
Schedule 3.17 or reflected in the Actava SEC Filings, Actava and its
subsidiaries do not have (i) material obligations in respect of borrowed money,
(ii) material obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) material obligations which would be required by generally
accepted accounting principles to be classified as "capital leases",
(iv) material obligations to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business and payable not more than twelve (12) months from the date of
incurrence, and (v) any guaranties of any material obligations of any other
person.
25
3.18 Environmental Matters. Except as disclosed on Schedule 3.18:
---------------------
(i) Neither Actava nor any of its subsidiaries is or has been in
violation in any material respect of any applicable Safety and Environmental Law
(as hereafter defined).
(ii) Actava and its subsidiaries have all Permits (as hereafter
defined) required pursuant to Safety and Environmental Laws that are material to
the conduct of the business of Actava or any of its subsidiaries, 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 Actava and each of its
subsidiaries is in compliance in all material respects with all terms and
conditions thereof.
(iii) Neither Actava nor any of its subsidiaries has received, or
expects to receive due to the consummation of the Mergers, any material Environ-
mental Claim (as hereafter defined).
(iv) To Actava's knowledge, Actava and its subsidiaries have
filed all notices required under Safety and Environmental Laws indicating the
past or present Release (as hereafter defined), generation, treatment, storage
or disposal of Hazardous Substances (as hereafter defined).
(v) Neither Actava nor any of its subsidiaries have entered into
any written agreement with any Governmental Body (as hereafter defined) or any
other person by which Actava or any of its subsidiaries has assumed
responsibility, either directly or as a guarantor or surety, for the remediation
of any condition arising from or relating to a Release or threatened Release of
Hazardous Substances into the Environment (as hereafter defined).
(vi) To Actava'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 Actava or any of its subsidiaries may be directly
or indirectly responsible.
(vii) To Actava'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 Actava or any of its subsidiaries, and, to Actava's knowledge, was
not at, on or in any real property previously owned, leased or operated by
Actava or any of its subsidiaries or any
26
predecessor: (A) any generation, use, handling, Release, treatment, recycling,
storage or disposal of any Hazardous Substances, (B) 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, (C) any landfill or solid waste disposal area, (D) any
asbestos-containing material in a condition requiring abatement, (E) any
polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical transformers
or other equipment, (F) 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 (as hereafter defined) under
Safety and Environmental Laws, or (G) 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 Actava and
its subsidiaries.
(viii) To Actava's knowledge, there is no basis or reasonably
anticipated basis for any material Environmental Claim or material Environmental
Compliance Costs (as hereafter defined).
(ix) Neither Actava nor any of its subsidiaries have transported,
stored, treated or disposed, nor have they allowed or arranged for any third
persons to transport, store, treat or dispose, any Hazardous Substance to or at:
(a) any location other than a site lawfully permitted to receive such substances
for such purposes, or (b) any location designated for Remedial Action pursuant
to Safety and Environmental Laws; nor have they performed, arranged for or
allowed by any method or procedure such transportation or disposal in
contravention of any Safety and Environmental Laws or in any other manner which
may result in Environmental Compliance Costs or in an Environmental Claim. All
locations at which Actava or any of its subsidiaries have disposed of any
Hazardous Substance are listed on Schedule 3.18(ix).
For purposes of this Agreement, the following terms have the following
meanings:
(i) "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
27
buildings and structures, and plant and animal life on earth.
(ii) "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 Merging Parties or any of their subsidiaries, or any
by-product thereof, or any of the property currently or formerly owned, leased
or operated by any of the Merging Parties or any of their subsidiaries, or the
operations or property of any predecessor of any of the Merging Parties or any
of their subsidiaries is or may be implicated in or subject to any proceeding,
action, investigation, claim, lawsuit, order, agreement or evaluation by any
Governmental Body or any other person.
(iii) "Environmental Compliance Costs" means any expenditures,
------------------------------
costs, assessments or expenses (including, without limitation, any expenditures,
costs, assessments or expenses in connection with the conduct of any Remedial
Action, as well as reasonable fees, disbursements and expenses of attorneys,
experts, personnel and consultants), whether direct or indirect, necessary to
cause the operations, real property, assets, equipment or facilities owned,
leased, operated or used by any of the Merging Parties or by any of their
subsidiaries to be in compliance with any and all requirements, as in effect as
of the date hereof, of Safety and Environmental Laws, principles of common law
concerning pollution, protection of the Environment or health and safety, or
Permits issued pursuant to Safety and Environmental Laws; provided, however,
-------- -------
that Environmental Compliance Costs do not include expenditures, costs,
assessments or expenses necessary in connection with normal maintenance of such
real property, assets, equipment or facilities or the replacement of equipment
in the normal course of events due to ordinary wear and tear.
(iv) "Governmental Body" means any government or political
-----------------
subdivision thereof, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision, or any court or
arbitrator.
(v) "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
28
such substance or waste, or any other substance regulated under or defined by
any Safety and Environmental Law.
(vi) "Permits" means all licenses, permits, orders or approvals
-------
of, and all required registrations with, any Governmental Body that are material
to the conduct of the business of any of the Merging Parties or any of their
subsidiaries.
(vii) "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.
(viii) "Remedial Action" means all actions, whether voluntary or
---------------
involuntary, reasonably necessary to comply with Safety and Environmental Laws
to (A) clean up, remove, treat, cover or in any other way adjust Hazardous
Substances in the indoor or outdoor Environment; (B) prevent or control the
Release of Hazardous Substances so that they do not migrate or endanger or
threaten to endanger public health or welfare or the Environment; or (C) perform
remedial studies, investigations, restoration and post-remedial studies,
investigations and monitoring on, about or in any real property.
(ix) "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. Sec. 9601 et
--
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et seq.,
---- -- ----
the Toxic Substances Control Act, 15 U.S.C. Sec. 2601 et seq., the Federal Water
-- ----
Pollution Control Act, 33 U.S.C. Sec. 1251 et seq., the Clean Air Act, 42 U.S.C.
-- ----
Sec. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7
-- ----
U.S.C. Sec. 121 et seq., the Occupational Safety and Health Act, 29 U.S.C. Sec.
-- ----
651 et seq., the Asbestos Hazard Emergency Response Act, 15 U.S.C. Sec. 2601
-- ----
et seq., the Safe Drinking Water Act, 42 U.S.C. Sec. 300f
-- ----
29
et seq., the Oil Pollution Act of 1990 and analogous state acts.
-- ----
3.19 Intellectual Property. Schedule 3.19 sets forth a list of all
---------------------
of Actava's and its subsidiaries' registered patents, registered trademarks,
registered service marks, registered trade names, registered copyrights and
franchises, all applications for any of the foregoing and all permits, grants
and licenses or other rights running to or from Actava and any of its
subsidiaries relating to any of the foregoing that are material to the business
of Actava and its subsidiaries taken as a whole. Except as set forth on
Schedule 3.19, to Actava's knowledge (i) Actava or one of its subsidiaries own,
or are licensed to, or otherwise have, the right to use all registered patents,
registered trademarks, registered service marks, registered trade names,
registered copyrights and franchises set forth on Schedule 3.19, and
(ii) Actava's rights in the property set forth on such list are free and clear
of any liens or other encumbrances and Actava and its subsidiaries have not
received written notice of any adversely-held patent, invention, trademark,
service xxxx or trade name of any other person, or notice of any charge or claim
of any person relating to such intellectual property or any process or
confidential information of Actava and its subsidiaries and to Actava's
knowledge there is no basis for any such charge or claim, and (iii) Actava, its
subsidiaries and their respective predecessors, if any, have not conducted
business at any time during the period beginning five years prior to the date
hereof under any corporate or partnership, trade or fictitious names other than
their current corporate or partnership names, except in the case of clauses (i),
(ii) and (iii) above, any of the foregoing which do not and will not have an
Actava Material Adverse Effect.
3.20 Real Estate.
-----------
(a) Schedule 3.20(a) sets forth a true, correct and complete
schedule of all real property owned by Actava or any of its subsidiaries.
Actava or one of its subsidiaries is the owner of fee title to the real property
described on Schedule 3.20(a) and to all of the buildings, structures and other
improvements located thereon free and clear of any mortgage, deed of trust,
lien, pledge, security interest, claim, lease, charge, option, right of first
refusal, easement, restrictive covenant, encroachment or other survey defect,
encumbrance or other restriction or limitation except for the matters listed on
Schedule 3.20(a) and any exceptions or restrictions which, individually or in
the aggregate, do not and will not have an Actava Material Adverse Effect.
30
(b) Schedule 3.20(b) sets forth a true, correct and complete
schedule of all material leases, subleases, licenses or other agreements under
which Actava or any of its subsidiaries uses or occupies, or has the right to
use or occupy, now or in the future, any real property or improvements thereon
(the "Actava Real Property Leases"). Except for the matters listed on Sche-
dule 3.20(b), to Actava's knowledge, Actava holds the leasehold estate under and
interest in each Actava Real Property Lease free and clear of all material
liens, encumbrances and other rights of occupancy. Except as set forth on
Schedule 3.20(b), all Actava Real Property Leases are valid and binding on the
lessors thereunder in accordance with their respective terms and to Actava's
knowledge, there is not under any such Actava Real Property Leases any existing
default, or any condition, event or act which with notice or lapse of time or
both would constitute such a default, which in either case, considered
individually or in the aggregate with all such other Actava Real Property Leases
under which there is such a default, condition, event or act, has or will have
an Actava Material Adverse Effect.
3.21 Records. The respective minute books of Actava and each of its
-------
subsidiaries made available to each of Orion, Sterling and MITI contain
materially accurate and complete records of all material corporate actions of
the respective stockholders and directors (and committees thereof).
3.22 Title to and Condition of Personal Property. Except as set forth
-------------------------------------------
on Schedule 3.22, Actava and each of its subsidiaries have good and marketable
title to the material personal property reflected in its or their financial
statements or currently used in the operation of their businesses (other than
leased property), and such property is free and clear of all liens, claims,
charges, security interests, options, or other title defects or encumbrances,
except for those which would not have an Actava Material Adverse Effect. All
such personal property is in good operating condition and repair, ordinary wear
and tear excepted, is suitable for the use to which the same is customarily put,
is free from defects and is merchantable and is of a quality and quantity
presently usable in the ordinary course of the operation of the business of
Actava and its subsidiaries, other than such matters as would not have an Actava
Material Adverse Effect.
3.23 No Adverse Actions. There is no existing, pending or, to
------------------
Actava's knowledge, threatened termination, cancellation, modification or change
in the business
31
relationship of Actava or any of its subsidiaries, with any supplier, customer
or other person or entity except those which do not and will not have an Actava
Material Adverse Effect. To Actava's knowledge, none of Actava, any subsidiary
of Actava or any stockholder, director, officer, agent, employee or other person
associated with or acting on behalf of any of the foregoing has used any
corporate funds for unlawful contributions, payments, gifts, entertainment or
other unlawful expenses relating to political activity, or made any direct or
indirect unlawful payments to governmental or regulatory officials.
3.24 Labor Matters.
-------------
(a) Except as set forth on Schedule 3.24(a), neither Actava nor
any of its subsidiaries has any material obligations, contingent or otherwise,
under any employment or consulting agreement (except if and as set forth in the
schedules hereto), collective bargaining agreement or other contract with a
labor union or other labor or employee group. There are no efforts presently
being made or, to Actava's knowledge, threatened by or on behalf of any labor
union with respect to employees of Actava or any subsidiary of Actava. No
unfair labor practice complaint against Actava or any subsidiary of Actava is
pending or, to Actava's knowledge, threatened before the National Labor
Relations Board; there is no labor strike, dispute, slowdown or stoppage pending
or, to Actava's knowledge, threatened against or involving Actava or any
subsidiary of Actava; no collective bargaining representation question exists
respecting the employees of Actava or any subsidiary of Actava; no grievance or
internal or informal complaint exists under any collective bargaining agreement,
no arbitration proceeding arising out of or under any collective bargaining
agreement is pending and no claim therefor has been asserted; no collective
bargaining agreement is currently being negotiated by Actava or any subsidiary
of Actava; and neither Actava nor any subsidiary of Actava has experienced any
labor difficulty, except as to each of the foregoing, any matter which would not
have an Actava Material Adverse Effect.
(b) Except as set forth on Schedule 3.24(b), in the last three
years, neither Actava nor any of its subsidiaries has effectuated, nor will
Actava or any of its subsidiaries at any time before the Effective Time,
effectuate (i) a "plant closing" (as defined in the Worker Adjustment and
Retraining Notification Act (and applicable similar state law (the "WARN Act"))
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of Actava or its
32
subsidiaries; or (ii) a "mass layoff" (as defined in the WARN Act) affecting any
site of employment or facility of Actava or its subsidiaries; nor has Actava or
its subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law.
(c) Except as set forth on Schedule 3.24(c), Actava and all of
its subsidiaries are in compliance with all federal and state laws respecting
immigration, employment and employment practices, fair labor practices, family
and medical leave, terms and conditions of employment (including
nondiscrimination in race, age, sex, religion, disability, etc.), and wages and
hours except to the extent failure to comply would not have an Actava Material
Adverse Effect.
3.25 Investment Company Act. Actava and each of its subsidiaries
----------------------
either (a) 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 (b) satisfies all conditions for an exemption from the
Investment Company Act, and, accordingly, neither Actava nor any of its
subsidiaries is required to be registered under the Investment Company Act.
3.26 Insurance. Except as set forth on Schedule 3.26, neither Actava
---------
nor any subsidiary of Actava has received notice of default under, or intended
cancellation or nonrenewal of, any material policies of insurance which insure
the properties, business or liability of Actava or any subsidiary of Actava,
except any of the foregoing which do not and will not have an Actava Material
Adverse Effect.
3.27 Products.
--------
(a) Except (i) as set forth on Schedule 3.27(a) and (ii) as does
not and will not have an Actava Material Adverse Effect, there are no product
liability claims against or involving Actava or any of its subsidiaries or any
product manufactured, marketed or distributed at any time by Actava or any of
its subsidiaries ("Actava Products") and no such claims have been settled,
adjudicated or otherwise disposed of since December 31, 1994.
(b) Except (i) as set forth on Schedule 3.27(b) and (ii) as does
not and will not have an Actava Material Adverse Effect, there are no
statements, citations or decisions by any Governmental Body specifically stating
that any Actava Product is defective or unsafe or fails to
33
meet any standards promulgated by any such Governmental Body. Except (i) as set
forth on Schedule 3.27(b) and (ii) as does not and will not have an Actava
Material Adverse Effect, there have been no recalls ordered by any such
Governmental Body with respect to any Actava Product. Except (i) as set forth
on Schedule 3.27(b) and (ii) as does not and will not have an Actava Material
Adverse Effect, to Actava's knowledge, there is no (A) fact relating to any
Actava Product that may impose upon Actava or any of its subsidiaries a duty to
recall any Actava Product or a duty to warn customers of a defect in any Actava
Product, (B) latent or overt design, manufacturing or other defect in any Actava
Product or (C) material liability for warranty claims or returns with respect to
any Actava Product not fully reflected on Actava's financial statements referred
to in Section 3.9 hereof.
ARTICLE 3A
FURTHER REPRESENTATIONS AND
WARRANTIES OF ACTAVA
Actava represents and warrants to each of Orion, Sterling and MITI
that from and after April 12, 1995 until the date hereof, Actava has performed
and complied with in all material respects its obligations, agreements and
covenants under the Agreement and Plan of Merger dated as of April 12, 1995
among Actava, Orion, Sterling and MITI (the "Initial Merger Agreement") which
were required to be performed or complied with by it at or prior to the date
hereof.
ARTICLE 3B
REPRESENTATIONS AND WARRANTIES
OF ACTAVA, OPC MERGERCO AND MITI MERGERCO
Actava, OPC Mergerco and MITI Mergerco, jointly and severally,
represent and warrant to each of Orion, Sterling and MITI as follows:
3B.1 Organization and Good Standing. Each of OPC Mergerco and MITI
------------------------------
Mergerco is a corporation duly organized, validly existing and in good standing
under the laws of Delaware and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted. Each of OPC Mergerco and MITI Mergerco is duly qualified or
licensed and in good
34
standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary. Actava has heretofore
delivered or made available to each of Orion, Sterling and MITI accurate and
complete copies of the Certificates of Incorporation and By-laws, or equivalent
governing instruments, as currently in effect, of each of OPC Mergerco and MITI
Xxxxxxxx.
0X.0 Xxxxxxxxxxxxxx. The authorized capital stock of OPC Mergerco
--------------
consists solely of 1,000 shares of Common Stock, par value $.01 per share (the
"OPC Mergerco Common Stock"), all of which as of the date hereof are issued and
outstanding and owned by Actava free and clear of all liens, pledges, mortgages,
security interests and encumbrances or other restrictions or limitations with
respect thereto. The authorized capital stock of MITI Mergerco consists solely
of 1,000 shares of Common Stock, par value $.01 per share (the "MITI Mergerco
Common Stock"), all of which as of the date hereof are issued and outstanding
and owned by Actava free and clear of all liens, pledges, mortgages, security
interests and encumbrances or other restrictions or limitations with respect
thereto. All issued and outstanding shares of capital stock of each of OPC
Mergerco and MITI Mergerco are owned by Actava and are validly issued, fully
paid and non-assessable and were issued free of preemptive rights and in
compliance with applicable federal and state securities laws and regulations.
There are not any outstanding rights, subscriptions, warrants, calls,
unsatisfied preemptive rights, options or other agreements of any kind to
purchase or otherwise receive from either OPC Mergerco or MITI Mergerco any of
the outstanding, authorized but unissued, unauthorized or treasury shares of the
capital stock or any other security of either OPC Mergerco or MITI Mergerco, and
there is no authorized or outstanding security of any kind convertible into or
exchangeable for any such capital stock.
3B.3 Subsidiaries. Neither OPC Mergerco nor MITI Mergerco owns any
------------
direct or indirect equity interest in any corporation, partnership, joint
venture or other entity, domestic or foreign.
3B.4 Authorization; Binding Agreement. Each of OPC Mergerco and MITI
--------------------------------
Mergerco has requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, subject to the
approval and adoption of this Agreement by the stockholders of Actava in
accordance with the DGCL and the Certificate of Incorporation and By-laws of
Actava. The
35
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including but not limited to the Mergers, have
been duly and validly authorized by each of OPC Mergerco's Board of Directors
and MITI Mergerco's Board of Directors and by Actava (through its Board of
Directors), as sole stockholder of each of OPC Mergerco and MITI Mergerco, and
no other corporate proceedings on the part of Actava, OPC Mergerco or MITI
Mergerco or any subsidiary of any of them are necessary to authorize the
execution and delivery of this Agreement by OPC Mergerco and MITI Mergerco or to
consummate the transactions so contemplated (other than the approval and
adoption of this Agreement by the stockholders of Actava in accordance with the
DGCL and the Certificate of Incorporation and By-laws of Actava). This
Agreement has been duly and validly executed and delivered by each of OPC
Mergerco and MITI Mergerco, and, subject to the approval and adoption of this
Agreement by the stockholders of Actava in accordance with the DGCL and the
Certificate of Incorporation and By-laws of Actava, constitutes the legal, valid
and binding agreement of each of OPC Mergerco and MITI Mergerco, enforceable
against each of OPC Mergerco and MITI Mergerco, in accordance with its terms,
except to the extent that enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by principles of equity regarding
the availability of remedies.
3B.5 Governmental Approvals. No consent, approval or authorization
----------------------
of or declaration or filing with any governmental agency or regulatory authority
on the part of either of OPC Mergerco and MITI Mergerco is required in
connection with the execution or delivery by either OPC Mergerco or MITI
Mergerco of this Agreement or the consummation by either OPC Mergerco or MITI
Mergerco of the transactions contemplated hereby other than (i) the filing of
this Agreement (or the Orion Certificate of Merger or MITI Certificate of
Merger, as appropriate, in lieu thereof) with the Secretary of State of Delaware
in accordance with the DGCL, (ii) filings with the SEC and any applicable
national securities exchange, (iii) filings under state securities or "Blue Sky"
laws and (iv) federal, state and local regulatory approvals and consents.
3B.6 No Violations. The execution and delivery by each of OPC
-------------
Mergerco and MITI Mergerco of this Agreement, the consummation of the
transactions contemplated hereby and compliance by each of OPC Mergerco and MITI
Mergerco with any of the provisions hereof will not (i) conflict with or result
in any breach of any provision of the Certificate of
36
Incorporation or By-laws or other governing instruments of either of OPC
Mergerco or MITI Mergerco, (ii) require any consent, approval or notice under or
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or augment the performance required) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, agreement or other instrument or obligation to which either of
OPC Mergerco or MITI Mergerco is a party or by which any of them or any of their
properties or assets may be bound, (iii) result in the creation or imposition of
any lien, charge or other encumbrance of any kind upon any of the assets of
either of OPC Mergerco or MITI Mergerco or (iv) subject to obtaining the
governmental and other consents referred to in Section 3B.5, contravene any
material law, rule or regulation of any state or of the United States or any
political subdivision thereof or therein, or any material order, writ,
injunction, determination or award currently in effect to which either of OPC
Mergerco or MITI Mergerco or any of their respective assets or properties are
subject.
3B.7 Conduct of Business. Except for activities related to the
-------------------
approval of this Agreement and the transactions contemplated hereby, neither OPC
Mergerco nor MITI Mergerco has conducted any business of any kind whatsoever or
owns or leases any real or personal property whatsoever.
3B.8 Liabilities. Neither OPC Mergerco nor MITI Mergerco has any
-----------
direct or indirect Liabilities, whether or not of a kind required by generally
accepted accounting principles to be set forth in a financial statement.
Neither OPC Mergerco nor MITI Mergerco has (i) obligations in respect of
borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) obligations which would be required by generally
accepted accounting principles to be classified as "capital leases",
(iv) obligations to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of business and
payable not more than twelve (12) months from the date of incurrence, and
(v) any guaranties of any obligations of any other person.
3B.9 Records. The respective minute books of each of OPC Mergerco
-------
and MITI Mergerco contain accurate and complete records of all corporate actions
of the respective stockholders and directors (and committees thereof) of OPC
Mergerco and MITI Mergerco.
37
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF ORION
Orion represents and warrants as of April 12, 1995 to each of Actava,
Sterling and MITI as follows (all references in this Article 4 to "as of the
date of this Agreement" or to "as of the date hereof" shall be deemed to refer
to April 12, 1995):
4.1 Organization and Good Standing. Orion and each of its material
------------------------------
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Orion and each of its
material subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the character of the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not have an Orion Material
Adverse Effect (as defined in Section 15.9). Orion has heretofore delivered or
made available to each of Actava, Sterling and MITI accurate and complete copies
of the Certificates of Incorporation and By-laws, or equivalent governing
instruments, as currently in effect, of Orion and each of its subsidiaries.
4.2 Capitalization. The authorized capital stock of Orion consists
--------------
of 100,000,000 shares of Orion Common Stock and 10,000,000 shares of Preferred
Stock, par value $1.00 per share ("Orion Preferred Stock"). As of March 31,
1995, 20,000,000 shares of Orion Common Stock and no shares of Orion Preferred
Stock were issued and outstanding. No other capital stock of Orion is
authorized or issued. All issued and outstanding shares of capital stock of
Orion are validly issued, fully paid and non-assessable and were issued free of
preemptive rights and in compliance with applicable federal and state securities
laws and regulations. Except as set forth on Schedule 4.2(a), at the date
hereof there are not any outstanding rights, subscriptions, warrants, calls,
unsatisfied preemptive rights, options or other agreements of any kind to
purchase or otherwise receive from Orion any of the outstanding, authorized but
unissued, unauthorized or treasury shares of the capital stock or any other
security of Orion, and there is no authorized or outstanding security of any
kind
38
convertible into or exchangeable for any such capital stock. Since March 31,
1995, Orion has not (i) issued any shares of capital stock or (ii) repurchased
any shares of Orion Common Stock.
4.3 Subsidiaries. Exhibit 21 to Orion's filing on Form 10-K for the
------------
year ended February 28, 1994, sets forth the name, jurisdiction of incorporation
or organization and percentages of outstanding capital stock or other equivalent
equity ownership owned, directly or indirectly, by Orion, with respect to each
subsidiary of Orion. Except as set forth on Schedule 4.3, Orion and its
subsidiaries own no material direct or indirect equity interest in any cor-
poration (other than direct or indirect subsidiaries of Orion), partnership,
joint venture or other entity, domestic or foreign. All of the outstanding
shares of capital stock in each of Orion's subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable. To Orion's
knowledge, there are no irrevocable proxies or similar obligations with respect
to such capital stock and no equity securities or other interests of any of the
subsidiaries are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any capital stock of any subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any subsidiary is bound to
issue additional shares of its capital stock, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock or securities
convertible into or exchangeable for such shares. All of such shares so owned
by Orion are owned by it free and clear of any claim, lien, encumbrance,
security interest or agreement with respect thereto.
4.4 Authorization; Binding Agreement. Orion has requisite corporate
--------------------------------
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject to the approval and adoption of this
Agreement by the Board of Directors and stockholders of Orion in accordance with
the DGCL and the Certificate of Incorporation and By-laws of Orion. This
Agreement has been duly and validly executed and delivered by Orion, and,
subject to the approval and adoption of this Agreement by the Board of Directors
and stockholders of Orion in accordance with the DGCL and the Certificate of
Incorporation and By-laws of Orion, constitutes the legal, valid and binding
agreement of Orion, enforceable against Orion in accordance with its terms,
except to the extent that enforceability thereof may be limited by applicable
future bankruptcy, insolvency, reorganization or other similar laws
39
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies.
4.5 Governmental Approvals. No consent, approval or authorization of
----------------------
or declaration or filing with any governmental agency or regulatory authority on
the part of Orion or any of its subsidiaries is required in connection with the
execution or delivery by Orion of this Agreement or the consummation by Orion of
the transactions contemplated hereby other than (i) the filing of this Agreement
(or the Certificate of Merger in lieu thereof) with the Secretary of State of
Delaware in accordance with the DGCL, (ii) filings with the SEC and any
applicable national securities exchange, (iii) filings under state securities or
"Blue Sky" laws, (iv) federal, state and local regulatory approvals and consents
and (v) filings under the HSR Act.
4.6 No Violations. The execution and delivery of this Agreement, the
-------------
consummation of the transactions contemplated hereby and compliance by Orion
with any of the provisions hereof will not (i) conflict with or result in any
breach of any provision of the Articles or Certificates of Incorporation or By-
laws or other governing instruments of Orion or any of its subsidiaries,
(ii) except as set forth on Schedule 4.6 and except for any of the following
which does not and will not have an Orion Material Adverse Effect, require any
consent, approval or notice under or result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration or augment
the performance required) under any of the terms, conditions or provisions of
the Plan (as defined in Section 4.17) or any note, bond, mortgage, indenture,
lease, license, agreement or other instrument or obligation to which Orion or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, (iii) result in the creation or imposition of
any lien, charge or other encumbrance of any kind upon any of the assets of
Orion or any of its subsidiaries other than any such lien, charge or other
encumbrance which does not or will not have an Orion Material Adverse Effect or
(iv) subject to obtaining the governmental and other consents referred to in
Section 4.5, contravene any material law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or any
material order, writ, injunction, determination or award currently in effect to
which Orion or any of its subsidiaries or any of their respective assets or
properties are subject.
40
4.7 Proxy Statement; Form S-4. None of the information relating to
-------------------------
Orion and its subsidiaries included in the Proxy Statement or Form S-4 will be
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except for information supplied or to be supplied by Actava,
Sterling or MITI in writing for inclusion therein, as to which no representation
is made, the Proxy Statement and Form S-4, and any supplements or amendments
thereto, will comply in all material respects with the Exchange Act and the
Securities Act, as the case may be, and in each case the rules and regulations
thereunder.
4.8 SEC Filings. Orion has made available to each of Actava,
-----------
Sterling and MITI true and complete copies of (i) its Annual Reports on Form 10-
K, as amended, for the years ended February 29, 1992, and February 28, 1993 and
1994, as filed with the SEC, (ii) its proxy statements relating to all of
Orion's meetings of stockholders (whether annual or special) since March 1,
1992, as filed with the SEC, and (iii) all other reports, statements and
registration statements (including Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as amended) filed by Orion with the SEC since March 1, 1992
(the reports and statements set forth in clauses (i), (ii) and (iii) are
referred to collectively as the "Orion SEC Filings"). As of their respective
dates, none of the Orion SEC Filings (including all exhibits and schedules
thereto and documents incorporated by reference therein), contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the Orion SEC
Filings at the time of filing complied in all material respects with the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations thereunder. As of the date hereof there are no claims, actions or
proceedings (and to Orion's knowledge no investigations) pending by or against,
or to Orion's knowledge threatened against Orion or any of its subsidiaries, or
any properties or rights of Orion or any of its subsidiaries, before any court
or any administrative, governmental or regulatory authority or body which is
required to be described in any Orion SEC Filing that is not so described which
have or will have an Orion Material Adverse Effect.
4.9 Financial Statements. The consolidated balance sheets of Orion
--------------------
as of February 29, 1992 and
41
February 28, 1993 and 1994 and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then ended,
including the footnotes thereto, certified by Ernst & Young LLP as to 1992 and
KPMG Peat Marwick LLP as to 1993 and 1994, Orion's independent certified public
accountants, as set forth in Orion's Annual Reports on Form 10-K, as amended,
for the years ended February 29, 1992 and February 28, 1993 and 1994 and the
unaudited consolidated balance sheet of Orion for the nine months ended
November 30, 1994, and the related consolidated statements of operations,
stockholders' equity and cash flows, including the footnotes thereto, as set
forth in Orion's Quarterly Report on Form 10-Q for the period ended November 30,
1994, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved and fairly
present the financial position of Orion and its consolidated subsidiaries as of
the dates thereof and the results of their operations for the periods then ended
(subject, in the case of any unaudited interim financial statements, to normal
year-end audit adjustments and to the lack of complete footnotes).
4.10 Absence of Certain Changes or Events. Except as set forth in
------------------------------------
the Orion SEC Filings, since November 30, 1994, there has not been: (i) any
material adverse change in the business, assets, prospects, condition (financial
or other) or the results of operations of Orion and its subsidiaries taken as a
whole other than any such change set forth on Schedule 4.10(i) or caused by
general economic conditions, political or governmental instability or
uncertainty, civil disturbances or unrest, war or other similar acts of force
majeure; (ii) any declaration, payment or setting aside for payment of any
dividend or any redemption, purchase or other acquisition of any shares of
capital stock or securities of Orion; (iii) any return of any capital or other
distribution of assets to stockholders of Orion; (iv) any material investment of
a capital nature by Orion or any of its subsidiaries either by the purchase of
any property or assets or by any acquisition (by merger, consolidation or
acquisition of stock or assets) of any corporation, partnership or other
business organization or division thereof; (v) except as set forth on
Schedule 4.10(v), any sale, disposition, license or other transfer of assets or
properties of Orion and its subsidiaries (A) in excess of $100,000 individually
or $1,000,000 in the aggregate for sales, dispositions or transfers of assets
other than licensing of film and television product and (B) pursuant to a
license for film and television product other than such a license (I) entered
into in the ordinary course of business, (II) with a
42
duration not in excess of seven years and (III) providing for payments not in
excess of $500,000 in the aggregate; (vi) except as set forth on Schedule
4.10(vi), any employment or consulting agreement entered into by Orion and its
subsidiaries with any officer or consultant of Orion and its subsidiaries
providing for annual salary or other annual payments in excess of $100,000 or
any amendment or modification to, or termination of, any current employment or
consulting agreement to which Orion or any of its subsidiaries is a party which
provides for annual salary or other annual payments in excess of $100,000;
(vii) any agreement to take, whether in writing or otherwise, any action which,
if taken prior to the date hereof, would have made any representation or
warranty in this Article 4 untrue, incomplete or incorrect in any material
respect; (viii) any change in accounting methods or practices or any change in
depreciation or amortization policies or rates; or (ix) any failure by Orion or
its subsidiaries to conduct their respective businesses only in the ordinary
course consistent with past practice.
4.11 Compliance with Laws. The business of Orion and its
--------------------
subsidiaries has been operated in compliance with all laws, ordinances,
regulations and orders of all governmental entities, domestic or foreign, except
for any instances of non-compliance which do not and will not have an Orion
Material Adverse Effect.
4.12 Permits. Except as set forth on Schedule 4.12, (i) Orion and
-------
its subsidiaries have all permits, certificates, licenses, approvals and other
authorizations (collectively, "Orion Permits") required in connection with the
operation of their businesses, (ii) neither Orion nor any of its subsidiaries
are in violation of any Orion Permit applicable to any of them or to the
operation of their businesses, and (iii) no proceedings are pending or, to
Orion's knowledge threatened, to revoke or terminate any Orion Permit, except,
in the case of clause (i) or (ii) above, those the absence or violation of which
do not and will not have an Orion Material Adverse Effect.
4.13 Finders and Investment Bankers. Neither Orion nor any of its
------------------------------
officers or directors has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby except a fee payable to Alex. Xxxxx &
Sons Incorporated ("Alex. Xxxxx") pursuant to that certain engagement letter
dated as of March 16, 1995 between Alex. Xxxxx and Orion and a fee payable to
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation.
43
4.14 Contracts. There is no Contract required to be described in or
---------
filed as an exhibit to any Orion SEC Filing that is not described in or filed as
required by the Securities Act or the Exchange Act, as the case may be. All
such Contracts are valid and binding and are in full force and effect and
enforceable in accordance with their respective terms other than such Contracts
which by their terms are no longer in force or effect or were otherwise rejected
by Orion in connection with Orion's filing under and emergence from Chapter 11
of the United States Bankruptcy Code. Except as set forth in Schedule 4.6 or
4.14, (i) no approval or consent of, or notice to, any person is needed in order
to ensure that such Contracts shall continue in full force and effect in
accordance with their respective terms without penalty, acceleration or rights
of early termination following the consummation of the transactions contemplated
by this Agreement, and (ii) Orion or its subsidiaries is not in violation or
breach of or default under any such Contract; nor to Orion's knowledge is any
other party to any such Contract in violation or breach of or default under any
such Contract, except in the case of clauses (i) and (ii) above, any of the
foregoing which do not and will not have an Orion Material Adverse Effect.
4.15 Employee Benefit Plans.
----------------------
(i) Except as set forth on Schedule 4.15(i), there are no
employee benefit plans or arrangements of any type, including (i) plans
described in section 3(3) of ERISA and any other material plans, programs,
practices or policies, including, but not limited to, any pension, profit
sharing, retirement, thrift, stock purchase or stock option plan, or any other
compensation, welfare, fringe benefit or retirement plan, program, policy,
understanding or arrangement of any kind whatsoever, whether formal or informal,
providing for benefits for or the welfare of any or all of the current or former
employees or agents of Orion and their beneficiaries or dependents, or
(ii) multiemployer plans as defined in section 3(37) of ERISA, or (iii) multiple
employer plans as defined in Section 413 of the Code, under which Orion has or
in the future could have, directly or indirectly through a "Commonly Controlled
Entity" (within the meaning of sections 414(b), (c), (m) and (o) of the Code),
any liability with respect to any current or former employee of Orion or any
Commonly Controlled Entity (collectively, "Orion Benefit Plans").
(ii) With respect to each Orion Benefit Plan (where applicable),
Orion has delivered to each of Actava, Sterling and MITI complete and accurate
copies or summaries
44
of (a) all plan texts and material agreements, (b) all material employee
communications, (c) the most recent annual report, (d) the most recent annual
and periodic accounting of plan assets, (e) the most recent determination letter
received from the Internal Revenue Service and (f) the most recent actuarial
valuation.
(iii) With respect to each Orion Benefit Plan, except as set forth
on Schedule 4.15(iii), (a) if intended to qualify under Code sections 401(a) or
403(a), (i) such Orion Benefit Plan has received a favorable determination
letter from the Internal Revenue Service (the "Service") indicating that such
Plan meets such requirements, and such determination by the Service includes any
new or modified requirements under the Tax Reform Act of 1986 and subsequent
legislation enacted thereafter through and including the Omnibus Budget
Reconciliation Act of 1993, or (ii) an application for a favorable determination
letter including such legislation was filed with the Service prior to the
expiration of the remedial amendment period (as defined in Code section 401(b)
and regulations thereunder, and as extended pursuant to notices and revenue
rulings of the Service) for filing such an application and such Plan has been
substantially amended to comply with the Tax Reform Act of 1986 and subsequent
legislation enacted through and including the Omnibus Budget Reconciliation Act
of 1993, or (iii) the remedial amendment period (as defined in (ii) above) with
respect to such Plan has not yet expired, and an application for a favorable
determination letter including such legislation will be timely filed with the
Service prior to the expiration of such period and the Plan will be amended to
comply with the Tax Reform Act of 1986 and subsequent legislation enacted
thereafter through and including the Omnibus Budget Reconciliation Act of 1993
prior to the expiration of such period, (b) if intended to qualify under Code
sections 401(a) or 403(a) and if originally effective prior to January 1, 1986,
such Orion Benefit Plan has previously received a favorable determination letter
from the Service indicating that such Plan meets the requirements of Code
sections 401(a) or 403(a) as in effect on the date of the letter, including
without limitation, TEFRA, DEFRA, and REACT, (c) such Orion Benefit Plan has
been administered in material compliance with its terms and applicable law,
(d) no event has occurred and there exists no circumstance under which Orion
could, directly or indirectly through a Commonly Controlled Entity, incur
material liability under ERISA, the Code or otherwise (other than routine claims
for benefits), (e) there are no actions, suits or claims pending (other than
routine claims for benefits) or, to Orion's knowledge, threatened, with respect
to any Orion Benefit Plan or against the assets of
45
any Orion Benefit Plan, (f) no "accumulated funding deficiency" (as defined in
ERISA section 302) has occurred, (g) no "prohibited transaction" (as defined in
ERISA section 406 or in Code section 4975) has occurred, (h) no "reportable
event" (as defined in ERISA section 4043) has occurred, (i) all contributions
and PBGC premiums or premiums due under an insurance contract that insures
benefits payable under an Orion Benefit Plan, as applicable, have been made on a
timely basis and (j) all contributions made or required to be made under any
Orion Benefit Plan which have been treated as deductible for purposes of one or
more federal income tax returns of Orion meet the requirements for deductibility
under the Code and all contributions that have not been made have been properly
recorded on the books of Orion or a Commonly Controlled Entity in accordance
with generally accepted accounting principles.
(iv) With respect to each Orion Benefit Plan that is subject to
Title IV of ERISA, except as set forth on Schedule 4.15(iv), (a) as of the date
hereof and at the Effective Time, the market value of assets (exclusive of any
contribution due to such Orion Benefit Plan) equals or exceeds the present value
of benefit liabilities as of the latest actuarial valuation date shown for such
plan (but not prior to 12 months prior to the date hereof), determined on the
basis of a shutdown of Orion and termination of such Orion Benefit Plan in
accordance with actuarial assumptions used by the Pension Benefit Guaranty
Corporation in single-employer plan terminations and since its last valuation
date, there have been no amendments to such Orion Benefit Plan that materially
increased the present value of benefit liabilities (determined as provided
above) nor any other material adverse changes in the funding status of such
Orion Benefit Plan, and (b) Orion has not incurred, directly or indirectly
through a Commonly Controlled Entity, any liability arising from a plan
termination or plan withdrawal from a multiemployer plan.
(v) With respect to each Orion Benefit Plan that is a "welfare
plan" (as defined in ERISA section 3(1)), except as set forth on
Schedule 4.15(v), (a) no such plan provides medical or death benefits (whether
or not insured) with respect to current or former employees beyond their
termination of employment or the end of the month of their termination of
employment (other than coverage mandated by law), (b) there are no reserves,
assets, surplus or prepaid premiums under any such plan and (c) Orion and any
Commonly Controlled Entity have materially complied with the requirements of
Code section 4980B.
46
(vi) With respect to each Orion Benefit Plan that is a
multiemployer plan, (a) Schedule 4.15(vi) indicates the number of employees with
respect to whom Orion or any Commonly Controlled Entity makes contributions to
each such plan and the most recent information available to Orion or any
Commonly Controlled Entity with respect to the withdrawal liability of Orion or
such Commonly Controlled Entity under each such plan, (b) each such plan is not,
as of the date hereof, insolvent or in reorganization, nor does it have an
accumulated funding deficiency, and Orion does not know of any reason why such
plan would become insolvent or in reorganization or have an accumulated funding
deficiency in the foreseeable future, (c) Orion or any Commonly Controlled
Entity has made all contributions to each such plan due or accrued as of the
date hereof and will have made all such contributions as of the Effective Time
and (d) the withdrawal liability with respect to each such Plan if any Commonly
Controlled Entity were to withdraw from the plan at the Effective Time is less
than or equal to $0.
(vii) Except as set forth on Schedule 4.15(vii), the consummation
of the transactions contemplated by this Agreement will not (a) entitle any
individual to severance pay, or (b) accelerate the time of payment, vesting of
benefits (including stock options and restricted stock) or increase the amount
of compensation due to any individual.
4.16 Taxes.
-----
(a) Except as set forth on Schedule 4.16, (i) Orion and each of
its subsidiaries timely has 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 Orion 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 SEC Filings
reflect an adequate reserve for all Taxes payable by Orion and its subsidiaries
accrued through the date of such financial statements and (ii) no deficiencies
for any Taxes have been proposed, asserted or assessed against Orion or any of
its subsidiaries other than those which are being contested in good faith and by
proper proceedings by Orion, except in the case of clauses (i) and (ii) above,
any of the foregoing which do not and will not have an Orion Material Adverse
Effect.
47
(b) The Federal income tax returns of Orion and each of its
subsidiaries 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 1991.
(c) Except as set forth on Schedule 4.16, none of Orion, any
subsidiary of Orion or, to Orion's knowledge, any group of which Orion or any
subsidiary of Orion 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.
(d) Except as set forth on Schedule 4.16, (i) none of Orion, any
subsidiary of Orion or, to Orion's knowledge, any group of which Orion or any
subsidiary of Orion is now or ever was a member, is a party to any action or
proceeding pending or, to Orion'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 Orion's knowledge been asserted, (iii)
no audit or investigation of Orion or any subsidiary of Orion by any
governmental authority is pending or, to Orion'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 an Orion Material Adverse Effect.
4.17 Liabilities. Except (i) as expressly disclosed in the Orion SEC
-----------
Filings or (ii) as set forth on Schedule 4.17, and in the case of (i) and (ii)
above, as does not and will not have an Orion Material Adverse Effect, Orion and
its subsidiaries do not have any direct or indirect Liabilities, whether or not
of a kind required by generally accepted accounting principles to be set forth
in a financial statement, other than Liabilities incurred since November 30,
1994 in the ordinary course of business. Except as set forth on Schedule 4.17
or reflected in the Orion SEC Filings, Orion and its subsidiaries do not have
(i) material obligations in respect of borrowed money, (ii) material obligations
evidenced by bonds, debentures, notes or other similar instruments,
(iii) material obligations which would be required by generally accepted
accounting principles to be classified as "capital leases", (iv) material
obligations to pay the deferred purchase price of property or services, except
trade accounts payable arising in the ordinary course of business and payable
not more than twelve (12) months from the date of incurrence, and (v) any
guaranties of any material obligations of any
48
other person. Schedule 4.17 sets forth a list, dated as of the date hereof, of
all unresolved "Claims" in excess of $100,000 as defined in and arising out of
Orion's Modified Third Amended Joint Consolidated Plan of Reorganization dated
October 20, 1992, as amended (the "Plan") specifying in reasonable detail the
name of such claimant and the amount and classification of each such Claim.
4.18 Environmental Protection. Except as disclosed on Schedule 4.18:
------------------------
(i) Neither Orion nor any of its subsidiaries is or has been in
violation in any material respect of any applicable Safety and Environmental
Law.
(ii) Orion and its subsidiaries have all Permits required
pursuant to Safety and Environmental Laws that are material to the conduct of
the business of Orion or any of its subsidiaries, 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 Orion and each of its subsidiaries is in compliance in
all material respects with all terms and conditions thereof.
(iii) Neither Orion nor any of its subsidiaries has received, or
expects to receive due to the consummation of the Orion Merger, any material
Environmental Claim.
(iv) To Orion's knowledge, Orion and its subsidiaries have filed
all notices required under Safety and Environmental Laws indicating the past or
present Release, generation, treatment, storage or disposal of Hazardous
Substances.
(v) Neither Orion nor any of its subsidiaries have entered into
any written agreement with any Governmental Body or any other person by which
Orion or any of its subsidiaries has assumed responsibility, either directly or
as a guarantor or surety, for the remediation of any condition arising from or
relating to a Release or threatened Release of Hazardous Substances into the
Environment.
(vi) To Orion'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 Orion or any of its subsidiaries may be directly
or indirectly responsible.
49
(vii) To Orion'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 Orion or any of its subsidiaries, and, to Orion's knowledge, was not
at, on or in any real property previously owned, leased or operated by Orion or
any of its subsidiaries or any predecessor: (A) any generation, use, handling,
Release, treatment, recycling, storage or disposal of any Hazardous Substances,
(B) 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, (C) any landfill or solid waste
disposal area, (D) any asbestos-containing material in a condition requiring
abatement, (E) any polychlorinated biphenyls (PCBs) used in hydraulic oils,
electrical transformers or other equipment, (F) 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 (G) 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 Orion and
its subsidiaries.
(viii) To Orion's knowledge, there is no basis or reasonably
anticipated basis for any material Environmental Claim or material Environmental
Compliance Costs.
(ix) Neither Orion nor any of its subsidiaries have transported,
stored, treated or disposed, nor have they allowed or arranged for any third
persons to transport, store, treat or dispose, any Hazardous Substance to or at:
(a) any location other than a site lawfully permitted to receive such substances
for such purposes, or (b) any location designated for Remedial Action pursuant
to Safety and Environmental Laws; nor have they performed, arranged for or
allowed by any method or procedure such transportation or disposal in
contravention of any Safety and Environmental Laws or in any other manner which
may result in Environmental Compliance Costs or in an Environmental Claim. All
locations at which Orion or any of its subsidiaries have disposed of any
Hazardous Substance are listed on Schedule 4.18(ix).
4.19 Intellectual Property. Schedule 4.19 sets forth a list of all
---------------------
of Orion's and its subsidiaries' registered patents, registered trademarks,
registered service marks, registered trade names, registered copyrights and
franchises, all applications for any of the foregoing
50
and all permits, grants and licenses or other rights running to Orion and any of
its subsidiaries relating to any of the foregoing that are material to the
business of Orion and its subsidiaries taken as a whole. Except as set forth on
Schedule 4.19, to Orion's knowledge (i) Orion or one of its subsidiaries own, or
are licensed to, or otherwise have, the right to use all registered patents,
registered trademarks, registered service marks, registered trade names,
registered copyrights and franchises set forth on Schedule 4.19, and
(ii) Orion's rights in the property set forth on such list are free and clear of
any liens or other encumbrances and Orion and its subsidiaries have not received
written notice of any adversely-held patent, invention, trademark, service xxxx
or trade name of any other person, or notice of any charge or claim of any
person relating to such intellectual property or any process or confidential
information of Orion and its subsidiaries and to Orion's knowledge there is no
basis for any such charge or claim, and (iii) Orion, its subsidiaries and their
respective predecessors, if any, have not conducted business at any time during
the period beginning five years prior to the date hereof under any corporate or
partnership, trade or fictitious names other than their current corporate or
partnership names, except in the case of clauses (i), (ii) and (iii) above, any
of the foregoing which do not and will not have an Orion Material Adverse
Effect.
4.20 Real Estate.
-----------
(a) Schedule 4.20(a) sets forth a true, correct and complete
schedule of all real property owned by Orion or any of its subsidiaries. Orion
or one of its subsidiaries is the owner of fee title to the real property
described on Schedule 4.20(a) and to all of the buildings, structures and other
improvements located thereon free and clear of any mortgage, deed of trust,
lien, pledge, security interest, claim, lease, charge, option, right of first
refusal, easement, restrictive covenant, encroachment or other survey defect,
encumbrance or other restriction or limitation except for the matters listed on
Schedule 4.20(a) and any exceptions or restrictions which, individually or in
the aggregate, do not and will not have an Orion Material Adverse Effect.
(b) Schedule 4.20(b) sets forth a true, correct and complete
schedule of all material leases, subleases, licenses or other agreements under
which Orion or any of its subsidiaries uses or occupies, or has the right to use
or occupy, now or in the future, any real property or improvements thereon (the
"Orion Real Property Leases"). Except for the matters listed on
Schedule 4.20(b), to
51
Orion's knowledge, Orion holds the leasehold estate under and interest in each
Orion Real Property Lease free and clear of all material liens, encumbrances and
other rights of occupancy. Except as set forth on Schedule 4.20(b), all Orion
Real Property Leases are valid and binding on the lessors thereunder in
accordance with their respective terms and to Orion's knowledge, there is not
under any such Orion Real Property Leases any existing default, or any
condition, event or act which with notice or lapse of time or both would
constitute such a default, which in either case, considered individually or in
the aggregate with all such other Orion Real Property Leases under which there
is such a default, condition, event or act, has or will have an Orion Material
Adverse Effect.
4.21 Records. The respective minute books of Orion and each of its
-------
subsidiaries made available to each of Actava, Sterling and MITI contain
materially accurate and complete records of all material corporate actions of
the respective stockholders and directors (and committees thereof).
4.22 Title to and Condition of Personal Property. Except as set forth
-------------------------------------------
on Schedule 4.22, Orion and each of its subsidiaries have good and marketable
title to the material personal property reflected in its or their financial
statements or currently used in the operation of their businesses (other than
leased property), and such property is free and clear of all liens, claims,
charges, security interests, options, or other title defects or encumbrances,
except for those which would not have an Orion Material Adverse Effect. All
such personal property is in good operating condition and repair, ordinary wear
and tear excepted, is suitable for the use to which the same is customarily put,
is free from defects and is merchantable and is of a quality and quantity
presently usable in the ordinary course of the operation of the businesses of
Orion and its subsidiaries, other than such matters as would not have an Orion
Material Adverse Effect.
4.23 No Adverse Actions. There is no existing, pending or, to
------------------
Orion's knowledge, threatened termination, cancellation, modification or change
in the business relationship of Orion or any of its subsidiaries, with any
supplier, customer or other person or entity except those which do not and will
not have an Orion Material Adverse Effect. To Orion's knowledge, none of Orion,
any subsidiary of Orion or any stockholder, director, officer, agent, employee
or other person associated with or acting on behalf of any of the foregoing has
used any corporate funds for unlawful contributions, payments, gifts,
entertainment or
52
other unlawful expenses relating to political activity, or made any direct or
indirect unlawful payments to governmental or regulatory officials.
4.24 Labor Matters.
-------------
(a) Except as set forth on Schedule 4.24(a), neither Orion nor
any of its subsidiaries has any material obligations, contingent or otherwise,
under any employment or consulting agreement (except if and as set forth in the
schedules hereto), collective bargaining agreement or other contract with a
labor union or other labor or employee group. There are no efforts presently
being made or, to Orion's knowledge, threatened by or on behalf of any labor
union with respect to employees of Orion or any subsidiary of Orion. No unfair
labor practice complaint against Orion or any subsidiary of Orion is pending or,
to Orion's knowledge, threatened before the National Labor Relations Board;
there is no labor strike, dispute, slowdown or stoppage pending or, to Orion's
knowledge, threatened against or involving Orion or any subsidiary of Orion; no
collective bargaining representation question exists respecting the employees of
Orion or any subsidiary of Orion; no grievance or internal or informal complaint
exists under any collective bargaining agreement, no arbitration proceeding
arising out of or under any collective bargaining agreement is pending and no
claim therefor has been asserted; no collective bargaining agreement is
currently being negotiated by Orion or any subsidiary of Orion; and neither
Orion nor any subsidiary of Orion has experienced any labor difficulty, except
as to each of the foregoing, any matter which would not have an Orion Material
Adverse Effect.
(b) Except as set forth on Schedule 4.24(b), in the last three
years, neither Orion nor any of its subsidiaries has effectuated, nor will Orion
or any of its subsidiaries at any time before the Effective Time, effectuate
(i) a "plant closing" (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of Orion or its subsidiaries; or (ii) a "mass layoff" (as
defined in the WARN Act) affecting any site of employment or facility of Orion
or its subsidiaries; nor has Orion or its subsidiaries been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law.
(c) Except as set forth on Schedule 4.24(c), Orion and all of
its subsidiaries are in compliance with all
53
federal and state laws respecting immigration, employment and employment
practices, fair labor practices, family and medical leave, terms and conditions
of employment (including nondiscrimination in race, age, sex, religion,
disability, etc.) and wages and hours except to the extent failure to comply
would not have an Orion Material Adverse Effect.
4.25 Investment Company Act. Orion and each of its subsidiaries
----------------------
either (a) 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 (b) satisfies all conditions for an
exemption from the Investment Company Act, and, accordingly, neither Orion nor
any of its subsidiaries is required to be registered under the Investment
Company Act.
4.26 Insurance. Except as set forth on Schedule 4.26, neither Orion
---------
nor any subsidiary of Orion has received notice of default under, or intended
cancellation or nonrenewal of, any material policies of insurance which insure
the properties, business or liability of Orion or any subsidiary of Orion,
except any of the foregoing which do not and will not have an Orion Material
Adverse Effect.
4.27 Products. (a) Except (i) as set forth on Schedule 4.27(a) and
--------
(ii) as does not and will not have an Orion Material Adverse Effect, there are
no product liability claims against or involving Orion or any of its
subsidiaries or any product manufactured, marketed or distributed at any time by
Orion or any of its subsidiaries ("Orion Products") and no such claims have been
settled, adjudicated or otherwise disposed of since November 30, 1994.
(b) Except (i) as set forth on Schedule 4.27(b) and (ii) as does
not and will not have an Orion Material Adverse Effect, there are no statements,
citations or decisions by any Governmental Body specifically stating that any
Orion Product is defective or unsafe or fails to meet any standards promulgated
by any such Governmental Body. Except (i) as set forth on Schedule 4.27(b) and
(ii) as does not and will not have an Orion Material Adverse Effect, there have
been no recalls ordered by any such Governmental Body with respect to any Orion
Product. Except (i) as set forth on Schedule 4.27(b) and (ii) as does not and
will not have an Orion Material Adverse Effect, to Orion's knowledge, there is
no (A) fact relating to any Orion Product that may impose upon Orion or any of
its subsidiaries a duty to recall any Orion Product or a duty to warn customers
of a defect in any Orion Product, (B) latent or overt design, manufacturing or
other defect in any Orion
54
Product or (C) material liability for warranty claims or returns with respect to
any Orion Product not fully reflected on Orion's financial statements referred
to in Section 4.9 hereof.
4.28 MetProductions Indebtedness. As of March 31, 1995, the
---------------------------
principal amount outstanding of the MetProductions Indebtedness was $6.28
million.
4.29 No Conflict. Other than the restrictions and covenants set
-----------
forth in the agreements, instruments and indentures referred to in Sections
12.2.9 and 12.2.10, Orion is not a party to any note, bond, mortgage, indenture,
lease, license, agreement or other instrument or obligation which would (i)
restrict Orion's ability to produce or acquire from third parties film product
other than with financing which is non-recourse to Orion or (ii) require Orion
to deposit and distribute its Net Cash Flow (as defined below) in accordance
with the Collateral Trust Agreement (as defined below). The representation and
warranty made in this Section 4.29 shall be deemed an Orion Modified
Representation (as hereinafter defined) subject to the provisions of Section
12.2.2(i) of this Agreement.
ARTICLE 4A
FURTHER REPRESENTATIONS
AND WARRANTIES OF ORION
Orion represents and warrants to each of Actava, Sterling and MITI
that from and after April 12, 1995 until the date hereof, Orion has performed
and complied with in all material respects its obligations, agreements and
covenants under the Initial Merger Agreement which were required to be performed
or complied with by it at or prior to the date hereof.
55
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF STERLING
Sterling represents and warrants as of April 12, 1995 to each of
Actava, Orion and MITI as follows (all references in this Article 5 to "as of
the date of this Agreement" or to "as of the date hereof" shall be deemed to
refer to April 12, 1995):
5.1 Organization and Good Standing. Sterling and each of its
------------------------------
material subsidiaries as disclosed on Exhibit 22.1 to Sterling's filing on Form
10-K for the year ended March 31, 1994, is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Sterling and each of its material subsidiaries is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the character of
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
have a Sterling Material Adverse Effect (as defined in Section 15.9). Sterling
has heretofore delivered or made available to each of Actava, Orion and MITI
accurate and complete copies of the Certificates of Incorporation and By-laws,
or equivalent governing instruments, as currently in effect, of Sterling and
each of its subsidiaries.
5.2 Capitalization. The authorized capital stock of Sterling
--------------
consists of 25,000,000 shares of Sterling Common Stock and 1,000,000 shares of
preferred stock, par value $.01 per share ("Sterling Preferred Stock"). As of
March 31, 1995 11,215,000 shares of Sterling Common Stock were issued and
outstanding and no shares of Sterling Preferred Stock were issued and
outstanding. No other capital stock of Sterling is authorized or issued. All
issued and outstanding shares of capital stock of Sterling are validly issued,
fully paid and non-assessable and were issued free of preemptive rights and in
compliance with applicable federal and state securities laws and regulations.
Except as set forth on Schedule 5.2(a), at the date hereof there are not any
outstanding rights, subscriptions, warrants, calls, unsatisfied preemptive
rights, options or other agreements of any kind to purchase or otherwise receive
from Sterling any of the outstanding, authorized but unissued, unauthorized or
treasury shares of
56
the capital stock or any other security of Sterling, and there is no authorized
or outstanding security of any kind convertible into or exchangeable for any
such capital stock. Except as set forth on Schedule 5.2(b), since March 31,
1995, Sterling has not (i) issued any shares of capital stock, except pursuant
to the exercise of then outstanding options or warrants in accordance with their
terms or (ii) repurchased any shares of Sterling Common Stock.
5.3 Subsidiaries. Exhibit 22.1 to Sterling's filing on Form 10-K for
------------
the year ended March 31, 1994 sets forth the name, jurisdiction of incorporation
or organization and percentages of outstanding capital stock or other equivalent
equity ownership owned, directly or indirectly, by Sterling, with respect to
each material subsidiary of Sterling. Except as set forth on Schedule 5.3,
Sterling and its subsidiaries own no material direct or indirect equity interest
in any corporation (other than direct or indirect subsidiaries of Sterling),
partnership, joint venture or other entity, domestic or foreign. All of the
outstanding shares of capital stock in each of Sterling's subsidiaries have been
duly authorized and validly issued and are fully paid and non-assessable.
Except as set forth on Schedule 5.3, to Sterling's knowledge there are no
irrevocable proxies or similar obligations with respect to such capital stock
and no equity securities or other interests of any of the subsidiaries are or
may become required to be issued by reason of any options, warrants, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any capital
stock of any subsidiary, and there are no contracts, commitments, understandings
or arrangements by which any subsidiary is bound to issue additional shares of
its capital stock, or options, warrants or rights to purchase or acquire any
additional shares of its capital stock or securities convertible into or
exchangeable for such shares. Except as set forth on Schedule 5.3, all of such
shares so owned by Sterling are owned by it free and clear of any claim, lien,
encumbrance, security interest or agreement with respect thereto.
5.4 Authorization; Binding Agreement. Sterling has requisite
--------------------------------
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, subject to the approval and
adoption of this Agreement by the stockholders of Sterling in accordance with
the DGCL and the Certificate of Incorporation and By-laws of Sterling. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including but not limited to the Sterling
57
Merger, have been duly and validly authorized by Sterling's Board of Directors
and no other corporate proceedings on the part of Sterling or any subsidiary of
Sterling are necessary to authorize the execution and delivery of this Agreement
or to consummate the transactions so contemplated (other than the approval and
adoption of this Agreement by the stockholders of Sterling in accordance with
the DGCL and the Certificate of Incorporation and By-laws of Sterling). This
Agreement has been duly and validly executed and delivered by Sterling, and,
subject to the approval and adoption of this Agreement by the stockholders of
Sterling in accordance with the DGCL and the Certificate of Incorporation and
By-laws of Sterling, constitutes the legal, valid and binding agreement of
Sterling, enforceable against Sterling in accordance with its terms, except to
the extent that enforceability thereof may be limited by applicable future
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by principles of equity regarding
the availability of remedies.
5.5 Governmental Approvals. No consent, approval or authorization of
----------------------
or declaration or filing with any governmental agency or regulatory authority on
the part of Sterling or any of its subsidiaries is required in connection with
the execution or delivery by Sterling of this Agreement or the consummation by
Sterling of the transactions contemplated hereby other than (i) the filing of
this Agreement (or the Certificate of Merger in lieu thereof) with the Secretary
of State of Delaware in accordance with the DGCL, (ii) filings with the SEC and
any applicable national securities exchange, (iii) filings under state
securities or "Blue Sky" laws, (iv) federal, state and local regulatory
approvals and consents and (v) filings under the HSR Act.
5.6 No Violations. The execution and delivery of this Agreement, the
-------------
consummation of the transactions contemplated hereby and compliance by Sterling
with any of the provisions hereof will not (i) conflict with or result in any
breach of any provision of the Articles or Certificates of Incorporation or By-
laws or other governing instruments of Sterling or any of its subsidiaries,
(ii) except as set forth on Schedule 5.6 and except for any of the following
which does not and will not have a Sterling Material Adverse Effect, require any
consent, approval or notice under or result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration or augment
the performance required) under any of the terms, conditions or provisions
58
of any note, bond, mortgage, indenture, lease, license, agreement or other
instrument or obligation to which Sterling or any of its subsidiaries is a party
or by which any of them or any of their properties or assets may be bound,
(iii) result in the creation or imposition of any lien, charge or other
encumbrance of any kind upon any of the assets of Sterling or any of its
subsidiaries other than any such lien, charge or other encumbrance which does
not and will not have a Sterling Material Adverse Effect or (iv) subject to
obtaining the governmental and other consents referred to in Section 5.5,
contravene any material law, rule or regulation of any state or of the United
States or any political subdivision thereof or therein, or any material order,
writ, injunction, determination or award currently in effect to which Sterling
or any of its subsidiaries or any of their respective assets or properties are
subject.
5.7 Proxy Statement; Form S-4. None of the information relating to
-------------------------
Sterling and its subsidiaries included in the Proxy Statement or Form S-4 will
be false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except for information supplied or to be supplied by Actava,
Orion and MITI in writing for inclusion therein, as to which no representation
is made, the Proxy Statement, and any supplements or amendments thereto, will
comply in all material respects with the Exchange Act and the rules and
regulations thereunder.
5.8 SEC Filings. Sterling has made available to each of Actava,
-----------
Orion and MITI true and complete copies of (i) its Annual Reports on Form 10-K,
as amended, for the years ended March 31, 1992, 1993 and 1994, as filed with the
SEC, (ii) its proxy statements relating to all of Sterling's meetings of
stockholders (whether annual or special) since April 1, 1992, as filed with the
SEC, and (iii) all other reports, statements and registration statements
(including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
amended) filed by Sterling with the SEC since April 1, 1992 (the reports and
statements set forth in clauses (i), (ii) and (iii) are referred to collectively
as the "Sterling SEC Filings"). As of their respective dates, none of the
Sterling SEC Filings (including all exhibits and schedules thereto and documents
incorporated by reference therein), contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not
59
misleading. Each of the Sterling SEC Filings at the time of filing complied in
all material respects with the Exchange Act or the Securities Act, as the case
may be, and the rules and regulations thereunder. As of the date hereof there
are no claims, actions or proceedings (and to Sterling's knowledge no
investigations) pending by or against or, to Sterling's knowledge, threatened
against Sterling or any of its subsidiaries, or any properties or rights of
Sterling or any of its subsidiaries, before any court or any administrative,
governmental or regulatory authority or body which is required to be described
in any Sterling SEC Filing that is not so described which have or will have a
Sterling Material Adverse Effect.
5.9 Financial Statements. The consolidated balance sheets of
--------------------
Sterling as of March 31, 1993 and 1994 and the related consolidated statements
of operations, stockholders' equity and cash flows for the years then ended,
including the footnotes thereto, audited by Xxxxxx Xxxxxxxx LLP, Sterling's
independent public accountants, as set forth in Sterling's Annual Reports on
Form 10-K, as amended, for the years ended March 31, 1992, 1993 and 1994, and
the unaudited consolidated balance sheet of Sterling for the nine months ended
December 31, 1994 and the related consolidated statements of operations, stock-
holders' equity and cash flows, including the footnotes thereto, as set forth in
Sterling's Quarterly Report on Form 10-Q for the period ended December 31, 1994,
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved and fairly present the
financial position of Sterling and its consolidated subsidiaries as of the dates
thereof and the results of their operations for the periods then ended (subject,
in the case of any unaudited interim financial statements, to normal year-end
audit adjustments and to the lack of complete footnotes).
5.10 Absence of Certain Changes or Events. Except as set forth in
------------------------------------
the Sterling SEC Filings, since December 31, 1994 there has not been: (i) any
material adverse change in the business, assets, prospects, condition (financial
or other) or the results of operations of Sterling and its subsidiaries taken as
a whole other than any such change caused by general economic conditions,
political or governmental instability or uncertainty, civil disturbances or
unrest, war or other similar acts of force majeure; (ii) any declaration,
payment or setting aside for payment of any dividend or any redemption, purchase
or other acquisition of any shares of capital stock or securities of Sterling;
(iii) any return of any capital or other distribution of assets to stockholders
of Sterling;
60
(iv) except as set forth on Schedule 5.10(v), any material investment of a
capital nature by Sterling or any of its subsidiaries either by the purchase of
any property or assets or by any acquisition (by merger, consolidation or
acquisition of stock or assets) of any corporation, partnership or other
business organization or division thereof; (v) except as set forth on Schedule
5.10(v), any sale, disposition, license or other transfer of assets or
properties of Sterling and its subsidiaries (A) in excess of $100,000
individually or $1,000,000 in the aggregate for sales, dispositions or transfers
of assets other than licensing a film and television product and (B) pursuant to
a license of film or television product other than such a license (I) entered
into in the ordinary course of business, (II) with a duration not in excess of 7
years and (III) providing for payments not in excess of $500,000 in the
aggregate; (vi) any employment or consulting agreement entered into by Sterling
and its subsidiaries with any officer or consultant of Sterling and its
subsidiaries providing for annual salary or other annual payments in excess of
$100,000 or any amendment or modification to, or termination of, any current
employment or consulting agreement to which Sterling or any of its subsidiaries
is a party which provides for annual salary or other annual payments in excess
of $100,000; (vii) any agreement to take, whether in writing or otherwise, any
action which, if taken prior to the date hereof, would have made any
representation or warranty in this Article 5 untrue, incomplete or incorrect in
any material respect; (viii) any change in accounting methods or practices or
any change in depreciation or amortization policies or rates; or (ix) any
failure by Sterling or its subsidiaries to conduct their respective businesses
only in the ordinary course consistent with past practice.
5.11 Compliance with Laws. The business of Sterling and its
--------------------
subsidiaries has been operated in compliance with all laws, ordinances,
regulations and orders of all governmental entities, domestic or foreign, except
for any instances of non-compliance which do not and will not have a Sterling
Material Adverse Effect.
5.12 Permits. Except as set forth on Schedule 5.12, (i) Sterling and
-------
its subsidiaries have all permits, certificates, licenses, approvals and other
authorizations (collectively, "Sterling Permits") required in connection with
the operation of their businesses, (ii) neither Sterling nor any of its
subsidiaries are in violation of any Sterling Permit applicable to any of them
or to the operation of their businesses, and (iii) no proceedings are pending
or, to Sterling's knowledge,
61
threatened, to revoke or terminate any Sterling Permit, except, in the case of
clause (i) or (ii) above, those the absence or violation of which do not and
will not have a Sterling Material Adverse Effect.
5.13 Finders and Investment Bankers. Neither Sterling nor any of its
------------------------------
officers or directors has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby, except a fee payable to Houlihan,
Lokey, Xxxxxx & Xxxxx ("Xxxxxxxx Xxxxx") pursuant to that certain engagement
letter dated April 11, 1995 between Xxxxxxxx Xxxxx and Sterling.
5.14 Contracts. There is no Contract required to be described in or
---------
filed as an exhibit to any Sterling SEC Filing that is not described in or filed
as required by the Securities Act or the Exchange Act, as the case may be. All
such Contracts are valid and binding and are in full force and effect and
enforceable in accordance with their respective terms other than such Contracts
which by their terms are no longer in force or effect. Except as set forth in
Schedule 5.6 or 5.14, (i) no approval or consent of, or notice to, any person is
needed in order to ensure that such Contracts shall continue in full force and
effect in accordance with their respective terms without penalty, acceleration
or rights of early termination following the consummation of the transactions
contemplated by this Agreement, and (ii) Sterling or its subsidiaries is not in
violation or breach of or default under any such Contract; nor to Sterling's
knowledge is any other party to any such Contract in violation or breach of or
default under any such Contract, except in the case of clauses (i) and (ii)
above, any of the foregoing which do not and will not have a Sterling Material
Adverse Effect.
5.15 Employee Benefit Plans.
----------------------
(i) Except as set forth on Schedule 5.15(i), there are no
employee benefit plans or arrangements of any type, including (i) plans
described in section 3(3) of ERISA and any other material programs, practices or
policies, including, but not limited to, any pension, profit sharing,
retirement, thrift, stock purchase or stock option plan, or any other
compensation, welfare, fringe benefit or retirement plan, program, policy,
understanding or arrangement of any kind whatsoever, whether formal or informal,
providing for benefits for or the welfare of any or all of the current or former
employees or agents of Sterling and their beneficiaries or dependents, or
(ii) multiemployer plans as defined in section 3(37) of
62
ERISA, or (iii) multiple employer plans as defined in Section 413 of the Code,
under which Sterling has or in the future could have, directly or indirectly
through a "Commonly Controlled Entity" (within the meaning of sections 414(b),
(c), (m) and (o) of the Code), any liability with respect to any current or
former employee of Sterling or any Commonly Controlled Entity (collectively,
"Sterling Benefit Plans").
(ii) With respect to each Sterling Benefit Plan (where
applicable), Sterling has delivered to each of Actava, Orion and MITI complete
and accurate copies or summaries of (a) all plan texts and material agreements,
(b) all material employee communications, (c) the most recent annual report, (d)
the most recent annual and periodic accounting of plan assets, (e) the most
recent determination letter received from the Internal Revenue Service and
(f) the most recent actuarial valuation.
(iii) With respect to each Sterling Benefit Plan, except as set
forth on Schedule 5.15(iii), (a) if intended to qualify under Code
sections 401(a) or 403(a), (i) such Sterling Benefit Plan has received a
favorable determination letter from the Internal Revenue Service (the "Service")
indicating that such Plan meets such requirements, and such determination by the
Service includes any new or modified requirements under the Tax Reform Act of
1986 and subsequent legislation enacted thereafter through and including the
Omnibus Budget Reconciliation Act of 1993, or (ii) an application for a
favorable determination letter including such legislation was filed with the
Service prior to the expiration of the remedial amendment period (as defined in
Code section 401(b) and regulations thereunder, and as extended pursuant to
notices and revenue rulings of the Service) for filing such an application and
such Plan has been substantially amended to comply with the Tax Reform Act of
1986 and subsequent legislation enacted through and including the Omnibus Budget
Reconciliation Act of 1993, or (iii) the remedial amendment period (as defined
in (ii) above) with respect to such Plan has not yet expired, and an application
for a favorable determination letter including such legislation will be timely
filed with the Service prior to the expiration of such period and the Plan will
be amended to comply with the Tax Reform Act of 1986 and subsequent legislation
enacted thereafter through and including the Omnibus Budget Reconciliation Act
of 1993 prior to the expiration of such period, (b) if intended to qualify under
Code sections 401(a) or 403(a) and if originally effective prior to January 1,
1986, such Sterling Benefit Plan has previously received a favorable
determination letter from the Service indicating that such
63
Plan meets the requirements of Code sections 401(a) or 403(a) as in effect on
the date of the letter, including without limitation, TEFRA, DEFRA, and REACT,
(c) such Sterling Benefit Plan has been administered in material compliance with
its terms and applicable law, (d) no event has occurred and there exists no
circumstance under which Sterling could, directly or indirectly through a
Commonly Controlled Entity, incur material liability under ERISA, the Code or
otherwise (other than routine claims for benefits), (e) there are no actions,
suits or claims pending (other than routine claims for benefits) or, to
Sterling's knowledge, threatened, with respect to any Sterling Benefit Plan or
against the assets of any Sterling Benefit Plan, (f) no "accumulated funding
deficiency" (as defined in ERISA section 302) has occurred, (g) no "prohibited
transaction" (as defined in ERISA section 406 or in Code section 4975) has
occurred, (h) no "reportable event" (as defined in ERISA section 4043) has
occurred, (i) all contributions and PBGC premiums or premiums due under an
insurance contract that insures benefits payable under a Sterling Benefit Plan,
as applicable, have been made on a timely basis and (j) all contributions made
or required to be made under any Sterling Benefit Plan which have been treated
as deductible for purposes of one or more federal income tax returns of Sterling
meet the requirements for deductibility under the Code and all contributions
that have not been made have been properly recorded on the books of Sterling or
a Commonly Controlled Entity in accordance with generally accepted accounting
principles.
(iv) With respect to each Sterling Benefit Plan that is subject
to Title IV of ERISA, except as set forth on Schedule 5.15(iv), (a) as of the
date hereof and at the Effective Time, the market value of assets (exclusive of
any contribution due to such Sterling Benefit Plan) equals or exceeds the
present value of benefit liabilities as of the latest actuarial valuation date
shown for such plan (but not prior to 12 months prior to the date hereof),
determined on the basis of a shutdown of Sterling and termination of such
Sterling Benefit Plan in accordance with actuarial assumptions used by the
Pension Benefit Guaranty Corporation in single-employer plan terminations and
since its last valuation date, there have been no amendments to such Sterling
Benefit Plan that materially increased the present value of benefit liabilities
(determined as provided above) nor any other material adverse changes in the
funding status of such Sterling Benefit Plan, and (b) Sterling has not incurred,
directly or indirectly through a Commonly Controlled Entity, any liability
arising from a plan termination or plan withdrawal from a multiemployer plan.
64
(v) With respect to each Sterling Benefit Plan that is a
"welfare plan" (as defined in ERISA section 3(1)), except as set forth on
Schedule 5.15(v), (a) no such plan provides medical or death benefits (whether
or not insured) with respect to current or former employees beyond their
termination of employment or the end of the month of their termination of
employment (other than coverage mandated by law), (b) there are no reserves,
assets, surplus or prepaid premiums under any such plan and (c) Sterling and any
Commonly Controlled Entity have materially complied with the requirements of
Code section 4980B.
(vi) With respect to each Sterling Benefit Plan that is a
multiemployer plan, (a) Schedule 5.15(vi) indicates the number of employees with
respect to whom Sterling or any Commonly Controlled Entity makes contributions
to each such plan and the most recent information available to Sterling or any
Commonly Controlled Entity with respect to the withdrawal liability of Sterling
or such Commonly Controlled Entity under each such plan, (b) each such plan is
not, as of the date hereof, insolvent or in reorganization, nor does it have an
accumulated funding deficiency, and Sterling does not know of any reason why
such plan would become insolvent or in reorganization or have an accumulated
funding deficiency in the foreseeable future, (c) Sterling or any Commonly
Controlled Entity has made all contributions to each such plan due or accrued as
of the date hereof and will have made all such contributions as of the Effective
Time and (d) the withdrawal liability with respect to each such Plan if any
Commonly Controlled Entity were to withdraw from the plan at the Effective Time
is less than or equal to $0.
(vii) Except as set forth on Schedule 5.15(vii), the consummation
of the transactions contemplated by this Agreement will not (a) entitle any
individual to severance pay, or (b) accelerate the time of payment, vesting of
benefits (including stock options and restricted stock) or increase the amount
of compensation due to any individual.
5.16 Taxes.
-----
(a) Except as set forth on Schedule 5.16, (i) Sterling and each
of its subsidiaries timely has 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
65
any of them with respect to, and has paid (or Sterling 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 this Agreement or the Effective Time, as the
case may be, and the most recent financial statements contained in the SEC
Filings reflect an adequate reserve for all Taxes payable by Sterling and its
subsidiaries accrued through the date of such financial statements and (ii) no
deficiencies for any Taxes have been proposed, asserted or assessed against
Sterling or any of its subsidiaries other than those which are being contested
in good faith and by proper proceedings by Sterling, except in the case of
clauses (i) and (ii) above, any of the foregoing which do not and will not have
a Sterling Material Adverse Effect.
(b) The Federal income tax returns of Sterling and each of its
subsidiaries 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 1990.
(c) Except as set forth on Schedule 5.16, none of Sterling, any
subsidiary of Sterling or, to Sterling's knowledge, any group of which Sterling
or any subsidiary of Sterling 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.
(d) Except as set forth on Schedule 5.16, (i) none of Sterling,
any subsidiary of Sterling or, to Sterling's knowledge, any group of which
Sterling or any subsidiary of Sterling is now or ever was a member, is a party
to any action or proceeding pending or, to Sterling'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 Sterling's
knowledge been asserted, (iii) no audit or investigation by any governmental
authority is pending or, to Sterling'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 Sterling Material Adverse Effect.
5.17 Liabilities. Except (i) as expressly disclosed in the Sterling
-----------
SEC Filings or (ii) as set forth on Schedule 5.17, and in the case of (i) and
(ii) above, as does not and will not have a Sterling Material Adverse Effect,
Sterling and its subsidiaries do not have any direct
66
or indirect Liabilities, whether or not of a kind required by generally accepted
accounting principles to be set forth in a financial statement, other than
Liabilities incurred since December 31, 1994 in the ordinary course of business.
Except as set forth on Schedule 5.17 or reflected in the Sterling SEC Filings,
Sterling and its subsidiaries do not have (i) material obligations in respect of
borrowed money, (ii) material obligations evidenced by bonds, debentures, notes
or other similar instruments, (iii) material obligations which would be required
by generally accepted accounting principles to be classified as "capital
leases", (iv) material obligations to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business and payable not more than twelve (12) months from the date of
incurrence, and (v) any guaranties of any material obligations of any other
person. Schedule 5.17 sets forth a list, dated as of the date hereof, of all
unresolved "Claims" in excess of $25,000, whether payable in cash or Sterling
Common Stock, as defined in and arising out of Sterling's Second Amended Joint
Plan of Reorganization dated February 5, 1992, specifying in reasonable detail
the name of such claimant and the amount and classification of each such Claim.
5.18 Environmental Protection. Except as disclosed on Schedule 5.18:
------------------------
(i) Neither Sterling nor any of its subsidiaries is or has been
in violation in any material respect of any applicable Safety and Environmental
Law.
(ii) Sterling and its subsidiaries have all Permits required
pursuant to Safety and Environmental Laws that are material to the conduct of
the business of Sterling or any of its subsidiaries, 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 Sterling and each of its subsidiaries is in
compliance in all material respects with all terms and conditions thereof.
(iii) Neither Sterling nor any of its subsidiaries has received,
or expects to receive due to the consummation of the Sterling Merger, any
material Environmental Claim.
(iv) To Sterling's knowledge, Sterling and its subsidiaries have
filed all notices required under Safety and Environmental Laws indicating the
past or present Release, generation, treatment, storage or disposal of Hazardous
Substances.
67
(v) Neither Sterling nor any of its subsidiaries have entered
into any written agreement with any Governmental Body or any other person by
which Sterling or any of its subsidiaries has assumed responsibility, either
directly or as a guarantor or surety, for the remediation of any condition
arising from or relating to a Release or threatened Release of Hazardous
Substances into the Environment.
(vi) To Sterling'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 Sterling or any of its subsidiaries may be
directly or indirectly responsible.
(vii) To Sterling'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 Sterling or any of its subsidiaries, and, to Sterling's knowledge,
was not at, on or in any real property previously owned, leased or operated by
Sterling or any of its subsidiaries or any predecessor: (A) any generation,
use, handling, Release, treatment, recycling, storage or disposal of any
Hazardous Substances, (B) 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, (C) any
landfill or solid waste disposal area, (D) any asbestos-containing material in a
condition requiring abatement, (E) any polychlorinated biphenyls (PCBs) used in
hydraulic oils, electrical transformers or other equipment, (F) 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 (as hereafter defined) under Safety and Environmental Laws, or (G) 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 Sterling and its subsidiaries.
(viii) To Sterling's knowledge, there is no basis or reasonably
anticipated basis for any material Environmental Claim or material Environmental
Compliance Costs.
(ix) Neither Sterling nor any of its subsidiaries have
transported, stored, treated or disposed, nor have they allowed or arranged for
any third persons to transport, store, treat or dispose, any Hazardous Substance
to or at: (a) any location other than a site lawfully
68
permitted to receive such substances for such purposes, or (b) any location
designated for Remedial Action pursuant to Safety and Environmental Laws; nor
have they performed, arranged for or allowed by any method or procedure such
transportation or disposal in contravention of any Safety and Environmental Laws
or in any other manner which may result in Environmental Compliance Costs or in
an Environmental Claim. All locations at which Sterling or any of its
subsidiaries have disposed of any Hazardous Substance are listed on
Schedule 5.18(ix).
5.19 Intellectual Property. Schedule 5.19 sets forth a list of all
---------------------
of Sterling's and its subsidiaries' registered patents, registered trademarks,
registered service marks, registered trade names, registered copyrights for
filmed product in which Sterling or one of its consolidated subsidiaries is the
registered owner of such product, and not the licensee of distribution rights
for filmed product ("Sterling Copyrights") and franchises, all applications for
any of the foregoing and all permits, grants and licenses or other rights
running to or from Sterling and any of its subsidiaries relating to any of the
foregoing and Sterling has delivered or made available a true and correct
listing of availabilities of all filmed product to which Sterling or any of its
consolidated subsidiaries has licensed distribution rights that are material to
the business of Sterling and its subsidiaries taken as a whole. Except as set
forth on Schedule 5.19, to Sterling's knowledge (i) Sterling or one of its
subsidiaries own, or are licensed to, or otherwise have, the right to use all
registered patents, registered trademarks, registered service marks, registered
trade names, Sterling Copyrights and franchises set forth on Schedule 5.19, and
(ii) Sterling's rights in the property set forth on such list are free and clear
of any liens or other encumbrances and Sterling and its subsidiaries have not
received written notice of any adversely-held patent, invention, trademark,
service xxxx or trade name of any other person, or notice of any charge or claim
of any person relating to such intellectual property or any process or
confidential information of Sterling and its subsidiaries and to Sterling's
knowledge there is no basis for any such charge or claim, and (iii) Sterling,
its subsidiaries and their respective predecessors, if any, have not conducted
business at any time during the period beginning five years prior to the date
hereof under any corporate or partnership, trade or fictitious names other than
their current corporate or partnership names, except in the case of clauses (i),
(ii) and (iii) above, any of the foregoing which do not and will not have a
Sterling Material Adverse Effect.
69
5.20 Real Estate.
-----------
(a) Neither Sterling nor any of its subsidiaries owns any real
property.
(b) Schedule 5.20(b) sets forth a true, correct and complete
schedule of all material leases, subleases, licenses or other agreements under
which Sterling or any of its subsidiaries uses or occupies, or has the right to
use or occupy, now or in the future, any real property or improvements thereon
(the "Sterling Real Property Leases"). Except for the matters listed on Sched-
ule 5.20(b), to Sterling's knowledge, Sterling holds the leasehold estate under
and interest in each Sterling Real Property Lease free and clear of all material
liens, encumbrances and other rights of occupancy. All Sterling Real Property
Leases are valid and binding on the lessors thereunder in accordance with their
respective terms and to Sterling's knowledge, there is not under any such
Sterling Real Property Leases any existing default, or any condition, event or
act which with notice or lapse of time or both would constitute such a default,
which in either case, considered individually or in the aggregate with all such
other Sterling Real Property Leases under which there is such a default, condi-
tion, event or act, do not or will not have a Sterling Material Adverse Effect.
5.21 Records. The respective minute books of Sterling and each of
-------
its subsidiaries made available to each of Actava, Orion and MITI contain
materially accurate and complete records of all material corporate actions of
the respective stockholders and directors (and committees thereof).
5.22 Title to and Condition of Personal Property. Sterling and each
-------------------------------------------
of its subsidiaries have good and marketable title to the material personal
property reflected in its or their financial statements or currently used in the
operation of their businesses (other than leased property), and such property is
free and clear of all liens, claims, charges, security interests, options, or
other title defects or encumbrances, except for those which would not have a
Sterling Material Adverse Effect. All such personal property is in good
operating condition and repair, ordinary wear and tear excepted, is suitable for
the use to which the same is customarily put, is free from defects and is
merchantable and is of a quality and quantity presently usable in the ordinary
course of the operation of the business of Sterling and its subsidiaries, other
than such matters as would not have a Sterling Material Adverse Effect.
70
5.23 No Adverse Actions. There is no existing, pending or, to
------------------
Sterling's knowledge, threatened termination, cancellation, modification or
change in the business relationship of Sterling or any of its subsidiaries, with
any supplier, customer or other person or entity except those which do not and
will not have a Sterling Material Adverse Effect. To Sterling's knowledge, none
of Sterling, any subsidiary of Sterling or any stockholder, director, officer,
agent, employee or other person associated with or acting on behalf of any of
the foregoing has used any corporate funds for unlawful contributions, payments,
gifts, entertainment or other unlawful expenses relating to political activity,
or made any direct or indirect unlawful payments to governmental or regulatory
officials.
5.24 Labor Matters.
-------------
(a) Except as set forth on Schedule 5.24(a), neither Sterling
nor any of its subsidiaries has any material obligations, contingent or
otherwise, under any employment or consulting agreement (except if and as set
forth in the schedules hereto), collective bargaining agreement or other
contract with a labor union or other labor or employee group. There are no
efforts presently being made or, to Sterling's knowledge, threatened by or on
behalf of any labor union with respect to employees of Sterling or any
subsidiary of Sterling. No unfair labor practice complaint against Sterling or
any subsidiary of Sterling is pending or, to Sterling's knowledge, threatened
before the National Labor Relations Board; there is no labor strike, dispute,
slowdown or stoppage pending or, to Sterling's knowledge, threatened against or
involving Sterling or any subsidiary of Sterling; no collective bargaining
representation question exists respecting the employees of Sterling or any
subsidiary of Sterling; no grievance or internal or informal complaint exists
under any collective bargaining agreement, no arbitration proceeding arising out
of or under any collective bargaining agreement is pending and no claim therefor
has been asserted; no collective bargaining agreement is currently being
negotiated by Sterling or any subsidiary of Sterling; and neither Sterling nor
any subsidiary of Sterling has experienced any labor difficulty, except as to
each of the foregoing, any matter which would not have a Sterling Material
Adverse Effect.
(b) Except as set forth on Schedule 5.24(b), in the last three
years, neither Sterling nor any of its subsidiaries has effectuated, nor will
Sterling or any of its subsidiaries at any time before the Effective Time,
effectuate (i) a "plant closing" (as defined in the WARN
71
Act) affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of Sterling or its subsidiaries;
or (ii) a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of Sterling or its subsidiaries; nor has Sterling or its
subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law.
(c) Except as set forth on Schedule 5.24(c), Sterling and all of
its subsidiaries are in compliance with all federal and state laws respecting
immigration, employment and employment practices, fair labor practices, family
and medical leave, terms and conditions of employment (including
nondiscrimination in race, age, sex, religion, disability, etc.), and wages and
hours except to the extent failure to comply would not have a Sterling Material
Adverse Effect.
5.25 Investment Company Act. Sterling and each of its subsidiaries
----------------------
either (a) 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 (b) satisfies all conditions for an
exemption from the Investment Company Act, and, accordingly, neither Sterling
nor any of its subsidiaries is required to be registered under the Investment
Company Act.
5.26 Insurance. Except as set forth on Schedule 5.26, neither
---------
Sterling nor any subsidiary of Sterling has received notice of default under, or
intended cancellation or nonrenewal of, any material policies of insurance which
insure the properties, business or liability of Sterling or any subsidiary of
Sterling, except any of the foregoing which do not and will not have a Sterling
Material Adverse Effect.
5.27 Products. (a) Except (i) as set forth on Schedule 5.27(a) and
--------
(ii) as does not and will not have an Sterling Material Adverse Effect, there
are no product liability claims against or involving Sterling or any of its
subsidiaries or any product manufactured, marketed or distributed at any time by
Sterling or any of its subsidiaries ("Sterling Products") and no such claims
have been settled, adjudicated or otherwise disposed of since December 31, 1994.
(b) Except (i) as set forth on Schedule 5.27(b) and (ii) as does
not and will not have a
72
Sterling Material Adverse Effect, there are no statements, citations or
decisions by any Governmental Body specifically stating that any Sterling
Product is defective or unsafe or fails to meet any standards promulgated by any
such Governmental Body. Except (i) as set forth on Schedule 5.27(b) and
(ii) does not and will not have a Sterling Material Adverse Effect, there have
been no recalls ordered by any such Governmental Body with respect to any
Sterling Product. Except (i) as set forth on Schedule 5.27(b) and (ii) as does
not and will not have a Sterling Material Adverse Effect, to Sterling's
knowledge, there is no (A) fact relating to any Sterling Product that may impose
upon Sterling or any of its subsidiaries a duty to recall any Sterling Product
or a duty to warn customers of a defect in any Sterling Product, (B) latent or
overt design, manufacturing or other defect in any Sterling Product or
(C) material liability for warranty claims or returns with respect to any
Sterling Product not fully reflected on Sterling's financial statements referred
to in Section 5.9 hereof.
ARTICLE 5A
----------
FURTHER REPRESENTATIONS AND
WARRANTIES OF STERLING
Sterling represents and warrants to each of Actava, Orion and MITI
that from and after April 12, 1995 until the date hereof, Sterling has performed
and complied with in all material respects its obligations, agreements and
covenants under the Initial Merger Agreement which were required to be
performed] or complied with by it at or prior to the date hereof.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF MITI
MITI represents and warrants as of April 12, 1995 to each of Actava,
Orion and Sterling as follows (all references in this Article 6 to "as of the
date of this Agreement" or to "as of the date hereof" shall be deemed to refer
to April 12, 1995):
6.1 Organization and Good Standing. MITI and each of its material
------------------------------
United States subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Each of the
73
foreign entities in which MITI or one of its United States subsidiaries owns an
interest is listed on Schedule 6.1(a) (collectively, the "Joint Venture
Entities") and each such Joint Venture Entity is duly organized under the laws
of its organization and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Except as set forth on Schedule 6.1(b), the organizational documents for each
Joint Venture Entity were properly filed under the laws of the jurisdiction in
which such Joint Venture Entity was organized. MITI and each of its material
United States subsidiaries is duly qualified or licensed and in good standing to
do business in each jurisdiction in which the character of the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not have a MITI Material
Adverse Effect (as defined in Section 15.9). MITI has heretofore delivered or
made available to each of Actava, Orion and Sterling accurate and complete
copies of the Certificates of Incorporation and By-laws, or equivalent governing
instruments, as currently in effect, of MITI and each of its United States
subsidiaries and, subject to the exceptions set forth on Schedule 6.1(b), the
organizational documents for each of the Joint Venture Entities.
6.2 Capitalization. The authorized capital stock of MITI consists of
--------------
2,500,000 shares of MITI Common Stock. As of March 31, 1995, 1,716,198 shares
of MITI Common Stock were issued and outstanding. No other capital stock of
MITI is authorized or issued. All issued and outstanding shares of MITI Common
Stock are validly issued, fully paid and non-assessable and were either issued
free of preemptive rights or in accordance with waivers of such preemptive
rights and in compliance with applicable federal and state securities laws and
regulations. Except as set forth on Schedule 6.2(a), at the date hereof there
are not any outstanding rights, subscriptions, warrants, calls, unsatisfied
preemptive rights, options or other agreements of any kind to purchase or
otherwise receive from MITI any of the outstanding, authorized but unissued,
unauthorized or treasury shares of the capital stock or any other security of
MITI, and there is no authorized or outstanding security of any kind convertible
into or exchangeable for any such capital stock. Except as set forth on
Schedule 6.2(b), since March 31, 1995, MITI has not (i) issued any shares of
capital stock, except pursuant to the exercise of then outstanding options or
warrants in accordance with their terms or (ii) repurchased any shares of MITI
Common Stock.
74
6.3 Subsidiaries. Schedule 6.3 sets forth the name, jurisdiction of
------------
incorporation or organization and percentages of outstanding capital stock or
other equivalent equity ownership owned, directly or indirectly, by MITI, with
respect to each United States subsidiary of MITI and each Joint Venture Entity.
Except as set forth on Schedule 6.3, MITI and its subsidiaries own no material
direct or indirect equity interest in any corporation (other than direct or
indirect subsidiaries of MITI), partnership, joint venture or other entity,
domestic or foreign. All of the outstanding shares of capital stock in each of
MITI's United States subsidiaries have been duly authorized and validly issued
and are fully paid and non-assessable. All of MITI's direct or indirect equity
interests in the Joint Venture Entities have been issued in accordance with the
law of the jurisdiction in which each such Joint Venture Entity was organized.
Except as set forth on Schedule 6.3, to MITI's knowledge, there are no
irrevocable proxies or similar obligations with respect to such capital stock
and no equity securities or other interests of any of the United States
subsidiaries or Joint Venture Entities are or may become required to be issued
by reason of any options, warrants, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible
into or exchangeable for, shares of any capital stock of any United States
subsidiary or Joint Venture Entities, and there are no contracts, commitments,
understandings or arrangements by which any subsidiary is bound to issue
additional shares of its capital stock, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock or securities
convertible into or exchangeable for such shares. Except as set forth on
Schedule 6.3, all of the shares of capital stock of MITI's United States
subsidiaries owned by MITI and each interest in a Joint Venture Entity owned
directly or indirectly by MITI are owned by it free and clear of any claim,
lien, encumbrance, security interest or agreement with respect thereto.
6.4 Authorization; Binding Agreement. MITI has the requisite
--------------------------------
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, subject to the approval and
adoption of this Agreement by the stockholders of MITI in accordance with the
DGCL, the Certificate of Incorporation and By-laws of MITI and the MITI
Stockholders Agreement (as defined in Section 12.1.1(iii) hereof). The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including but not limited to the MITI Merger,
have been duly and validly authorized by MITI's Board of Directors and no other
corporate proceedings on the
75
part of MITI are necessary to authorize the execution and delivery of this
Agreement or to consummate the transactions so contemplated (other than the
approval and adoption of this Agreement by the stockholders of MITI in
accordance with the DGCL, the Certificate of Incorporation and By-laws of MITI
and the MITI Stockholders Agreement (as defined in Section 12.1.1(iii) hereof)).
This Agreement has been duly and validly authorized, executed and delivered by
MITI and, subject to the approval and adoption of this Agreement by the
stockholders of MITI in accordance with the DGCL, the Certificate of
Incorporation and By-laws of MITI and the MITI Stockholders Agreement (as
defined in Section 12.1.1(iii) hereof), constitutes the legal, valid and binding
agreement of MITI, enforceable against it in accordance with its terms, except
that enforceability thereof may be limited by bankruptcy, insolvency, reorgani-
zation or other similar laws affecting creditors' rights generally and by
principles of equity regarding the availability of remedies.
6.5 No Violations. The execution and delivery by MITI of this
-------------
Agreement, the consummation of the transactions contemplated hereby and
compliance by MITI with any of the provisions hereof will not (i) conflict with
or result in a breach of any of the provisions of the Articles or the
Certificates of Incorporation or By-laws or other governing instruments of MITI,
any of its United States subsidiaries or any of the Joint Venture Entities,
(ii) except as set forth on Schedule 6.5 and except for any of the following
which does not and will not have an MITI Material Adverse Effect, require any
consent, approval or notice under or result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration or augment
the performance required) under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, agreement or other
instrument or obligation to which MITI, any of its United States subsidiaries or
any of the Joint Venture Entities is a party or by which any of them or any of
their properties or assets may be bound, (iii) result in the creation or
imposition of any lien, charge or other encumbrance of any kind upon any of the
assets of MITI, any of its United States subsidiaries or any of the Joint
Venture Entities other than any such lien, charge or other encumbrance which
does not and will not have a MITI Material Adverse Effect, or (iv) subject to
the obtaining of the governmental and other consents referred to in Section 6.7,
contravene any material law, rule or regulation of any state or of the United
States or any political subdivision thereof or therein or of any foreign country
or political subdivision thereof or therein, or any material order, writ,
judgment,
76
injunction, decree, determination or award currently in effect to which MITI,
any of its United States subsidiaries or any of the Joint Venture Entities or
any of their assets or properties are subject.
6.6 Proxy Statement; Form S-4. None of the information relating to
-------------------------
MITI, its United States subsidiaries or any Joint Venture Entity included in the
Proxy Statement or the Form S-4 will be false or misleading with respect to any
material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.7 Governmental Approvals. Except as set forth on Schedule 6.7, no
----------------------
consent, approval or authorization of or declaration or filing with any
governmental agency or regulatory authority on the part of MITI, any of its
United States subsidiaries or any Joint Venture Entity is required in connection
with the execution or delivery by MITI of this Agreement or the consummation by
MITI of the transactions contemplated hereby other than (i) the filing of this
Agreement (or the Certificate of Merger in lieu thereof) with the Secretary of
State of Delaware in accordance with the DGCL, (ii) filings with the SEC and any
applicable national securities exchange, (iii) filings under state securities or
"Blue Sky" laws, (iv) federal, state or local regulatory approvals and consents
and (v) filings under the HSR Act.
6.8 Financial Statements. The consolidated balance sheets of MITI
--------------------
and its predecessors, International Telcell, Inc., a Delaware corporation
("ITI") and Metromedia International Inc., a Delaware corporation ("MII") as of
December 31, 1993 and 1994 and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then ended,
including the footnotes thereto, certified by KPMG Peat Marwick LLP, MITI's
independent certified public accountants, other than with respect to a "going
concern" qualification contained in KPMG Peat Marwick LLP's report for the
fiscal year ended December 31, 1994, which have been delivered to each of
Actava, Orion and Sterling, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except that during
1994 MITI changed its policy of accounting for its Joint Venture Entities by
recording its equity interest in the losses of such Joint Venture Entities based
on a three month lag) during the periods involved and fairly present the
financial position of MITI, its consolidated subsidiaries and its investments in
the Joint Venture Entities, including but not limited to
77
ITI and MII as of the dates thereof and the results of their operations for the
periods then ended.
6.9 Absence of Certain Changes or Events. Except as set forth on
------------------------------------
Schedule 6.9, since December 31, 1994 (September 30, 1994 with respect to the
Joint Venture Entities) there has not been: (i) any material adverse change in
the business, assets, prospects, condition (financial or other) or the results
of operations of MITI, its United States subsidiaries or any of the Joint
Venture Entities which are marked with a star on Schedule 6.1(a) (such Joint
Venture Entities marked with a star are referred to collectively as the
"Operating Joint Venture Entities") taken as a whole other than any such change
caused by general economic conditions, political or governmental instability or
uncertainty, civil disturbances or unrest, war or other similar acts of force
majeure; (ii) any declaration, payment or setting aside for payment of any
dividend or any redemption, purchase or other acquisition of any shares of
capital stock or securities of MITI; (iii) any return of any capital or other
distribution of assets to stockholders of MITI; (iv) any material investments of
a capital nature in excess of $10,000,000 in the aggregate by MITI, its United
States subsidiaries and the Joint Venture Entities, either by the purchase of
any property or assets or by any acquisition (by merger, consolidation or
acquisition of stock or assets) of any corporation, partnership or other
business organization or division thereof other than in accordance with the
aggregate amount provided for in MITI's budget for the year ended December 31,
1995 (the "MITI Budget"); (v) any sale, disposition or other transfer of assets
or properties of MITI, its United States subsidiaries or any Joint Venture
Entity in excess of $100,000 individually or $1,000,000 in the aggregate other
than investments (whether in the form of debt or equity) in any subsidiary of
MITI or any Joint Venture Entity in accordance with the aggregate amount
provided for in the MITI Budget; (vi) any employment or consulting agreement
entered into by MITI, its United States subsidiaries or any Joint Venture Entity
with any officer or consultant of MITI, its United States subsidiaries or any
Joint Venture Entity providing for annual salary or other annual payments in
excess of $100,000 or any amendment or modification to, or termination of, any
current employment or consulting agreement to which MITI, any of its United
States subsidiaries or any Joint Venture Entity is a party which provides for
annual salary or other annual payments in excess of $100,000; (vii) any
agreement to take, whether in writing or otherwise, any action which, if taken
prior to the date hereof, would have made any representation or warranty in this
Article 6 untrue, incomplete or incorrect
78
in any material respect; (viii) any change in accounting methods or practices or
any change in depreciation or amortization policies or rates (other than any
such changes made in connection with the initial audits of the Joint Venture
Entities); or (ix) any failure by MITI, its United States subsidiaries or any
Operating Joint Venture Entity to conduct their respective businesses only in
the ordinary course consistent with past practice (other than any changes made
in connection with the initial audits of the Joint Venture Entities or changes
made in an effort to conduct operations more effectively).
6.10 Compliance with Laws. Except as set forth on Schedule 6.10, the
--------------------
businesses of MITI, its United States subsidiaries and the Joint Venture
Entities have been operated in compliance with all laws, ordinances, regulations
and orders of all governmental entities, domestic or foreign, except for any
instances of non-compliance which do not and will not have a MITI Material
Adverse Effect.
6.11 Permits. Except as set forth on Schedule 6.11, (i) MITI, its
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United States subsidiaries and the Operating Joint Venture Entities have all
permits, certificates, licenses, approvals and other authorizations
(collectively, "MITI Permits") required in connection with the operation of
their businesses, (ii) none of MITI, any of its United States subsidiaries nor
any of the Operating Joint Venture Entities are in violation of any MITI Permit
applicable to it or to the operation of their businesses, and (iii) no
proceedings are pending or, to MITI's knowledge, threatened, to revoke or
terminate any MITI Permit, except in the case of clause (i), (ii) or (iii)
above, those the absence or violation of which do not and will not have a MITI
Material Adverse Effect.
6.12 Finders and Investment Bankers. Neither MITI nor any of its
------------------------------
officers or directors has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby except a fee payable to Xxxxxx Xxxxxx
Xxxxxxxx & Co., L.L.C. ("GKMC") pursuant to that certain engagement letter dated
April 7, 1995 between GKMC and MITI.
6.13 Employee Benefit Plans.
----------------------
(i) Except as set forth on Schedule 6.13(i), there are no
employee benefit plans or arrangements of any type, including (i) plans
described in section 3(3) of ERISA and any other material plans, programs,
practices or
79
policies, including, but not limited to, any pension, profit sharing,
retirement, thrift, stock purchase or stock option plan, or any other
compensation, welfare, fringe benefit or retirement plan, program, policy,
understanding or arrangement of any kind whatsoever, whether formal or informal,
providing for benefits for or the welfare of any or all of the current or former
employees or agents of MITI and their beneficiaries or dependents, or
(ii) multiemployer plans as defined in section 3(37) of ERISA, or (iii) multiple
employer plans as defined in Section 413 of the Code, under which MITI has or in
the future could have, directly or indirectly through a "Commonly Controlled
Entity" (within the meaning of sections 414(b), (c), (m) and (o) of the Code),
any liability with respect to any current or former employee of MITI or any
Commonly Controlled Entity (collectively, "MITI Benefit Plans").
(ii) With respect to each MITI Benefit Plan (where applicable),
MITI has delivered to each of Orion, Actava and Sterling complete and accurate
copies or summaries of (a) all plan texts and material agreements, (b) all
material employee communications, (c) the most recent annual report, (d) the
most recent annual and periodic accounting of plan assets, (e) the most recent
determination letter received from the Internal Revenue Service and (f) the most
recent actuarial valuation.
(iii) With respect to each MITI Benefit Plan, except as set forth
on Schedule 6.13(iii), (a) if intended to qualify under Code sections 401(a) or
403(a), (i) such MITI Benefit Plan has received a favorable determination letter
from the Internal Revenue Service (the "Service") indicating that such Plan
meets such requirements, and such determination by the Service includes any new
or modified requirements under the Tax Reform Act of 1986 and subsequent
legislation enacted thereafter through and including the Omnibus Budget
Reconciliation Act of 1993, or (ii) an application for a favorable determination
letter including such legislation was filed with the Service prior to the
expiration of the remedial amendment period (as defined in Code section 401(b)
and regulations thereunder, and as extended pursuant to notices and revenue
rulings of the Service) for filing such an application and such Plan has been
substantially amended to comply with the Tax Reform Act of 1986 and subsequent
legislation enacted through and including the Omnibus Budget Reconciliation Act
of 1993, or (iii) the remedial amendment period (as defined in (ii) above) with
respect to such Plan has not yet expired, and an application for a favorable
determination letter including such legislation will be timely filed with the
Service prior to the expiration of such period and the Plan
80
will be amended to comply with the Tax Reform Act of 1986 and subsequent
legislation enacted thereafter through and including the Omnibus Budget
Reconciliation Act of 1993 prior to the expiration of such period, (b) if
intended to qualify under Code sections 401(a) or 403(a) and if originally
effective prior to January 1, 1986, such MITI Benefit Plan has previously
received a favorable determination letter from the Service indicating that such
Plan meets the requirements of Code sections 401(a) or 403(a) as in effect on
the date of the letter, including without limitation, TEFRA, DEFRA, and REACT,
(c) such MITI Benefit Plan has been administered in material compliance with its
terms and applicable law, (d) no event has occurred and there exists no
circumstance under which MITI could, directly or indirectly through a Commonly
Controlled Entity, incur material liability under ERISA, the Code or otherwise
(other than routine claims for benefits), (e) there are no actions, suits or
claims pending (other than routine claims for benefits) or, to MITI's knowledge,
threatened, with respect to any MITI Benefit Plan or against the assets of any
MITI Benefit Plan, (f) no "accumulated funding deficiency" (as defined in ERISA
section 302) has occurred, (g) no "prohibited transaction" (as defined in ERISA
section 406 or in Code section 4975) has occurred, (h) no "reportable event" (as
defined in ERISA section 4043) has occurred, (i) all contributions and PBGC
premiums or premiums due under an insurance contract that insures benefits
payable under an MITI Benefit Plan, as applicable, have been made on a timely
basis and (j) all contributions made or required to be made under any MITI
Benefit Plan which have been treated as deductible for purposes of one or more
federal income tax returns of MITI meet the requirements for deductibility under
the Code and all contributions that have not been made have been properly
recorded on the books of MITI or a Commonly Controlled Entity in accordance with
generally accepted accounting principles.
(iv) With respect to each MITI Benefit Plan that is subject to
Title IV of ERISA, except as set forth on Schedule 6.13(iv), (a) as of the date
hereof and at the Effective Time, the market value of assets (exclusive of any
contribution due to such MITI Benefit Plan) equals or exceeds the present value
of benefit liabilities as of the latest actuarial valuation date shown for such
plan (but not prior to 12 months prior to the date hereof), determined on the
basis of a shutdown of MITI and termination of such MITI Benefit Plan in
accordance with actuarial assumptions used by the Pension Benefit Guaranty
Corporation in single-employer plan terminations and since its last valuation
date, there have been no amendments to such MITI Benefit
81
Plan that materially increased the present value of benefit liabilities
(determined as provided above) nor any other material adverse changes in the
funding status of such MITI Benefit Plan, and (b) MITI has not incurred,
directly or indirectly through a Commonly Controlled Entity, any liability
arising from a plan termination or plan withdrawal from a multiemployer plan.
(v) With respect to each MITI Benefit Plan that is a "welfare
plan" (as defined in ERISA section 3(1)), except as set forth on
Schedule 6.13(v), (a) no such plan provides medical or death benefits (whether
or not insured) with respect to current or former employees beyond their
termination of employment or the end of the month of their termination of
employment (other than coverage mandated by law), (b) there are no reserves,
assets, surplus or prepaid premiums under any such plan and (c) MITI and any
Commonly Controlled Entity have materially complied with the requirements of
Code section 4980B.
(vi) With respect to each MITI Benefit Plan that is a
multiemployer plan, (a) Schedule 6.13(vi) indicates the number of employees with
respect to whom MITI or any Commonly Controlled Entity makes contributions to
each such plan and the most recent information available to MITI or any Commonly
Controlled Entity with respect to the withdrawal liability of MITI or such
Commonly Controlled Entity under each such plan, (b) each such plan is not, as
of the date hereof, insolvent or in reorganization, nor does it have an
accumulated funding deficiency, and MITI does not know of any reason why such
plan would become insolvent or in reorganization or have an accumulated funding
deficiency in the foreseeable future, (c) MITI or any Commonly Controlled Entity
has made all contributions to each such plan due or accrued as of the date
hereof and will have made all such contributions as of the Effective Time and
(d) the withdrawal liability with respect to the Plan if any Commonly Controlled
Entity were to withdraw from each such plan at the Effective Time is less than
or equal to $0.
(vii) Except as set forth on Schedule 6.13(vii), the consummation
of the transactions contemplated by this Agreement will not (a) entitle any
individual to severance pay, or (b) accelerate the time of payment, vesting of
benefits (including stock options and restricted stock) or increase the amount
of compensation due to any individual.
82
6.14 Taxes.
-----
(a) Except as set forth on Schedule 6.14, (i) MITI, each of its
United States subsidiaries and, to MITI's knowledge after due inquiry, each
Joint Venture Entity timely has 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 MITI 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 this Agreement or the Effective Time,
as the case may be, and the most recent financial statements of MITI reflect an
adequate reserve for all Taxes payable by MITI and its United States
subsidiaries and each Joint Venture Entity, to the extent that a reserve for
taxes of Joint Venture Entities is reflected in the "loss for equity investment"
line appearing in MITI's statements of operations referred to in Section 6.8 of
this Agreement accrued through the date of such financial statements and (ii) no
deficiencies for any Taxes have been proposed, asserted or assessed against
MITI, any of its United States subsidiaries or any Joint Venture Entity other
than those which are being contested in good faith and by proper proceedings by
MITI, except in the case of clauses (i) and (ii) above, any of the foregoing
which do not and will not have a MITI Material Adverse Effect.
(b) None of the Federal income tax returns of MITI or its
subsidiaries have been examined by the IRS, and the statute of limitations with
respect to each of the years subject to such federal income tax returns has not
expired.
(c) Except as set forth on Schedule 6.14, none of MITI or any
United States subsidiary of MITI, or to MITI's knowledge any Operating Joint
Venture Entity or any group of which MITI or any subsidiary of MITI 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.
(d) Except as set forth on Schedule 6.14, (i) none of MITI, any
United States subsidiary of MITI, any Operating Joint Venture Entity or, to
MITI's knowledge, any group of which MITI or any United States subsidiary of
MITI is now or ever was a member, is a party to any action or
83
proceeding pending or, to MITI'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 MITI's knowledge, been asserted, (iii)
no audit or investigation by any governmental authority is pending or, to MITI'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 MITI
Material Adverse Effect.
6.15 Liabilities. Except (i) as set forth on Schedule 6.15 or
-----------
(ii) as reflected in the financial statements referred to in Section 6.8, and in
the case of (i) and (ii) above, as does not and will not have a MITI Material
Adverse Effect, MITI, its United States subsidiaries and the Joint Venture
Entities do not have any Liabilities, whether or not of a kind required by
generally accepted accounting principles to be set forth in a financial
statement, other than Liabilities incurred since December 31, 1994 in the
ordinary course of business. Except as set forth on Schedule 6.15 or reflected
in the financial statements referred to in Section 6.8, MITI, its United States
subsidiaries and the Joint Venture Entities do not have (i) material obligations
in respect of borrowed money, (ii) material obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) material obligations which
would be required by generally accepted accounting principles to be classified
as "capital leases," (iv) material obligations to pay the deferred purchase
price of property or services, except trade accounts payable arising in the
ordinary course of business and payable not more than twelve (12) months from
the date of incurrence, and (v) any guaranties of any material obligations of
any other person.
6.16 Environmental Protection. Except as disclosed on Schedule 6.16:
------------------------
(i) Neither MITI nor any of its subsidiaries is or has been in
violation in any material respect of any applicable Safety and Environmental
Law.
(ii) MITI and its subsidiaries have all Permits required pursuant
to Safety and Environmental Laws that are material to the conduct of the
business of MITI or any of its subsidiaries, 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 MITI and each of its subsidiaries is in compliance in
all material respects with all terms and conditions thereof.
84
(iii) Neither MITI nor any of its subsidiaries has received, or
expects to receive due to the consummation of the MITI Merger, any material
Environmental Claim.
(iv) To MITI's knowledge, MITI and its subsidiaries have filed
all notices required under Safety and Environmental Laws indicating the past or
present Release, generation, treatment, storage or disposal of Hazardous
Substances.
(v) Neither MITI nor any of its subsidiaries has entered into
any written agreement with any Governmental Body or any other person by which
MITI or any of its subsidiaries has assumed responsibility, either directly or
as a guarantor or surety, for the remediation of any condition arising from or
relating to a Release or threatened Release of Hazardous Substances into the
Environment.
(vi) To MITI'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 MITI or any of its subsidiaries may be directly
or indirectly responsible.
(vii) To MITI'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 MITI or any of its subsidiaries, and, to MITI's knowledge, was not
at, on or in any real property previously owned, leased or operated by MITI or
any of its subsidiaries or any predecessor: (A) any generation, use, handling,
Release, treatment, recycling, storage or disposal of any Hazardous Substances,
(B) 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, (C) any landfill or solid waste
disposal area, (D) any asbestos-containing material in a condition requiring
abatement, (E) any polychlorinated biphenyls (PCBs) used in hydraulic oils,
electrical transformers or other equipment, (F) 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 (G) 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 MITI and
its subsidiaries.
85
(viii) To MITI's knowledge, there is no basis or reasonably
anticipated basis for any material Environmental Claim or material Environmental
Compliance Costs.
(ix) Neither MITI nor any of its subsidiaries have transported,
stored, treated or disposed, nor have they allowed or arranged for any third
persons to transport, store, treat or dispose, any Hazardous Substance to or at:
(a) any location other than a site lawfully permitted to receive such substances
for such purposes, or (b) any location designated for Remedial Action pursuant
to Safety and Environmental Laws; nor have they performed, arranged for or
allowed by any method or procedure such transportation or disposal in
contravention of any Safety and Environmental Laws or in any other manner which
may result in Environmental Compliance Costs or in an Environmental Claim. All
locations at which MITI or any of its subsidiaries have disposed of any
Hazardous Substance are listed on Schedule 6.16(ix).
6.17 Intellectual Property. Schedule 6.17 sets forth a list of all
---------------------
of MITI's, its United States subsidiaries' and the Joint Venture Entities'
registered patents, registered trademarks, registered service marks, registered
trade names, registered copyrights and franchises, all applications for any of
the foregoing and all permits, grants and licenses or other rights running to or
from MITI, any of its United States subsidiaries and the Joint Venture Entities
relating to any of the foregoing that are material to the business of MITI, its
United States subsidiaries and the Joint Venture Entities taken as a whole.
Except as set forth on Schedule 6.17, to MITI's knowledge (i) MITI, one of its
United States subsidiaries or one of the Joint Venture Entities owns, or is
licensed to, or otherwise has, the right to use all registered patents,
registered trademarks, registered service marks, registered trade names,
registered copyrights and franchises set forth on Schedule 6.17, (ii) MITI's
rights in the property set forth on such list are free and clear of any liens or
other encumbrances and MITI, its United States subsidiaries and the Joint
Venture Entities have not received written notice of any adversely-held patent,
invention, trademark, service xxxx or trade name of any other person, or notice
of any charge or claim of any person relating to such intellectual property or
any process or confidential information of MITI, its United States subsidiaries,
the Joint Venture Entities and MITI does not know of any basis for any such
charge or claim, and (iii) MITI, its United States subsidiaries, the Joint
Venture Entities and their respective predecessors, if any, have not conducted
business at any time during the period beginning five years prior to the date
hereof under
86
any corporate or partnership, trade or fictitious name other than their current
corporate or partnership name, except in the case of clauses (i), (ii) and (iii)
above, any of the foregoing which do not and will not have a MITI Material
Adverse Effect.
6.18 Real Estate.
-----------
(a) Neither MITI nor any of its United States subsidiaries owns
any real property and to MITI's knowledge, none of the Joint Venture Entities
owns any real property.
(b) Schedule 6.18(b) sets forth a true, correct and complete
schedule of all material leases, subleases, licenses or other agreements under
which MITI, any of its United States subsidiaries or any Operating Joint Venture
Entity uses or occupies, or has the right to use or occupy, now or in the
future, any real property or improvements thereon (the "MITI Real Property
Leases"). Except for the matters listed on Schedule 6.18(b), to MITI's
knowledge, MITI or an Operating Joint Venture Entity holds the leasehold estate
under and interest in each MITI Real Property Lease free and clear of all
material liens, encumbrances and other rights of occupancy. All MITI Real
Property Leases are valid and binding on the lessors thereunder in accordance
with their respective terms and to MITI's knowledge, there is not under any such
MITI Real Property Leases any existing default, or any condition, event or act
which with notice or lapse of time or both would constitute such a default,
which in either case, considered individually or in the aggregate with all such
other MITI Real Property Leases under which there is such a default, condition,
event or act, does not or will not have a MITI Material Adverse Effect.
6.19 Contracts. Schedule 6.19 sets forth each Contract to which
---------
MITI, its United States subsidiaries or any Joint Venture Entity or their
respective assets or properties are bound or subject. Except as set forth on
Schedule 6.19, all such Contracts are valid and binding and are in full force
and effect and enforceable in accordance with their respective terms. Except as
set forth in Schedule 6.19, (i) no approval or consent of, or notice to, any
person is needed in order to ensure that any Contract shall continue in full
force and effect in accordance with its terms without penalty, acceleration or
right of early termination following the consummation of the transactions
contemplated by this Agreement and (ii) MITI, its United States subsidiaries or
any Joint Venture Entity is not in violation or breach of, or in default under,
any Contract;
87
nor, to MITI's knowledge, is any other party in violation or breach of, or in
default under, any Contract, except in the case of clauses (i) and (ii) above,
any of the foregoing which do not and will not have a MITI Material Adverse
Effect.
6.20 Litigation. Except as set forth in Schedule 6.20, there are no
----------
claims, actions or proceedings (and, to MITI's knowledge, no investigations)
pending by or against, or to MITI's knowledge, threatened against MITI, any of
its United States subsidiaries or any Joint Venture Entity or any properties or
rights of MITI, any of its United States subsidiaries or any Joint Venture
Entity, before any court or any administrative, governmental or regulatory
authority or body which have or will have a MITI Material Adverse Effect.
6.21 Records. The respective minute books of MITI, each of its
-------
United States subsidiaries and the Joint Venture Entities made available to each
of Actava, Orion and Sterling contain materially accurate and complete records
of all material corporate actions of the respective stockholder and directors
(and any committees thereof).
6.22 Title to and Condition of Personal Property. MITI, each of its
-------------------------------------------
United States subsidiaries and the Operating Joint Venture Entities have good
and marketable title to the material personal property reflected in its or their
financial statements or currently used in the operation of their businesses
(other than leased property), and such property is free and clear of all liens,
claims, charges, security interests, options, or other title defects or
encumbrances, except for those which would not have a MITI Material Adverse
Effect. All such personal property is in good operating condition and repair,
ordinary wear and tear excepted, is suitable for the use to which the same is
customarily put, is free from defects and is merchantable and is of a quality
and quantity presently usable in the ordinary course of the operation of the
business of MITI, its United States subsidiaries and the Operating Joint Venture
Entities, other than such matters as would not have a MITI Material Adverse
Effect.
6.23 No Adverse Actions. There is no existing, pending or, to MITI's
------------------
knowledge, threatened termination, cancellation, modification or change in the
business relationship of MITI, any of its United States subsidiaries or any
Operating Joint Venture Entity, with any supplier, customer or other person or
entity except those which do not and will not have a MITI Material Adverse
Effect. To MITI's knowledge, none of MITI, any United States subsidiary of
88
MITI or any Operating Joint Venture Entity or any stockholder, director,
officer, agent, employee or other person associated with or acting on behalf of
any of the foregoing has used any corporate funds for unlawful contributions,
payments, gifts, entertainment or other unlawful expenses relating to political
activity, or made any direct or indirect unlawful payments to governmental or
regulatory officials.
6.24 Labor Matters.
-------------
(a) Except as set forth on Schedule 6.24(a), none of MITI, any
of its United States subsidiaries nor any of the Joint Venture Entities has any
material obligations, contingent or otherwise, under any employment or
consulting agreement (except if and as set forth in the schedules hereto),
collective bargaining agreement or other contract with a labor union or other
labor or employee group. There are no efforts presently being made or, to
MITI's knowledge, threatened by or on behalf of any labor union with respect to
employees of MITI, any United States subsidiary of MITI or any of the Joint
Venture Entities. No unfair labor practice complaint against MITI is pending
or, to MITI's knowledge, threatened before the National Labor Relations Board;
there is no labor strike, dispute, slowdown or stoppage pending or, to MITI's
knowledge, threatened against or involving MITI, any United States subsidiary of
MITI or any of the Joint Venture Entities; no collective bargaining
representation question exists respecting the employees of MITI, any United
States subsidiary of MITI or any of the Joint Venture Entities; no grievance or
internal or informal complaint exists under any collective bargaining agreement,
no arbitration proceeding arising out of or under any collective bargaining
agreement is pending and no claim therefor has been asserted; no collective
bargaining agreement is currently being negotiated by MITI, any United States
subsidiary of MITI or any of the Joint Venture Entities; and none of MITI, any
United States subsidiary of MITI or any of the Joint Venture Entities has
experienced any labor difficulty, except as to each of the foregoing, any matter
which would not have a MITI Material Adverse Effect.
(b) In the last three years, neither MITI nor any of its United
States subsidiaries has effectuated, nor will MITI or any of its United States
subsidiaries at any time before the Effective Time, effectuate (i) a "plant
closing" (as defined in the WARN Act) affecting any site of employment or one or
more facilities or operating units within any site of employment or facility of
MITI or its subsidiaries; or (ii) a "mass layoff" (as defined in the
89
WARN Act) affecting any site of employment or facility of MITI or its
subsidiaries; nor has MITI or its United States subsidiaries been affected by
any transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law.
(c) Except as set forth on Schedule 6.24(c), MITI and all of its
United States subsidiaries are in compliance with all federal and state laws
respecting immigration, employment and employment practices, fair labor
practices, family and medical leave, terms and conditions of employment
(including nondiscrimination in race, age, sex, religion, disability, etc.) and
wages and hours except to the extent the failure to comply would not have a MITI
Material Adverse Effect.
6.25 Investment Company Act. MITI and each of its United States
----------------------
subsidiaries either (a) 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 (b) satisfies all
conditions for an exemption from the Investment Company Act, and, accordingly,
neither MITI nor any of its United States subsidiaries is required to be
registered under the Investment Company Act.
6.26 Insurance. Except as set forth on Schedule 6.26, none of MITI,
---------
any United States subsidiary of MITI nor any Joint Venture Entity has received
notice of default under, or intended cancellation or nonrenewal of, any material
policies of insurance which insure the properties, business or liability of
MITI, any United States subsidiary of MITI or any Joint Venture Entity, except
any of the foregoing as do not and will not have a MITI Material Adverse Effect.
6.27 Products. (a) Except (i) as set forth on Schedule 6.27(a) and
--------
(ii) as does not and will not have an MITI Material Adverse Effect, there are no
product liability claims against or involving MITI, any of its United States
subsidiaries or any Joint Venture Entity or any product manufactured, marketed
or distributed at any time by MITI, any of its United States subsidiaries or any
Joint Venture Entity ("MITI Products") and no such claims have been settled,
adjudicated or otherwise disposed of since December 31, 1994.
(b) Except (i) as set forth on Schedule 6.27(b) and (ii) as does
not and will not have an MITI Material Adverse Effect, there are no statements,
citations or decisions by any Governmental Body specifically stating
90
that any MITI Product is defective or unsafe or fails to meet any standards
promulgated by any such Governmental Body. Except (i) as set forth on
Schedule 6.27(b) and (ii) as does not and will not have a MITI Material Adverse
Effect, there have been no recalls ordered by any such Governmental Body with
respect to any MITI Product. Except (i) as set forth on Schedule 6.27(b) and
(ii) as does not and will not have a MITI Material Adverse Effect, to MITI's
knowledge, there is no (A) fact relating to any MITI Product that may impose
upon MITI or any of its subsidiaries or any of the Joint Venture Entities a duty
to recall any MITI Product or a duty to warn customers of a defect in any MITI
Product, (B) latent or overt design, manufacturing or other defect in any MITI
Product or (C) material liability for warranty claims or returns with respect to
any MITI Product not fully reflected on MITI's financial statements referred to
in Section 6.8 hereof.
ARTICLE 6A
----------
FURTHER REPRESENTATIONS AND
WARRANTIES OF MITI
MITI represents and warrants to each of Actava, Orion and Sterling
that from and after April 12, 1995 until the date hereof, MITI has performed and
complied with in all material respects its obligations, agreements and covenants
under the Initial Merger Agreement which were required to be performed or
complied with by it at or prior to the date hereof.
ARTICLE 7
COVENANTS OF ACTAVA
Actava covenants and agrees that from and after the execution and
delivery of this Agreement to the Effective Time:
7.1 Conduct of Business of Actava. Except as expressly contemplated
-----------------------------
by this Agreement, Actava shall, and it shall cause its subsidiaries to, conduct
its and their businesses in the ordinary course and consistent with past
practice, and Actava shall, and it shall cause its subsidiaries to, use its best
efforts to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain satisfactory
relationships with all persons with which it does business. Without limiting
the generality of the foregoing, and except
91
as otherwise expressly provided in this Agreement, prior to the Effective Time,
neither Actava nor any or its subsidiaries will, without the prior written
consent of Orion, Sterling and MITI:
(i) except as contemplated by this Agreement, amend or propose
to amend its Certificate of Incorporation or By-laws (or comparable governing
instruments);
(ii) authorize for issuance, issue, grant, sell, pledge, dispose
of or propose to issue, grant, sell, pledge or dispose of any shares of, or any
options, warrants, commitments, subscriptions or rights of any kind to acquire
any shares of, the capital stock of Actava or any securities convertible into or
exchangeable for shares of stock of any class of Actava or any of its
subsidiaries except for the issuance of shares of Common Stock pursuant to the
exercise of stock options or warrants or the conversion of convertible
securities described on Schedule 3.2(a) and outstanding on the date hereof in
accordance with their present terms;
(iii) split, combine, subdivide or reclassify any shares of its
capital stock or, except as contemplated by this Agreement and the Contribution
Agreement, issue or authorize the issuance of other securities in respect of, in
lieu of or in substitution for shares of its capital stock or declare, pay or
set aside any dividend or other distribution (whether in cash, stock or property
or any combination thereof) in respect of its capital stock, or redeem, purchase
or otherwise acquire or offer to acquire any shares of its own capital stock or
any of its subsidiaries or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities;
(iv) (a) except for (I) indebtedness under the Finance and
Security Agreement, dated as of October 23, 1992 between ITT Commercial Finance
Corp. and Actava, as amended from time to time, (II) indebtedness (including
obligations in respect of capital leases) to be used to finance the operations
of Actava's Snapper Power Equipment Company division not in excess of
$10,000,000 and (III) other indebtedness (including obligations in respect of
capital leases) not in excess of $1,000,000, create, incur or assume any short-
term debt, long-term debt or obligations in respect of capital leases;
(b) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, indirectly, contingently or otherwise) for the obligations of
any other person except wholly-owned subsidiaries of
92
Actava, in the ordinary course of business consistent with past practice;
(c) make any capital expenditures or make any loans, advances or capital
contributions to, or investments in, any other person (other than customary
travel or business advances to employees, representatives, consultants,
directors or advisors or subsidiaries made in the ordinary course of business
consistent with past practice and currently committed, budgeted capital
expenditures and additional capital expenditures for use in the operations of
Actava's Snapper Power Equipment Company division not in excess of $5,000,000);
or (d) incur any material liability or obligation (absolute, accrued, contingent
or otherwise) other than in the ordinary and usual course of business and
consistent with past practice;
(v) except in the ordinary course of business consistent with
past practice or as may be required by local law, sell, transfer, mortgage, or
otherwise dispose of, or encumber, or agree to sell, transfer, mortgage or
otherwise dispose of or encumber, any material assets or properties, real,
personal or mixed;
(vi) increase in any manner the compensation of any of its
officers, except in the ordinary course of business consistent with past
practice; or
(vii) agree, commit or arrange to do any of the foregoing.
Notwithstanding the foregoing, nothing in this Agreement shall
preclude Actava from taking any or all of the following actions and actions
incident thereto or require the consent of Orion, Sterling and MITI with respect
thereto:
(a) in accordance with and as required by the terms of the
6 1/2% Convertible Debentures of Actava (the "Actava Convertible Debentures"),
the issuance of Common Stock upon the conversion by the holders thereof of the
Actava Convertible Debentures into Common Stock;
(b) grants of options having an exercise price at least equal to
the market price on the grant date of the underlying Common Stock to employees,
representatives, consultants, advisors or directors of Actava or its
subsidiaries pursuant to plans in effect on the date of this Agreement, and
consistent with past practice or issuances of shares pursuant to authorization
of the Actava Board of Directors of up to 280,000 shares of Common Stock to
advisors or consultants in return for the performance of services for Actava,
where Actava's obligation to any such
93
advisors or consultants is not in excess of the fair market value of the Common
Stock being issued in respect of such obligation for the performance of
services;
(c) declaration and payment of dividends and other distributions
to Actava by its subsidiaries;
(d) draws and payments under and pursuant to the existing Actava
credit facility or facilities listed on Schedule 7.1;
(e) entering into severance, termination or retention
agreements, and terminating any employment agreements, with its officers and key
employees in the ordinary course of business and in accordance with past
practice;
(f) payment of mandatory sinking fund payments under Actava
indentures existing on the date hereof; and
(g) ministerial amendments to the Certificate or Articles of
Incorporation or By-laws of Actava's subsidiaries not inconsistent with the
terms of this Agreement.
7.2 Notification of Certain Matters. Actava shall give prompt
-------------------------------
written notice to Orion, Sterling and MITI specifying in reasonable detail:
(i) any notice of, or other communication relating to, a default or event which,
with notice or lapse of time or both, would become a default under any
agreement, indenture or instrument material to the business, assets, property,
condition (financial or otherwise) or the results of operations of Actava and
its subsidiaries, taken as a whole, to which Actava or any of its subsidiaries
is a party or is subject; (ii) any material notice or other communication from
any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement
including the Mergers; (iii) any material notice or other communication from any
regulatory authority (including the SEC or the NYSE in connection with the
transactions contemplated by this Agreement; (iv) any event which has an Actava
Material Adverse Effect or the occurrence of an event which, so far as
reasonably can be foreseen at the time of its occurrence, would result in an
Actava Material Adverse Effect; (v) any claims, actions, proceedings or
investigations commenced or, to Actava's knowledge, threatened, involving or
affecting Actava or any of its subsidiaries or any of its property or assets,
or, to Actava's knowledge, any employee, consultant, director or
94
officer, in his or her capacity as such, of Actava or any of its subsidiaries
which, if pending on the date hereof, would have been required to have been
disclosed in a Schedule pursuant to this Agreement or which relates to the
consummation of the Mergers; and (vi) any event or action which if known on the
date hereof (a) would have caused a representation or warranty set forth in
Article 3 hereof to be untrue or incomplete or incorrect in any material respect
or (b) would have been required to have been disclosed in a Schedule pursuant to
this Agreement.
7.3 Access and Information.
----------------------
(i) Actava will give each of Orion, Sterling and MITI and their
respective authorized representatives (including in each case their financial
advisors, accountants and legal counsel) at all reasonable times and on
reasonable advance notice access to all plants, offices, warehouses and other
facilities and to all contracts, agreements, commitments, books and records
(including tax returns) of it and its subsidiaries (except to the extent any
such agreements or contracts by their terms restrict access to third parties and
the consent of the other party(ies) thereto cannot be obtained after reasonable
efforts to do so), will permit Orion, Sterling or MITI, as the case may be, to
make such inspections as it may require and will cause its officers and those of
its subsidiaries promptly to furnish Orion, Sterling or MITI, as the case may
be, with (a) such financial and operating data and other information with
respect to the business and properties of Actava and its subsidiaries as Orion,
Sterling or MITI may from time to time request, and (b) a copy of each report,
schedule and other document filed or received by Actava or any of its
subsidiaries pursuant to the requirements of federal or state securities laws or
of the NYSE.
(ii) Each of Orion, Sterling and MITI will hold and will each
cause its respective affiliates, employees, representatives, consultants and
advisors to hold in strict confidence, unless compelled to disclose by judicial
or administrative process, or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning the other party
hereto and its subsidiaries and affiliates furnished to Orion, Sterling or MITI
in connection with the transactions contemplated by this Agreement (except to
the extent that such information can be shown to have been (a) previously known
by Orion, Sterling or MITI, as the case may be, or any affiliate of either of
them, (b) in the public domain through no fault of any of Orion, Sterling or
MITI, as the case may be, or any of their affiliates, employees,
representatives, consultants
95
or advisors or (c) later lawfully acquired from other sources unless any of
Orion, Sterling or MITI, as the case may be, knew such information was obtained
in violation of an agreement of confidentiality) and will not release or
disclose such information to any other person, except its auditors, attorneys,
financial advisors, and other consultants and advisors and lending institutions
(including banks) in connection with this Agreement (it being understood that
such persons shall be informed by Orion, Sterling or MITI, as the case may be,
of the confidential nature of such information and shall be directed by Orion,
Sterling or MITI, as the case may be, to treat such information confidentially).
If the transactions contemplated by this Agreement are not consummated, such
confidence shall be maintained except to the extent such information comes into
the public domain under judicial or administrative process or other requirements
of law or through no fault of any of Orion, Sterling or MITI, as the case may
be, or any of their affiliates, employees, representatives, consultants or
advisors and, if requested by Actava, each of Orion, Sterling and MITI, as the
case may be, will promptly destroy or return to Actava all copies of written
information furnished by Actava or its respective affiliates, agents,
representatives or advisors and all copies thereof and excerpts therefrom. If
Orion, Sterling or MITI shall be required to make disclosure of any such
information by operation of law, Orion, Sterling or MITI, as the case may be,
shall give Actava prior written notice of the making of such disclosure and
shall use all reasonable efforts to afford Actava an opportunity to contest the
making of such disclosures.
7.4 Stockholder Approval. As soon as practicable, Actava will take
--------------------
all steps necessary to duly call, give notice of, convene and hold a meeting of
its stockholders (including filing with the SEC and mailing to its stockholders
the Proxy Statement) for the purpose of adopting and approving this Agreement
and the Mergers and for such other purposes as may be necessary or desirable in
connection with effectuating the transactions contemplated hereby and thereby.
Subject to the compliance by Orion, Sterling and MITI with the material terms
and conditions of this Agreement, the Board of Directors of Actava, subject to
applicable law and the fiduciary duties of loyalty and care, (i) will not change
its recommendation to the stockholders of Actava that they adopt and approve
this Agreement and the Mergers and (ii) will use its best efforts to obtain any
necessary approval by its stockholders of the transactions contemplated hereby.
96
7.5 Benefit Plans. Except as otherwise provided in this Agreement,
-------------
no award or grant of Actava securities under any of Actava's stock option plans
or any other benefit plan or program shall be made without the consent of Orion,
Sterling and MITI; nor shall Actava take any action or permit any action to be
taken to accelerate the vesting of any options or other restricted securities
previously granted pursuant to any stock option plans or other benefit plan.
Actava shall not make any material amendment to any (i) stock option plan or
options outstanding thereunder, (ii) any other option or warrant agreement or
other stock-based benefit plan, or (iii) the terms of any other security con-
vertible into or exchangeable for Common Stock without the consent of Orion,
Sterling and MITI.
7.6 No Inconsistent Activities. Subject to applicable law and the
--------------------------
fiduciary duties of loyalty and care of the Actava Board of Directors, Actava
will not, and will direct its officers, directors and other representatives
(including, without limitation, any financial advisor, attorney or accountant
retained by Actava) not to, directly or indirectly, solicit, encourage, or
participate in any way in discussions or negotiations with, or provide any
information, data or assistance to, any third party (other than Orion, Sterling
and MITI) concerning any acquisition of shares of capital stock of Actava or all
or any significant portion of the total assets of Actava or any material
subsidiary or division of Actava (in either case whether by merger,
consolidation, purchase of assets, tender offer or otherwise). Actava will
promptly communicate to Orion, Sterling and MITI in writing the terms of any
proposal or contact it may receive in respect of any such transaction. Actava
agrees not to release any third party from any confidentiality or standstill
agreements to which Actava or any of its subsidiaries is a party.
7.7 SEC and Stockholder Filings. Actava shall send to Orion,
---------------------------
Sterling and MITI copies of all public reports and materials as and when it
sends the same to its stockholders or the SEC.
7.8 Consents, Waivers, Authorizations, etc. Actava will use its best
--------------------------------------
efforts to obtain all consents, waivers, authorizations, orders and approvals of
and make all filings and registrations with, any governmental commission, board
or other regulatory body or any nongovernmental third party, required for, or in
connection with, the performance by it of this Agreement and the consummation by
it of the transactions contemplated hereby, or as may be required in order not
to accelerate, violate, breach or terminate any agreement to which Actava or any
of its
97
subsidiaries may be subject, if the failure to obtain or make such consent,
waiver, authorization, order, approval, filing or registration would have an
Actava Material Adverse Effect. Actava will cooperate fully with each of Orion,
Sterling and MITI in assisting it to obtain such consents, authorizations,
orders and approvals. Actava will not take any action which could reasonably be
anticipated to have the effect of delaying, impairing or impeding the receipt of
any required approvals, regulatory or otherwise.
7.9 Roadmaster Approval of the Mergers. Actava shall use best
----------------------------------
efforts and will cause its officers and directors to use best efforts to have
the Board of Directors of Roadmaster approve the Mergers in the manner provided
in Section 203 of the DGCL.
7.10 Related Agreements. Actava covenants and agrees that it will
------------------
comply with the terms and provisions of the Contribution Agreement and the
Registration Rights Agreement, dated as of the date hereof (the "Registration
Rights Agreement"), between the Metromedia Holders and certain of their
affiliates and Actava, substantially in the form of the copies attached hereto
as Exhibits C-1 and C-2, respectively, including, without limitation, in the
case of the Registration Rights Agreement, using its best efforts to file with
and have declared effective by the SEC a Rule 415 Registration Statement on
Form S-3 registering the shares of Common Stock owned by the Metromedia Holders
and their affiliates (the "Shelf Registration Statement").
7.11 Indemnification. From and after the Effective Time, Actava
---------------
shall not take any action nor permit any action to be taken which would have the
effect of eliminating or impairing the rights of current or former officers and
directors of Actava, Orion, Sterling or MITI, prior to the Effective Time, to be
indemnified by the Orion Merger Surviving Corporation, the Surviving Corporation
or the MITI Merger Surviving Corporation, as the case may be, for any actions
taken by such officers or directors in such capacities so long as such
indemnification would have been available to such parties at such time in
accordance with the respective By-laws and certificates of incorporation of
Actava, Orion, Sterling or MITI, as the case may be, and applicable law.
98
ARTICLE 8
COVENANTS OF ORION
Orion covenants and agrees that from and after the execution and
delivery of this Agreement to the Effective Time:
8.1 Conduct of Business of Orion. Except as expressly contemplated
----------------------------
by this Agreement, Orion shall, and it shall cause its subsidiaries to, conduct
its and their businesses in the ordinary course and consistent with past
practice, and Orion shall, and it shall cause its subsidiaries to, use its best
efforts to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain satisfactory
relationships with all persons with which it does business. Without limiting
the generality of the foregoing, and except as otherwise expressly provided in
this Agreement, prior to the Effective Time, neither Orion nor any or its
subsidiaries will, without the prior written consent of Actava, Sterling and
MITI:
(i) amend or propose to amend its Certificate of Incorporation
or By-laws (or comparable governing instruments);
(ii) authorize for issuance, issue, grant, sell, pledge, dispose
of or propose to issue, grant, sell, pledge or dispose of any shares of, or any
options, warrants, commitments, subscriptions or rights of any kind to acquire
any shares of, the capital stock of Orion or any securities convertible into or
exchangeable for shares of stock of any class of Orion or any of its
subsidiaries except for the issuance of shares of Orion Common Stock pursuant to
the exercise of stock options or warrants or the conversion of convertible
securities described on Schedule 4.2(a) and outstanding on the date hereof in
accordance with their present terms;
(iii) split, combine, subdivide or reclassify any shares of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
declare, pay or set aside any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or redeem, purchase or otherwise acquire or offer to acquire any shares of its
own capital stock or any of its subsidiaries or any other securities thereof or
any rights, warrants or options to acquire any such shares or other securities;
99
(iv) (a) except for debt (including obligations in respect of
capital leases) not in excess of $3,000,000 or indebtedness which is non-
recourse to Orion and its Restricted Subsidiaries (as defined in Section 15.9),
create, incur or assume any short-term debt, long-term debt or obligations in
respect of capital leases; (b) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, indirectly, contingently or otherwise)
for the obligations of any other person except wholly-owned subsidiaries of
Orion, in the ordinary course of business consistent with past practice;
(c) make any capital expenditures or make any loans, advances or capital
contributions to, or investments in, any other person (other than customary
travel or business advances to employees, representatives, consultants,
directors or advisors or subsidiaries made in the ordinary course of business
consistent with past practice and currently committed, budgeted capital
expenditures and additional capital expenditures not in excess of $1,000,000);
or (d) incur any material liability or obligation (absolute, accrued, contingent
or otherwise) other than in the ordinary and usual course of business and
consistent with past practice;
(v) except in the ordinary course of business consistent with
past practice or as may be required by local law, sell, transfer, mortgage, or
otherwise dispose of, or encumber, or agree to sell, transfer, mortgage or
otherwise dispose of or encumber, any material assets or properties, real,
personal or mixed;
(vi) increase in any manner the compensation of any of its
officers, except in the ordinary course of business consistent with past
practice; or
(vii) agree, commit or arrange to do any of the foregoing.
Notwithstanding the foregoing, nothing in this Agreement shall
preclude Orion from taking any or all of the following actions and actions
incident thereto or require the consent of Actava, Sterling and MITI with
respect thereto:
(a) declaration and payment of dividends and other distributions
to Orion by its subsidiaries;
(b) draws and payments under and pursuant to the existing Orion
credit facility or facilities or the other indebtedness listed on Schedule 8.1;
100
(c) entering into severance, termination or retention
agreements, and terminating any employment agreements, with its officers and key
employees in the ordinary course of business and in accordance with past
practice;
(d) making payments in accordance with the terms of the Orion
Pictures Corporation Incentive Bonus Plan or the termination thereof; and
(e) ministerial amendments to the Certificate or Articles of
Incorporation or By-laws of Orion's subsidiaries not inconsistent with the terms
of this Agreement.
8.2 Notification of Certain Matters. Orion shall give prompt written
-------------------------------
notice to Actava, Sterling and MITI specifying in reasonable detail: (i) any
notice of, or other communication relating to, a default or event which, with
notice or lapse of time or both, would become a default under any agreement,
indenture or instrument material to the business, assets, property, condition
(financial or otherwise) or the results of operations of Orion and its
subsidiaries, taken as a whole, to which Orion or any of its subsidiaries is a
party or is subject; (ii) any material notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement including the
Mergers; (iii) any material notice or other communication from any regulatory
authority (including the SEC or the National Association of Securities Dealers
(the "NASD") in connection with the transactions contemplated by this Agreement;
(iv) any event which has an Orion Material Adverse Effect or the occurrence of
an event which, so far as reasonably can be foreseen at the time of its
occurrence, would result in an Orion Material Adverse Effect; (v) any claims,
actions, proceedings or investigations commenced or, to Orion's knowledge,
threatened, involving or affecting Orion or any of its subsidiaries or any of
its property or assets, or, to Orion's knowledge, any employee, consultant,
director or officer, in his or her capacity as such, of Orion or any of its
subsidiaries which, if pending on the date hereof, would have been required to
have been disclosed in a Schedule pursuant to this Agreement or which relates to
the consummation of the Orion Merger; and (vi) any event or action which if
known on the date hereof (a) would have caused a representation or warranty set
forth in Article 4 hereof to be untrue or incomplete or incorrect in any
material respect or (b) would have been required to have been disclosed on a
Schedule pursuant to this Agreement.
101
8.3 Access and Information.
----------------------
(i) Orion will give each of Actava, Sterling and MITI and their
respective authorized representatives (including in each case their financial
advisors, accountants and legal counsel) at all reasonable times and on
reasonable advance notice access to all plants, offices, warehouses and other
facilities and to all contracts, agreements, commitments, books and records
(including tax returns) of it and its subsidiaries (except to the extent any
such agreements or contracts by their terms restrict access to third parties and
the consent of the other party(ies) thereto cannot be obtained after reasonable
efforts to do so), will permit Actava, Sterling or MITI, as the case may be, to
make such inspections as it may require and will cause its officers and those of
its subsidiaries promptly to furnish Actava, Sterling or MITI, as the case may
be, with (a) such financial and operating data and other information with
respect to the business and properties of Orion and its subsidiaries as Actava,
Sterling or MITI may from time to time request, and (b) a copy of each report,
schedule and other document filed or received by Orion, or any of its
subsidiaries pursuant to the requirements of federal or state securities laws or
of the NASD.
(ii) Each of Actava, Sterling and MITI will hold and will each
cause its respective affiliates, employees, representatives, consultants and
advisors to hold in strict confidence, unless compelled to disclose by judicial
or administrative process, or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning the other party
hereto and its subsidiaries and affiliates furnished to Actava, Sterling or MITI
in connection with the transactions contemplated by this Agreement (except to
the extent that such information can be shown to have been (a) previously known
by Actava, Sterling or MITI, as the case may be, or any affiliate of either of
them, (b) in the public domain through no fault of any of Actava, Sterling or
MITI, as the case may be, or any of their affiliates, employees,
representatives, consultants or advisors or (c) later lawfully acquired from
other sources unless any of Actava, Sterling or MITI, as the case may be, knew
such information was obtained in violation of an agreement of confidentiality)
and will not release or disclose such information to any other person, except
its auditors, attorneys, financial advisors, and other consultants and advisors
and lending institutions (including banks) in connection with this Agreement (it
being understood that such persons shall be informed by Actava, Sterling or
MITI, as the case may be, of the confidential nature of such information and
shall be directed by Actava,
102
Sterling or MITI, as the case may be, to treat such information confidentially).
If the transactions contemplated by this Agreement are not consummated, such
confidence shall be maintained except to the extent such information comes into
the public domain under judicial or administrative process or other requirements
of law or through no fault of any of Actava, Sterling or MITI, as the case may
be, or any of their affiliates, employees, representatives, consultants or
advisors and, if requested by Orion, each of Actava, Sterling and MITI, as the
case may be, will promptly destroy or return to Actava all copies of written
information furnished by Orion or its respective affiliates, agents,
representatives or advisors and all copies thereof and excerpts therefrom. If
Actava, Sterling or MITI shall be required to make disclosure of any such
information by operation of law, Actava, Sterling or MITI, as the case may be,
shall give Orion prior written notice of the making of such disclosure and shall
use all reasonable efforts to afford Orion an opportunity to contest the making
of such disclosures.
8.4 Stockholder Approval. As soon as practicable, Orion will take
--------------------
all steps necessary to duly call, give notice of, convene and hold a meeting of
its stockholders (including filing with the SEC and mailing to its stockholders
the Proxy Statement) for the purpose of adopting and approving this Agreement
and the Orion Merger and for such other purposes as may be necessary or
desirable in connection with effectuating the transactions contemplated hereby.
Subject to the compliance by Actava, Sterling and MITI with the material terms
and conditions of this Agreement, the Board of Directors of Orion, subject to
applicable law and the fiduciary duties of loyalty and care, (i) will not change
its recommendation to the stockholders of Orion that they adopt and approve this
Agreement and the Orion Merger and (ii) will use its best efforts to obtain any
necessary approval by its stockholders of the transactions contemplated hereby.
8.5 Benefit Plans. Except as otherwise provided in this Agreement,
-------------
no award or grant under any of Orion's stock option plans or any other benefit
plan or program shall be made without the consent of Actava, Sterling and MITI;
nor shall Orion take any action or permit any action to be taken to accelerate
the vesting of any options or other restricted securities previously granted
pursuant to any stock option plans or other benefit plan. Orion shall not make
any material amendment to any (i) stock option plan or options outstanding
thereunder, (ii) any other option or warrant agreement or other stock-based
benefit plan, or (iii) the terms of any other security convertible into or
103
exchangeable for Orion Common Stock without the consent of Actava, Sterling and
MITI.
8.6 No Inconsistent Activities. Subject to applicable law and the
--------------------------
fiduciary duties of loyalty and care of the Orion Board of Directors, Orion will
not, and will direct its officers, directors and other representatives
(including, without limitation, any financial adviser, attorney or accountant
retained by Orion) not to, directly or indirectly, solicit, encourage, or
participate in any way in discussions or negotiations with, or provide any
information, data or assistance to, any third party (other than Actava, Sterling
and MITI) concerning any acquisition of shares of capital stock of Orion or all
or any significant portion of the total assets of Orion or any material
subsidiary or division of Orion (in either case whether by merger,
consolidation, purchase of assets, tender offer or otherwise). Orion will
promptly communicate to Actava, Sterling and MITI in writing the terms of any
proposal or contact it may receive in respect of any such transaction. Orion
agrees not to release any third party from any confidentiality or standstill
agreements to which Orion or any of its subsidiaries is a party.
8.7 SEC and Stockholder Filings. Orion shall send to Actava,
---------------------------
Sterling and MITI copies of all public reports and materials as and when it
sends the same to its stockholders or the SEC.
8.8 Consents, Waivers, Authorizations, etc. Orion will use its best
--------------------------------------
efforts to obtain all consents, waivers, authorizations, orders and approvals of
and make all filings and registrations with, any governmental commission, board
or other regulatory body or any nongovernmental third party, required for, or in
connection with, the performance by it of this Agreement and the consummation by
it of the transactions contemplated hereby, or as may be required in order not
to accelerate, violate, breach or terminate any agreement to which Orion or any
of its subsidiaries may be subject, if the failure to obtain or make such
consent, waiver, authorization, order, approval, filing or registration would
have an Orion Material Adverse Effect. Orion will cooperate fully with each of
Actava, Sterling and MITI in assisting it to obtain such consents,
authorizations, orders and approvals. Orion will not take any action which
could reasonably be anticipated to have the effect of delaying, impairing or
impeding the receipt of any required approvals, regulatory or otherwise.
104
ARTICLE 9
COVENANTS OF STERLING
Sterling covenants and agrees that from and after the execution and
delivery of this Agreement to the Effective Time:
9.1 Conduct of Business of Sterling. Except as expressly
-------------------------------
contemplated by this Agreement, Sterling shall, and it shall cause its
subsidiaries to, conduct its and their businesses in the ordinary course and
consistent with past practice, and Sterling shall, and it shall cause its
subsidiaries to, use its best efforts to preserve intact its business
organization, to keep available the services of its officers and employees and
to maintain satisfactory relationships with all persons with which it does
business. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, prior to the Effective Time,
neither Sterling nor any or its subsidiaries will, without the prior written
consent of Actava, Orion and MITI:
(i) amend or propose to amend its Certificate of Incorporation
or By-laws (or comparable governing instruments);
(ii) authorize for issuance, issue, grant, sell, pledge, dispose
of or propose to issue, grant, sell, pledge or dispose of any shares of, or any
options, warrants, commitments, subscriptions or rights of any kind to acquire
any shares of, the capital stock of Sterling or any securities convertible into
or exchangeable for shares of stock of any class of Sterling or any of its
subsidiaries except for the issuance of shares of Sterling Common Stock pursuant
to the exercise of stock options or warrants or the conversion of convertible
securities described on Schedule 5.2(a) and outstanding on the date hereof in
accordance with their present terms;
(iii) split, combine, subdivide or reclassify any shares of its
capital stock or issue or authorize the issuance of any other securities in
respect, in lieu of or in substitution for shares of its capital stock or
declare, pay or set aside any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or redeem, purchase or otherwise acquire or offer to acquire any shares of its
own capital stock or any of its subsidiaries or any other securities thereof or
any rights, warrants or options to acquire any such shares or other securities;
105
(iv) (a) except for debt entered into in connection with the
transactions set forth on Schedule 5.10(v), which require the consent of Orion
pursuant to Section 9.1(v) hereof and debt (including obligations in respect of
capital leases) not in excess of $100,000 create, incur or assume any short-term
debt, long-term debt or obligations in respect of capital leases; assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
indirectly, contingently or otherwise) for the obligations of any other person
except wholly-owned subsidiaries of Sterling, in the ordinary course of business
consistent with past practice; (c) make any capital expenditures or make any
loans, advances or capital contributions to, or investments in, any other person
(other than customary travel or business advances to employees, representatives,
consultants, advisors or directors or subsidiaries made in the ordinary course
of business consistent with past practice and currently committed, budgeted
capital expenditures and additional capital expenditures not in excess of
$100,000); or (d) incur any material liability or obligation (absolute, accrued,
contingent or otherwise) other than in the ordinary and usual course of business
and consistent with past practice;
(v) except in the ordinary course of business consistent with
past practice or as may be required by local law, sell, transfer, mortgage, or
otherwise dispose of, or encumber, or agree to sell, transfer, mortgage or
otherwise dispose of or encumber, any material assets or properties, real,
personal or mixed or enter into any agreements with the Showtime Networks, Inc.
without the prior written consent of Orion;
(vi) increase in any manner the compensation of any of its
officers, except in the ordinary course of business consistent with past
practice; or
(vii) agree, commit or arrange to do any of the foregoing.
Notwithstanding the foregoing, nothing in this Agreement shall
preclude Sterling from taking any or all of the following actions and actions
incident thereto or require the consent of Actava, Orion and MITI with respect
thereto:
(a) grants of up to 1,000,000 shares of Sterling Common Stock
and cash payments in an amount not to exceed $650,000 in the aggregate to
employees and consultants of Sterling in accordance with the MCEG Sterling
Incorporated Incentive Bonus Plan;
106
(b) declaration and payment of dividends and other distributions
to Sterling by its subsidiaries;
(c) draws and payments under and pursuant to the existing
Sterling credit facility or facilities listed on Schedule 9.1;
(d) entering into severance, termination or retention
agreements, and terminating any employment agreements, with its officers and key
employees in the ordinary course of business and in accordance with past
practice; and
(e) ministerial amendments to the Certificate or Articles of
Incorporation or By-laws of Sterling's subsidiaries not inconsistent with the
terms of this Agreement.
9.2 Notification of Certain Matters. Sterling shall give prompt
-------------------------------
written notice to Actava, Orion and MITI specifying in reasonable detail:
(i) any notice of, or other communication relating to, a default or event which,
with notice or lapse of time or both, would become a default under any
agreement, indenture or instrument material to the business, assets, property,
condition (financial or otherwise) or the results of operations of Sterling and
its subsidiaries, taken as a whole, to which Sterling or any of its subsidiaries
is a party or is subject; (ii) any material notice or other communication from
any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement
including the Mergers; (iii) any material notice or other communication from any
regulatory authority (including the SEC or the NASD) in connection with the
transactions contemplated by this Agreement; (iv) any event which has a Sterling
Material Adverse Effect or the occurrence of an event which, so far as
reasonably can be foreseen at the time of its occurrence, would result in a
Sterling Material Adverse Effect; (v) any claims, actions, proceedings or
investigations commenced or, to Sterling's knowledge, threatened, involving or
affecting Sterling or any of its subsidiaries or any of its property or assets,
or, to Sterling's knowledge, any employee, consultant, director or officer, in
his or her capacity as such, of Sterling or any of its subsidiaries which, if
pending on the date hereof, would have been required to have been disclosed in a
Schedule pursuant to this Agreement or which relates to the consummation of the
Sterling Merger; and (vi) any event or action which if known on the date hereof
(a) would have caused a representation or warranty set forth in Article 5 hereof
to be untrue or incomplete or incorrect in any
107
material respect or (b) would have been required to have been disclosed in a
Schedule pursuant to this Agreement.
9.3 Access and Information.
----------------------
(i) Sterling will give each of Actava, Orion and MITI and their
respective authorized representatives (including in each case their financial
advisors, accountants and legal counsel) at all reasonable times and on
reasonable advance notice access to all plants, offices, warehouses and other
facilities and to all contracts, agreements, commitments, books and records
(including tax returns) of it and its subsidiaries (except to the extent any
such agreements or contracts by their terms restrict access to third parties and
the consent of the other party(ies) thereto cannot be obtained after reasonable
efforts to do so), will permit Actava, Orion or MITI, as the case may be, to
make such inspections as it may require and will cause its officers and those of
its subsidiaries promptly to furnish Actava, Orion or MITI, as the case may be,
with (a) such financial and operating data and other information with respect to
the business and properties of Sterling and its subsidiaries as Actava, Orion or
MITI may from time to time request, and (b) a copy of each report, schedule and
other document filed or received by Sterling or any of its subsidiaries pursuant
to the requirements of federal or state securities laws.
(ii) Each of Actava, Orion and MITI will hold and will each cause
its respective affiliates, employees, representatives, consultants and advisors
to hold in strict confidence, unless compelled to disclose by judicial or
administrative process, or, in the opinion of its counsel, by other requirements
of law, all documents and information concerning the other party hereto and its
subsidiaries and affiliates furnished to Actava, Orion or MITI in connection
with the transactions contemplated by this Agreement (except to the extent that
such information can be shown to have been (a) previously known by Actava, Orion
or MITI, as the case may be, or any affiliate of either of them, (b) in the
public domain through no fault of any of Actava, Orion or MITI, as the case may
be, or any of their affiliates, employees, representatives, consultants or
advisors or (c) later lawfully acquired from other sources unless any of Actava,
Orion or MITI, as the case may be, knew such information was obtained in
violation of an agreement of confidentiality) and will not release or disclose
such information to any other person, except its auditors, attorneys, financial
advisors, and other consultants and advisors and lending institutions (including
banks) in connection with this Agreement (it being understood that
108
such persons shall be informed by Actava, Orion or MITI, as the case may be, of
the confidential nature of such information and shall be directed by Actava,
Orion or MITI, as the case may be, to treat such information confidentially).
If the transactions contemplated by this Agreement are not consummated, such
confidence shall be maintained except to the extent such information comes into
the public domain under judicial or administrative process or other requirements
of law or through no fault of any of Actava, Orion or MITI, as the case may be,
or any of their affiliates, employees, representatives, consultants or advisors
and, if requested by Sterling, each of Actava, Orion or MITI, as the case may
be, will promptly destroy or return to Sterling all copies of written
information furnished by Sterling or its respective affiliates, agents, repre-
sentatives or advisors and all copies thereof and excerpts therefrom. If
Actava, Orion or MITI shall be required to make disclosure of any such
information by operation of law, Actava, Orion and MITI, as the case may be,
shall give Sterling prior written notice of the making of such disclosure and
shall use all reasonable efforts to afford Sterling an opportunity to contest
the making of such disclosures.
9.4 Stockholder Approval. As soon as practicable, Sterling will take
--------------------
all steps necessary to duly call, give notice of, convene and hold a meeting of
its stockholders (including filing with the SEC and mailing to its stockholders
the Proxy Statement) for the purpose of adopting and approving this Agreement
and the Sterling Merger and for such other purposes as may be necessary or
desirable in connection with effectuating the transactions contemplated hereby.
Subject to the compliance by Actava, Orion and MITI with the material terms and
conditions of this Agreement, the Board of Directors of Sterling, subject to
applicable law and the fiduciary duties of loyalty and care (and also subject to
the understanding that members of the Sterling Board of Directors who serve as
voting trustees of the Sterling Voting Trust, shall not be required as a result
of this Agreement to take any actions contrary to their fiduciary duties in
their capacities as trustees), (i) will not change its recommendation to the
stockholders of Sterling that they adopt and approve this Agreement and the
Sterling Merger and (ii) will use its best efforts to obtain any necessary
approval by its stockholders of the transactions contemplated hereby.
9.5 Benefit Plans. Except as otherwise provided in this Agreement,
-------------
no award or grant under any of Sterling's stock option plans or any other
benefit plan or program shall be made without the consent of Actava, Orion and
MITI;
109
nor shall Sterling take any action or permit any action to be taken to
accelerate the vesting of any options or other restricted securities previously
granted pursuant to any stock option plans or other benefit plan. Sterling
shall not make any material amendment to any (i) stock option plan or options
outstanding thereunder, (ii) any other option or warrant agreement or other
stock-based benefit plan, or (iii) the terms of any other security convertible
into or exchangeable for Sterling Common Stock without the consent of Actava,
Orion and MITI.
9.6 No Inconsistent Activities. Subject to applicable law and the
--------------------------
fiduciary duties of loyalty and care of the Sterling Board of Directors,
Sterling will not, and will direct its officers, directors and other
representatives (including, without limitation, any financial advisor, attorney
or accountant retained by Sterling) not to, directly or indirectly, solicit,
encourage, or participate in any way in discussions or negotiations with, or
provide any information, data or assistance to, any third party (other than
Actava, Orion, and MITI) concerning any acquisition of shares of capital stock
of Sterling or all or any significant portion of the total assets of Sterling or
any material subsidiary or division of Sterling (in either case whether by
merger, consolidation, purchase of assets, tender offer or otherwise). Sterling
will promptly communicate to Actava, Orion and MITI in writing the terms of any
proposal or contact it may receive in respect of any such transaction. Sterling
agrees not to release any third party from any confidentiality or standstill
agreements to which Sterling or any of its subsidiaries is a party.
9.7 SEC and Stockholder Filings. Sterling shall send to Actava,
---------------------------
Orion and MITI copies of all public reports and materials as and when it sends
the same to its stockholders or the SEC.
9.8 Consents, Waivers, Authorizations, etc. Sterling will use its
--------------------------------------
best efforts to obtain all consents, waivers, authorizations, orders and
approvals of and make all filings and registrations with, any governmental com-
mission, board or other regulatory body or any nongovernmental third party,
required for, or in connection with, the performance by it of this Agreement and
the consummation by it of the transactions contemplated hereby, or as may be
required in order not to accelerate, violate, breach or terminate any agreement
to which Sterling or any of its subsidiaries may be subject, if the failure to
obtain or make such consent, waiver, authorization, order, approval, filing or
registration would have a Sterling Material
110
Adverse Effect. Sterling will cooperate fully with each of Actava, Orion and
MITI in assisting it to obtain such consents, authorizations, orders and
approvals. Sterling will not take any action which could reasonably be antici-
pated to have the effect of delaying, impairing or impeding the receipt of any
required approvals, regulatory or otherwise.
ARTICLE 10
COVENANTS OF MITI
MITI covenants and agrees that from and after the execution and
delivery of this Agreement to the Effective Time:
10.1 Conduct of Business of MITI. Except as expressly contemplated
---------------------------
by this Agreement, MITI shall, and it shall use its best efforts to cause its
United States subsidiaries and Joint Venture Entities to, conduct its and their
businesses in the ordinary course and consistent with past practice (other than
any changes made in connection with the initial audits of the Joint Venture
Entities or changes made in an effort to conduct business operations more
effectively), and MITI shall, and it shall use its best efforts to cause each of
the United States subsidiaries and the Joint Venture Entities to, use its best
efforts to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain, in accordance with past
practice, satisfactory relationships with all persons with which it does
business. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, prior to the Effective Time,
none of MITI, any of its United States subsidiaries nor any Operating Joint
Venture Entity will, without the prior written consent of Actava, Orion and
Sterling:
(i) amend or propose to amend its Certificate of Incorporation
or By-laws (or comparable governing instruments);
(ii) authorize for issuance, issue, grant, sell, pledge, dispose
of or propose to issue, grant, sell, pledge or dispose of any shares of, or any
options, warrants, commitments, subscriptions or rights of any kind to acquire
any shares of, the capital stock of MITI, any United States subsidiary or any
Operating Joint Venture Entity or any securities convertible into or
exchangeable for shares of stock of any class of MITI, any of its United
111
States subsidiaries or any Operating Joint Venture Entity except for (A) the
issuance of shares of MITI Common Stock pursuant to the exercise of stock
options or warrants or other rights or the conversion of convertible securities
described on Schedule 6.2(a) and outstanding on the date hereof in accordance
with their present terms or (B) issuances as contemplated by Schedule 10.1(ii);
(iii) other than as contemplated on Schedules 6.2(a) and 6.2(b),
split, combine, subdivide or reclassify any shares of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock or declare, pay or set aside any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem, purchase or
otherwise acquire or offer to acquire any shares of its own capital stock or any
of its United States subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(iv) (a) except for (I) indebtedness which is contemplated by
the MITI Budget, (II) indebtedness (including obligations in respect of capital
leases) not in excess of $10,000,000 or (III) indebtedness owed or guaranteed by
MITI and its United States subsidiaries to the Overseas Private Investment
Corporation (the "OPIC Loan"), create, incur or assume any short-term debt,
long-term debt or obligations in respect of capital leases; (b) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
indirectly, contingently or otherwise) for the obligations of any other person
except direct or indirect wholly-owned subsidiaries of MITI or the Joint Venture
Entities, in the ordinary course of business consistent with past practice;
(c) make any capital expenditures or make any loans, advances or capital
contributions to, or investments in, any other person (other than (I) customary
travel or business advances to employees, directors, representatives,
consultants or advisors or subsidiaries made in the ordinary course of business
consistent with past practice, (II) loans, advances, capital contributions to or
investments in foreign entities in accordance with currently committed, budgeted
capital expenditures and (III) additional capital expenditures not in excess of
$10,000,000) or (d) incur any material liability or obligation (absolute,
accrued, contingent or otherwise) other than in the ordinary and usual course of
business and consistent with past practice;
112
(v) except in the ordinary course of business consistent with
past practice, as may be required by local law or except for liens and other
security interests granted by MITI and its United States subsidiaries to secure
the OPIC Loan or in connection with the incurrence of any indebtedness by MITI
which is permitted by the preceding clause (iv) hereof, sell, transfer,
mortgage, or otherwise dispose of, or encumber, or agree to sell, transfer,
mortgage or otherwise dispose of or encumber, any material assets or properties,
real, personal or mixed;
(vi) increase in any manner the compensation of any of its
officers in excess of $100,000, except in the ordinary course of business
consistent with past practice; or
(vii) agree, commit or arrange to do any of the foregoing.
Notwithstanding the foregoing, nothing in this Agreement shall
preclude MITI, any of its United States subsidiaries or any Operating Joint
Venture Entity from taking any or all of the following actions and actions
incident thereto or require the consent of Actava, Orion and Sterling with
respect thereto:
(a) grants of options to acquire up to 107,000 shares of MITI
Common Stock (subject to adjustment in accordance with the MITI 1994 Stock
Option Plan) to officers, directors, employees and consultants of MITI in
accordance with the MITI 1994 Stock Option Plan and grants of options having an
exercise price at least equal to the market price on the grant date of the
underlying MITI Common Stock to employees, directors, representatives,
consultants or advisors of MITI or its United States subsidiaries pursuant to
plans in effect on the date of this Agreement, as the same may be amended to
increase the number of shares available thereunder, and consistent with past
practice;
(b) declaration and payment of dividends and other distributions
to MITI or its subsidiaries by their respective subsidiaries or any of the Joint
Venture Entities;
(c) draws under and pursuant to the existing MITI credit
facility or facilities listed on Schedule 10.1;
(d) entering into severance, termination or retention
agreements, and terminating any employment agreements, with its officers and key
employees in the
113
ordinary course of business and in accordance with past practice;
(e) ministerial amendments to the Certificate or Articles of
Incorporation or By-laws of MITI's United States subsidiaries not inconsistent
with the terms of this Agreement; and
(f) amendments, modifications or restatements of the Certificate
or Articles of Incorporation or By-laws (or comparable governing instruments and
charter documents) of the Joint Venture Entities, so long as any of the above
would not have a MITI Material Adverse Effect.
10.2 Notification of Certain Matters. MITI shall give prompt written
-------------------------------
notice to Actava, Orion and Sterling specifying in reasonable detail: (i) any
notice of, or other communication relating to, a default or event which, with
notice or lapse of time or both, would become a default under any agreement,
indenture or instrument material to the business, assets, property, condition
(financial or otherwise) or the results of operations of MITI, its United States
subsidiaries or any Joint Venture Entity, taken as a whole, to which MITI, any
of its United States subsidiaries or any Joint Venture Entity is a party or is
subject; (ii) any material notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement including the
Mergers; (iii) any material notice or other communication from any regulatory
authority in connection with the transactions contemplated by this Agreement;
(iv) any event which has a MITI Material Adverse Effect, or the occurrence of an
event which, so far as reasonably can be foreseen at the time of its occurrence,
would result in any MITI Material Adverse Effect; (v) any claims, actions,
proceedings or investigations commenced or, to MITI's knowledge, threatened,
involving or affecting MITI, any of its United States subsidiaries or any Joint
Venture Entity or any of their respective property or assets, or, to MITI's
knowledge, any employee, consultant, director or officer, in his or her capacity
as such, of MITI or any of its subsidiaries which, if pending on the date
hereof, would have been required to have been disclosed in a Schedule pursuant
to this Agreement or which relates to the consummation of the MITI Merger; and
(vi) any event or action which if known on the date hereof (a) would have caused
a representation or warranty set forth in Article 6 hereof to be untrue or
incomplete or incorrect in any material respect or (b) would have been required
to have been disclosed in a Schedule pursuant to this Agreement.
114
10.3 Access and Information.
----------------------
(i) MITI will give each of Actava, Orion and Sterling and their
respective authorized representatives (including in each case their financial
advisors, accountants and legal counsel) at all reasonable times and on
reasonable advance notice access to all plants, offices, warehouses and other
facilities and to all contracts, agreements, commitments, books and records
(including tax returns) of it and its subsidiaries (except to the extent any
such agreements or contracts by their terms restrict access to third parties and
the consent of the other party(ies) thereto cannot be obtained after reasonable
efforts to do so), will permit Actava, Orion or Sterling, as the case may be, to
make such inspections as it may require and will cause its officers and those of
its United States subsidiaries and will use its best efforts to cause
representatives of the Joint Venture Entities promptly to furnish Actava, Orion
or Sterling, as the case may be, with such financial and operating data and
other information with respect to the business and properties of MITI, its
United States subsidiaries and its Joint Venture Entities as Actava, Orion, or
Sterling may from time to time request.
(ii) Each of Actava, Orion and Sterling will hold and will each
cause its respective affiliates, employees, representatives, consultants and
advisors to hold in strict confidence, unless compelled to disclose by judicial
or administrative process, or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning the other party
hereto and its subsidiaries and affiliates furnished to Actava, Orion or
Sterling in connection with the transactions contemplated by this Agreement
(except to the extent that such information can be shown to have been
(a) previously known by Actava, Orion or Sterling, as the case may be, or any
affiliate of either of them, (b) in the public domain through no fault of any of
Actava, Orion or Sterling, as the case may be, or any of their affiliates,
employees, representatives, consultants or advisors or (c) later lawfully
acquired from other sources unless any of Actava, Orion or Sterling, as the case
may be, knew such information was obtained in violation of an agreement of
confidentiality) and will not release or disclose such information to any other
person, except its auditors, attorneys, financial advisors, and other consul-
tants and advisors and lending institutions (including banks) in connection with
this Agreement (it being understood that such persons shall be informed by
Actava, Orion or Sterling, as the case may be, of the confidential nature of
such information and shall be directed by Actava, Orion or Sterling, as the case
may be, to treat such information
115
confidentially). If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained except to the extent such
information comes into the public domain under judicial or administrative
process or other requirements of law or through no fault of any of Actava, Orion
or Sterling, as the case may be, or any of their affiliates, employees,
representatives, consultants or advisors and, if requested by MITI, each of
Actava, Orion and Sterling, as the case may be, will promptly destroy or return
to MITI all copies of written information furnished by MITI or its respective
affiliates, agents, representatives or advisors and all copies thereof and
excerpts therefrom. If Actava, Orion or Sterling shall be required to make
disclosure of any such information by operation of law, Actava, Orion or
Sterling, as the case may be, shall give MITI prior written notice of the making
of such disclosure and shall use all reasonable efforts to afford MITI an
opportunity to contest the making of such disclosures.
10.4 Stockholder Approval. As soon as practicable, MITI will take
--------------------
all steps necessary to duly call, give notice of, convene and hold a meeting of
its stockholders for the purpose of adopting and approving this Agreement and
the MITI Merger and for such other purposes as may be necessary or desirable in
connection with effectuating the transactions contemplated hereby unless MITI's
stockholders, in lieu of such a meeting, have acted by written consent pursuant
to the provisions of Section 228 of the DGCL, with respect to the foregoing in
which case MITI will have no obligation hereunder to convene and hold a meeting
of its stockholders. Subject to the compliance by Actava, Orion and Sterling
with the material terms and conditions of this Agreement, the Board of Directors
of MITI, subject to applicable law and the fiduciary duties of loyalty and care,
(i) will not change its recommendation to the stockholders of MITI that they
adopt and approve this Agreement and (ii) will use its best efforts to obtain
any necessary approval by its stockholders of the transactions contemplated
hereby.
10.5 Benefit Plans. Except as otherwise provided in this Agreement,
-------------
no award or grant under any of MITI's stock option plans or any other benefit
plan or program shall be made without the consent of Actava, Orion and Sterling;
nor shall MITI take any action or permit any action to be taken to accelerate
the vesting of any options or other restricted securities previously granted
pursuant to any stock option plans or other benefit plan. MITI shall not make
any material amendment to any (i) stock option plan or options outstanding
thereunder, (ii) any other option or warrant agreement or other stock-based
benefit plan, or
116
(iii) the terms of any other security convertible into or exchangeable for MITI
Common Stock without the consent of Actava, Orion and Sterling.
10.6 No Inconsistent Activities. Subject to applicable law and the
--------------------------
fiduciary duties of loyalty and care of the MITI Board of Directors, MITI will
not, and will direct its officers, directors and other representatives
(including, without limitation, any financial advisor, attorney or accountant
retained by MITI) not to, directly or indirectly, solicit, encourage, or
participate in any way in discussions or negotiations with, or provide any
information, data or assistance to, any third party (other than Actava, Orion
and Sterling) concerning any acquisition of shares of capital stock of MITI or
all or any significant portion of the total assets of MITI or any material
subsidiary or division of MITI (in either case whether by merger, consolidation,
purchase of assets, tender offer or otherwise). MITI will promptly communicate
to Actava, Orion and Sterling in writing the terms of any proposal or contact it
may receive in respect of any such transaction. MITI agrees not to release any
third party from any confidentiality or standstill agreements to which MITI or
any of its subsidiaries is a party.
10.7 Stockholder Communications. MITI shall send or make available
--------------------------
to Actava, Orion and Sterling copies of all reports and materials sent by MITI
to all of its stockholders as and when it sends the same to its stockholders.
10.8 Consents, Waivers, Authorizations, etc. MITI will use its best
--------------------------------------
efforts to obtain all consents, waivers, authorizations, orders and approvals of
and make all filings and registrations with, any governmental commission, board
or other regulatory body or any nongovernmental third party, required for, or in
connection with, the performance by it of this Agreement and the consummation by
it of the transactions contemplated hereby, or as may be required in order not
to accelerate, violate, breach or terminate any agreement to which MITI or any
of its subsidiaries may be subject, if the failure to obtain or make such
consent, waiver, authorization, order, approval, filing or registration would
have a MITI Material Adverse Effect. MITI will cooperate fully with each of
Actava, Orion and Sterling in assisting it to obtain such consents,
authorizations, orders and approvals. MITI will not take any action which could
reasonably be anticipated to have the effect of delaying, impairing or impeding
the receipt of any required approvals, regulatory or otherwise.
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ARTICLE 11
COVENANTS OF EACH OF ACTAVA, OPC MERGERCO,
MITI MERGERCO, ORION, STERLING AND MITI
11.1 Further Assurances. Subject to the terms and conditions herein
------------------
provided, each of Actava, OPC Mergerco, MITI Mergerco, Orion, Sterling and MITI
agrees to use its best efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
to consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including (i) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby,
(ii) obtaining all governmental consents required for the consummation of the
Mergers and the transactions contemplated thereby, and (iii) making and causing
their stockholders, as applicable, to timely make all necessary filings under
the HSR Act. Upon the terms and subject to the conditions hereof, each of
Actava, OPC Mergerco, MITI Mergerco, Orion, Sterling and MITI agrees to use any
and all best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things reasonably necessary to satisfy the other
conditions of the closing set forth herein. Each Merging Party will consult
with counsel for the other Merging Parties as to, and will permit such counsel
to participate in, at such other Merging Party's expense, any lawsuits or
proceedings referred to in clause (i) above brought against any Merging Party or
Merging Parties but not against any or all of the other Merging Parties. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the officers and
directors of the Surviving Corporation shall take all such necessary action.
11.2 Public Announcements. So long as this Agreement is in effect,
--------------------
each of Actava, Orion, Sterling and MITI shall not, and shall cause their
affiliates not to, issue or cause the publication of any press release or any
other announcement with respect to the Mergers or the transactions contemplated
by this Agreement without the written consent of the other Merging Parties,
except where such release or announcement is required by applicable law or
pursuant to any listing agreement with, or the rules or regulations of the SEC
or NYSE or NASD or other national securities exchange in which case each of
Actava, Orion,
118
Sterling and MITI will deliver simultaneously a copy of such release or
announcement to the other Merging Parties.
11.3 Exchange Act and Securities Act Compliance. In consummating the
------------------------------------------
Mergers and the transactions contemplated hereby, each Merging Party shall
comply in all material respects with the provisions of the Exchange Act and the
Securities Act and the rules and regulations thereunder.
11.4 Surviving Corporation Board of Directors.
----------------------------------------
(i) Subject to the proviso contained in Section 1.5.2 hereof, it
is the intention of the Merging Parties that the Surviving Corporation will
obtain the necessary director and/or stockholder approvals to fix, as of the
Effective Time, the number of directors constituting a full Board of Directors
of the Surviving Corporation at ten and to elect initially as directors of the
Surviving Corporation six individuals designated prior to the Effective Time by
the then Board of Directors of Orion and four individuals designated prior to
the Effective Time by the then Board of Directors of Actava. Subject to the
proviso contained in Section 1.5.2 hereof, each of the Merging Parties agrees
to use its best efforts to establish such a Board of Directors of the Surviving
Corporation.
(ii) In the event that (a) at the Effective Time, Triton
designates one member of the Surviving Corporation's Board of Directors as
provided in the proviso contained in Section 1.5.2, and (b)(x) prior to the time
that the Surviving Corporation's Board of Directors nominates directors for
election at the first annual meeting of stockholders of the Surviving
Corporation next following the end of the Surviving Corporation's fiscal year
ending December 31, 1995, Triton loses or waives its right to designate one
member of the Surviving Corporation's Board of Directors and (y) the person
designated at the Effective Time by Triton to the Surviving Corporation's Board
of Directors resigns from the Surviving Corporation's Board of Directors, then
if the conditions set forth in clauses (a) and (b) above are satisfied, each of
Actava, Orion, MITI and Sterling agrees to use its best efforts to cause the
Board of Directors of the Surviving Corporation, consistent with their fiduciary
duties and applicable law, to increase the size of the Board of Directors of the
Surviving Corporation to ten persons and to fill the two vacancies in the
Surviving Corporation's Board of Directors with the two persons listed on
Schedule 1.5.2(b) under the caption "Actava's Designees to the Surviving
Corporation's Board of Directors," who, pursuant to Section 1.5.2 hereof, were
119
designated by Actava to serve on the Surviving Corporation's Board of Directors
but were unable to serve because Triton did not waive its rights under the
Triton Stockholder Agreement, each of whom shall hold office until their
respective successors are duly elected or appointed and qualified in the manner
provided in the Certificate of Incorporation and By-laws of the Surviving
Corporation.
(iii) Each of Actava, Orion, MITI and Sterling agrees to use its
best efforts to cause the Board of Directors of the Surviving Corporation to
adopt, consistent with its fiduciary duties and applicable law, a stockholder
rights plan or "poison pill," with such terms and conditions as the Surviving
Corporation's Board of Directors determines.
11.5 Listing of the Common Stock. Each of the Merging Parties shall
---------------------------
use its best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things reasonably necessary, proper or advisable to cause
the Common Stock to be authorized for listing on the NYSE or the American Stock
Exchange Inc. ("AMEX") or to be quoted on the National Market System of the
National Association of Securities Dealers, Inc. Automatic Quotations System
("NMS/NASDAQ").
11.6 Labor Matters. Each of the Merging Parties agrees to deliver to
-------------
each of the other Merging Parties any written communications which implicate the
WARN ACT and relate to the transactions contemplated by this Agreement provided
to the employees of the Merging Parties during the period from the date hereof
until the Effective Time, understanding (a) that one or more of the Merging
Parties may be required by the WARN Act to give notices to some of its employees
of their imminent termination, (b) that one or more of the Merging Parties may
be required by applicable law to communicate with some of its employees
regarding their impending termination of employment and matters connected
therewith, and (c) that all of the Merging Parties have an interest in any
written communications made to their respective employees concerning the matters
contemplated by this Agreement.
11.7 Refinancing of Indebtedness. Each of the Merging Parties agrees
---------------------------
to use its best efforts and to take all necessary steps and actions to
facilitate the refinancing by Orion and Actava of the Orion Senior Indebtedness
(as defined in Section 15.9) and the Orion Subordinated Indebtedness (as defined
in Section 15.9).
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ARTICLE 12
CONDITIONS
12.1 Conditions to Each Merging Party's Obligations. The respective
----------------------------------------------
obligations of each Merging Party to effect the Merger or Mergers to which it is
a party shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions:
12.1.1 Stockholder Approval.
--------------------
(i) This Agreement and the Orion Merger shall have been adopted
at or prior to the Effective Time by the requisite vote of the
stockholders of Actava and Orion in accordance with applicable law;
(ii) This Agreement and the Sterling Merger shall have been
adopted at or prior to the Effective Time by the requisite vote of the
stockholders of Actava and Sterling in accordance with applicable law;
and
(iii) This Agreement and the MITI Merger shall have been adopted
at or prior to the Effective Time by the requisite vote of the
stockholders of Actava and MITI in accordance with applicable law and
the terms of that certain Stockholders Agreement, dated as of
August 15, 1994, among MITI and its stockholders (the "MITI
Stockholders Agreement").
12.1.2 Consummation of the Mergers. Each of the Mergers shall
---------------------------
have been concurrently consummated.
12.1.3 No Injunction. No order, statute, rule, regulation,
-------------
executive order, stay, decree, judgment or injunction shall have been
enacted, entered, promulgated or enforced by any court or governmental
authority which prohibits or prevents the consummation of any of the
Mergers and which has not been stayed or vacated by the Effective Time.
Actava, Orion, Sterling and MITI shall use their best efforts and shall
cooperate with each other to have any such order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction vacated
or stayed.
12.1.4 HSR Act. Any waiting period applicable to each of the
-------
Mergers under the HSR Act shall
121
have expired or earlier termination thereof shall have been granted.
12.1.5 Required Consents. Any required consents or approvals of
-----------------
any person to the Mergers or the transactions contemplated hereby shall
have been obtained and be in full force and effect, except for those the
failure of which to obtain will not have a material adverse effect on the
business, assets, properties, prospects, condition (financial or otherwise)
or the results of operations of the Surviving Corporation and its
subsidiaries taken as a whole.
12.1.6 Effective Form S-4. The Form S-4 shall have been
------------------
declared effective by the SEC and no stop order suspending the
effectiveness of the Form S-4 shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the SEC.
12.1.7 Appraisal Rights. There shall not have been either
----------------
(i) Sterling Dissenting Shares in excess of 25% of the Sterling Common
Stock entitled to vote at the meeting of Sterling stockholders held to vote
on this Agreement and the transactions contemplated hereby or (ii) MITI
Dissenting Shares in excess of 25% of the MITI Common Stock entitled to
vote at the meeting, if any, of MITI stockholders, or the action taken by
consent pursuant to the provisions of Section 228 of the DGCL held or
undertaken to vote on this Agreement and the transactions contemplated
hereby.
12.2 Conditions to Obligations of Actava. The obligation of Actava
-----------------------------------
to effect the Mergers shall be subject to the fulfillment at or prior to the
Effective Time of the following additional conditions, any one or more of which
may be waived by Actava:
12.2.1 Obligations Performed. Each of Orion, Sterling and MITI
---------------------
shall have performed and complied with in all material respects its
obligations, agreements and covenants under this Agreement which are
required to be performed or complied with by it at or prior to the
Effective Time.
12.2.2 Representations and Warranties. As of the Effective Time
------------------------------
as if made as of the Effective Time, each of the representations and
warranties contained in (i) Article 4 or Article 4A of this Agreement which
are modified by "materiality" or an
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"Orion Material Adverse Effect" (an "Orion Modified Representation"),
(ii) Article 5 or Article 5A of this Agreement which are modified by
"materiality" or a "Sterling Material Adverse Effect" (a "Sterling Modified
Representation") and (iii) Article 6 or Article 6A of this Agreement which
are modified by "materiality" or a "MITI Material Adverse Effect" (a "MITI
Modified Representation") shall be true and correct in all respects and
each representation and warranty contained in (x) Article 4 or Article 4A
which is not so modified (an "Orion Non-Modified Representation"),
(y) Article 5 or Article 5A which is not so modified (a "Sterling Non-
Modified Representation") and (z) Article 6 or Article 6A which is not so
modified (a "MITI Non-Modified Representation") shall be true and correct
in all material respects (except in each case for such changes that are
caused by Orion's, Sterling's or MITI's compliance, as the case may be,
with the terms of this Agreement or are contemplated hereby).
12.2.3 Certificates Delivered. Each of Orion, Sterling and MITI
----------------------
shall have delivered to Actava a certificate executed on its behalf by its
President or another authorized executive officer in their corporate
capacity to the effect that the conditions set forth in subsections 12.2.1
and 12.2.2 as such conditions apply to such officer's company have been
satisfied.
12.2.4 No Material Adverse Change. There shall not have
--------------------------
occurred since April 12, 1995 any material adverse change in the business,
assets, prospects, condition (financial or otherwise) and the results of
operations of any of (i) Orion and its subsidiaries, taken as a whole, (ii)
Sterling and its consolidated subsidiaries, taken as a whole or (iii) MITI,
its United States subsidiaries and Operating Joint Venture Entities, taken
as a whole (except in each such case for such changes that are caused by
compliance with the terms of this Agreement and are contemplated hereby).
12.2.5 Actava Stock Price. The Average Closing Price shall not
------------------
be less than $8.25 (subject to appropriate upward or downward adjustment in
the event of a stock split, stock dividend or recapitalization or other
similar event applicable to shares of Common Stock prior to the
Determination Date).
123
12.2.6 Opinions of Counsel. Actava shall have received an
-------------------
opinion of (i) Xxxx, Weiss, Rifkind, Xxxxxxx and Xxxxxxxx, counsel to
Orion, substantially in the form of Exhibit D hereto (the "Xxxx Xxxxx
Opinion"), (ii) Xxxxxxxx Xxxx Xxxxxxxx Xxxxxx Xxxxxxxx & Xxxxx, P.C.,
counsel to Sterling, substantially in the form of Exhibit E hereto (the
"Xxxxxxxx Brog Opinion") and (iii) Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx,
counsel to MITI, substantially in the form of Exhibit F hereto (the "Xxxxx
Xxxx Opinion") and (iv) an opinion of Long, Xxxxxxxx & Xxxxxx, counsel to
Actava, substantially to the effect that no gain or loss will be recognized
for federal income tax purposes by the Actava Stockholders as a result of
the Mergers.
12.2.7 Fairness Opinion. The opinion of First Boston, dated as
----------------
of the date of the Proxy Statement, that as of such date the Orion Exchange
Ratio, the Sterling Exchange Ratio and the MITI Exchange Ratio, taken as a
whole, are fair from a financial point of view to the stockholders of
Actava, shall have not been withdrawn, amended or modified.
12.2.8 Listing. The shares of Common Stock shall have been
-------
accepted for listing on the NYSE or the AMEX or accepted for quotation on
the NMS/NASDAQ.
12.2.9 Refinancing of Orion Senior Indebtedness. The Orion
----------------------------------------
Senior Indebtedness shall have been refinanced on terms reasonably
satisfactory to Actava.
12.2.10 Refinancing of Orion Subordinated Indebtedness. The
----------------------------------------------
Orion Subordinated Indebtedness shall have been refinanced on terms
reasonably satisfactory to Actava.
12.2.11 FIRPTA Certificate. Actava shall have received a
------------------
certificate of an executive officer of each of Orion, Sterling and MITI,
sworn to under penalty of perjury, setting forth the name, address and
Federal tax identification number of Orion, Sterling or MITI, as the case
may be, and stating that no interest in Orion, Sterling or MITI, as the
case may be, constitutes a "United States real property interest" within
the meaning of Section 897(c)(1) of the Code. If, on or before the
Effective Time, Actava shall not have received any such certificate, Actava
may withhold from the Common Stock payable at the Effective Time to the
stockholders of the company with respect to which such certificate was not
received such amounts as may be
124
required to be withheld therefrom under Section 1445 of the Code.
12.3 Conditions to Obligations of Orion. The obligations of Orion to
----------------------------------
effect the Orion Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following additional conditions, any one or more of which
may be waived by Orion:
12.3.1 Obligations Performed. Each of Actava, OPC Mergerco,
---------------------
MITI Mergerco, Sterling and MITI shall have performed and complied with in
all material respects its obligations, agreements and covenants under this
Agreement which are required to be performed or complied with by it at or
prior to the Effective Time.
12.3.2 Representations and Warranties. As of the Effective Time
------------------------------
as if made as of the Effective Time, each of (i) the representations and
warranties contained in Article 3, Article 3A or Article 3B of this
Agreement which are modified by "materiality" or an "Actava Material
Adverse Effect" (an "Actava Modified Representation"), (ii) the Sterling
Modified Representations and (iii) the MITI Modified Representations shall
be true and correct in all respects and each representation and warranty
contained in (x) Article 3, Article 3A or Article 3B which is not so
modified (an "Actava Non-Modified Representation"), (y) each Sterling Non-
Modified Representation and (z) each MITI Non-Modified Representation shall
be true and correct in all material respects (except in each case for such
changes that are caused by Actava's, Sterling's or MITI's compliance, as
the case may be, with the terms of this Agreement or are contemplated
hereby).
12.3.3 Certificate. Each of Actava, Sterling and MITI shall
-----------
have delivered to Orion a certificate executed on its behalf by its
President or another duly authorized executive officer in their corporate
capacity to the effect that the conditions set forth in subsections 12.3.1
and 12.3.2 as such conditions apply to such officer's company have been
satisfied.
12.3.4 No Material Adverse Change. There shall not have
--------------------------
occurred since April 12, 1995 any material adverse change in the business,
assets, prospects, condition (financial or otherwise) or the results of
operations of (i) Actava, Roadmaster and
125
their respective subsidiaries, taken as a whole, (ii) Sterling and its
consolidated subsidiaries, taken as a whole or (iii) MITI, its United
States subsidiaries and Operating Joint Venture Entities, taken as a whole
(except, in each such case, for such changes that are caused by compliance
with the terms of this Agreement and are contemplated hereby).
12.3.5 Opinions of Counsel. Orion shall have received (i) the
-------------------
opinion of Long, Xxxxxxxx & Xxxxxx substantially in the form of Exhibit G
hereto (the "Long Xxxxxxxx Opinion"), (ii) the Xxxxxxxx Xxxx Opinion and
(iii) the Xxxxx Xxxx Opinion and (iv) an opinion of Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx, substantially to the effect that the Orion Merger will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code.
12.3.6 Fairness Opinion. The opinion of Alex. Xxxxx, dated as
----------------
of the date of the Proxy Statement, that the value of the consideration to
be paid to the stockholders of Orion in the Orion Merger is fair from a
financial point of view to the stockholders of Orion, shall have not been
withdrawn, amended or modified.
12.3.7 Refinancing of Orion Senior Indebtedness. The Orion
----------------------------------------
Senior Indebtedness shall have been refinanced on terms reasonably
satisfactory to Orion.
12.3.8 Refinancing of Orion Subordinated Indebtedness. The
----------------------------------------------
Orion Subordinated Indebtedness shall have been refinanced on terms
reasonably satisfactory to Orion.
12.3.9 Refinancing of Other Indebtedness. The Other
---------------------------------
Indebtedness (as defined in Section 15.9) shall have been refinanced or
repaid in full.
12.3.10 Refinancing or Contribution of MetProductions
---------------------------------------------
Indebtedness and MII Indebtedness. The MetProductions Indebtedness and the
---------------------------------
MII Indebtedness shall have been refinanced or repaid in full or
MetProductions Inc., a Delaware corporation ("MetProductions"), or Met
International, Inc., a Delaware corporation ("Met International"), shall,
at Orion's option, contribute, assign or convey to the Surviving
Corporation the MetProductions Indebtedness and/or the MII Indebtedness, as
the case may be, in
126
exchange for shares of Common Stock as provided for in the Contribution
Agreement.
12.3.11 Ancillary Agreements; Shelf Registration Statement.
--------------------------------------------------
Orion shall have received a fully executed copy of the Contribution
Agreement and the Shelf Registration Statement shall have been declared
effective by the SEC and no stop order suspending the effectiveness of the
Shelf Registration Statement shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the SEC.
12.4 Conditions to Obligations of Sterling. The obligation of
-------------------------------------
Sterling to effect the Sterling Merger shall be subject to the fulfillment at or
prior to the Effective Time of the following additional conditions, any one or
more of which may be waived by Sterling:
12.4.1 Obligations Performed. Each of Actava, OPC Mergerco,
---------------------
MITI Mergerco, Orion and MITI shall have performed and complied with in all
material respects its obligations, agreements and covenants under this
Agreement which are required to be performed or complied with by it at or
prior to the Effective Time.
12.4.2 Representations and Warranties. As of the Effective Time
------------------------------
as if made as of the Effective Time, each of the Actava Modified
Representations, the Orion Modified Representations and the MITI Modified
Representations shall be true and correct in all respects and each Actava
Non-Modified Representation, each Orion Non-Modified Representation and
each MITI Non-Modified Representation shall be true and correct in all
material respects (except in each case for such changes that are caused by
Actava's, Orion's or MITI's compliance, as the case may be, with the terms
of this Agreement or are contemplated hereby).
12.4.3 Certificates Delivered. Each of Actava, Orion and MITI
----------------------
shall have delivered to Sterling a certificate executed on its behalf by
its President or another authorized executive officer in their corporate
capacity to the effect that the conditions set forth in subsections 12.4.1
and 12.4.2 as such conditions apply to such officer's company have been
satisfied.
12.4.4 No Material Adverse Change. There shall not have
--------------------------
occurred since April 12, 1995 any mate-
127
rial adverse change in the business, assets, prospects, condition
(financial or otherwise) or the results of operations of (i) Actava,
Roadmaster or Orion and their respective subsidiaries, taken as a whole,
respectively or (ii) MITI, its United States subsidiaries and Operating
Joint Venture Entities, taken as a whole (except, in each such case, for
such changes that are caused by compliance with the terms of this Agreement
and are contemplated hereby).
12.4.5 Opinions of Counsel. Sterling shall have received the
-------------------
Long Xxxxxxxx Opinion, the Xxxx Xxxxx Opinion and the Xxxxx Xxxx Opinion
and an opinion of Xxxxxxxx Xxxx Xxxxxxxx Xxxxxx Xxxxxxxx & Xxxxx P.C.
substantially to the effect that the Sterling Merger will be treated for
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code.
12.4.6 Fairness Opinion. The opinion of Xxxxxxxx Xxxxx, dated
----------------
as of the date of the Proxy Statement, that the value of the consideration
to be paid to the stockholders of Sterling in the Sterling Merger is fair
from a financial point of view to the stockholders of Sterling, shall have
not been withdrawn, amended or modified.
12.5 Conditions to Obligations of MITI. The obligation of MITI to
---------------------------------
effect the MITI Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following additional conditions, any one or more of which
may be waived by MITI.
12.5.1 Obligations Performed. Each of Actava, OPC Mergerco,
---------------------
MITI Mergerco, Orion and Sterling shall have performed and complied with in
all material respects its obligations, agreements and covenants under this
Agreement which are required to be performed or complied with by it at or
prior to the Effective Time.
12.5.2 Representations and Warranties. As of the Effective Time
------------------------------
as if made as of the Effective Time, each of the Actava Modified
Representations, the Orion Modified Representations and the Sterling
Modified Representations shall be true and correct in all respects and each
of the Actava Non-Modified Representations, the Orion Non-Modified
Representations and the Sterling Non-Modified Representations shall be true
and correct in all material respects (except in each case for such changes
that are caused by Actava's,
128
Orion's or MITI's compliance, as the case may be, with the terms of this
Agreement or are contemplated hereby).
12.5.3 Certificates Delivered. Each of Actava, Orion and
----------------------
Sterling shall have delivered to MITI a certificate executed on its behalf
by its President or another authorized executive officer in their corporate
capacity to the effect that the conditions set forth in subsections 12.5.1
and 12.5.2 as such conditions apply to such officer's company have been
satisfied.
12.5.4 No Material Adverse Change. There shall not have
--------------------------
occurred since April 12, 1995 any material adverse change in the business,
assets, prospects, condition (financial or otherwise) or the results of
operation of (i) Actava, Roadmaster and their respective subsidiaries,
taken as a whole, (ii) Orion and its respective subsidiaries, taken as a
whole or (iii) Sterling and its consolidated subsidiaries, taken as a whole
(except, in each such case, for such changes that are caused by compliance
with the terms of this Agreement and are contemplated hereby).
12.5.5 Opinions of Counsel. MITI shall have received the Long
-------------------
Xxxxxxxx Opinion, the Xxxx Xxxxx Opinion and the Xxxxxxxx Brog Opinion and
an opinion of Xxxxx Xxxx Xxxxx Constant and Xxxxxxxx, substantially to the
effect that the MITI Merger will be treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code.
12.5.6 Fairness Opinion. The opinion of GKMC, dated as of the
----------------
date of the Proxy Statement, that the value of the consideration to be paid
to the stockholders of MITI in the MITI Merger is fair from a financial
point of view to the stockholders of MITI, shall not have been amended,
withdrawn or modified.
12.5.7 Listing. The shares of Common Stock shall have been
-------
accepted for listing on the NYSE or the AMEX or accepted for quotation on
the NMS/NASDAQ.
ARTICLE 13
CLOSING
13.1 Time and Place. The closing of the Mergers (the "Closing")
--------------
shall take place as soon as practicable
129
after each of the conditions set forth in Article 12 have been satisfied or
waived by the party or parties entitled to the benefit of such conditions at
10:00 a.m. at the offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx,
1285 Avenue of the Americas, Xxx Xxxx, Xxx Xxxx 00000-0000; or at such time and
place as the Merging Parties mutually agree. The date on which the Closing
actually occurs is herein referred to as the "Closing Date."
13.2 Filing of Certificates of Merger, Etc. At the Closing,
-------------------------------------
(i) Actava, OPC Mergerco, MITI Mergerco, Orion, Sterling and MITI shall cause
the Orion Certificate of Merger, the Sterling Certificate of Merger and the MITI
Certificate of Merger to be executed and filed with the Secretary of State of
Delaware as provided in the DGCL and (ii) Actava, OPC Mergerco, MITI Mergerco,
Orion, Sterling and MITI shall take any and all other lawful actions and do any
and all other lawful things necessary to cause the Mergers to become effective.
ARTICLE 14
TERMINATION AND ABANDONMENT
14.1 Termination. This Agreement may be terminated and the Mergers
-----------
contemplated hereby may be abandoned at any time prior to the Effective Time,
whether before or after approval by the stockholders of Actava, Orion, Sterling
and MITI:
(i) by a majority of the members of each of the Boards of
Directors of Actava, Orion, Sterling and MITI;
(ii) by any of Actava, Orion, Sterling or MITI if the Mergers
shall not have been consummated on or before December 31, 1995 (or such later
date as may be agreed to by Actava, Orion, Sterling or MITI); provided, that,
-------- ----
none of Actava, Orion, Sterling or MITI may terminate this Agreement under this
Section 14.1(ii) if the failure has been caused by such party's material breach
or default of its obligations under this Agreement;
(iii) by Actava, Orion or Sterling if (x) there are any
inaccuracies, misrepresentations or breaches of any MITI Modified
Representations, (y) there are any material inaccuracies, misrepresentations or
breaches of any MITI Non-Modified Representations or (z) MITI has breached or
failed to perform any of its material obligations, covenants or agreements
contained herein as to which written notice has been given to MITI and MITI has
failed to
130
cure or otherwise resolve the same to the reasonable satisfaction of Actava,
Orion and Sterling within 30 days after receipt of such notice;
(iv) by Actava, Orion or MITI if (x) there are any inaccuracies,
misrepresentations or breaches of any Sterling Modified Representations,
(y) there are any material inaccuracies, misrepresentations or breaches of any
Sterling Non-Modified Representations or (z) Sterling has breached or failed to
perform any of its material obligations, covenants or agreements contained
herein as to which written notice has been given to Sterling and Sterling has
failed to cure or otherwise resolve the same to the reasonable satisfaction of
Actava, Orion and MITI within 30 days after receipt of such notice;
(v) by Actava, Sterling or MITI if (x) there are any
inaccuracies, misrepresentations or breaches of any Orion Modified
Representations, (y) there are any material inaccuracies, misrepresentations or
breaches of any Orion Non-Modified Representations or (z) Orion has breached or
failed to perform any of its material obligations, covenants or agreements
contained herein as to which written notice has been given to Orion and Orion
has failed to cure or otherwise resolve the same to the reasonable satisfaction
of Actava, Sterling and MITI within 30 days after receipt of such notice;
(vi) by Orion, Sterling or MITI if (x) there are any
inaccuracies, misrepresentations or breaches of any Actava Modified
Representations, (y) there are any material inaccuracies, misrepresentations or
breaches of any Actava Non-Modified Representations or (z) Actava has breached
or failed to perform any of its material obligations, covenants or agreements
contained herein as to which written notice has been given to Actava and Actava
has failed to cure or otherwise resolve the same to the reasonable satisfaction
of Orion, Sterling and MITI within 30 days after receipt of such notice; or
(vii) by Actava, Orion, Sterling or MITI if a court of competent
jurisdiction or other governmental body shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
any of the Mergers and such order, decree, ruling or other action shall have
become final and nonappealable.
14.2 Procedure and Effect of Termination. In the event of
-----------------------------------
termination and abandonment of any of the Mergers by Actava, Orion, Sterling or
MITI pursuant to Section 14.1, written notice thereof shall forthwith be given
to each of
131
the other parties hereto and this Agreement shall terminate and the Mergers
shall be abandoned without further action by any of the parties hereto. If this
Agreement is terminated as provided herein no party hereto shall have any
liability or further obligation to any other party under the terms of this
Agreement except for a willful breach, violation or default by any party hereto
of any provision of this Agreement and except as stated in Sections 7.3(ii),
8.3(ii), 9.3(ii), 10.3(ii) and 15.6.
ARTICLE 15
MISCELLANEOUS
15.1 Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified or supplemented only by a written instrument
among Actava, Orion, Sterling and MITI, at any time prior to the Effective Time
with respect to any of the terms contained herein.
15.2 Waiver of Compliance; Consents. Any failure of any Merging
------------------------------
Party to comply with any obligation, covenant, agreement or condition contained
herein may be waived by the other Merging Parties, only by a written instrument
signed by the Merging Party or Merging Parties granting such waiver, but such
waiver with or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure by any Merging Party to comply
with any obligation, agreement or condition contained herein. Whenever this
Agreement requires or permits consent by or on behalf of any Merging Party, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 15.2.
15.3 Survival of Representations and Warranties. The respective
------------------------------------------
representations and warranties of Actava, OPC Mergerco, MITI Mergerco, Orion,
Sterling and MITI contained herein or in any certificates or other documents
delivered prior to or at the Closing by such parties pursuant to the terms of
this Agreement shall survive the execution and delivery of this Agreement but
shall terminate upon the consummation of the Mergers.
15.4 Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day
132
when sent by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified by like notice).
(i) if to Actava, OPC Mergerco or MITI Mergerco, to
The Actava Group Inc.
000 Xxxx Xxxxx Xxxxx Xxxx,
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Long, Xxxxxxxx & Xxxxxx
One Peachtree Center, Suite 5300
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
(ii) if to Orion, to
Orion Pictures Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(iii) if to Sterling, to:
MCEG Sterling Incorporated
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx Xxxx
Telecopy: (000) 000-0000
133
with a copy to:
Xxxxxxxx Brog Leinwand Xxxxxx Xxxxxxxx & Xxxxx, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
and
(iv) if to MITI, to:
Metromedia International Telecommunications, Inc.
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
15.5 Assignment. This Agreement and all of the provisions hereof
----------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors (including but not limited to the Sterling Corporation)
and permitted assigns. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto prior to
the Effective Time without the prior written consent of the other parties
hereto. This Agreement is not intended to confer upon any other person except
the parties hereto any rights or remedies hereunder.
15.6 Expenses. If the Mergers are not consummated, all costs and
--------
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs or expenses,
subject to the rights of such party contemplated under Section 14.2 with respect
to a willful breach, violation or default by another party hereto.
15.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
-------------
THE STATE OF DELAWARE, APPLICABLE TO
134
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
15.8 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.9 Interpretation; Definitions. The article and section headings
---------------------------
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. As used in this Agreement,
(i) the term "person" means and includes an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof;
(ii) the term "affiliate," with respect to any person, shall mean
and include any person directly or indirectly controlling, controlled by or
under common control with such person;
(iii) the term "Actava Material Adverse Effect" means a material
adverse effect on the business, assets, prospects, condition (financial or
otherwise) or the results of operation of Actava and its subsidiaries, taken as
a whole;
(iv) the term "Orion Material Adverse Effect" means a material
adverse effect on the business, assets, prospects, condition (financial or
otherwise) or the results of operation of Orion and its subsidiaries, taken as a
whole;
(v) the term "Sterling Material Adverse Effect" means a material
adverse effect on the business, assets, prospects, condition (financial or
otherwise) or the results of operation of Sterling and its consolidated
subsidiaries, taken as a whole;
(vi) the term "MITI Material Adverse Effect" means a material
adverse effect on the business, assets, prospects, condition (financial or
otherwise) or the results of operation of MITI, its United States subsidiaries
and the Operating Joint Venture Entities, taken as a whole;
(vii) the "Orion Exchange Ratio," if the Average Closing Price is
greater than or equal to $10.50,
135
shall be equal to a fraction, the numerator of which is 11,428,572 and the
denominator of which is the number of shares of Orion Common Stock outstanding
on the business day immediately preceding the Determination Date; provided,
--------
that, if the Average Closing Price is less than $10.50, the Orion Exchange Ratio
----
shall instead have the meaning set forth in and shall be determined in accor-
dance with Schedule 15.9(viii);
(viii) the "MITI Exchange Ratio," if the Average Closing Price is
greater than or equal to $10.50, shall be equal to a fraction, the numerator of
which is 9,523,810 and the denominator of which is the number of shares of MITI
Common Stock outstanding on the business day immediately preceding the
Determination Date; provided, that, if the Average Closing Price is less than
-------- ----
$10.50, the MITI Exchange Ratio shall instead have the meaning set forth in and
shall be determined in accordance with Schedule 15.9(ix);
(ix) the "Sterling Exchange Ratio," if the Average Closing Price
is greater than or equal to $10.50, but less than or equal to $14.875, shall be
equal to a fraction, the numerator of which is 571,428 and the denominator of
which is the number of shares of Sterling Common Stock outstanding on the
business day immediately preceding the Determination Date; provided, that, if
-------- ----
the Average Closing Price is less than $10.50, the Sterling Exchange Ratio shall
instead have the meaning set forth in and shall be determined in accordance with
Schedule 15.9(x)(a); provided, further, that if the Average Closing Price is
-------- -------
greater than $14.875, the Sterling Exchange Ratio shall instead have the meaning
set forth in and shall be determined in accordance with Schedule 15.9(x)(b);
(x) the term "Orion Senior Indebtedness" means (a) Orion's
indebtedness to Chemical Bank, as Agent and the banks (the "Banks") parties to
the Third Amended and Restated Credit Agreement, dated as of October 20, 1992
among Orion, the Agent and the Banks (the "Credit Agreement") and (b) its
indebtedness to Sony Pictures Entertainment Inc. ("Sony") pursuant to that
certain letter agreement between Orion and Sony attached as Exhibit F to Orion's
Disclosure Statement for its Modified Third Amended Joint Consolidated Plan of
Reorganization (the "Sony Letter");
(xi) the term "Orion Subordinated Indebtedness" means Orion's
Talent Notes due 1999, Orion's Creditor Notes due 1999 and Orion's 10%
Subordinated Debentures due 2001;
136
(xii) the term "Restricted Subsidiary" shall have the meaning
assigned thereto in the Credit Agreement;
(xiii) the term "Other Indebtedness" means (a) all outstanding Bank
Reimbursable Amounts (as defined in the Reimbursement Agreement, dated as of
October 20, 1992 (the "Reimbursement Agreement") between Orion and Metromedia
Company), (b) all outstanding Sony Reimbursable Amounts (as defined in the
Reimbursement Agreement) payable to Metromedia Company, (c) all amounts owed to
Metromedia Company by Sterling and its subsidiaries and (d) all amounts owed by
MITI to Metromedia Company (other than the MII Indebtedness), plus in the case
of (a), (b), (c) and (d) above, all accrued, but unpaid interest thereon;
(xiv) the term "MII Indebtedness" means all of the indebtedness of
MII to Met International at the Effective Time, plus all accrued, but unpaid
interest thereon;
(xv) the term "MetProductions Indebtedness" means the amounts
described in Section 4.28, any other indebtedness of Orion and its subsidiaries
to MetProductions incurred prior to the Effective Time in accordance with this
Agreement and all accrued and unpaid interest on such amounts;
(xvi) the term "subsidiary" of any specified person means any
corporation 50 percent or more of the outstanding voting power of which, or any
partnership, joint venture or other entity 50 percent or more of the total
equity interest of which, is directly or indirectly owned by such specified
person. For purposes of this Agreement, all references to "subsidiaries" of a
person shall be deemed to mean "subsidiary" if such person has only one
subsidiary.
(xvii) the term "Sterling Voting Trust" shall mean the trust
created by the Voting Trust Agreement dated March 30, 1992 by and among
Sterling, the voting trustees specified therein and the Liquidation Estate.
15.10 Entire Agreement. This Agreement and the documents or
----------------
instruments referred to herein, embodies the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein. There
are no restrictions, promises, representations, warranties, agreements,
covenants, or undertakings, other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and the understandings
between the parties with respect to such subject matter.
137
IN WITNESS WHEREOF, Actava, Orion, Sterling, MITI, OPC Mergerco and
MITI Mergerco have caused this Agreement to be signed by their respective duly
authorized officers as of the date first above written.
THE ACTAVA GROUP INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and
Chief Executive Officer
ORION PICTURES CORPORATION
By: /s/ Xxxxxxx Xxxxx
---------------------------------------------------
Name: Xxxxxxx Xxxxx
Title: President and
Chief Executive Officer
MCEG STERLING INCORPORATED
By: /s/ Xxx X. Xxxxxxx
--------------------------------------------------
Name: Xxx X. Xxxxxxx
Title: Executive Vice President
METROMEDIA INTERNATIONAL
TELECOMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Co-President
OPC MERGER CORP.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
MITI MERGER CORP.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
Exhibit A-1
CERTIFICATE OF MERGER
OF
ORION PICTURES CORPORATION
INTO
OPC MERGER CORP.
________________________________________________________________________________
The undersigned corporation does hereby certify:
FIRST: The name and state of incorporation of each of the constituent
-----
corporations of the merger provided for herein (the "Merger") are as follows:
NAME STATE OF INCORPORATION
---- ----------------------
Orion Pictures Corporation Delaware
OPC Merger Corp. Delaware
SECOND: An agreement and plan of merger, which is hereinafter
------
sometimes referred to as the "Merger Agreement," between each of the parties to
the Merger has been approved, adopted, certified, executed and acknowledged by
each of the constituent corporations in accordance with the requirements of
Section 251 of the General Corporation Law of the State of Delaware.
THIRD: The surviving corporation of the Merger is OPC Merger Corp.
-----
FOURTH: The Certificate of Incorporation of OPC Merger Corp., which
------
is the surviving corporation of the Merger, as amended herein, shall be the
Certificate of Incorporation of the surviving corporation. Article FIRST of
such Certificate of Incorporation is hereby amended so that as amended it shall
read as follows:
"The name of the corporation is ORION PICTURES CORPORATION (the
"Corporation")."
FIFTH: The executed Merger Agreement is on file at the principal
-----
place of business of the surviving corporation. The address of such principal
place of business is 000 Xxxx Xxxxx Xxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx
00000.
SIXTH: A copy of the Merger Agreement will be furnished on request
-----
and without cost to any stockholder of any constituent corporation.
* * * *
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Merger on _______ __, 1995.
OPC MERGER CORP.
By:_________________________
Name:
Title:
ATTEST:
By:______________________
Name:
Title:
Exhibit A-2
CERTIFICATE OF MERGER
OF
MCEG STERLING INCORPORATED
INTO
THE ACTAVA GROUP INC.
________________________________________________________________________________
The undersigned corporation does hereby certify:
FIRST: The name and state of incorporation of each of the constituent
-----
corporations of the merger provided for herein (the "Merger") are as follows:
NAME STATE OF INCORPORATION
---- ----------------------
MCEG Sterling Incorporated Delaware
The Actava Group Inc. Delaware
SECOND: An agreement and plan of merger, which is hereinafter
------
sometimes referred to as the "Merger Agreement," between each of the parties to
the Merger has been approved, adopted, certified, executed and acknowledged by
each of the constituent corporations in accordance with the requirements of
Section 251 of the General Corporation Law of the State of Delaware.
THIRD: The surviving corporation of the Merger is The Actava Group
-----
Inc., the name of which is changed as a result thereof to Metromedia
International Group, Inc.
FOURTH: The Restated Certificate of Incorporation of The Actava Group
------
Inc. with such amendments as are
affected by the Merger is attached to this Certificate of Merger as Exhibit A
and shall be the Restated Certificate of Incorporation of the surviving
corporation.
FIFTH: The executed Merger Agreement is on file at the principal
-----
place of business of the surviving corporation. The address of such principal
place of business is 000 Xxxx Xxxxx Xxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx
00000.
SIXTH: A copy of the Merger Agreement will be furnished on request
-----
and without cost to any stockholder of any constituent corporation.
* * * *
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Merger on _______ __, 1995.
THE ACTAVA GROUP INC.
By:_________________________
Name:
Title:
ATTEST:
By:______________________
Name:
Title:
Exhibit A
RESTATED CERTIFICATE OF INCORPORATION
of
THE ACTAVA GROUP INC.
FIRST: The name of the corporation is METROMEDIA INTERNATIONAL GROUP,
INC. (the "Corporation").
SECOND: The address of the Corporation's registered office is 00
Xxxxxxxxxx Xxxxxx, Xxxxx X-000, Xxxx xx Xxxxx, Xxxxxx of Kent, State of
Delaware; and its registered agent at such address is The Xxxxxxxx-Xxxx
Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in, carry on and
conduct any lawful act or activity for which corporations may be organized under
the Delaware General Corporation Law.
FOURTH: The total number of shares of stock that the Corporation
shall have authority to issue is 180,000,000, divided as follows: 70,000,000
shares of Preferred Stock, of the par value of $1.00 per share (the "Preferred
Stock") and 110,000,000 shares of Common Stock, of the par value of $1.00 per
share (the "Common Stock").
The designation, relative rights, preferences and limitations of the
shares of each class are as follows:
4.1 Preferred Stock. The shares of Preferred Stock may be
---------------
issued from time to time in one or more series of any number of shares, provided
that the
aggregate number of shares issued and not cancelled of any and all such series
shall not exceed the total number of shares of Preferred Stock hereinabove
authorized, and with such powers, preferences and rights and qualifications,
limitations or restrictions thereof, and such distinctive serial designations,
all as shall hereafter be stated and expressed in the resolution or resolutions
providing for the issue of such shares of Preferred Stock from time to time
adopted by the Board of Directors pursuant to authority so to do which is hereby
vested in the Board of Directors. Each series of shares of Preferred Stock
(a) may have such voting rights or powers, full or limited, or may be without
voting rights or powers; (b) may be subject to redemption at such time or times
and at such prices; (c) may be entitled to receive dividends (which may be
cumulative or non-cumulative) at such rate or rates, on such conditions and at
such times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes or series of stock; (d) may have such
rights upon the voluntary or involuntary liquidation, winding up or dissolution
of, or upon any distribution of the assets of, the Corporation; (e) may be made
convertible into or exchangeable for, shares of any other class or classes or of
any other series of the same or any other class or classes of stock of the
Corporation at such price or prices or at such rates of exchange and with such
adjustments; (f) may be entitled to the benefit of a sinking fund to be applied
to the purchase or redemption of shares of such series in such amount or
amounts; (g) may be entitled to the benefit of
conditions and restrictions upon the creation of indebtedness of the Corporation
or any subsidiary, upon the issue of any additional shares (including additional
shares of such series or of any other series) and upon the payment of dividends
or the making of other distributions on, and the purchase, redemption or other
acquisition by the Corporation or any subsidiary of, any outstanding shares of
the Corporation and (h) may have such other relative, participating, optional or
other special rights, qualifications, limitations or restrictions thereof; all
as shall be stated in said resolution or resolutions providing for the issue of
such shares of Preferred Stock. Shares of Preferred Stock of any series that
have been redeemed (whether through the operation of a sinking fund or other-
wise) or that if convertible or exchangeable, have been converted into or
exchanged for shares of any other class or classes shall have the status of
authorized and unissued shares of Preferred Stock undesignated as to series and
may be reissued as a part of the series of which they were originally a part or
as part of a new series of shares of Preferred Stock to be created by resolution
or resolutions of the Board of Directors or as part of any other series of
shares of Preferred Stock, all subject to the conditions or restrictions on
issuance set forth in the resolution or resolutions adopted by the Board of
Directors providing for the issue of any series of shares of Preferred Stock.
4.2 Common Stock. Subject to the provisions of any applicable
------------
law or of the By-laws of the Corporation, as from time to time amended, with
respect to the closing of
the transfer books or the fixing of a record date for the determination of
stockholders entitled to vote and except as otherwise provided by law or by the
resolution or resolutions providing for the issue of any series of shares of
Preferred Stock, the holders of outstanding shares of Common Stock shall
exclusively possess voting power for the election of directors and for all other
purposes, each holder of record of shares of Common Stock being entitled to one
vote for each share of Common Stock standing in his or her name on the books of
the Corporation. Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of shares of Preferred Stock, the holders
of shares of Common Stock shall be entitled, to the exclusion of the holders of
shares of Preferred Stock of any and all series, to receive such dividends as
from time to time may be declared by the Board of Directors. In the event of
any liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, after payment shall have been made to the holders of shares of
Preferred Stock of the full amount to which they shall be entitled pursuant to
the resolution or resolutions providing for the issue of any series of shares of
Preferred Stock, the holders of shares of Common Stock shall be entitled, to the
exclusion of the holders of shares of Preferred Stock of any and all series, to
share, ratably according to the number of shares of Common Stock held by them,
in all remaining assets of the Corporation available for distribution to its
stockholders.
4.3 Subject to the provisions of this Certificate of
Incorporation and except as otherwise provided by law, the stock of the
Corporation, regardless of class, may be issued for such consideration and for
such corporate purposes as the Board of Directors may from time to time
determine.
FIFTH: Members of the Board of Directors may be elected either by
written ballot or by voice vote.
SIXTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
SEVENTH: No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (a) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) under Section 174 of the Delaware General Corporation Law
or (d) for any transaction from which the director derived any improper personal
benefits. If the Delaware General Corporation Law is hereafter amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
EIGHTH: (a) To the extent not prohibited by law, the Corporation
shall indemnify any person who is or was made, or threatened to be made, a party
to any threatened, pending or completed action, suit or proceeding (a
"Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a director or
officer of the Corporation, or is or was serving in any capacity at the request
of the Corporation for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees and disbursements). Persons who
are not directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation or to an Other Entity at the request of
the Corporation to the extent the Board at any time specifies that such persons
are entitled to the benefits of this Article EIGHTH.
(b) The Corporation shall, from time to time, reimburse or
advance to any director or officer or other person entitled to indemnification
hereunder the funds necessary for payment of expenses, including attorneys' fees
and disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; provided, however, that, if required by
-------- -------
the Delaware General Corporation Law, such expenses incurred by or on behalf of
any director or officer or other person may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Corporation of an under-
taking, by or on behalf of such director or officer (or other person indemnified
hereunder), to repay any such amount so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right of
appeal that such director, officer or other person is not entitled to be
indemnified for such expenses.
(c) The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Article EIGHTH
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or here-
after be entitled under any statute, this Certificate of Incorporation, the By-
laws of the Corporation (the "By-laws"), any agreement, any vote of stockholders
or disinterested directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office.
(d) The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Article EIGHTH
shall continue as to a person who has ceased to be a director or officer (or
other person indemnified hereunder) and shall inure to the benefit of the
executors, administrators, legatees and distributees of such person.
(e) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of an Other Entity, against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power to indemnify
such person against such liability under the provisions of this Article EIGHTH,
the By-laws or under Section 145 of the Delaware General Corporation Law or any
other provision of law.
(f) The provisions of this Article EIGHTH shall be a contract
between the Corporation, on the one hand, and each director and officer who
serves in such capacity at any time while this Article EIGHTH is in effect and
any other person indemnified hereunder, on the other hand, pursuant to which the
Corporation and each such director, officer, or other person intend to be
legally bound. No repeal or modification of this Article EIGHTH shall affect
any rights or obligations with respect to any state of facts then or theretofore
existing or thereafter arising or any proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
(g) The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Article EIGHTH
shall be enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses in any court of competent jurisdiction.
The burden of proving that such indemnification or
reimbursement or advancement of expenses is not appropriate shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel and its stockholders) to have made a
determination prior to the commencement of such action that such indemnification
or reimbursement or advancement of expenses is proper in the circumstances nor
an actual determination by the Corporation (including its Board of Directors,
its independent legal counsel and its stockholders) that such person is not
entitled to such indemnification or reimbursement or advancement of expenses
shall constitute a defense to the action or create a presumption that such per-
son is not so entitled. Such a person shall also be indemnified for any
expenses incurred in connection with successfully establishing his or her right
to such indemnification or reimbursement or advancement of expenses, in whole or
in part, in any such proceeding.
(h) Any director or officer of the Corporation serving in any
capacity (i) another corporation of which a majority of the shares entitled to
vote in the election of its directors is held, directly or indirectly, by the
Corporation or (ii) any employee benefit plan of the Corporation or any
corporation referred to in clause (i) shall be deemed to be doing so at the
request of the Corporation.
(i) Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Article EIGHTH may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; provided, however, that if no such notice is given, the right to
-------- -------
indemnification or reimbursement or advancement of expenses shall be determined
by the law in effect at the time indemnification or reimbursement or advancement
of expenses is sought.
NINTH: This Article is inserted for the management of the business
and for the conduct of the affairs of the Corporation and it is expressly
provided that it is intended to be in furtherance of and not in limitation or
exclusion of the powers conferred by applicable law.
9.1 Number, Election, and Terms of Office of Board of Directors.
-----------------------------------------------------------
The business of the Corporation shall be managed by a Board of Directors
consisting of not less than seven nor more than 15 persons. The exact number of
directors within the minimum and maximum limitations specified in the preceding
sentence shall be fixed from time to time by, or in the manner provided in, the
By-laws. The directors shall be divided into three classes with the term of
office of the first class to expire at the first annual meeting of stockholders
of the Corporation next following the end of the Corporation's fiscal year
ending December 31,
1995, the term of office of the second class to expire at the first annual
meeting of stockholders of the Corporation next following the end of the
Corporation's fiscal year ending December 31, 1996 and the term of office of the
third class to expire at the first annual meeting of stockholders of the
Corporation next following the end of the Corporation's fiscal year ending
December 31, 1997. At each annual meeting of stockholders following such
initial election as specified above, directors elected to succeed those
directors whose terms expire shall be elected for a term of office to expire at
the third succeeding annual meeting of stockholders after their election.
9.2 Tenure. Notwithstanding any provisions to the contrary
------
contained herein, each director shall hold office until his successor is elected
and qualified, or until his earlier death, resignation or removal.
9.3 Newly Created Directorships and Vacancies. Subject to the
-----------------------------------------
rights of the holders of any series of Preferred Stock then outstanding, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
shall be filled by a majority vote of the remaining directors then in office,
though less than a quorum, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of the class to
which they have been elected expires or, in each case, until their respective
successors are duly elected and qualified.
No decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director. When any director shall give notice
of resignation effective at a future date, the Board of Directors may fill such
vacancy to take effect when such resignation shall become effective.
9.4 Removal of Directors. Any one or more or all of the
--------------------
directors may be removed, at any time, but only for cause by the holders of at
least a majority in voting power of the then issued and outstanding shares of
capital stock of the Corporation.
TENTH: Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of such holders and may not be effected by any consent in
writing of such holders. At any annual meeting or special meeting of
stockholders of the Corporation, only such business shall be conducted as shall
have been brought before such meeting in the manner provided by the By-laws of
the Corporation.
ELEVENTH: Special meetings of stockholders for any purpose may be
called at any time by the Chairman or Vice Chairman of the Board of Directors.
Special meetings of stockholders shall be held at such place or places within or
without the State of Delaware as shall from time to time be designated by the
Board of Directors and stated in the notice of such meeting. At a special
meeting of stockholders no business shall be transacted and no corporate action
shall be taken other than that stated in the notice of the meeting.
TWELFTH: The Board of Directors may from time to time make, alter or
repeal the By-laws by a vote of a majority of the entire Board of Directors that
would be in office if no vacancy existed, whether or not present at a meeting;
provided, however, that any By-laws made, amended or repealed by the Board of
-------- -------
Directors may be amended or repealed, and any By-laws may be made, by the
stockholders of the Corporation by vote of a majority of the holders of shares
of stock of the Corporation entitled to vote in the election of directors of the
Corporation.
Exhibit A-3
CERTIFICATE OF MERGER
OF
METROMEDIA INTERNATIONAL TELECOMMUNICATIONS, INC.
INTO
MITI MERGER CORP.
________________________________________________________________________________
The undersigned corporation does hereby certify:
FIRST: The name and state of incorporation of each of the constituent
-----
corporations of the merger provided for herein (the "Merger") are as follows:
NAME STATE OF INCORPORATION
---- ----------------------
Metromedia International Delaware
Telecommunications, Inc.
MITI Merger Corp. Delaware
SECOND: An agreement and plan of merger, which is hereinafter
------
sometimes referred to as the "Merger Agreement," between each of the parties to
the Merger has been approved, adopted, certified, executed and acknowledged by
each of the constituent corporations in accordance with the requirements of
Section 251 of the General Corporation Law of the State of Delaware.
THIRD: The surviving corporation of the Merger is MITI Merger Corp.
-----
FOURTH: The Certificate of Incorporation of MITI Merger Corp., which
------
is the surviving corporation of the Merger, as amended herein, shall be the
Certificate of Incorporation of the surviving corporation. Article FIRST of
such Certificate of Incorporation is hereby amended so that as amended it shall
read as follows:
"The name of the corporation is METROMEDIA INTERNATIONAL
TELECOMMUNICATIONS, INC. (the "Corporation")."
FIFTH: The executed Merger Agreement is on file at the principal
-----
place of business of the surviving corporation. The address of such principal
place of business is 000 Xxxx Xxxxx Xxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx
00000.
SIXTH: A copy of the Merger Agreement will be furnished on request
-----
and without cost to any stockholder of any constituent corporation.
* * * *
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Merger on _______ __, 1995.
MITI MERGER CORP.
By:_________________________
Name:
Title:
ATTEST:
By:______________________
Name:
Title:
Exhibit B
METROMEDIA INTERNATIONAL GROUP, INC.
Incorporated Under the Laws of
the State of Delaware
BY-LAWS
-------
ARTICLE I
OFFICES
The registered office of Metromedia International Group, Inc. (the
"Corporation") in Delaware shall be at 00 Xxxxxxxxxx Xxxxxx, Xxxxx X-000 in the
City of Dover, County of Kent, in the State of Delaware, and The Xxxxxxxx-Xxxx
Corporation System, Inc. shall be the resident agent of this Corporation in
charge thereof. The Corporation may also have such other offices at such other
places, within or without the State of Delaware, as the Board of Directors may
from time to time designate or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of stockholders for
--------------
the election of directors and the transaction of any other business shall be
held in the month of March, April or May on such date as may be designated by
the
Board of Directors, and in the absence of any such designation it shall be held
on the second Tuesday of April each year, or as soon after such date as may be
practicable, in such city and state and at such time and place as may be
designated by the Board of Directors, and set forth in the notice of such
meeting. If said day be a legal holiday, said meeting shall be held on the next
succeeding business day.
Section 2. Special Meetings. Special meetings of the stockholders
----------------
for any purpose may be called at any time by the Chairman or Vice Chairman of
the Board of Directors. Special meetings shall be held at such place or places
within or without the State of Delaware as shall from time to time be designated
by the Board of Directors and stated in the notice of such meeting. At a
special meeting no business shall be transacted and no corporate action shall be
taken other than that stated in the notice of the meeting.
Section 3. Notice of Meetings. Written notice of the time, date and
------------------
place of any stockholders' meeting and the purpose or purposes for which it is
called, whether annual or special, shall be given to each stockholder entitled
to vote thereat, by personal delivery or by mailing the same to him at his
address as the same appears upon the records of the Corporation at least ten
(10) days but not more than sixty (60) days before the day of the meeting.
Notice of any adjourned meeting need not be given except by announcement at the
meeting so adjourned, unless otherwise ordered in connection with such
adjournment. Such further notice, if any, shall be given as may be required by
law.
Section 4. Quorum. Any number of stockholders, together holding at
------
least a majority of the shares of stock of the Corporation issued and
outstanding and entitled to vote, who shall be present in person or represented
by proxy at any meeting duly called, shall constitute a quorum for the
transaction of all business, except as otherwise provided by law, by the
Restated Certificate of Incorporation of the Corporation (the same, as it shall
from time to time be in effect, is hereinafter referred to as the "Certificate
of Incorporation") or by these By-laws.
Section 5. Adjournment of Meetings. If less than a quorum shall
-----------------------
attend at the time for which a meeting shall have been called, the meeting may
adjourn from time to time by a majority vote of the stockholders present or
represented by proxy and entitled to vote. Any meeting at which a quorum is
present may also be adjourned in like manner and for such time or upon such call
as may be determined by a majority vote of the stockholders present or
represented by proxy and entitled to vote. At any adjourned meeting at which a
quorum shall be present, any business may be transacted and any corporate action
may be taken which might have been transacted at the meeting as originally
called.
Section 6. Voting List. The Secretary shall prepare and make, at
-----------
least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote, arranged in alphabetical order and showing the
address of each stockholder and the number of shares of each stockholder of each
class of capital stock of the Corporation. Such list shall be open at the place
where the meeting is to be held for said ten days, to the examination of any
stockholder, and shall be produced and kept at the time and place of the meeting
during the whole time thereof, and shall be subject to the inspection of any
stockholder who may be present.
Section 7. Voting. Each stockholder entitled to vote at any meeting
------
may vote either in person or by proxy, but no proxy shall be voted on or after
three years from its date unless said proxy provides for a longer period.
Unless otherwise provided in the Certificate of Incorporation, each stockholder
entitled to vote shall at every meeting of the stockholders be entitled to one
vote for each share of common stock registered in his name on the record of
stockholders. If the Certificate of Incorporation provides for more than one
vote for any share, on any matter, every reference in these By-laws or the
General Corporation Law of the State of Delaware, as amended from time to time
(the "GCL"), to a majority or other proportion of stock shall refer to such
majority or other proportion of the votes of
such stock. At all meetings of stockholders, the election of directors shall be
determined by the affirmative vote of the plurality of shares present in person
or by proxy and entitled to vote on the subject matter and all other matters,
except as otherwise provided by statute, shall be determined by the affirmative
vote of the majority of shares present in person or by proxy and entitled to
vote on the subject matter. Voting at meetings of stockholders need not be by
written ballot.
Section 8. Record Date of Stockholders. The Board of Directors is
---------------------------
authorized to fix in advance a date not exceeding sixty days nor less than ten
days preceding the date of any meeting of stockholders, or the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into effect,
or a date in connection with obtaining the consent of stockholders for any
purposes, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting, and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent, and, in such case, such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of, and to
vote at, such meeting, and any adjournment thereof, or to receive payment of
such dividend, or to receive such allotment of rights, or to exercise such
rights, or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation, after such record date
fixed as aforesaid.
Section 9. Conduct of Meetings. (a) The Chairman or Vice Chairman of
-------------------
the Board of Directors or, in their absence the President or any Vice President
designated by the Chairman or Vice Chairman of the Board, shall preside at all
regular or special meetings of stockholders. To the maximum extent permitted by
law, such presiding person shall have the power to set procedural rules,
including but not limited to rules respecting the time allotted to stockholders
to speak, governing all aspects of the conduct of such meetings.
(b) Only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors. Nominations
of persons for election to the Board of Directors of the Corporation may be made
at an annual meeting or special meeting of stockholders (i) by or at the
direction of the Board of Directors, (ii) by any nominating committee or person
appointed by the Board of Directors or (iii) by any stockholder of the
Corporation entitled to vote for the election of directors at the meeting who
complies with the provisions of the
following paragraph (persons nominated in accordance with (iii) above are
referred to herein as "stockholder nominees").
In addition to any other applicable requirements, all nominations of
stockholder nominees must be made by written notice given by or on behalf of a
stockholder of record of the Corporation (the "Notice of Nomination"). The
Notice of Nomination must be delivered personally to, or mailed to, and received
at the principal executive office of the Corporation, addressed to the attention
of the Secretary, (x) with respect to a Notice of Nomination for an annual
meeting of stockholders, not less than sixty (60) days nor more than ninety (90)
days prior to the first anniversary of the preceding year's annual meeting of
stockholders; provided, however, that in the event that the date of annual
-------- -------
meeting of stockholders is advanced by more than thirty (30) days or delayed by
more than sixty (60) days from such anniversary date, the Notice of Nomination
must be so delivered not later than ten (10) days after the first date of public
disclosure by the Corporation of the date of the annual meeting of stockholders
and (y) with respect to a Notice of Nomination for a special meeting of
stockholders, not later than ten (10) days after the first date of public
disclosure by the Corporation of the date of the special meeting of
stockholders. For purposes of this Section 9(b), public disclosure shall be
deemed to be first
made when disclosure of such date of the annual meeting or special meeting of
stockholders is first made in a press release reported by the Dow Xxxxx News
Services, Associated Press or other comparable national news service, or in a
document which has been publicly filed by the Corporation with the Securities
and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or any successor thereto.
Such Notice of Nomination shall set forth (i) the name and record address of the
stockholder proposing to make nominations, (ii) the class and aggregate number
of shares of capital stock held of record, held beneficially and represented by
proxy held by such person as of the record date for the meeting and as of the
date of such Notice of Nomination, (iii) all information regarding each
stockholder nominee that would be required to be set forth in a definitive proxy
statement filed with the Securities and Exchange Commission pursuant to Section
14 of the Exchange Act, or any successor thereto, and the written consent of
each such stockholder nominee to serve if elected, and (iv) all other
information that would be required to be filed with the Securities and Exchange
Commission if the person proposing such nominations were a participant in a
solicitation subject to Section 14 of the Exchange Act or any successor thereto.
The chairman of the meeting shall, if the facts warrant, determine and declare
to the meeting,
that any proposed nomination of a stockholder nominee was not made in accordance
with the foregoing procedures and, if he should so determine, he shall declare
to the meeting and the defective nomination shall be disregarded.
(c) At any annual meeting of stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To
be properly brought before an annual meeting of stockholders, (i) business must
be specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (ii) otherwise properly brought before
the meeting by or at the direction of the Board of Directors or (iii) otherwise
properly brought before the meeting by a stockholder in accordance with the
terms of the following paragraph (business brought before the meeting in
accordance with (iii) above is referred to as "stockholder business").
In addition to any other applicable requirements, all proposals of
stockholder business must be made by written notice given by or on behalf of a
stockholder of record of the Corporation (the "Notice of Business"). The Notice
of Business must be delivered personally to, or mailed to, and received at the
principal executive office of the Corporation, addressed to the attention of the
Secretary, not less than sixty (60) days nor more than ninety (90) days prior to
the first anniversary of the preceding year's annual meeting of stockholders;
provided,
--------
however, that in the event that the date of annual meeting of stockholders is
-------
advanced by more than thirty (30) days or delayed by more than sixty (60) days
from such anniversary date, the Notice of Business must be so delivered not
later than ten (10) days after the first date of public disclosure by the
Corporation of the date of the annual meeting of stockholders. For purposes of
this Section 9(c), disclosure shall be deemed to be first made when disclosure
of such date of the annual meeting of stockholders is first made in a press
release reported by the Dow Xxxxx News Services, Associated Press or other
comparable national news service, or in a document which has been publicly filed
by the Corporation with the Securities and Exchange Commission pursuant to
Sections 13, 14 or 15(d) of the Exchange Act or any successor thereto. Such
Notice of Business shall set forth (i) the name and record address of the
stockholder proposing such stockholder business, (ii) the class and aggregate
number of shares of capital stock held of record, held beneficially and
represented by proxy held by such person as of the record date for the meeting
and as of the date of such Notice of Business, (iii) a brief description of the
stockholder business desired to be brought before the annual meeting and the
reasons for conducting such stockholder business at the annual meeting, (iv) any
material interest of the stockholder in such stockholder business and (v) all
other information that would be required to be filed
with the Securities and Exchange Commission if the person proposing such
stockholder business were a participant in a solicitation subject to Section 14
of the Exchange Act. Notwithstanding anything in these By-laws to the contrary,
no business shall be conducted at the annual meeting of stockholders except in
accordance with the procedures set forth in this Section 9(c), provided,
--------
however, that nothing in this Section 9(c) shall be deemed to preclude
-------
discussion by any stockholder of any business properly brought before the annual
meeting in accordance with said procedure. At any special meeting of
stockholders, only such business shall be conducted as shall have been brought
before the meeting pursuant to the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors. The chairman of the
meeting shall, if the facts warrant, determine and declare to the meeting, that
business was not properly brought before the meeting in accordance with the
foregoing procedures and, if he should so determine, he shall declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
ARTICLE III
DIRECTORS
Section 1. General Powers. Except as otherwise provided in the
--------------
Certificate of Incorporation, the business
and affairs of the Corporation shall be managed by or under the direction of the
Board of Directors. The Board of Directors may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or these By-
laws or applicable laws, as it may deem proper for the conduct of its meetings
and the management of the Corporation. In addition to the powers expressly
conferred by these By-laws, the Board of Directors may exercise all powers and
perform all acts that are not required, by these By-laws or the Certificate of
Incorporation or by statute, to be exercised and performed by the stockholders.
Section 2. Number, Election, and Terms of Office of Board of
-------------------------------------------------
Directors. The business of the Corporation shall be managed by a Board of
---------
Directors consisting of not less than seven nor more than 15 persons. The exact
number of directors within the minimum and maximum limitations specified in the
preceding sentence shall be fixed from time to time by resolution adopted by a
majority of the entire Board of Directors that would be in office, if no vacancy
existed, whether or not present at a meeting. The directors shall be divided
into three classes with the term of office of the first class to expire at the
first annual meeting of stockholders of the Corporation next following the end
of the Corporation's fiscal year ending December 31, 1995, the term of office of
the second class to expire at the first annual meeting of stockholders of the
Corporation next
following the end of the Corporation's fiscal year ending December 31, 1996 and
the term of office of the third class to expire at the first annual meeting of
stockholders of the Corporation next following the end of the Corporation's
fiscal year ending December 31, 1997. At each annual meeting of stockholders
following such initial election as specified above, directors elected to succeed
those directors whose terms expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election.
Section 3. Tenure. Notwithstanding any provisions to the contrary
------
contained herein, each director shall hold office until his successor is elected
and qualified, or until his earlier death, resignation or removal.
Section 4. Newly Created Directorships and Vacancies. Subject to the
-----------------------------------------
rights of the holders of any series of Preferred Stock then outstanding, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
shall be filled by a majority vote of the remaining directors then in office,
though less than a quorum, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of the class to
which they have been elected expires or, in each case, until their respective
successors are duly elected and qualified. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director. When any director shall give notice of resignation
effective at a future date, the Board of Directors may fill such vacancy to take
effect when such resignation shall become effective.
Section 5. Removal of Directors. Any one or more or all of the
--------------------
directors may be removed, at any time, but only for cause by the holders of at
least a majority in voting power of the then issued and outstanding shares of
capital stock of the Corporation.
Section 6. Election of Directors. Directors shall, except as
---------------------
otherwise required by statute or by the Certificate of Incorporation, be elected
by a plurality of the votes cast at a meeting of stockholders by the holders of
shares entitled to vote in the election, voting as a separate class.
Section 7. Regular Meetings. The Board of Directors shall hold an
----------------
annual meeting for the purpose of organization and the transaction of any
business immediately after the annual meeting of the stockholders, provided a
quorum of Directors is present. Other regular meetings may be held at such
times as may be determined from time to time by resolution of the Board of
Directors.
Section 8. Special Meetings. Special meetings of the Board of
----------------
Directors may be called by the Chairman of the Board of Directors, the Vice
Chairman of the Board of Directors, by the President or by a majority of the
Directors.
Section 9. Notice and Place of Meetings. Meetings of the Board of
----------------------------
Directors may be held at the principal office of the Corporation, or at such
other place as shall be stated in the notice of such meeting. Notice of any
special meeting, and, except as the Executive Committee may unanimously
recommend and the Board of Directors may otherwise determine by resolution,
notice of any regular meeting also, shall be mailed to each Director addressed
to him at his residence or usual place of business at least four days before the
day on which the meeting is to be held, or if sent to him at such place by
telegraph or cable or delivered personally or by overnight mail service,
telephone or telecopy not later than 24 hours before the time at which the
meeting is to be held. Notice of the annual meeting of the Board of Directors
shall not be required if it is held immediately after the annual meeting of the
stockholders and if a quorum is present.
Section 10. Business Transacted at Meetings, Etc. Any business may be
-------------------------------------
transacted and any corporate action may be taken at any regular or special
meeting of the Board of Directors at which a quorum shall be present, whether
such business or proposed action be stated in the notice of such
meeting or not, unless special notice of such business or proposed action shall
be required by statute.
Section 11. Quorum. A majority of the Board of Directors at any time
------
in office shall constitute a quorum. At any meeting at which a quorum is
present, the vote of a majority of the members present shall be the act of the
Board of Directors unless the act of a greater number is specifically required
by law or by the Certificate of Incorporation or these By-laws.
Section 12. Compensation. Each Director, in consideration of his or
------------
her service as such, shall be entitled to receive from the Corporation such
amount per annum or such fees for attendance at Directors' meetings, or both, as
the Board of Directors may from time to time determine, together with
reimbursement for the reasonable out-of-pocket expenses, if any, incurred by
such Director in connection with the performance of his or her duties. Nothing
contained in this Section 12 shall preclude any Director from serving the
Corporation or its subsidiaries in any other capacity and receiving proper
compensation therefor.
Section 13. Action Without a Meeting. Any action required or
------------------------
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of the proceedings of the
Board or committee.
Section 14. Meetings Through Use of Communications Equipment.
------------------------------------------------
Members of the Board of Directors, or any committee designated by the Board of
Directors, shall, except as otherwise provided by law, the Certificate of
Incorporation or these By-laws, have the power to attend and participate in a
meeting of the Board of Directors, or any committee, by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at the meeting.
ARTICLE IV
COMMITTEES
The following committees of the Board of Directors shall be
constituted and exist with the membership, functions, powers and authorizations
set forth below: Executive Committee and Audit Committee.
Section 1. Executive Committee. The Board of Directors shall, by
-------------------
resolution passed by a majority of the entire Board, designate two or more of
their number to constitute an Executive Committee to hold office at the pleasure
of the Board. The Executive Committee shall have reasonable access during
normal working hours to all significant information (including all books and
records)
respecting the Corporation and its assets. Subject to the provisions of the
GCL, the Executive Committee shall have and may exercise all of the powers of
the Board of Directors in the management and affairs of the Corporation
including, without limitation, the power and authority to declare a dividend, to
authorize the issuance of stock or to adopt a certificate of ownership and
merger in connection with the merger of the Corporation and any of its
subsidiaries.
The membership of the Executive Committee may be changed at any time
by a resolution of a majority of the entire Board of Directors.
Any person ceasing to be a Director shall ipso facto cease to be a
---- -----
member of the Executive Committee.
Any vacancy in the Executive Committee occurring from any cause
whatsoever may be filled from among the Directors by a resolution of a majority
of the entire Board of Directors.
Section 2. Audit Committee. The Board of Directors shall, by
---------------
resolution passed by a majority of the entire Board, designate two or more of
their number to constitute an Audit Committee to hold office at the pleasure of
the Board. The function of the Audit Committee shall be (a) to review the
professional services and independence of the Corporation's independent auditors
and the scope of the annual external audit as recommended by the independent
auditors, (b) to ensure that the scope of the annual
external audit is sufficiently comprehensive, (c) to review, in consultation
with the independent auditors and the internal auditors, the plan and results of
the annual external audit, the adequacy of the Corporation's internal control
systems and the results of the Corporation's internal audits, (d) to review,
with management and the independent auditors, the Corporation's annual financial
statements, financial reporting practices and the results of each external audit
and (e) to undertake reasonably related activities to those set forth in clauses
(a) through (d) of this Section 2. The Audit Committee shall also have the
authority to consider the qualification of the Corporation's independent
auditors, to make recommendations to the Board of Directors as to their
selection and retention and to review and resolve disputes between such
independent auditors and management relating to the preparation of the annual
financial statements.
Section 3. Other Committees. Other committees may be appointed by
----------------
the Board of Directors, the members of which committees shall hold office for
such time and have such powers and perform such duties as may from time to time
be assigned to them by the Board of Directors; provided, however, that no such
-------- -------
committee shall have any power not permitted to the Executive Committee under
the GCL.
The membership of any committee of the Corporation may be changed at
any time by the Board of Directors. Any
vacancy in any committee occurring from any cause whatsoever may be filled from
among the directors by the Board of Directors.
Section 4. Resignation. Any member of a committee may resign at any
-----------
time by written notice to the Corporation. Such resignation shall be made in
writing and shall take effect at the time specified therein, or, if no time be
specified, at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective unless
so specified therein.
Section 5. Quorum. A majority of the members of a committee shall
------
constitute a quorum. The act of a majority of the members of a committee
present at any meeting at which a quorum is present shall be the act of such
committee. The members of a committee shall act only as a committee, and the
individual members thereof shall not have any powers as such.
Section 6. Record of Proceedings, Etc. Each committee shall keep
---------------------------
minutes of all meetings thereof, summarizing its acts and proceedings, and shall
promptly report the same to the Board of Directors when and as required by the
Board of Directors.
Section 7. Organization, Meetings, Notices, Etc. A committee may
-------------------------------------
hold its meetings at the principal office of the Corporation, or at any other
place which a majority of
the committee may at any time agree upon. Each committee may make such rules as
it may deem expedient for the regulation and carrying on of its meetings and
proceedings. Unless otherwise ordered by the Executive Committee, any notice of
a meeting of such committee may be given by the Secretary of the Corporation or
by the chairman of the committee and shall be sufficiently given if mailed to
each member at his residence or usual place of business at least two days before
the day on which the meeting is to be held, or if sent to him at such place by
telegraph or cable or delivered personally or by telephone or by telecopy not
later than 24 hours before the time at which the meeting is to be held.
Section 8. Compensation. The members of any committee shall be
------------
entitled to such compensation as may be allowed them by resolution of the Board
of Directors.
ARTICLE V
OFFICERS
Section 1. Number. The Officers of the Corporation shall be a
------
President, one or more Vice-Presidents, a Secretary, one or more Assistant
Secretaries, a Treasurer, and one or more Assistant Treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 3 of
this Article V. The Board of Directors in its discretion may also elect a
Chairman of the Board of Directors and a Vice Chairman of the Board of
Directors.
Section 2. Election, Term of Office and Qualifications. The
-------------------------------------------
officers, except as provided in Section 3 of this Article V, shall be chosen
annually by the Board of Directors. Each such officer shall, except as herein
otherwise provided, hold office until his successor shall have been chosen and
shall qualify. The Chairman of the Board of Directors and the Vice Chairman of
the Board of Directors, if any, and the President shall be Directors of the
Corporation, and should any one of them cease to be a Director, he shall ipso
----
facto cease to be such officer. Except as otherwise provided by law, any
-----
number of offices may be held by the same person.
Section 3. Other Officers. Other officers, including one or more
--------------
additional Vice-Presidents, Assistant Secretaries or Assistant Treasurers, may
from time to time be appointed by the Board of Directors, which other officers
shall have such powers and perform such duties as may be assigned to them by the
Board of Directors.
Section 4. Removal of Officers. Any officer of the Corporation may
-------------------
be removed from office, with or without cause, by a vote of a majority of the
Board of Directors.
Section 5. Resignation. Any officer of the Corporation may resign at
-----------
any time by written notice to the Corporation. Such resignation shall take
effect at the time specified therein, and if no time be specified, at the time
of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary in order to make it
effective, unless so specified therein.
Section 6. Filling of Vacancies. A vacancy in any office shall be
--------------------
filled by the Board of Directors.
Section 7. Compensation. The compensation of the officers shall be
------------
fixed by the Board of Directors, or by any committee upon whom power in that
regard may be conferred by the Board of Directors.
Section 8. Chairman of the Board of Directors. The Chairman of the
----------------------------------
Board of Directors shall be a Director and shall preside at all meetings of the
Board of Directors at which he shall be present, and shall have such power and
perform such duties as may from time to time be assigned to him by the Board of
Directors.
Section 9. Vice Chairman of the Board of Directors. The Vice
---------------------------------------
Chairman of the Board of Directors of the Corporation shall be a Director and
shall, in the absence of the Chairman of the Board of Directors, preside, when
present, at meetings of the Board of Directors, and shall have such powers and
perform such duties as may from time to time be assigned to him by the Board of
Directors or the Chairman.
Section 10. President. The President shall, when present, preside at
---------
all meetings of the stockholders, and, in the absence of the Chairman and the
Vice Chairman of the Board of Directors, at all meetings of the Board of
Directors. He shall have power to call special meetings of the stockholders or
of the Board of Directors or of the Executive Committee at any time. He shall
be the chief executive officer of the Corporation, and shall have responsibility
for the general direction of the business, affairs and property of the
Corporation, and of its several officers, and shall have and exercise all such
powers and discharge such duties as usually pertain to the office of President.
Section 11. Office of the Chairman. The Office of the Chairman shall
----------------------
be composed of the Chairman, the Vice Chairman and the President. The members
of the Office of the Chairman shall have the authority to oversee the day-to-day
management of the business and affairs of the Corporation, subject, however, to
the control of the Board of Directors and the Executive Committee.
Section 12. Vice-Presidents. The Vice-Presidents, or any of them,
---------------
shall, subject to the direction of the Board of Directors, at the request of the
President or in his absence, or in case of his inability to perform his duties
from any cause, perform the duties of the President, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the President.
The Vice-Presidents shall also perform such other duties as may be assigned to
them by the Board of Directors, and the
Board of Directors may determine the order of priority among them.
Section 13. Secretary. The Secretary shall perform such duties as
---------
are incident to the office of Secretary, or as may from time to time be assigned
to him by the Board of Directors, or as are prescribed by these By-laws.
Section 14. Treasurer. The Treasurer shall perform such duties and
---------
have powers as are usually incident to the office of Treasurer or which may be
assigned to him by the Board of Directors.
ARTICLE VI
CAPITAL STOCK
Section 1. Issue of Certificates of Stock. Certificates of capital
------------------------------
stock shall be in such form as shall be approved by the Board of Directors.
They shall be numbered in the order of their issue and shall be signed by the
Chairman of the Board of Directors, the President or one of the Vice-Presidents,
and the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and the seal of the Corporation or a facsimile thereof shall be
impressed or affixed or reproduced thereon; provided, however, that where such
-------- -------
certificates are signed by a transfer agent or an assistant transfer agent or by
a transfer clerk acting on behalf of the Corporation and a registrar, the
signature of any such Chairman of the Board of Directors, President, Vice-
President, Secretary, Assistant Secretary,
Treasurer or Assistant Treasurer may be facsimile. In case any officer or
officers who shall have signed, or whose facsimile signature or signatures shall
have been used on any such certificate or certificates shall cease to be such
officer or officers of the Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been delivered by
the Corporation, such certificate or certificates may nevertheless be adopted by
the Corporation and be issued and delivered as though the person or persons who
signed such certificate or certificates, or whose facsimile signature or
signatures shall have been used thereon, have not ceased to be such officer or
officers of the Corporation.
Section 2. Registration and Transfer of Shares. The name of each
-----------------------------------
person owning any share of the capital stock of the Corporation shall be entered
on the books of the Corporation together with the number of shares of each class
of capital stock held by him, the numbers of the certificates covering such
shares and the dates of issue of such certificates. The shares of stock of the
Corporation shall be transferable on the books of the Corporation by the holders
thereof in person, or by their duly authorized attorneys or legal
representatives, on surrender and cancellation of certificates for a like number
of shares, accompanied by an assignment or power of transfer endorsed thereon or
attached thereto, duly executed, and with such
proof of the authenticity of the signature as the Corporation or its agents may
reasonably require. A record shall be made of each transfer.
The Board of Directors may make other and further rules and
regulations concerning the transfer and registration of certificates for stock
and may appoint a transfer agent or registrar or both and may require all
certificates of stock to bear the signature of either or both.
Section 3. Lost, Destroyed and Mutilated Certificates. The holder of
------------------------------------------
any stock of the Corporation shall immediately notify the Corporation of any
loss, theft, destruction or mutilation of the certificates therefor. The
Corporation may issue a new certificate of stock in the place of any certificate
theretofore issued by it alleged to have been lost, stolen or destroyed, and the
Board of Directors may, in its discretion, require the owner of the lost, stolen
or destroyed certificate, or his legal representatives, to give the Corporation
a bond, in such sum not exceeding double the value of the stock and with such
surety or sureties as they may require, to indemnify it against any claim that
may be made against it by reason of the issue of such new certificate and
against all other liability in the premises, or may remit such owner to such
remedy or remedies as he may have under the laws of the State of Delaware.
ARTICLE VII
DIVIDENDS, SURPLUS, ETC.
The Board of Directors shall have power to fix and vary the amount to
be set aside or reserved as working capital of the Corporation, or as reserves,
or for other proper purposes of the Corporation, and, subject to the
requirements of the Certificate of Incorporation, to determine whether any part
of the surplus or net profits of the Corporation, if any, shall be declared as
dividends and paid to the stockholders, and to fix the date or dates for the
payment of dividends.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation shall
-----------
commence on the first day of January and end on the last day of December,
inclusive, or consist of such other 12 consecutive months as the Board of
Directors may by resolution designate.
Section 2. Corporate Seal. The corporate seal shall be circular in
--------------
form, with the name of the corporation in the circumference and the words and
figures "Corporate Seal - 1968 - Delaware" in the center. The form of the
corporate seal of the Corporation may be altered at the pleasure of the Board of
Directors. The corporate seal may be used by causing it or a facsimile thereof
to be impressed or affixed or reproduced or otherwise.
Section 3. Notices. Except as otherwise expressly provided, any
-------
notice required by these By-laws to be given shall be sufficient if given by
depositing the same in a post office or letter box in a sealed postpaid wrapper
addressed to the person entitled thereto at his address, as the same appears
upon the books of the Corporation, or by telecopying, telegraphing or cabling
the same to such person at such addresses; and such notice shall be deemed to be
given at the time it is mailed, telecopied, telegraphed or cabled.
Section 4. Waiver of Notice. Any stockholder, Director or member of
----------------
a committee may at any time, by writing or by telecopy, telegraph or by cable,
waive any notice required to be given under these By-laws, and if any
stockholder, Director or member of a committee shall be present at any meeting
his presence shall constitute a waiver of such notice unless he shall appear
solely for the purpose of objecting to the absence of notice and at the
beginning of the meeting shall declare such right to the other stockholders,
Directors or committee members then present.
Section 5. Checks, Drafts, Etc. All checks, drafts or other orders
--------------------
for the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation, and in such manner, as
shall from time to time be designated by resolution of the Board of Directors.
Section 6. Deposits. All funds of the Corporation shall be deposited
--------
from time to time to the credit of the Corporation in such bank or banks, trust
companies or other depositories as may be selected by the Board of Directors or
by such officers of the Corporation as may from time to time be designated by
resolution of the Board of Directors. For the purpose of such deposit, checks,
drafts, warrants and other orders for the payment of money which are payable to
the order of the Corporation may be endorsed for deposit, assigned and delivered
by any officer of the Corporation, or by such agents of the Corporation as the
Board of Directors or the President may authorize for that purpose.
Section 7. Voting Stock of Other Corporations. Except as otherwise
----------------------------------
ordered by the Board of Directors or the Executive Committee, the President or
any Vice President, acting jointly with the Treasurer, shall have the full power
and authority on behalf of the Corporation to attend and to act and to vote at
any meeting of the stockholders of any corporation of which the Corporation is a
stockholder and to execute a proxy to any other person to represent the Corpo-
ration at any such meeting, and at any such meeting, the President or any Vice
President, acting jointly with the Treasurer, or the holder of any such proxy,
as the case may be, shall possess and may exercise any and all rights and
powers incident to ownership of such stock and which, as owner thereof, the
Corporation might have possessed and exercised if present. The Board of
Directors or the Executive Committee may from time to time confer like powers
upon any other person or persons.
ARTICLE IX
AMENDMENTS
The Board of Directors may from time to time make, alter or repeal the
By-laws by a vote of a majority of the entire Board of Directors that would be
in office if no vacancy existed, whether or not present at a meeting; provided,
--------
however, that any By-laws made, amended or repealed by the Board of Directors
-------
may be amended or repealed, and any By-laws may be made, by the stockholders of
the Corporation by vote of a majority of the holders of shares of stock of the
Corporation entitled to vote in the election of Directors of the Corporation.
Exhibit C-1
CONTRIBUTION AGREEMENT
----------------------
CONTRIBUTION AGREEMENT ("Agreement"), dated as of __________, 1995
among Met International, Inc., a Delaware corporation ("Met International"),
MetProductions, Inc., a Delaware corporation ("MetProductions"), and The Actava
Group Inc., a Delaware corporation ("Actava").
WHEREAS, pursuant to an Amended and Restated Agreement and Plan of
Merger, dated as of September __, 1995 (the "Merger Agreement"), among Actava,
Orion Pictures Corporation, a Delaware corporation ("Orion"), MCEG Sterling
Incorporated, a Delaware corporation ("Sterling"), Metromedia International
Telecommunications, Inc., a Delaware corporation ("MITI"), OPC Merger Corp., a
Delaware corporation and a wholly owned subsidiary of Actava ("OPC Mergerco"),
and MITI Merger Corp., a Delaware corporation and a wholly owned subsidiary of
Actava ("MITI Mergerco"), each of Actava, Orion, Sterling, MITI, OPC Mergerco
and MITI Mergerco have agreed that (i) Orion will merge with and into OPC
Mergerco (the "Orion Merger"), with OPC Mergerco being the surviving corporation
of the Orion Merger, (ii) Sterling will merge with and into Actava (the
"Sterling Merger"), with Actava being the surviving corporation (the "Surviving
Corporation") of the Sterling Merger and (iii) MITI will merge with and into
MITI Mergerco (the "MITI Merger" and together with the Orion Merger and the
Sterling Merger, the
"Mergers"), with MITI Mergerco being the surviving corporation of the MITI
Merger;
WHEREAS, pursuant to Section 12.3.10 of the Merger Agreement, it is a
condition (the "Section 12.3.10 Condition") to the consummation of the Orion
Merger that all of the MetProductions Indebtedness (as defined in the Merger
Agreement) and the MII Indebtedness (as defined in the Merger Agreement) will be
either refinanced or repaid in full or contributed, assigned or conveyed to the
Surviving Corporation in exchange for shares of common stock of the Surviving
Corporation, par value $1.00 per share (the "Common Stock");
WHEREAS, if the Section 12.3.10 Condition is to be satisfied by the
contribution, assignment or conveyance of the MetProductions Indebtedness and/or
the MII Indebtedness in exchange for shares of Common Stock, MetProductions or
Met International, as the case may be, will contribute, assign or convey to the
Surviving Corporation the MetProductions Indebtedness and/or the MII
Indebtedness, as the case may be, in exchange for shares of Common Stock in
accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
ARTICLE I
CONTRIBUTION OF INDEBTEDNESS
----------------------------
1.1 Contribution of Indebtedness and Issuance of Stock. If the
--------------------------------------------------
Section 12.3.10 Condition is to be satisfied by the contribution, assignment or
conveyance of the MII Indebtedness and/or the MetProductions Indebtedness in
exchange for shares of Common Stock, MetProductions or Met International, as the
case may be, will execute all necessary documentation and take all necessary
action in order to contribute, assign or convey to the Surviving Corporation
such MetProductions Indebtedness and/or MII Indebtedness, as the case may be,
and (b) in exchange therefor, the Surviving Corporation shall issue (i) to
MetProductions, a certificate or certificates registered in the name of
MetProductions, or any permitted assignee of MetProductions, representing a
number of shares of Common Stock equal to the product of (A) the quotient of (I)
the aggregate amount of such MetProductions Indebtedness as of the Effective
Time (as defined in the Merger Agreement) divided by (II) 6, multiplied by (B)
the Orion Exchange Ratio (as defined in the Merger Agreement), and/or (ii) to
Met International, a certificate or certificates registered in the name of Met
International, or any permitted assignee of Met International, representing a
number of shares of Common Stock equal to the product of (A) the quotient of (I)
the aggregate amount of such MII Indebtedness as of the Effective Time divided
by (II) the quotient of (a) 100,000,000 divided by (b) the number of shares of
MITI
Common Stock (as defined in the Merger Agreement) outstanding as of the
Determination Date (as defined in the Merger Agreement), multiplied by (B) the
MITI Exchange Ratio.
If MetProductions and/or Met International does contribute, assign or
convey to the Surviving Corporation the MetProductions Indebtedness or the MII
Indebtedness in the manner described above, for purposes of this Agreement, such
contribution, assignment or conveyance shall be referred to herein as the
"Contribution" and MetProductions and/or Met International, as the case may be,
shall be referred to as a "Metromedia Holder."
1.2 Closing of the Contribution. The closing of such Contribution
---------------------------
(the "Contribution Closing") shall take place at the Effective Time (as such
term is defined in the Merger Agreement) of the Mergers at the offices of Xxxx,
Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
1.3 Deliveries at the Closing: At the Closing, Actava shall deliver
-------------------------
to the Metromedia Holders the following:
(a) certificates for a number of duly authorized shares of
Common Stock determined in accordance with Section 1.1 hereof registered in such
name(s) as the Metromedia Holders shall direct; and
(b) an opinion of counsel to Actava in the form of Exhibit 1.3
hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1 Actava Representations and Warranties. Actava
-------------------------------------
represents and warrants to Met International and MetProductions that:
(a) Organization and Good Standing. Actava and each of its
------------------------------
material subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Actava and each
of its material subsidiaries is duly qualified or licensed and in good standing
to do business in each jurisdiction in which the character of the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not have a material
adverse effect on the business, assets, condition (financial or otherwise) or
the results of operations of Actava and its material subsidiaries, taken as a
whole.
(b) Authorization; Binding Agreement. Actava has all requisite
--------------------------------
corporate power and authority to execute and deliver this Agreement and the
Registration Rights Agreement (as defined below) and to consummate the
transactions contemplated hereby and thereby. This
Agreement and the Registration Rights Agreement have been duly and validly
executed and delivered by Actava, and this Agreement and the Registration Rights
Agreement constitute the legal, valid and binding agreement of Actava,
enforceable against Actava in accordance with their respective terms, except to
the extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies.
(c) Actava is not required to obtain any consent, approval,
waiver, authorization or order of, or filing or registration with, any court or
governmental agency or other party for the execution and delivery by Actava of
this Agreement or the Registration Rights Agreement and the performance by
Actava of this Agreement or the Registration Rights Agreement and the
transactions contemplated hereby or thereby.
(d) All shares of Common Stock to be issued hereunder to the
Metromedia Holders shall be duly authorized, validly issued, fully paid and non-
assessable and will not be subject to any preemptive or similar rights.
(e) All shares of Common Stock to be issued hereunder shall be
authorized for listing upon each national securities exchange, if any, upon
which the outstanding Common Stock is listed at the time of such delivery or
shall be authorized for quotation, prior to such delivery, on the National
Association of Securities Dealers, Inc.'s Automated Quotation System ("NASDAQ"),
if the shares of Common Stock are quoted at such time on NASDAQ.
Section 2.2 Metromedia Holders' Representations and Warranties. The
--------------------------------------------------
Metromedia Holders represent and warrant to Actava that:
(a) Each Metromedia Holder has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed by each of the Metromedia Holders and constitutes the legal, valid and
binding obligation of each of the Metromedia Holders, enforceable against the
Metromedia Holders in accordance with its terms, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforceability of
creditors' rights generally and by general principles of equity regarding the
availability of remedies.
(b) Except for the consents listed on Schedule 2.2, no consent,
approval, waiver, authorization or order of, or filing or registration with, any
court or governmental agency or other party is required to be obtained by any of
the Metromedia Holders for the execution and delivery by the Metromedia Holders
of this Agreement and the performance by the Metromedia Holders of this
Agreement and the transactions contemplated hereby.
ARTICLE III
MISCELLANEOUS
-------------
Section 3.1 Assignment. The Metromedia Holders may assign all or
----------
part of their rights hereunder to one or more of their Affiliates (as such term
is defined pursuant to Rule 12b-2 of the Securities Exchange Act of 1934, as
amended).
Section 3.2 Amendments. Subject to applicable law, this Agreement
----------
may be amended, modified or supplemented only by a written instrument among
Actava and each of the Metromedia Holders, at any time prior to the Contribution
Closing with respect to any of the terms contained herein.
Section 3.3 Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 3.4 Headings. The parties to this Agreement agree that the
--------
Article and Section headings have been prepared for convenience only and are not
part of this Agreement and shall not be taken as an interpretation of any
provision of this Agreement.
Section 3.5 Notices. All demands, notices and communications
-------
hereunder shall be in writing and shall be delivered or mailed by registered or
certified United States mail, postage prepaid or telecopied or facsimile
transmission and confirmed by first-class mail, and addressed in each case as
follows:
(a) If to Actava:
The Actava Group Inc.
000 Xxxx Xxxxx Xxxxx Xxxx,
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
(b) If to the Metromedia Holders:
c/o Metromedia Company
Xxx Xxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
Any of the foregoing persons may change its address or telecopier number for
notices hereunder by giving notice of such change to the other persons. All
notices and demands shall be deemed to have been given either at the time of the
delivery thereof to any officer of the person entitled to receive such notices
and demands at the address or telecopier number of such person for notices
hereunder, or on the third day after the mailing thereof to such address, as the
case may be.
Section 3.6 Remedies. Each Metromedia Holder, in addition to being
--------
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
Actava agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
Section 3.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING
EFFECT TO CHOICE-OF-LAW PRINCIPLES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first written above.
MET INTERNATIONAL, INC.
By:
----------------------------------------------------
Name:
Title:
METPRODUCTIONS, INC.
By:
----------------------------------------------------
Name:
Title:
THE ACTAVA GROUP INC.
By:
----------------------------------------------------
Name:
Title:
Schedule 2.2
Consent of The Actava Group Inc. pursuant to a Credit Agreement,
dated as of October 11, 1995 among Metromedia Company, a Delaware general
partnership, and The Actava Group Inc., as amended.
Exhibit 1.3
Opinion of Counsel to Actava
Opinion of Long, Xxxxxxxx & Xxxxxx, Counsel to Actava, shall cover the
following matters, subject to customary exceptions and limitations:
1. Each of Actava, OPC Mergerco and MITI Mergerco
(collectively, the "Corporations") is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware.
2. Each of the Corporations has all necessary corporate power
and authority to execute, deliver and perform its obligations under the
Merger Agreement, the Contribution Agreement and the Registration Rights
Agreement (collectively, the "Agreements"), as appropriate, and the
execution, delivery and performance (including consummation of each of the
Mergers) of the Agreements by the Corporations have been duly authorized by
all necessary action on the part of the Board of Directors and stockholders
of the Corporations, as appropriate. Each of the Agreements has been duly
executed and delivered by the Corporations, as appropriate, and constitutes
the legal, valid and binding obligation of the Corporations, enforceable
against the Corporations in accordance with its terms.
2
3. The execution, delivery and performance by the Corporations
of the Agreements do not violate or result in a
breach of or default under (i) any provision of the certificate of
incorporation or by-laws of the Corporations, as appropriate, or any law or
regulation of the State of Georgia or the United States or any provision of
the General Corporation Law of the State of Delaware, (ii) any order, writ,
injunction or decree of which we have knowledge (without independent
investigation) of any court or governmental authority binding upon any of
the Corporations or to which any of the Corporations is subject, or
(iii) to our knowledge, any provision of any credit agreement, indenture or
similar agreement to which any of the Corporations is a party or to which
any of the Corporations is bound.
4. Upon the filing of the Orion Certificate of Merger, the
Sterling Certificate of Merger and the MITI Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with Section 1.2
of the Merger Agreement, each of the Mergers will be effective in
accordance with the terms of the Orion Certificate of Merger, the Sterling
Certificate of Merger and the MITI Certificate of Merger, as appropriate.
5. The shares of Common Stock when issued by Actava pursuant to
the terms of the Merger Agreement and the Contribution Agreement will
constitute validly issued, fully paid and non-assessable shares of stock of
Actava.
Exhibit C-2
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REGISTRATION RIGHTS AGREEMENT
Between
THE ACTAVA GROUP INC.
and
THE METROMEDIA HOLDERS NAMED HEREIN
_____________________________________________________
Common Stock, par value $1.00 per share
_____________________________________________________
Dated as of September 27, 1995
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TABLE OF CONTENTS
Page
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1. Registration Under Securities Act, etc. . . . . . . . . . . . . . . 1
1.1 Registration on Request . . . . . . . . . . . . . . . . . . . . 1
1.2 Registration Procedures . . . . . . . . . . . . . . . . . . . . 3
1.3 Underwritten Offerings . . . . . . . . . . . . . . . . . . . . 6
1.4 Preparation; Reasonable Investigation . . . . . . . . . . . . . 7
1.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 7
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3. Rule 144 and Rule 144A . . . . . . . . . . . . . . . . . . . . . . 12
4. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 13
5. Nominees for Beneficial Owners . . . . . . . . . . . . . . . . . . 13
6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8. Calculation of Percentage Interests in Registrable Securities . . 14
9. Investment Only . . . . . . . . . . . . . . . . . . . . . . . . . 14
10. No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . 15
11. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 15
14. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . 15
15. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
i
REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of
September 27, 1995 among Metromedia Company, a Delaware general partnership
("Metromedia"), Met Telcell, Inc., a Delaware corporation ("Met Telcell"),
Met International Inc., a Delaware corporation ("Met International"), Xxxx
X. Xxxxx ("Xxxxx"), Xxxxx X. Xxxxxxxxx and Xxxxxx Xxxxxxxxx, as joint
tenants ("Subotnick"), and MetProductions, Inc., a Delaware corporation
("MetProductions" and together with Metromedia, Met Telcell, Met
International, Xxxxx and Xxxxxxxxx, the "Metromedia Holders") and The
Actava Group Inc., a Delaware corporation ("Actava" or the "Company").
Capitalized terms used herein but not otherwise defined shall have the
meanings given them in Section 2 of this Agreement.
WHEREAS, pursuant to an Amended and Restated Agreement and Plan
of Merger, dated as of September 27, 1995, as amended from time to time
(the "Merger Agreement"), among the Company, Orion Pictures Corporation, a
Delaware corporation ("Orion"), MCEG Sterling Incorporated, a Delaware cor-
poration ("Sterling"), Metromedia International Telecommunications, Inc., a
Delaware corporation ("MITI"), OPC Merger Corp., a Delaware corporation and
a wholly-owned subsidiary of the Company ("OPC Mergerco"), and MITI Merger
Corp., a Delaware corporation and a wholly-owned subsidiary of the Company
("MITI Mergerco"), Orion and MITI will merge with and into OPC Mergerco and
MITI Mergerco, respectively, and Sterling will merge with and into the
Company, with the Company being the surviving corporation of such merger
(the "Sterling Merger"; and together with the mergers of Orion and MITI
with and into OPC Mergerco and MITI Mergerco, respectively, the "Mergers");
WHEREAS, pursuant to a Contribution Agreement, to be dated as of
the Effective Time (as defined in the Merger Agreement) of the Mergers,
among the Company and certain of the Metromedia Holders (the "Contribution
Agreement"), at the Effective Time of the Mergers, certain of the
Metromedia Holders may contribute, assign or convey to the Company certain
amounts owed by Orion, MITI and certain of their affiliates to such
Metromedia Holders in return for shares of common stock, par value $1.00
per share, of the Company ("Common Stock").
1. Registration Under Securities Act, etc.
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1.1 Registration on Request.
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(1) Shelf Registration. Actava shall file as soon as
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reasonably practicable following the date hereof a "shelf" registration
statement with respect to the Registrable Securities (as defined below) to
be issued to the Metromedia Holders pursuant to the Merger Agreement and
the Contribution Agreement, on Form S-3 pursuant to Rule 415 under the
Securities Act (the "Shelf Registration"). Actava shall use its best
efforts to have the Shelf Registration declared
effective as soon as reasonably practicable after such filing but in any
event on or prior to the Effective Time (as defined in the Merger
Agreement) of the Mergers and, shall use its best efforts to keep the Shelf
Registration continuously effective from the date such Shelf Registration
is declared effective until such time as all of the Registrable Securities
shall cease to be Registrable Securities.
Actava shall supplement or amend, if necessary the Shelf
Registration, as required by the registration form utilized by Actava or by
the instructions applicable to such registration form or by the Securities
Act or the rules and regulations promulgated thereunder or as reasonably
required by Metromedia or, if the Metromedia Holders do not hold at least
50% of the Registrable Securities, the holder or holders of (or any under-
writer for) a majority of the Registrable Securities (the "Majority
Holders"), and Actava shall furnish to the holders of the Registrable
Securities to which the Shelf Registration relates copies of any such
supplement or amendment prior to its being used and/or filed with the
Commission. Actava shall pay all Registration Expenses incurred in connec-
tion with the Shelf Registration and any supplements or amendments thereto,
whether or not it becomes effective, and whether all, none or some of the
Registrable Securities are sold pursuant to the Shelf Registration. In no
event shall the Shelf Registration include securities other than
Registrable Securities, unless Metromedia consents to such inclusion.
(2) Underwriting Procedures. If Metromedia so elects
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or, in the event the Metromedia Holders do not hold a majority of the
Registrable Securities, the Majority Holders, so elect, the offering of all
or a portion of the Registrable Securities pursuant to such Shelf
Registration shall be in the form of an underwritten offering. The managing
underwriter or managing underwriters of the underwritten offering to which
the Shelf Registration relates shall be a firm or firms of nationally
recognized standing selected by Metromedia or, if the Metromedia Holders do
not hold at least 50% of the Registrable Securities, the Majority Holders,
and shall be reasonably acceptable to the Company, it being agreed that
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation or any successor
thereto is reasonably acceptable to the Company.
1.2 Registration Procedures. In connection with the
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registration statement filed pursuant to Section 1.1, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith
as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities covered by such regis-
tration statement or as may be reasonably requested by Metromedia or,
if the Metromedia Holders do not hold at least 50% of the Registrable
Securities, the Majority Holders, until such time as all of such
Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set
forth in such registration statement;
(b) furnish to each seller of Registrable Securities
covered by such registration statement, such number of conformed
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits) and such
number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably request;
(c) use its best efforts (x) to register or qualify
all Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
such States of the United States of America where an exemption is not
available and as the sellers of Registrable Securities covered by such
registration statement shall reasonably request, (y) to keep such
registration or qualification in effect for so long as such registra-
tion statement remains in effect, and (z) to take any other action
which may be reasonably necessary or advisable to enable such sellers
to consummate the disposition in such jurisdictions of the securities
to be sold by such sellers, except that the Company shall not for any
such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for
the requirements of this subdivision (iii) be obligated to be so
qualified, subject itself to taxation in any such jurisdiction or to
consent to general service of process in any such jurisdiction;
(d) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered
with or approved by such other federal or state governmental agencies
or authorities as may be necessary in the opinion of counsel to the
Company and counsel to the seller or sellers of Registrable
Securities to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(e) use its best efforts to furnish at the effective
date of such registration statement and, if applicable, the date of
the closing under the underwriting agreement, to each seller of
Registrable Securities, and each such seller's underwriters, if any, a
signed counterpart of (x) an opinion of counsel for the Company, dated
the effective date of such registration statement and (y) in
connection with an underwritten offering, a "comfort" letter signed by
the independent public accountants who have certified the Company's
financial statements included or incorporated by reference in such
registration statement, covering substantially the same matters with
respect to such registration statement (and the prospectus included
therein) and, in the case of the accountants' comfort letter, with
respect to events subsequent to the date of such financial statements,
as are customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities and, in the case of the
accountants' comfort letter, such other financial matters, and, in the
case of the legal opinion, such other legal matters, as the sellers of
the Registrable Securities covered by such registration statement, or
the underwriters, may reasonably request;
(f) promptly notify each seller of Registrable
Securities covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such regis-
tration statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not mis-
leading, in the light of the circumstances under which they were made,
and at the request of any such seller promptly prepare and furnish to
it a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
under which they were made;
(g) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months,
but not more than eighteen months, beginning with the first full
calendar month after the effective date of such registration statement,
which earnings statement shall satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 promulgated thereunder, and promptly
furnish to each such seller of Registrable Securities a copy of any
amendment or supplement to such registration statement or prospectus;
and
(h) use its best efforts to list all Registrable
Securities covered by such registration statement on the NYSE, the
AMEX or such other national securities exchange on which Registrable
Securities of the same class and, if applicable, series, covered by
such registration statement are then listed or on the National
Association of Securities Dealers Automated Quotations System, Inc.
("NASDAQ") if the Registrable Securities are quoted on NASDAQ.
The Company may (i) require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such
information regarding such seller and the distribution of such securities
as the Company may from time to time reasonably request in writing and
(ii) require each seller of Registrable Securities to agree to comply with
the Securities Act and the Exchange Act in connection with the registration
and distribution of the Registrable Securities.
Notwithstanding the foregoing, if any such registration or
comparable statement refers to any holder by name or otherwise as the
holder of any securities of the Company and in its sole and exclusive
judgment such holder is or might be deemed to be a controlling person of
the Company, such holder shall have the right to require the insertion
therein of language, in form and substance reasonably satisfactory to such
holder and the Company, to the effect that the holding by such holder of
such securities is not to be construed as a recommendation by such holder
of the investment quality of the Company's securities covered thereby and
that such holding does not imply that such holder will assist in meeting
any future financial requirements of the Company.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind described in subdivision
(vi) of this Section 1.2, such holder will forthwith discontinue such
holder's
disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until such holder's
receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (vi) of this Section 1.2 and, if so directed by
the Company, will promptly deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such
holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
1.3 Underwritten Offerings. If requested by the
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underwriters for any underwritten offering by holders of Registrable
Securities pursuant to the Shelf Registration, the Company will use its
best efforts to enter into an underwriting agreement with such underwriters
for such offering, such agreement to be reasonably satisfactory in form and
substance to each such holder, the Company and the underwriters and to
contain such representations and warranties by the Company and such other
terms as are generally prevailing in agreements of that type, including,
without limitation, indemnities to the effect and to the extent provided in
Section 1.5. The holders of the Registrable Securities proposed to be sold
by such underwriters will reasonably cooperate with the Company in the
negotiation of the underwriting agreement. Such holders of Registrable
Securities to be sold by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of
the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to
the obligations of such holders of Registrable Securities. Any such holder
of Registrable Securities shall not be required to make any representations
or warranties to or agreements with the Company other than representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution or any other
representations required by applicable law.
1.4 Preparation; Reasonable Investigation. In connection
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with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company (i) shall give
Metromedia or, if the Metromedia Holders do not hold at least 50% of the
Registrable Securities, a representative holder designated in writing to
the Company by the Majority Holders (the "Representative"), such holders'
underwriters, if any, and counsel and accountants designated by Metromedia
or the
Representative, as the case may be, the opportunity to participate in the
preparation of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or
supplement thereto, (ii) shall give each of them such reasonable access to
its books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of
Metromedia or the Representative, as the case may be, and such underwriters
or such counsel or accountants, to conduct a reasonable investigation
within the meaning of the Securities Act and (iii) shall promptly notify
Metromedia or the Representative, as the case may be, and its counsel of
any stop order issued or threatened by the Commission and promptly take all
reasonable actions required to prevent the entry of such stop order or to
remove it if entered.
1.5 Indemnification.
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(1) Indemnification by the Company. The Company will,
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and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 1.1, each seller of any
Registrable Securities covered by such registration statement and each
other Person who participates as an underwriter in the offering or sale of
such securities and each other Person, if any, who controls such seller or
any such underwriter within the meaning of the Securities Act, and their
respective directors, officers, partners, shareholders, employees and
affiliates against any losses, claims, damages or liabilities, joint or
several, to which such seller or underwriter or any such director, officer,
partner, shareholder, employee, affiliate or controlling person may become
subject under the Securities Act or otherwise, including, without
limitation, the fees and expenses of legal counsel, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made
not misleading, or any violation by the Company of the Securities Act or
any rule or regulation thereunder applicable to the Company and the Company
will reimburse each such seller or underwriter and each such director,
officer, partner, shareholder, employee, affiliate and controlling Person
for
any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; provided, that the Company shall not be liable in any such case
--------
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary pros-
pectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by or on behalf of such seller
or underwriter, as the case may be, specifically stating that it is for use
in the preparation thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any such
seller or any such director, officer, employee, affiliate, partner or
controlling person and shall survive the transfer of such securities by
such seller.
(2) Indemnification by the Sellers. As a condition to
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including any Registrable Securities in any registration statement, the
Company shall have received an undertaking satisfactory to it from the
prospective seller of such Registrable Securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in
subdivision (a) of this Section 1.5) the Company, and each director,
officer, employee and shareholder of the Company and each other Person, if
any, who participates as an underwriter in the offering or sale of such
securities and each other Person who controls the Company or any such
underwriter within the meaning of the Securities Act, with respect to any
untrue statement or alleged untrue statement of a material fact contained
in or any omission or alleged omission to state therein a material fact in
any such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company through an instrument
duly executed by or on behalf of such seller specifically stating that it
is for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement;
provided, however, that the liability of such indemnifying party under this
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Section 1.5(b) shall be limited to the amount of proceeds received by such
indemnifying party in the offering giving rise to such liability. Such
indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director,
officer, employee, shareholder or controlling person
and shall survive the transfer of such securities by such seller.
(3) Notices of Claims, etc. Promptly after receipt by
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an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions of
this Section 1.5, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to
the latter of the commencement of such action; provided, however, that the
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failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 1.5, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice.
In case any such action is brought against an indemnified party the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that if the indemnified party
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reasonably believes it is advisable for it to be represented by separate
counsel because there exists a conflict of interest between its interests
and those of the indemnifying party with respect to such claim, or there
exist defenses available to such indemnified party which may not be avail-
able to the indemnifying party, or if the indemnifying party shall fail to
assume responsibility for such defense, the indemnified party may retain
counsel satisfactory to it and the indemnifying party shall pay all fees
and expenses of such counsel. No indemnifying party shall be liable for
any settlement of any action or proceeding effected without its written
consent, which consent shall not be unreasonably withheld or delayed. No
indemnifying party shall, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation or which requires action other than the
payment of money by the indemnifying party. Each indemnified party shall
furnish such information regarding itself or the claim in question as an
indemnifying party may reasonably request in writing and as shall be
reasonably requested in connection with the defense of such claim and
litigation resulting therefrom.
(4) Contribution. If the indemnification provided for
------------
in this Section 1.5 shall for any reason be held by a court of competent
jurisdiction to be unavailable to an indemnified party under subparagraph
(a) or (b) hereof in respect of any loss, claim, damage or liability, or
any action in respect thereof, then, in lieu of the amount paid or payable
under subparagraph (a) or (b) hereof, the indemnified party and the
indemnifying party under subparagraph (a) or (b) hereof shall contribute to
the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative
fault of the Company and the prospective sellers of Registrable Securities
covered by the registration statement in connection with the statements or
omissions which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations (the relative fault of the Company and such prospective
sellers to be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied
by the Company or such prospective sellers and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission) or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
shall be appropriate to reflect the relative benefits received by the
Company and such prospective sellers from the offering of the securities
covered by such registration statement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation. Such prospective sellers'
obligations to contribute as provided in this subparagraph (d) are several
in proportion to the relative value of their respective Registrable
Securities covered by such registration statement and not joint. In
addition, no Person shall be obligated to contribute hereunder any amounts
in payment for any settlement of any action or claim effected without such
Person's consent, which consent shall not be unreasonably withheld or
delayed.
(5) Other Indemnification. Indemnification and
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contribution similar to that specified in the preceding subdivisions of
this Section 1.5 (with appropriate modifications) shall be given by the
Company and each seller of Registrable Securities with respect to any
required registration or other qualification of securities under any
federal or state law, rule or regulation of any governmental authority
other than the Securities Act.
(6) Indemnification Payments. The indemnification and
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contribution required by this Section 1.5 shall be made by prompt periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred.
2. Definitions. As used herein, unless the context otherwise
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requires, the following terms have the following respective meanings:
"AMEX" means the American Stock Exchange Inc.
----
"Commission" means the Securities and Exchange Commission or any
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other federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, or any successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include a reference to the comparable section, if any, of
any such successor federal statute.
"Majority Holder" is defined in Section 1.1.
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"NYSE" means the New York Stock Exchange, Inc.
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"Person" means any individual, corporation, partnership, trust,
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incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency, department or political subdivision
thereof) or other entity of any kind.
"Registrable Securities" means (i) the Shares, (ii) any other
----------------------
shares of Common Stock owned by any Metromedia Holder or any affiliate of
Metromedia and (iii) any Related Registrable Securities. As to any
particular Registrable Securities, once issued such securities shall cease
to be Registrable Securities when (a) a registration statement with respect
to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b) they shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (c) they shall have been otherwise transferred,
and new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent public
distribution of them shall not, in the opinion of counsel to the holders
(or in the opinion of counsel to the Company, which opinion is reasonably
satisfactory to the holders), require registration of them under the
Securities Act, or (d) they shall have ceased to be outstanding. All
references to percentages of Registrable Securities shall be calculated
pursuant to Section 8.
"Registration Expenses" means all costs, fees and expenses
---------------------
incident to the Company's performance of or compliance with Section 1,
including, without limitation, all registration, filing and NASD fees, all
fees and expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of "cold comfort"
letters required by or incident to such performance and compliance, any
fees and disbursements of underwriters customarily paid by issuers or
sellers of securities (excluding any underwriting discounts or commissions
or transfer taxes with respect to the Registrable Securities) and the
reasonable fees and expenses of one counsel to Metromedia or, if the
Metromedia Holders do not hold at least 50% of the Registrable Securities,
one counsel to the Majority Holders.
"Related Registrable Securities" means any securities of the
------------------------------
Company issued or issuable with respect to the Shares by way of a dividend
or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise.
"Securities Act" means the Securities Act of 1933, or any
--------------
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to
a particular section of the Securities Act of 1933 shall include a
reference to the comparable section, if any, of any such successor federal
statute.
"Shares" means the shares of Common Stock to be received by the
------
Metromedia Holders pursuant to the Merger Agreement and the Contribution
Agreement.
3. Rule 144 and Rule 144A. The Company shall take all actions
----------------------
reasonably necessary to enable holders of Registrable Securities to sell
such securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, (b) Rule 144A under the
Securities Act, as such Rule may be amended from time to time, or (c) any
similar rules or regulations hereafter adopted by the Commission,
including, without limiting the generality of the foregoing, filing on a
timely basis all reports required to be filed by the Exchange
Act. Upon the request of any holder of Registrable Securities, the Company
will deliver to such holder a written statement as to whether it has
complied with such requirements.
4. Amendments and Waivers. This Agreement may be amended with
----------------------
the written consent of the Company and the Company may take any action
herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained the written
consent to such amendment, action or omission to act, of Metromedia or, if
the Metromedia Holders do not hold at least 50% of the Registrable
Securities, the Majority Holders affected by such amendment, action or
omission to act. Each holder of any Registrable Securities at the time or
thereafter outstanding shall be bound by any consent authorized by this
Section 4, whether or not such Registrable Securities shall have been
marked to indicate such consent.
5. Nominees for Beneficial Owners. In the event that any
------------------------------
Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its election in writing
delivered to the Company, be treated as the holder of such Registrable
Securities for purposes of any request, consent, waiver or other action by
any holder or holders of Registrable Securities pursuant to this Agreement
or any determination of any number or percentage of shares of Registrable
Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably satis-
factory to it of such owner's beneficial ownership of such Registrable
Securities.
6. Notices. All notices, demands and other communications
-------
provided for or permitted hereunder shall be made in writing and shall be
by registered or certified first-class mail, return receipt requested,
telex, telegram, telecopier, reputable courier service or personal delivery
to the following addresses (or at such other address for a party as shall
be specified by like notice):
(a) if to any of the Metromedia Holders,
c/o Metromedia Company
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
(b) if to the Company, to
The Actava Group Inc.
000 Xxxx Xxxxx Xxxxx Xxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day
after being sent by reputable courier service; three business days after
being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; and when receipt is acknowledged, if telecopied.
7. Assignment. This Agreement shall be binding upon and inure
----------
to the benefit of and shall be enforceable by the parties hereto and, with
respect to the Company, its respective successors and assigns and, with
respect to the Metromedia Holders, any holder of any Registrable
Securities, subject to the provisions respecting the minimum numbers of
percentages of shares of Registrable Securities required in order to be
entitled to certain rights, or to take certain actions, contained herein.
8. Calculation of Percentage Interests in Registrable
--------------------------------------------------
Securities. For purposes of this Agreement, all references to a percentage
----------
of the Registrable Securities shall be calculated based upon the total
number of shares of Common Stock included in the definition of the
Registrable Securities outstanding at the time such calculation is made.
9. Investment Only. Each Metromedia Holder hereby represents
---------------
and warrants to the Company that it, he or she has acquired the Shares for
investment only, for its, his or her own account and not for resale or
distribution. Each Metromedia Holder further acknowledges that the Shares
are being issued pursuant to an exemption from registration under the
Securities Act and agrees not to sell or otherwise dispose of the Shares in
any transaction which, in the reasonable opinion of Company's counsel,
would be in violation of the Securities Act. The Metromedia Holders each
acknowledge that a legend appears on the certificates for the Shares
reflecting the foregoing restriction and each of the Metromedia Holders
hereby consents to the Company's maintaining "stop transfer" instructions
with its transfer agent with respect thereto.
10. No Inconsistent Agreements. The Company will not hereafter
--------------------------
enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement.
11. Remedies. Each holder of Registrable Securities, in
--------
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive the defense
in any action for specific performance that a remedy at law would be
adequate.
12. Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein
shall not be in any way impaired thereby, it being intended and understood
that all of the rights and privileges of the Metromedia Holders shall be
enforceable to the fullest extent permitted by law.
13. Entire Agreement. This Agreement is intended by the parties
----------------
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to
such subject matter.
14. Descriptive Headings. The descriptive headings of the
--------------------
several sections and paragraphs of this Agreement are inserted for
reference only and shall not limit or otherwise affect the meaning hereof.
15. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND
-------------
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
16. Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
METROMEDIA COMPANY
By:
--------------------------
Name:
Title:
MET TELCELL, INC.
By:
-------------------------
Name:
Title:
MET INTERNATIONAL, INC.
By:
-------------------------
Name:
Title:
____________________________
Xxxx X. Xxxxx
_____________________________
Xxxxx X. Xxxxxxxxx
and Xxxxxx Xxxxxxxxx,
as joint tenants
METPRODUCTIONS, INC.
By:
--------------------------
Name:
Title:
THE ACTAVA GROUP INC.
By:
--------------------------
Name:
Title:
Exhibit D
Opinion of Counsel to Orion
Opinion of Counsel of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, Counsel to
Orion, shall cover the following matters, subject to customary exceptions
and limitations:
1. Orion is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
2. Orion has all necessary corporate power and authority to
execute, deliver and perform its obligations under the Merger Agreement and
the execution, delivery and performance (including consummation of the
Orion Merger) by Orion of the Merger Agreement have been duly authorized by
all necessary action on the part of the Board of Directors and stockholders
of Orion. The Merger Agreement has been duly executed and delivered by
Orion and constitutes the legal, valid and binding obligation of Orion,
enforceable against Orion in accordance with its terms.
3. The execution, delivery and performance by Orion of the
Merger Agreement does not violate or result in a breach of or default under
(i) any provision of its certificate of incorporation or by-laws or any law
or regulation of the State of New York or the United States or any
provision of the General Corporation Law of the State of Delaware, (ii) any
order, writ, injunction or decree of which we have knowledge (without
independent investigation) of any court or governmental authority binding
upon Orion or to which Orion is subject, or (iii) to our knowledge, any
provision of any credit agreement, indenture or similar agreement to which
Orion is a party or to which Orion is bound.
4. Upon the filing of the Orion Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with Section 1.2
of the Merger Agreement, the Orion Merger will be effective in accordance
with the terms of the Orion Certificate of Merger.
Exhibit E
Opinion of Counsel to Sterling
Opinion of Xxxxxxxx Brog Leinwand Xxxxxx Xxxxxxxx & Xxxxx P.C., Counsel to
Sterling, shall cover the following matters, to be rendered in accordance
with the Legal Opinion Accord of the ABA Section of Business Law (1991):
1. Sterling is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
2. Sterling has all necessary corporate power and authority to
execute, deliver and perform its obligations under the Merger Agreement,
and the execution, delivery and performance (including consummation of the
Sterling Merger) by Sterling of the Merger Agreement have been duly
authorized by all necessary action on the part of the Board of Directors
and stockholders of Sterling. The Merger Agreement has been duly executed
and delivered by Sterling and constitutes the legal, valid and binding
obligation of Sterling, enforceable against Sterling in accordance with its
terms.
3. The execution, delivery and performance by Sterling of the
Merger Agreement do not violate or result in a breach of or default under
(i) any provision of the certificate of incorporation or by-laws of
Sterling, or any law or regulation of the State of New York or the United
States or any provision of the General Corporation Law of the State of
Delaware, (ii) any order, writ, injunction or decree of which we have
knowledge (without independent investigation) of any court or governmental
authority binding upon Sterling or to which Sterling is subject, or
(iii) to our knowledge, any provision of any credit agreement, indenture or
similar agreement to which Sterling is a party or to which Sterling is
bound of which we have Actual Knowledge.
4. Upon the filing of the Sterling Certificate of Merger with
the Secretary of State of the State of Delaware in accordance with
Section 1.2 of the Merger Agreement, the Sterling Merger will be effective
in accordance with the terms of the Sterling Certificate of Merger.
Exhibit F
Opinion of Counsel to MITI
Opinion of Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx, Counsel to MITI, shall
cover the following matters, subject to customary exceptions and
limitations:
1. MITI is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
2. MITI has all necessary corporate power and authority to
execute, deliver and perform its obligations under the Merger Agreement,
and the execution, delivery and performance (including consummation of the
MITI Merger) by MITI of the Merger Agreement have been duly authorized by
all necessary action on the part of the Board of Directors and stockholders
of MITI. The Merger Agreement has been duly executed and delivered by MITI
and constitutes the legal, valid and binding obligation of MITI,
enforceable against MITI in accordance with its terms.
3. The execution, delivery and performance by MITI of the
Merger Agreement do not violate or result in a breach of or default under
(i) any provision of the certificate of incorporation or by-laws of MITI,
or any law or regulation of the State of New York or the United States or
any provision of the General Corporation Law of the State of Delaware,
(ii) any order, writ, injunction or decree of which we have knowledge
(without independent investigation) of any court or governmental authority
binding upon MITI or to which MITI is subject, or (iii) to our knowledge,
any provision of any credit agreement, indenture or similar agreement to
which MITI is a party or to which MITI is bound.
4. Upon the filing of the MITI Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with Section 1.2
of the Merger Agreement, the MITI Merger will be effective in accordance
with the terms of the MITI Certificate of Merger.
Exhibit G
Opinion of Counsel to Actava
Opinion of Long, Xxxxxxxx & Xxxxxx, Counsel to Actava, shall cover the
following matters, subject to customary exceptions and limitations:
1. Each of Actava, OPC Mergerco and MITI Mergerco
(collectively, the "Corporations") is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware.
2. Each of the Corporations has all necessary corporate power
and authority to execute, deliver and perform its obligations under the
Merger Agreement, the Contribution Agreement and the Registration Rights
Agreement (collectively, the "Agreements"), as appropriate, and the
execution, delivery and performance (including consummation of each of the
Mergers) of the Agreements by the Corporations have been duly authorized by
all necessary action on the part of the Board of Directors and stockholders
of the Corporations, as appropriate. Each of the Agreements has been duly
executed and delivered by the Corporations, as appropriate, and constitutes
the legal, valid and binding obligation of the Corporations, enforce-able
against the Corporations in accordance with its terms.
3. The execution, delivery and performance by the Corporations
of the Agreements do not violate or result in a breach of or default under
(i) any provision of the certificate of incorporation or by-laws of the
Corporations, as appropriate, or any law or regulation of the State of
Georgia or the United States or any provision of the General Corporation
Law of the State of Delaware, (ii) any order, writ, injunction or decree of
which we have knowledge (without independent investigation) of any court or
governmental authority binding upon any of the Corporations or to which any
of the Corporations is subject, or (iii) to our knowledge, any provision of
any credit agreement, indenture or similar agreement to which any of the
Corporations is a party or to which any of the Corporations is bound.
4. Upon the filing of the Orion Certificate of Merger, the
Sterling Certificate of Merger and the MITI Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with Section 1.2
of the Merger Agreement, each of the Mergers will be effective in
accordance with the terms of the Orion Certificate of Merger, the Sterling
Certificate of Merger and the MITI Certificate of Merger, as appropriate.
2
5. The shares of Common Stock when issued by Actava pursuant to
the terms of the Merger Agreement will constitute validly issued, fully
paid and non-assessable shares of stock of Actava.
Schedule 1.5.2(a)
Directors
---------
Orion's Designees to the
Surviving Corporation's Board of Directors
------------------------------------------
Xxxx X. Xxxxx
Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx Xxxxx
Actava's Designees to the
Surviving Corporation's Board of Directors
------------------------------------------
Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxx
Xxxx X. Xxxxx
Xxxxx X. Xxxxxxx
Schedule 1.5.2(b)
Directors
---------
Orion's Designees to the
Surviving Corporation's Board of Directors
------------------------------------------
Xxxx X. Xxxxx
Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx Xxxxx
Actava's Designees to the
Surviving Corporation's Board of Directors
------------------------------------------
Xxxx X. Xxxxxxxx
and one of Xxxx X. Xxxxxxx, Xxxx X. Xxxxx
and Xxxxx X. Xxxxxxx
Triton's Designee to the
Surviving Corporation's Board of Directors
------------------------------------------
Xxxxxxx Xxxxxx
Schedule 15.9(viii)
Orion Exchange Ratio
--------------------
If the Average Closing Price is less than $10.50, the Orion
Exchange Ratio shall be determined by solving for "Y" in the following
formula and dividing "Y" by the number of shares of Orion Common Stock
outstanding on the business day immediately preceding the Determination
Date:
120,000,000 = "Y" x Average Closing Price
Schedule 15.9(ix)
MITI Exchange Ratio
-------------------
If the Average Closing Price is less than $10.50, the MITI
Exchange Ratio shall be determined by solving for "Y" in the following
formula and dividing "Y" by the number of shares of MITI Common Stock
outstanding on the business day immediately preceding the Determination
Date:
100,000,000 = "Y" x Average Closing Price.
Schedule 15.9(x)(a)
Adjustment to Sterling Exchange Ratio
-------------------------------------
If the Average Closing Price is less than $10.50, the Sterling
Exchange Ratio shall be determined by solving for "Y" in the following
formula and then dividing "Y" by the number of shares of Sterling Common
Stock outstanding on the business day immediately preceding the
Determination Date:
6,000,000 = "Y" x Average Closing Price
Schedule 15.9(x)(b)
Adjustment to Sterling Exchange Ratio
-------------------------------------
If the Average Closing Price is greater than $14.875, the
Sterling Exchange Ratio shall be determined by solving for "Y" in the
following formula and then dividing "Y" by the number of shares of Sterling
Common Stock outstanding on the business day immediately preceding the
Determination Date:
8,500,000 = "Y" x Average Closing Price
shares of stock of Actava.
